Exhibit 10.7
 
$100,000,000
CREDIT AGREEMENT
Dated as of November 10, 2006
among
ASSISTED LIVING CONCEPTS, INC., as Borrower,
THE LENDERS AND L/C ISSUERS PARTY HERETO
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Administrative Agent and Collateral Agent
w w w
GE CAPITAL MARKETS, INC.,
as Sole Lead Arranger and Bookrunner
 

 

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Table of Contents

                              Page   ARTICLE I     DEFINITIONS, INTERPRETATION
AND ACCOUNTING TERMS     1                    
 
  Section 1.1   Defined Terms     1  
 
  Section 1.2   UCC Terms     28  
 
  Section 1.3   Accounting Terms and Principles     28  
 
  Section 1.4   Payments     29  
 
  Section 1.5   Interpretation     29  
 
                ARTICLE II     THE FACILITY     30    
 
  Section 2.1   The Commitments     30  
 
  Section 2.2   Borrowing Procedures     31  
 
  Section 2.3   Swing Loans     32  
 
  Section 2.4   Letters of Credit     34  
 
  Section 2.5   Reduction and Termination of the Commitments     36  
 
  Section 2.6   Repayment of Loans     37  
 
  Section 2.7   Optional Prepayments     37  
 
  Section 2.8   Mandatory Prepayments     37  
 
  Section 2.9   Interest     38  
 
  Section 2.10   Conversion and Continuation Options     39  
 
  Section 2.11   Fees     39  
 
  Section 2.12   Application of Payments     40  
 
  Section 2.13   Payments and Computations     41  
 
  Section 2.14   Evidence of Debt     42  
 
  Section 2.15   Suspension of Eurodollar Rate Option     44  
 
  Section 2.16   Breakage Costs; Increased Costs; Capital Requirements     44  
 
  Section 2.17   Taxes     45  
 
  Section 2.18   Substitution of Lenders     48  
 
                ARTICLE III     CONDITIONS TO LOANS AND LETTERS OF CREDIT     49
                   
 
  Section 3.1   Conditions Precedent to Initial Loans and Letters of Credit    
49  
 
  Section 3.2   Conditions Precedent to Each Loan and Letter of Credit     51  
 
  Section 3.3   Conditions Precedent to Each Facility Increase     51  
 
  Section 3.4   Determinations of Initial Borrowing Conditions     53  
 
                ARTICLE IV     REPRESENTATIONS AND WARRANTIES     53            
       
 
  Section 4.1   Corporate Existence; Compliance with Law     53  
 
  Section 4.2   Loan and Related Documents     54  
 
  Section 4.3   Ownership of Group Members     54  
 
  Section 4.4   Financial Statements     55  
 
  Section 4.5   Material Adverse Effect     55  
 
  Section 4.6   Solvency     55  
 
  Section 4.7   Litigation     56  
 
  Section 4.8   Taxes     56  
 
  Section 4.9   Margin Regulations     56  
 
  Section 4.10   No Burdensome Obligations; No Defaults     56  
 
  Section 4.11   Investment Company Act; Public Utility Holding Company Act    
56  
 
  Section 4.12   Labor Matters     57  
 
  Section 4.13   ERISA     57  

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                              Page  
 
  Section 4.14   Environmental Matters     57  
 
  Section 4.15   Intellectual Property     58  
 
  Section 4.16   Title; Real Property     58  
 
  Section 4.17   Compliance With Healthcare Laws     58  
 
  Section 4.18   HIPAA Compliance     59  
 
  Section 4.19   Reimbursement From Third Party Payors     60  
 
  Section 4.20   Fraud and Abuse     60  
 
  Section 4.21   Full Disclosure     60  
 
                ARTICLE V     FINANCIAL COVENANTS     60                    
 
  Section 5.1   Maximum Consolidated Leverage Ratio     60  
 
  Section 5.2   [Reserved]     61  
 
  Section 5.3   Minimum Consolidated Fixed Charge Coverage Ratio     61  
 
  Section 5.4   Capital Expenditures     61  
 
                ARTICLE VI     REPORTING COVENANTS     61                    
 
  Section 6.1   Financial Statements     61  
 
  Section 6.2   Other Events     63  
 
  Section 6.3   Copies of Notices and Reports     63  
 
  Section 6.4   Taxes     63  
 
  Section 6.5   Labor Matters     63  
 
  Section 6.6   ERISA Matters     64  
 
  Section 6.7   Environmental Matters     64  
 
  Section 6.8   Other Information     65  
 
                ARTICLE VII     AFFIRMATIVE COVENANTS     65                    
 
  Section 7.1   Maintenance of Corporate Existence     65  
 
  Section 7.2   Compliance with Laws, Etc     65  
 
  Section 7.3   Payment of Obligations     65  
 
  Section 7.4   Maintenance of Property     66  
 
  Section 7.5   Maintenance of Insurance     66  
 
  Section 7.6   Keeping of Books     66  
 
  Section 7.7   Access to Books and Property     66  
 
  Section 7.8   Environmental     66  
 
  Section 7.9   Use of Proceeds     67  
 
  Section 7.10   Additional Collateral and Guaranties     67  
 
  Section 7.11   Deposit Accounts; Securities Accounts and Cash Collateral
Accounts     68  
 
  Section 7.12   Accreditation and Licensing     68  
 
                ARTICLE VIII     NEGATIVE COVENANTS     69                    
 
  Section 8.1   Indebtedness     69  
 
  Section 8.2   Liens     70  
 
  Section 8.3   Investments     71  
 
  Section 8.4   Asset Sales     72  
 
  Section 8.5   Restricted Payments     73  
 
  Section 8.6   Prepayment of Indebtedness     73  
 
  Section 8.7   Fundamental Changes     74  
 
  Section 8.8   Change in Nature of Business     74  
 
  Section 8.9   Transactions with Affiliates     74  

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                              Page  
 
  Section 8.10   Third-Party Restrictions on Indebtedness, Liens, Investments or
       
 
      Restricted Payments     75  
 
  Section 8.11   Modification of Certain Documents     75  
 
  Section 8.12   Accounting Changes; Fiscal Year     76  
 
  Section 8.13   Margin Regulations     76  
 
  Section 8.14   Compliance with ERISA     76  
 
  Section 8.15   Hazardous Materials     76  
 
                ARTICLE IX     EVENTS OF DEFAULT     76  

 
               
 
  Section 9.1   Definition     76  
 
  Section 9.2   Remedies     78  
 
  Section 9.3   Actions in Respect of Letters of Credit     78  
 
                ARTICLE X     THE ADMINISTRATIVE AGENT     79  

 
               
 
  Section 10.1   Appointment and Duties     79  
 
  Section 10.2   Binding Effect     80  
 
  Section 10.3   Use of Discretion     80  
 
  Section 10.4   Delegation of Rights and Duties     80  
 
  Section 10.5   Reliance and Liability     80  
 
  Section 10.6   Administrative Agent Individually     82  
 
  Section 10.7   Lender Credit Decision     82  
 
  Section 10.8   Expenses; Indemnities     82  
 
  Section 10.9   Resignation of Administrative Agent or L/C Issuer     83  
 
  Section 10.10   Release of Collateral or Guarantors     83  
 
  Section 10.11   Additional Secured Parties     84  
 
                ARTICLE XI     MISCELLANEOUS     85  

 
               
 
  Section 11.1   Amendments, Waivers, Etc     85  
 
  Section 11.2   Assignments and Participations; Binding Effect     86  
 
  Section 11.3   Costs and Expenses     88  
 
  Section 11.4   Indemnities     89  
 
  Section 11.5   Survival     90  
 
  Section 11.6   Limitation of Liability for Certain Damages     90  
 
  Section 11.7   Lender-Creditor Relationship     90  
 
  Section 11.8   Right of Setoff     91  
 
  Section 11.9   Sharing of Payments, Etc     91  
 
  Section 11.10   Marshaling; Payments Set Aside     91  
 
  Section 11.11   Notices     91  
 
  Section 11.12   Electronic Transmissions     92  
 
  Section 11.13   Governing Law     93  
 
  Section 11.14   Jurisdiction     94  
 
  Section 11.15   WAIVER OF JURY TRIAL     94  
 
  Section 11.16   Severability     94  
 
  Section 11.17   Execution in Counterparts     95  
 
  Section 11.18   Entire Agreement     95  
 
  Section 11.19   Use of Name     95  
 
  Section 11.20   Non-Public Information; Confidentiality     95  
 
  Section 11.21   Patriot Act Notice     96  

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SCHEDULES

         
Schedule I
  –   Commitments
Schedule II
  –   Addresses for Notices
Schedule III
  –   Separation Costs
Schedule IV
  –   Minimum Consolidated EBITDA
Schedule 4.2
  –   Consents
Schedule 4.3
  –   Ownership of Borrower and Subsidiaries
Schedule 4.7
  –   Litigation
Schedule 4.12
  –   Labor Matters
Schedule 4.13
  –   List of Plans
Schedule 4.14
  –   Environmental Matters
Schedule 4.16
  –   Real Property
Schedule 8.1
  –   Existing Indebtedness
Schedule 8.2
  –   Existing Liens
Schedule 8.3
  –   Existing Investments

EXHIBITS

         
Exhibit A
  –   Form of Assignment
Exhibit B
  –   Form of Note
Exhibit C
  –   Form of Notice of Borrowing
Exhibit D
  –   Form of Swingline Request
Exhibit E
  –   Form of L/C Request
Exhibit F
  –   Form of Notice of Conversion or Continuation
Exhibit G
  –   Form of Compliance Certificate
Exhibit H
  –   Form of Guaranty and Security Agreement
Exhibit I
  –   Mortgaged Property Report

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          This CREDIT AGREEMENT, dated as of November 10, 2006, is entered into
among ASSISTED LIVING CONCEPTS, INC., a Nevada corporation (the “Borrower”), the
Lenders (as defined below), the L/C Issuers (as defined below) and GENERAL
ELECTRIC CAPITAL CORPORATION (“GE Capital”), as administrative agent and
collateral agent for the Lenders and the L/C Issuers (in such capacity, and
together with its successors and permitted assigns, the “Administrative Agent”).
          The parties hereto agree as follows:
ARTICLE I
DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS
     Section 1.1 Defined Terms. As used in this Agreement, the following terms
have the following meanings:
     “Additional Projections” has the meaning specified in Section 6.1(e).
     “Adjusted Consolidated EBITDA” means Consolidated EBITDA, subject to such
adjustments as determined by Administrative Agent in its reasonable discretion.
     “Affected Lender” has the meaning specified in Section 2.18.
     “Affiliate” means, with respect to any Person, each officer, director,
general partner or joint-venturer of such Person and any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, such Person; provided, however, that no Secured Party shall be an
Affiliate of the Borrower. For purpose of this definition, “control” means the
possession of either (a) the power to vote, or the beneficial ownership of, 10%
or more of the Voting Stock of such Person or (b) the power to direct or cause
the direction of the management and policies of such Person, whether by contract
or otherwise.
     “Agreement” means this Credit Agreement.
     “Applicable Margin” means, with respect to Revolving Loans, Swing Loans and
the Unused Commitment Fee, a percentage equal to (a) during the period
commencing on the Closing Date and ending on the next date of determination that
is at least 180 days after the Closing Date, the percentage set forth in the
applicable column opposite Level III in the table set forth in clause (b) below
and (b) thereafter, as of each date of determination (and until the next such
date of determination), a percentage equal to the percentage set forth below in
the applicable column opposite the level corresponding to the Consolidated
Leverage Ratio in effect as of the last day of the most recently ended Fiscal
Quarter:

 

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                                              EURODOLLAR RATE     LEVEL  
CONSOLIDATED LEVERAGE RATIO   BASE RATE LOANS   LOANS   UNUSED COMMITMENT FEE
I
  Greater than or equal to 4.50 to 1     0.50 %     2.00       0.375 %
II
  Less than 4.50 to 1 and equal to or greater than 4.00 to 1     0.25 %     1.75
%     0.375 %
III
  Less than 4.00 to 1     0.00 %     1.50 %     0.375 %

Each date of determination for the “Applicable Margin” shall be the date that is
3 Business Days after delivery by the Borrower to the Administrative Agent of a
new Compliance Certificate pursuant to Section 6.1(c). Notwithstanding anything
to the contrary set forth in this Agreement (including the then effective
Consolidated Leverage Ratio), the Applicable Margin shall equal the percentage
set forth in the appropriate column opposite Level I in the table above,
effective immediately upon (x) the occurrence of any Event of Default under
Section 9.1(e)(ii) or (y) the delivery of a notice by the Administrative Agent
or the Required Lenders to the Borrower during the continuance of any other
Event of Default and, in each case, for as long as such Event of Default shall
be continuing.
     “Approved Fund” means, with respect to any Lender, any Person (other than a
natural Person) that (a) 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 (b) is advised or managed by (i) such
Lender, (ii) any Affiliate of such Lender or (iii) any Person (other than an
individual) or any Affiliate of any Person (other than an individual) that
administers or manages such Lender.
     “Arranger” means GE Capital Markets, Inc.
     “Assignment” means an assignment agreement entered into by a Lender, as
assignor, and any prospective assignee thereof and accepted by the
Administrative Agent, in substantially the form of Exhibit A.
     “Base Rate” means, at any time, a rate per annum equal to the higher of
(a) the rate last quoted by The Wall Street Journal as the “base rate on
corporate loans posted by at least 75% of the nation’s 30 largest banks” in the
United States or, if The Wall Street Journal ceases to quote such rate, the
highest per annum interest rate published by the Federal Reserve Board in
Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the
“bank prime loan” rate or, if such rate is no longer quoted therein, any similar
rate quoted therein (as determined by the Administrative Agent) or any similar
release by the Federal Reserve Board (as determined by the Administrative Agent)
and (b) the sum of 0.5% per annum and the Federal Funds Rate.
     “Base Rate Loan” means any Loan that bears interest based on the Base Rate.
     “Benefit Plan” means any employee benefit plan as defined in Section 3(3)
of ERISA (whether governed by the laws of the United States or otherwise) to
which any Group Member incurs or otherwise has any obligation or liability,
contingent or otherwise.
     “Borrower” has the meaning specified in the preamble.

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     “Borrowing” means a borrowing consisting of Loans (other than Swing Loans
and Loans deemed made pursuant to Section 2.4) made in one Facility on the same
day by the Lenders according to their respective Commitments under such
Facility.
     “Business Day” means any day of the year that is not a Saturday, Sunday or
a day on which banks are required or authorized to close in New York City and,
when determined in connection with notices and determinations in respect of any
Eurodollar Rate or Eurodollar Rate Loan or any funding, conversion,
continuation, Interest Period or payment of any Eurodollar Rate Loan, that is
also a day on which dealings in Dollar deposits are carried on in the London
interbank market.
     “Capital Expenditures” means, for any Person for any period, the aggregate
of all expenditures, whether or not made through the incurrence of Indebtedness,
by such Person and its Subsidiaries during such period for the acquisition,
leasing (pursuant to a Capital Lease), construction, replacement, repair,
substitution or improvement of fixed or capital assets or additions to
equipment, in each case required to be capitalized under GAAP on a Consolidated
balance sheet of such Person, excluding (a) interest capitalized during
construction and (b) any expenditure to the extent, for purpose of the
definition of Permitted Acquisition, such expenditure is part of the aggregate
amounts payable in connection with, or other consideration for, any Permitted
Acquisition consummated during or prior to such period and (c) expenditures
consisting of Capitalized Lease Obligations or purchase money Indebtedness
permitted pursuant to Section 8.1(c).
     “Capital Lease” means, with respect to any Person, any lease of, or other
arrangement conveying the right to use, any property (whether real, personal or
mixed) by such Person as lessee that has been or should be accounted for as a
capital lease on a balance sheet of such Person prepared in accordance with
GAAP.
     “Capitalized Lease Obligations” means, at any time, with respect to any
Capital Lease, any lease entered into as part of any Sale and Leaseback
Transaction of any Person or any synthetic lease, the amount of all obligations
of such Person that is (or that would be, if such synthetic lease or other lease
were accounted for as a Capital Lease) capitalized on a balance sheet of such
Person prepared in accordance with GAAP.
     “Cash Collateral Account” means a deposit account or securities account in
the name of the Borrower and under the sole control (as defined in the
applicable UCC) of the Administrative Agent and (a) in the case of a deposit
account, from which the Borrower may not make withdrawals except as permitted by
the Administrative Agent and (b) in the case of a securities account, with
respect to which the Administrative Agent shall be the entitlement holder and
the only Person authorized to give entitlement orders with respect thereto.
     “Cash Equivalents” means (a) any readily-marketable securities (i) issued
by, or directly, unconditionally and fully guaranteed or insured by the United
States federal government or (ii) issued by any agency of the United States
federal government the obligations of which are fully backed by the full faith
and credit of the United States federal government, (b) any readily-marketable
direct obligations issued by any other agency of the United States federal
government, any state of the United States or any political subdivision of any
such state or any public instrumentality thereof, in each case having a rating
of at least “A-1” from S&P or at least “P-1” from Moody’s, (c) any commercial
paper rated at least “A-1” by S&P or “P-1” by Moody’s and issued by any Person
organized under the laws of any state of the United States, (d) any Dollar-

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denominated time deposit, insured certificate of deposit, overnight bank deposit
or bankers’ acceptance issued or accepted by (i) any Lender or (ii) any
commercial bank that is (A) organized under the laws of the United States, any
state thereof or the District of Columbia, (B) “adequately capitalized” (as
defined in the regulations of its primary federal banking regulators) and
(C) has Tier 1 capital (as defined in such regulations) in excess of
$250,000,000 and (e) shares of any United States money market fund that (i) has
substantially all of its assets invested continuously in the types of
investments referred to in clause (a), (b), (c) or (d) above with maturities as
set forth in the proviso below, (ii) has net assets in excess of $500,000,000
and (iii) has obtained from either S&P or Moody’s the highest rating obtainable
for money market funds in the United States; provided, however, that the
maturities of all obligations specified in any of clauses (a), (b), (c) and (d)
above shall not exceed 365 days.
     “CERCLA” means the United States Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. §§ 9601 et seq.).
     “Change of Control” means the occurrence of any of the following:
     (a) any person shall become the legal or beneficial owner of, or shall have
acquired, pursuant to any Contractual Obligation or otherwise, control over the
voting rights of, 35% or more of the issued and outstanding Voting Stock of the
Borrower;
     (b) at any time after the second anniversary of the Closing Date,
continuing directors shall cease for any reason other than death or disability
to constitute a majority of the members of the board of directors of the
Borrower then in office;
     (c) the Borrower shall cease to own and control legally and beneficially
all of the economic and voting rights associated with all classes of the
outstanding Stock and Stock Equivalents of any Guarantor; or
     (d) a “Change of Control” or any term of similar effect, as defined in any
other document governing Indebtedness of any Loan Party having a principal
amount in excess of $5,000,000 shall occur.
For purpose of this definition, the following terms shall have the following
meanings: (x) “person” means any “person” as such term is used in the United
States Securities Exchange Act of 1934, as amended, including any partnership,
limited partnership, syndicate or group of persons that is deemed to be a
“person” for purposes of Sections 13(d) and 14(d)(2) of such Securities Exchange
Act, (y) “beneficial owner” means any “beneficial owner” under and as defined in
Rules 13d-3 and 13d-5 of the United States Securities and Exchange Commission
under such Securities Exchange Act; provided, however, that any person shall be
deemed to be the beneficial owner of all Securities that such person has the
right to acquire, whether such right is exercisable immediately or with the
passage of time and (z) “continuing director” means, at any date of
determination, each individual member of the board of directors of the Borrower
who (i) has been a member of such board in the period of twelve successive
calendar months last ended prior to such date or (ii) whose nomination for
election by the stockholders of the Borrower was approved by a vote of at least
two thirds of the directors who were continuing directors at the time of such
nomination.
     “Closing Date” means the first date on which this Agreement shall have been
executed and all conditions to the initial funding of any Loan set forth in
Section 3.1 have been satisfied.

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     “CMS” means the Centers for Medicare and Medicaid Services, formerly known
as the Health Care Financing Administration or HCFA.
     “Code” means the U.S. Internal Revenue Code of 1986.
     “Collateral” means all property and interests in property and proceeds
thereof now owned or hereafter acquired by any Loan Party in or upon which a
Lien is granted or purported to be granted pursuant to any Loan Document.
     “Commitment” means, with respect to any Lender, such Lender’s Revolving
Credit Commitment.
     “Compliance Certificate” means a certificate substantially in the form of
Exhibit G.
     “Consolidated” means, with respect to any Person, the accounts of such
Person and its Subsidiaries consolidated in accordance with GAAP. When used with
respect to the Borrower, consolidated means the accounts of the Borrower
consolidated with those of all other Group Members.
     “Consolidated Cash Interest Expense” means, with respect to any Person for
any period, the Consolidated Interest Expense of such Person for such period
less the sum of, in each case to the extent included in the definition of
Consolidated Interest Expense, (a) the amortized amount of debt discount and
debt issuance costs, (b) charges relating to write-ups or write-downs in the
book or carrying value of existing Consolidated Total Debt, (c) interest payable
in evidences of Indebtedness or by addition to the principal of the related
Indebtedness and (d) other non-cash interest.
     “Consolidated Current Assets” means, with respect to any Person at any
date, the total Consolidated current assets of such Person at such date other
than cash, Cash Equivalents and any Indebtedness owing to such Person or any of
its Subsidiaries by Affiliates of such Person.
     “Consolidated Current Liabilities” means, with respect to any Person at any
date, all liabilities of such Person and its Subsidiaries at such date that
should be classified as current liabilities on a Consolidated balance sheet of
such Person; provided, however, that “Consolidated Current Liabilities” shall
exclude the principal amount of the Loans then outstanding.
     “Consolidated EBITDA” means, with respect to any Person for any period,
(a) the Consolidated Net Income of such Person for such period plus (b) the sum
of, in each case to the extent included in the calculation of such Consolidated
Net Income but without duplication, (i) any provision for United States federal
income taxes or other taxes measured by net income, (ii) Consolidated Interest
Expense, amortization of debt discount and commissions and other fees and
charges associated with Indebtedness, (iii) any loss from extraordinary items,
(iv) any depreciation, depletion and amortization expense, (v) any aggregate net
loss on the Sale of property (other than accounts (as defined under the
applicable UCC) and inventory) outside the ordinary course of business, (vi) any
other non-cash expenditure, charge or loss for such period (other than any
non-cash expenditure, charge or loss relating to write-offs, write-downs or
reserves with respect to accounts and inventory), including the amount of any
compensation deduction as the result of any grant of Stock or Stock Equivalents
to employees, officers, directors or consultants and (vii) the one-time,
non-recurring expenses incurred by the Borrower in connection with the Related
Transactions, as set forth on Schedule III hereto minus (c) the sum

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of, in each case to the extent included in the calculation of such Consolidated
Net Income and without duplication, (i) any credit for United States federal
income taxes or other taxes measured by net income, (ii) any interest income,
(iii) any gain from extraordinary items and any other non-recurring gain,
(iv) any aggregate net gain from the Sale of property (other than accounts (as
defined in the applicable UCC) and inventory) out of the ordinary course of
business by such Person, (v) any other non-cash gain, including any reversal of
a charge referred to in clause (b)(vi) above by reason of a decrease in the
value of any Stock or Stock Equivalent, and (vi) any other cash payment in
respect of expenditures, charges and losses that have been added to Consolidated
EBITDA of such Person pursuant to clause (b)(vi) above in any prior period.
     “Consolidated Fixed Charge Coverage Ratio” means, with respect to any
Person for any period, the ratio, computed on a Pro Forma Basis, of
(a) Consolidated EBITDA of such Person for such period minus Consolidated
Maintenance Capital Expenditures of such Person for such period minus the total
liability for United States federal income taxes and other taxes measured by net
income earned in the ordinary course of business actually paid or due and
payable by such Person in respect of such period to (b) the Consolidated Fixed
Charges of such Person for such period.
     “Consolidated Fixed Charges” means, with respect to any Person for any
period, the sum, determined on a Consolidated basis, of (a) the Consolidated
Cash Interest Expense of such Person and its Subsidiaries for such period,
(b) the principal amount of Consolidated Total Debt of such Person and its
Subsidiaries having a scheduled due date during such period, provided that there
shall be excluded from Consolidated Fixed Charges for any period the principal
portion of any such Indebtedness that is repaid or refinanced at maturity with
additional Indebtedness permitted to be incurred pursuant to the terms of the
Loan Documents (other than Loans made under this Agreement), (c) all cash
dividends payable by such Person and its Subsidiaries on Stock in respect of
such period to Persons other than such Person and its Subsidiaries and (d) all
commitment fees and other costs, fees and expenses payable by such Person and
its Subsidiaries during such period in order to effect, or because of, the
incurrence of any Indebtedness.
     “Consolidated Growth Capital Expenditures” means, for any period, all
Capital Expenditures of the Borrower and its Subsidiaries for such period
representing the purchase price for, or other costs associated with the
acquisition, construction or expansion of, a facility owned or operated by the
Borrower or any Subsidiary.
     “Consolidated Interest Expense” means, for any Person for any period,
(a) Consolidated total interest expense of such Person and its Subsidiaries for
such period and including, in any event, (i) interest capitalized during such
period and net costs under Interest Rate Contracts for such period and (ii) all
fees, charges, commissions, discounts and other similar obligations (other than
reimbursement obligations) with respect to letters of credit, bank guarantees,
banker’s acceptances, surety bonds and performance bonds (whether or not
matured) payable by such Person and its Subsidiaries during such period minus
(b) the sum of (i) Consolidated net gains of such Person and its Subsidiaries
under Interest Rate Contracts for such period and (ii) Consolidated interest
income of such Person and its Subsidiaries for such period.
     “Consolidated Leverage Ratio” means, with respect to any Person as of any
date and calculated on a Pro Forma Basis, the ratio of (a) Consolidated Total
Debt of such Person outstanding as of such date to (b) Consolidated EBITDA for
such Person for the last period of four consecutive Fiscal Quarters ending on or
before such date.

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     “Consolidated Maintenance Capital Expenditures” means, for any period, all
Capital Expenditures of the Borrower and its Subsidiaries for such period other
than Consolidated Growth Capital Expenditures.
     “Consolidated Net Income” means, with respect to any Person, for any
period, the Consolidated net income (or loss) of such Person and its
Subsidiaries for such period; provided, however, that the following shall be
excluded: (a) the net income of any other Person in which such Person or one of
its Subsidiaries has a joint interest with a third-party (which interest does
not cause the net income of such other Person to be Consolidated into the net
income of such Person), except to the extent of the amount of dividends or
distributions paid to such Person or Subsidiary, (b) the net income of any
Subsidiary of such Person that is, on the last day of such period, subject to
any restriction or limitation on the payment of dividends or the making of other
distributions, to the extent of such restriction or limitation and (c) except as
agreed by the Administrative Agent in connection with any Pro Forma Transaction,
the net income of any other Person arising prior to such other Person becoming a
Subsidiary of such Person or merging or consolidating into such Person or its
Subsidiaries.
     “Consolidated Total Debt” of any Person means all Indebtedness of a type
described in clause (a), (b), (c)(i), (d) or (f) of the definition thereof and
all Guaranty Obligations with respect to any such Indebtedness, in each case of
such Person and its Subsidiaries on a Consolidated basis.
     “Constituent Documents” means, with respect to any Person, collectively
and, in each case, together with any modification of any term thereof, (a) the
articles of incorporation, certificate of incorporation, constitution or
certificate of formation of such Person, (b) the bylaws, operating agreement or
joint venture agreement of such Person, (c) any other constitutive,
organizational or governing document of such Person, whether or not equivalent,
and (d) any other document setting forth the manner of election or duties of the
directors, officers or managing members of such Person or the designation,
amount or relative rights, limitations and preferences of any Stock of such
Person.
     “Contractual Obligation” means, with respect to any Person, any provision
of any Security issued by such Person or of any document or undertaking (other
than a Loan Document) to which such Person is a party or by which it or any of
its property is bound or to which any of its property is subject.
     “Control Agreement” means, with respect to any deposit account, any
securities account, commodity account, securities entitlement or commodity
contract, an agreement, in form and substance satisfactory to the Administrative
Agent, among the Administrative Agent, the financial institution or other Person
at which such account is maintained or with which such entitlement or contract
is carried and the Loan Party maintaining such account, effective to grant
“control” (as defined under the applicable UCC) over such account to the
Administrative Agent.
     “Controlled Deposit Account” means each deposit account (including all
funds on deposit therein) that is the subject of an effective Control Agreement
and that is maintained by any Loan Party with a financial institution approved
by the Administrative Agent.
     “Controlled Securities Account” means each securities account or commodity
account (including all financial assets held therein and all certificates and
instruments, if any, representing or evidencing such financial assets) that is
the subject of an effective Control Agreement and that

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is maintained by any Loan Party with a securities intermediary or commodity
intermediary approved by the Administrative Agent.
     “Copyrights” means all rights, title and interests (and all related IP
Ancillary Rights) arising under any Requirement of Law in or relating to
copyrights and all mask work, database and design rights, whether or not
registered or published, all registrations and recordations thereof and all
applications in connection therewith.
     “Corporate Chart” means a document in form reasonably acceptable to the
Administrative Agent and setting forth, as of a date set forth therein, for each
Person that is a Loan Party, that is subject to Section 7.10 or that is a
Subsidiary or joint venture of any of them, (a) the full legal name of such
Person, (b) the jurisdiction of organization and any organizational number and
tax identification number of such Person, (c) the location of such Person’s
chief executive office (or, if applicable, sole place of business) and (d) the
number of shares of each class of Stock of such Person authorized, the number
outstanding and the number and percentage of such outstanding shares for each
such class owned, directly or indirectly, by any Loan Party or any Subsidiary of
any of them.
     “Customary Permitted Liens” means, with respect to any Person, any of the
following:
     (a) Liens (i) with respect to the payment of taxes, assessments or other
governmental charges or (ii) of suppliers, carriers, materialmen, warehousemen,
workmen or mechanics and other similar Liens, in each case imposed by law or
arising in the ordinary course of business, and, for each of the Liens in
clauses (i) and (ii) above for amounts that are not yet due or that are being
contested in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves or other appropriate provisions are
maintained on the books of such Person in accordance with GAAP;
     (b) Liens of a collection bank on items in the course of collection arising
under Section 4-208 of the UCC as in effect in the State of New York or any
similar section under any applicable UCC or any similar Requirement of Law of
any foreign jurisdiction;
     (c) pledges or cash deposits made in the ordinary course of business (i) in
connection with workers’ compensation, unemployment insurance or other types of
social security benefits (other than any Lien imposed by ERISA), (ii) to secure
the performance of bids, tenders, leases (other than Capital Leases) sales or
other trade contracts (other than for the repayment of borrowed money) or
(iii) made in lieu of, or to secure the performance of, surety, customs,
reclamation or performance bonds (in each case not related to judgments or
litigation);
     (d) judgment liens (other than for the payment of taxes, assessments or
other governmental charges) securing judgments and other proceedings not
constituting an Event of Default under Section 9.1(f) and pledges or cash
deposits made in lieu of, or to secure the performance of, judgment or appeal
bonds in respect of such judgments and proceedings;
     (e) Liens (i) arising by reason of zoning restrictions, easements,
licenses, reservations, restrictions, covenants, rights-of-way, encroachments,
minor defects or irregularities in title (including leasehold title) and other
similar encumbrances on the use of real property or (ii) consisting of leases,
licenses or subleases granted by a lessor, licensor or sublessor on its property
(in each case other than Capital Leases) otherwise permitted under Section 8.4
that, for each of the Liens in clauses (i) and (ii) above, do not, in the
aggregate, materially (x) impair the

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value or marketability of such real property or (y) interfere with the ordinary
conduct of the business conducted and proposed to be conducted at such real
property;
     (f) Liens of landlords and mortgagees of landlords (i) arising by statute
or under any lease or related Contractual Obligation entered into in the
ordinary course of business, (ii) on fixtures and movable tangible property
located on the real property leased or subleased from such landlord, (iii) for
amounts not yet due or that are being contested in good faith by appropriate
proceedings diligently conducted and (iv) for which adequate reserves or other
appropriate provisions are maintained on the books of such Person in accordance
with GAAP; and
     (g) the title and interest of a lessor or sublessor in and to personal
property leased or subleased (other than through a Capital Lease), in each case
extending only to such personal property.
     “Default” means any Event of Default and any event that, with the passing
of time or the giving of notice or both, would become an Event of Default.
     “Disclosure Documents” means, collectively, (a) all confidential
information memoranda and related materials prepared in connection with the
syndication of the Facility and (b) all other documents filed by any Group
Member with the United States Securities and Exchange Commission.
     “Dollars” and the sign “$” each mean the lawful money of the United States
of America.
     “Domestic Person” means any “United States person” under and as defined in
Section 770l(a)(30) of the Code.
     “E-Fax” means any system used to receive or transmit faxes electronically.
     “Electronic Transmission” means each document, instruction, authorization,
file, information and any other communication transmitted, posted or otherwise
made or communicated by e-mail or E-Fax, or otherwise to or from an E-System or
other equivalent service.
     “Eligible Assignee” has the meaning specified in Section 11.2.
     “Environmental Laws” means all Requirements of Law and Permits imposing
liability or standards of conduct for or relating to the regulation and
protection of human health, safety, the environment and natural resources,
including CERCLA, the SWDA, the Hazardous Materials Transportation Act (49
U.S.C. §§ 5101 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act
(7 U.S.C. §§ 136 et seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601
et seq.), the Clean Air Act (42 U.S.C. §§ 7401 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. §§ 1251 et seq.), the Occupational Safety and
Health Act (29 U.S.C. §§ 651 et seq.), the Safe Drinking Water Act (42 U.S.C. §§
300(f) et seq.), all regulations promulgated under any of the foregoing, all
analogous Requirements of Law and Permits and any environmental transfer of
ownership notification or approval statutes, including the Industrial Site
Recovery Act (N.J. Stat. Ann. §§ 13:1K-6 et seq.).
     “Environmental Liabilities” means all Liabilities (including costs of
Remedial Actions, natural resource damages and costs and expenses of
investigation and feasibility studies) that may

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be imposed on, incurred by or asserted against any Group Member as a result of,
or related to, any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law or otherwise, arising under
any Environmental Law or in connection with any environmental, health or safety
condition or with any Release and resulting from the ownership, lease, sublease
or other operation or occupation of property by any Group Member, whether on,
prior or after the date hereof.
     “ERISA” means the United States Employee Retirement Income Security Act of
1974.
     “ERISA Affiliate” means, collectively, any Group Member, and any Person
under common control, or treated as a single employer, with any Group Member,
within the meaning of Section 414(b), (c), (m) or (o) of the Code.
     “ERISA Event” means any of the following: (a) a reportable event described
in Section 4043(b) of ERISA (or, unless the 30-day notice requirement has been
duly waived under the applicable regulations, Section 4043(c) of ERISA) with
respect to a Title IV Plan, (b) the withdrawal of any ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA, (c) the
complete or partial withdrawal of any ERISA Affiliate from any Multiemployer
Plan, (d) with respect to any Multiemployer Plan, the filing of a notice of
reorganization, insolvency or termination (or treatment of a plan amendment as
termination) under Section 4041A of ERISA, (e) the filing of a notice of intent
to terminate a Title IV Plan (or treatment of a plan amendment as termination)
under Section 4041 of ERISA, (f) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC, (g) the failure to make any
required contribution to any Title IV Plan or Multiemployer Plan when due,
(h) the imposition of a lien under Section 412 of the Code or Section 302 or
4068 of ERISA on any property (or rights to property, whether real or personal)
of any ERISA Affiliate, (i) the failure of a Benefit Plan or any trust
thereunder intended to qualify for tax exempt status under Section 401 or 501 of
the Code or other Requirements of Law to qualify thereunder and (j) any other
event or condition that might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan or Multiemployer Plan or for the imposition of any
liability upon any ERISA Affiliate under Title IV of ERISA other than for PBGC
premiums due but not delinquent.
     “E-Signature” means the process of attaching to or logically associating
with an Electronic Transmission an electronic symbol, encryption, digital
signature or process (including the name or an abbreviation of the name of the
party transmitting the Electronic Transmission) with the intent to sign,
authenticate or accept such Electronic Transmission.
     “E-System” means any electronic system, including Intralinks® and any other
Internet or extranet-based site, whether such electronic system is owned,
operated or hosted by the Administrative Agent, any of its Related Persons or
any other Person, providing for access to data protected by passcodes or other
security system.
     “Eurodollar Base Rate” means, with respect to any Interest Period for any
Eurodollar Rate Loan, the rate determined by the Administrative Agent to be the
offered rate for deposits in Dollars for the applicable Interest Period
appearing on the Dow Jones Markets Telerate Page 3750 as of 11:00 a.m. (London
time) on the second full Business Day next preceding the first day of each
Interest Period. In the event that such rate does not appear on the Dow Jones
Markets

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Telerate Page 3750 (or otherwise on the Dow Jones Markets screen) at such time,
the “Eurodollar Base Rate” shall be determined by reference to such other
comparable publicly available service for displaying the offered rate for
deposit in Dollars in the London interbank market as may be selected by the
Administrative Agent and, in the absence of availability, such other method to
determine such offered rate as may be selected by the Administrative Agent in
its sole discretion.
     “Eurodollar Rate” means, with respect to any Interest Period and for any
Eurodollar Rate Loan, an interest rate per annum determined as the ratio of
(a) the Eurodollar Base Rate with respect to such Interest Period for such
Eurodollar Rate Loan to (b) the difference between the number one and the
Eurodollar Reserve Requirements with respect to such Interest Period and for
such Eurodollar Rate Loan.
     “Eurodollar Rate Loan” means any Loan that bears interest based on the
Eurodollar Rate.
     “Eurodollar Reserve Requirements” means, with respect to any Interest
Period and for any Eurodollar Rate Loan, a rate per annum equal to the
aggregate, without duplication, of the maximum rates (expressed as a decimal
number) of reserve requirements in effect 2 Business Days prior to the first day
of such Interest Period (including basic, supplemental, marginal and emergency
reserves) under any regulations of the Federal Reserve Board or other
Governmental Authority having jurisdiction with respect thereto dealing with
reserve requirements prescribed for eurocurrency funding (currently referred to
as “eurocurrency liabilities” in Regulation D of the Federal Reserve Board)
maintained by a member bank of the United States Federal Reserve System.
     “Event of Default” has the meaning specified in Section 9.1.
     “Excluded Foreign Subsidiary” means any Subsidiary that is not a Domestic
Person and in respect of which any of (a) the pledge of all of the Stock of such
Subsidiary as Collateral for any Obligation of the Borrower, (b) the grant by
such Subsidiary of a Lien on any of its property as Collateral for any
Obligation of the Borrower or (c) such Subsidiary incurring Guaranty Obligations
with respect to any Obligation of the Borrower, the Borrower or any Domestic
Person would, in the good faith judgment of the Borrower, result in materially
adverse tax consequences to the Loan Parties and their Subsidiaries, taken as a
whole; provided, however, that (x) the Administrative Agent and the Borrower may
agree that, despite the foregoing, any such Subsidiary shall not be an “Excluded
Foreign Subsidiary” and (y) no such Subsidiary shall be an “Excluded Foreign
Subsidiary” if, with substantially similar tax consequences, such Subsidiary has
entered into any Guaranty Obligations with respect to, such Subsidiary has
granted a security interest in any of its property to secure, or more than 66%
of the Voting Stock of such Subsidiary was pledged to secure, directly or
indirectly, any Indebtedness (other than the Obligations) of any Loan Party.
     “Extendicare” means Extendicare, Inc., a corporation organized under the
laws of Ontario.
     “Facility” means the Revolving Credit Facility.
     “Facility Increase” has the meaning specified in Section 2.1(b).
     “Facility Increase Date” has the meaning specified in Section 2.1(b).

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     “Facility Increase Notice” means a notice from the Borrower to the
Administrative Agent requesting a Facility Increase, which may include any
proposed term and condition for such proposed Facility Increase but shall
include in any event the amount of such proposed Facility Increase.
     “Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as determined by the Administrative
Agent in its sole discretion.
     “Federal Reserve Board” means the Board of Governors of the United States
Federal Reserve System and any successor thereto.
     “Fee Letters” means (a) the letter agreement, dated as of August 25, 2006,
addressed to the Borrower from the Administrative Agent and accepted by the
Borrower, with respect to certain fees to be paid from time to time to the
Administrative Agent and its Related Persons and (b) any additional fee letter
entered into as part of the Facility Increase and executed by, among others, the
Borrower and the Administrative Agent.
     “Financial Statement” means each financial statement delivered pursuant to
Section 4.4 or 6.1.
     “Fiscal Quarter” means each 3 fiscal month period ending on March 31,
June 30, September 30 or December 31.
     “Fiscal Year” means the twelve month period ending on December 31.
     “GAAP” means generally accepted accounting principles in the United States
of America, as in effect from time to time, set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants, in the statements and pronouncements of the
Financial Accounting Standards Board and in such other statements by such other
entity as may be in general use by significant segments of the accounting
profession that are applicable to the circumstances as of the date of
determination. Subject to Section 1.3, all references to “GAAP” shall be to GAAP
applied consistently with the principles used in the preparation of the
Financial Statements described in Section 4.4(a).
     “Governmental Authority” means any nation, sovereign or government, any
state or other political subdivision thereof, any agency, authority or
instrumentality thereof and any entity or authority exercising executive,
legislative, taxing, judicial, regulatory or administrative functions of or
pertaining to government, including any central bank, stock exchange, regulatory
body, arbitrator, public sector entity, supra-national entity (including the
European Union and the European Central Bank) and any self-regulatory
organization (including the National Association of Insurance Commissioners).
     “Government Reimbursement Program” means (i) Medicare, the Federal
Employees Health Benefit Program under 5 U.S.C. §§ 8902 et seq., the TRICARE
program established by the Department of Defense under 10 U.S.C. §§ 1071 et seq.
or the Civilian Health and Medical Program of the Uniformed Services under 10
U.S.C. §§ 1079 and 1086, (ii) Medicaid or (iii) any agent, administrator,
intermediary or carrier for any of the foregoing.

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     “Group Members” means, collectively, the Borrower and its Subsidiaries.
     “Group Members’ Accountants” means KPMG LLP or other nationally-recognized
independent registered certified public accountants selected by Borrower and
reasonably acceptable to the Administrative Agent.
     “Guarantor” means each Subsidiary of the Borrower listed on Schedule 4.3
that is not an Excluded Foreign Subsidiary and each other Person that enters
into any Guaranty Obligation with respect to any Obligation of any Loan Party.
     “Guaranty and Security Agreement” means a guaranty and security agreement,
in substantially the form of Exhibit H, among the Administrative Agent, the
Borrower and other Guarantors from time to time party thereto.
     “Guaranty Obligation” means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of such Person for any
Indebtedness, lease, dividend or other obligation (the “primary obligation”) of
another Person (the “primary obligor”), if the purpose or intent of such Person
in incurring such liability, or the economic effect thereof, is to guarantee
such primary obligation or provide support, assurance or comfort to the holder
of such primary obligation or to protect or indemnify such holder against loss
with respect to such primary obligation, including (a) the direct or indirect
guaranty, endorsement (other than for collection or deposit in the ordinary
course of business), co-making, discounting with recourse or sale with recourse
by such Person of any primary obligation, (b) the incurrence of reimbursement
obligations with respect to any letter of credit or bank guarantee in support of
any primary obligation, (c) the existence of any Lien, or any right, contingent
or otherwise, to receive a Lien, on the property of such Person securing any
part of any primary obligation and (d) any liability of such Person for a
primary obligation through any Contractual Obligation (contingent or otherwise)
or other arrangement (i) to purchase, repurchase or otherwise acquire such
primary obligation or any security therefor or to provide funds for the payment
or discharge of such primary obligation (whether in the form of a loan, advance,
stock purchase, capital contribution or otherwise), (ii) to maintain the
solvency, working capital, equity capital or any balance sheet item, level of
income or cash flow, liquidity or financial condition of any primary obligor,
(iii) to make take-or-pay or similar payments, if required, regardless of
non-performance by any other party to any Contractual Obligation, (iv) to
purchase, sell or lease (as lessor or lessee) any property, or to purchase or
sell services, primarily for the purpose of enabling the primary obligor to
satisfy such primary obligation or to protect the holder of such primary
obligation against loss or (v) to supply funds to or in any other manner invest
in, such primary obligor (including to pay for property or services irrespective
of whether such property is received or such services are rendered); provided,
however, that “Guaranty Obligations” shall not include (x) endorsements for
collection or deposit in the ordinary course of business and (y) product
warranties given in the ordinary course of business. The outstanding amount of
any Guaranty Obligation shall equal the outstanding amount of the primary
obligation so guaranteed or otherwise supported as reasonably determined by the
Administrative Agent or, if lower, the stated maximum amount for which such
Person may be liable under such Guaranty Obligation.
     “Hazardous Material” means any substance, material or waste that is
classified, regulated or otherwise characterized under any Environmental Law as
hazardous, toxic, a contaminant or a pollutant or by other words of similar
meaning or regulatory effect, including petroleum or any fraction thereof,
asbestos, polychlorinated biphenyls and radioactive substances.

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     “Healthcare Laws” collectively, any and all federal, state or local laws,
rules, regulations and administrative manuals, orders, guidelines and
requirements issued under or in connection with Medicare, Medicaid or any
Government Reimbursement Program or any law governing the licensure of or
regulating healthcare providers, professionals, facilities or payors or
otherwise governing or regulating the provision of, or payment for, medical
services or the sale of medical supplies. Healthcare Laws include, but are not
limited to, 31 U.S.C. Section 3729, et seq. (the “Federal False Claims Act”); 42
U.S.C. Section 1320a-7(b) (the “Federal Anti-Kickback Statute”); and 42 U.S.C.
1395nn (the “Physician Self Referral Statute” or “Stark Law”).
     “Hedging Agreement” means any Interest Rate Contract, foreign exchange,
swap, option or forward contract, spot, cap, floor or collar transaction, any
other derivative instrument and any other similar speculative transaction and
any other similar agreement or arrangement designed to alter the risks of any
Person arising from fluctuations in any underlying variable.
     “HIPAA” means the Health Insurance Portability and Accountability Act of
1996, and any and all rules or regulations promulgated from time to time
thereunder.
     “Indebtedness” of any Person means, without duplication, any of the
following, whether or not matured: (a) all indebtedness for borrowed money,
(b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all reimbursement and all obligations with respect to
(i) letters of credit, bank guarantees or bankers’ acceptances or (ii) surety,
customs, reclamation or performance bonds (in each case not related to judgments
or litigation) other than those entered into in the ordinary course of business,
(d) all obligations to pay the deferred purchase price of property or services,
other than trade payables incurred in the ordinary course of business, (e) all
obligations created or arising under any conditional sale or other title
retention agreement, regardless of whether the rights and remedies of the seller
or lender under such agreement in the event of default are limited to
repossession or sale of such property, (f) all Capitalized Lease Obligations,
(g) all obligations, whether or not contingent, to purchase, redeem, retire,
defease or otherwise acquire for value any of its own Stock or Stock Equivalents
(or any Stock or Stock Equivalent of a direct or indirect parent entity thereof)
prior to the date that is 180 days after the Scheduled Revolving Credit
Termination Date, valued at, in the case of redeemable preferred Stock, the
greater of the voluntary liquidation preference and the involuntary liquidation
preference of such Stock plus accrued and unpaid dividends, (h) all payments
that would be required to be made in respect of any Hedging Agreement in the
event of a termination (including an early termination) on the date of
determination and (i) all Guaranty Obligations for obligations of any other
Person constituting Indebtedness of such other Person; provided, however, that
the items in each of clauses (a) through (i) above shall constitute
“Indebtedness” of such Person solely to the extent, directly or indirectly,
(x) such Person is liable for any part of any such item, (y) any such item is
secured by a Lien on such Person’s property or (z) any other Person has a right,
contingent or otherwise, to cause such Person to become liable for any part of
any such item or to grant such a Lien.
     “Indemnified Matter” has the meaning specified in Section 11.4.
     “Indemnitee” has the meaning specified in Section 11.4.
     “Initial Projections” means those financial projections, dated August 24,
2006, covering the Fiscal Years ending in 2007 through 2011 and delivered to the
Administrative Agent by the Borrower prior to the date hereof.

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     “Intellectual Property” means all rights, title and interests in or
relating to intellectual property arising under any Requirement of Law and all
IP Ancillary Rights relating thereto, including all Copyrights, Patents,
Trademarks, Internet Domain Names, Trade Secrets and IP Licenses.
     “Interest Period” means, with respect to any Eurodollar Rate Loan, the
period commencing on the date such Eurodollar Rate Loan is made or converted to
a Eurodollar Rate Loan or, if such loan is continued, on the last day of the
immediately preceding Interest Period therefor and, in each case, ending 1, 2, 3
or 6 months thereafter, as selected by the Borrower pursuant hereto; provided,
however, that (a) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day, unless the result of such extension would be to extend
such Interest Period into another such Business Day falls in the next calendar
month, in which case such Interest Period shall end on the immediately preceding
Business Day, (b) any Interest Period that 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 a calendar month, (c) the Borrower may not select any Interest
Period ending after the Scheduled Revolving Credit Termination Date, (d) the
Borrower may not select any Interest Period in respect of Loans having an
aggregate principal amount of less than $5,000,000 and (e) there shall be
outstanding at any one time no more than 5 Interest Periods.
     “Interest Rate Contracts” means all interest rate swap agreements, interest
rate cap agreements, interest rate collar agreements and interest rate
insurance.
     “Internet Domain Names” means all rights, title and interests (and all
related IP Ancillary Rights) arising under any Requirement of Law in or relating
to Internet domain names.
     “Investment” means, with respect to any Person, directly or indirectly,
(a) to own, purchase or otherwise acquire, in each case whether beneficially or
otherwise, any investment in, including any interest in, any Security of any
other Person (other than any evidence of any Obligation), (b) to purchase or
otherwise acquire, whether in one transaction or in a series of transactions,
all or a significant part of the property of any other Person or a business
conducted by any other Person or all or substantially all of the assets
constituting the business of a division, branch, brand or other unit operation
of any other Person, (c) to incur, or to remain liable under, any Guaranty
Obligation for Indebtedness of any other Person, to assume the Indebtedness of
any other Person or to make, hold, purchase or otherwise acquire, in each case
directly or indirectly, any deposit, loan, advance, commitment to lend or
advance, or other extension of credit (including by deferring or extending the
date of, in each case outside the ordinary course of business, the payment of
the purchase price for Sales of property or services to any other Person, to the
extent such payment obligation constitutes Indebtedness of such other Person),
excluding deposits with financial institutions available for withdrawal on
demand, prepaid expenses, accounts receivable and similar items created in the
ordinary course of business, (d) to make, directly or indirectly, any
contribution to the capital of any other Person or (e) to Sell any property for
less than fair market value (including a disposition of cash or Cash Equivalents
in exchange for consideration of lesser value); provided, however, that such
Investment shall be valued at the difference between the value of the
consideration for such Sale and the fair market value of the property Sold.
     “IP Ancillary Rights” means, with respect to any other Intellectual
Property, as applicable, all foreign counterparts to, and all divisionals,
reversions, continuations,

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continuations-in-part, reissues, reexaminations, renewals and extensions of,
such Intellectual Property and all income, royalties, proceeds and Liabilities
at any time due or payable or asserted under or with respect to any of the
foregoing or otherwise with respect to such Intellectual Property, including all
rights to sue or recover at law or in equity for any past, present or future
infringement, misappropriation, dilution, violation or other impairment thereof,
and, in each case, all rights to obtain any other IP Ancillary Right.
     “IP License” means all Contractual Obligations (and all related IP
Ancillary Rights), whether written or oral, granting any right title and
interest in or relating to any Intellectual Property.
     “IRS” means the Internal Revenue Service of the United States and any
successor thereto.
     “Issue” means, with respect to any Letter of Credit, to issue, extend the
expiration date of, renew (including by failure to object to any automatic
renewal on the last day such objection is permitted), increase the face amount
of, or reduce or eliminate any scheduled decrease in the face amount of, such
Letter of Credit, or to cause any Person to do any of the foregoing. The terms
“Issued” and “Issuance” have correlative meanings.
     “L/C Cash Collateral Account” means any Cash Collateral Account
(a) specifically designated as such by the Borrower in a notice to the
Administrative Agent and (b) from and after the effectiveness of such notice,
not containing any funds other than those required under the Loan Documents to
be placed therein.
     “L/C Issuer” means (a) U.S. Bank National Association or any of its
Affiliates and (b) each Person that hereafter becomes an L/C Issuer with the
approval of, and pursuant to an agreement with and in form and substance
satisfactory to, the Administrative Agent and the Borrower, in each case in
their capacity as L/C Issuers hereunder and together with their successors.
     “L/C Obligations” means, for any Letter of Credit at any time, the sum of
(a) the L/C Reimbursement Obligations at such time for such Letter of Credit and
(b) the aggregate maximum undrawn face amount of such Letter of Credit
outstanding at such time.
     “L/C Reimbursement Agreement” has the meaning specified in Section 2.4(a).
     “L/C Reimbursement Date” has the meaning specified in Section 2.4(e).
     “L/C Reimbursement Obligation” means, for any Letter of Credit, the
obligation of the Borrower to the L/C Issuer thereof, as and when matured, to
pay all amounts drawn under such Letter of Credit.
     “L/C Request” has the meaning specified in Section 2.4(b).
     “L/C Sublimit” means $50,000,000.
     “Lender” means, collectively, the Swingline Lender and any other financial
institution or other Person that (a) is listed on the signature pages hereof as
a “Lender” (b) from time to time becomes a party hereto by execution of an
Assignment, in each case together with its successors, or (c) becomes a party
hereto in connection with a Facility Increase by execution of an assumption
agreement in connection with such Facility Increase.

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     “Letter of Credit” means any letter of credit Issued pursuant to
Section 2.4.
     “Liabilities” means all claims, actions, suits, judgments, damages, losses,
liability, obligations, responsibilities, fines, penalties, sanctions, costs,
fees, taxes, commissions, charges, disbursements and expenses, in each case of
any kind or nature (including interest accrued thereon or as a result thereto
and fees, charges and disbursements of financial, legal and other advisors and
consultants), whether joint or several, whether or not indirect, contingent,
consequential, actual, punitive, treble or otherwise.
     “Lien” means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge, deposit arrangement, encumbrance, easement, lien (statutory
or other), security interest or other security arrangement and any other
preference, priority or preferential arrangement of any kind or nature
whatsoever, including any conditional sale contract or other title retention
agreement, the interest of a lessor under a Capital Lease and any synthetic or
other financing lease having substantially the same economic effect as any of
the foregoing.
     “Loan” means any loan made or deemed made by any Lender hereunder.
     “Loan Documents” means, collectively, this Agreement, any Notes, the
Guaranty and Security Agreement, the Mortgages, the Control Agreements, the Fee
Letters, the L/C Reimbursement Agreements, the Secured Hedging Agreements and,
when executed, each document executed by a Loan Party and delivered to the
Administrative Agent, any Lender or any L/C Issuer in connection with or
pursuant to any of the foregoing or the Obligations, together with any
modification of any term, or any waiver with respect to, any of the foregoing.
     “Loan Party” means each Borrower and each Guarantor.
     “Loan To Value Ratio” means, as of any date of determination, the ratio of
(a) the sum of outstanding Loans and L/C Obligations to (b) the aggregate value
of all Mortgaged Property as reasonably determined by the Administrative Agent
as of the Closing Date; provided that if any Mortgaged Property Report has been
delivered by the Borrower to the Administrative Agent in accordance with
Section 6.1(j), then the aggregate value of all Mortgaged Property shall be
determined in accordance with the most recently delivered Mortgaged Property
Report.
     “Material Adverse Effect” means an effect that results in or causes, or
could reasonably be expected to result in or cause, a material adverse change in
any of (a) the condition (financial or otherwise), business, performance,
operations or property of the Group Members, taken as a whole, (b) the ability
of any Loan Party to perform its obligations under any Loan Document and (c) the
validity or enforceability of any Loan Document or the rights and remedies of
the Administrative Agent, the Lenders and the other Secured Parties under any
Loan Document.
     “Material Environmental Liabilities” means Environmental Liabilities
exceeding (a) $1,000,000 individually, or (b) $5,000,000 in the aggregate for
any one or more Group Members.
     “Maximum Lawful Rate” has the meaning specified in Section 2.13.
     “Medicaid” means the medical assistance programs administered by state
agencies and approved by CMS pursuant to the terms of Title XIX of the Social
Security Act, codified at 42 U.S.C. 1396 et seq.

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     “Medicare” means the program of health benefits for the aged and disabled
administered by CMS pursuant to the terms of Title XVIII of the Social Security
Act, codified at 42 U.S.C. 1395 et seq.
     “Moody’s” means Moody’s Investors Service, Inc.
     “Mortgage” means any mortgage, deed of trust or other document executed or
required herein to be executed by any Loan Party and granting a security
interest over real property in favor of the Administrative Agent as security for
the Obligations.
     “Mortgage Supporting Documents” means, with respect to any Mortgage for a
parcel of real property, each document (including title policies or marked-up
unconditional insurance binders, in each case, together with copies of all
documents referred to therein, maps, environmental assessments and reports and
evidence regarding recording and payment of fees, insurance premium and taxes)
that the Administrative Agent may reasonably request, to create, register,
perfect, maintain, evidence the existence, substance, form or validity of or
enforce a valid lien on such parcel of real property in favor of the
Administrative Agent for the benefit of the Secured Parties, subject only to
such Liens as the Administrative Agent may approve.
     “Mortgaged Property” means any real property of any Loan Party that is the
subject of a Mortgage.
     “Mortgaged Property Report” has the meaning specified in Section 6.1(j).
     “Multiemployer Plan” means any multiemployer plan, as defined in
Section 400l(a)(3) of ERISA, to which any ERISA Affiliate incurs or otherwise
has any obligation or liability, contingent or otherwise.
     “Net Cash Proceeds” means proceeds received in cash from (a) any Sale of,
or Property Loss Event with respect to, property, net of (i) the customary
out-of-pocket cash costs, fees and expenses paid or required to be paid in
connection therewith, (ii) taxes paid or reasonably estimated to be payable as a
result thereof and (iii) any amount required to be paid or prepaid on
Indebtedness (other than the Obligations and Indebtedness owing to any Group
Member) secured by the property subject thereto or (b) any sale or issuance of
Stock or incurrence of Indebtedness, in each case net of brokers’, advisors’ and
investment banking fees and other customary out-of-pocket underwriting
discounts, commissions and other customary out-of-pocket cash costs, fees and
expenses, in each case incurred in connection with such transaction; provided,
however, that any such proceeds received by any Subsidiary of the Borrower that
is not a Wholly Owned Subsidiary of the Borrower shall constitute “Net Cash
Proceeds” only to the extent of the aggregate direct and indirect beneficial
ownership interest of the Borrower therein.
     “Non-Funding Lender” has the meaning specified in Section 2.2(c).
     “Non-Recourse Indebtedness” means Indebtedness (a) as to which none of the
Group Members (other than a Non-Recourse Subsidiary that is the obligor on such
Indebtedness) (i) provides credit support of any kind (including any
undertaking, agreement or instrument that would constitute Indebtedness),
(ii) is directly or indirectly liable (as a guarantor or otherwise), or
(iii) constitutes the lender; (b) no default with respect to which (including
any rights that the holders thereof may have to take enforcement action against
any Non-Recourse Subsidiary) would permit (upon notice, lapse of time or both)
any holder of any other Indebtedness (other

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than the Obligations) of any of the Group Members to declare a default on such
other Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity, (c) as to which the lenders thereunder will not
have any recourse to the Stock or assets of any Group Member (other than the
Non-Recourse Subsidiary that is the obligor on such Indebtedness), and (d) the
Net Cash Proceeds of which are used to finance the purchase of property used in
the business of the Group Members or improvements made to such property.
     “Non-Recourse Subsidiary” means any Subsidiary that incurs Non-Recourse
Indebtedness and has no material assets other than the property that was
purchased or improved with the proceeds of such Non-Recourse Indebtedness.
     “Non-U.S. Lender Party” means each of the Administrative Agent, each
Lender, each L/C Issuer, each SPV and each participant, in each case that is not
a Domestic Person.
     “Note” means a promissory note of the Borrower, in substantially the form
of Exhibit B, payable to the order of a Lender in the Facility in a principal
amount equal to the amount of such Lender’s Commitment under the Facility.
     “Notice of Borrowing” has the meaning specified in Section 2.2.
     “Notice of Conversion or Continuation” has the meaning specified in Section
2.10.
     “Obligations” means, with respect to any Loan Party, all amounts,
obligations, liabilities, covenants and duties of every type and description
owing by such Loan Party to the Administrative Agent, any Lender, any L/C
Issuer, any other Indemnitee, any participant, any SPV or, in the case of any
Secured Hedging Agreement, any Affiliate of any of them arising out of, under,
or in connection with, any Loan Document, whether direct or indirect (regardless
of whether acquired by assignment), absolute or contingent, due or to become
due, whether liquidated or not, now existing or hereafter arising and however
acquired, and whether or not evidenced by any instrument or for the payment of
money, including, without duplication, (a) if such Loan Party is the Borrower,
all Loans and L/C Obligations, (b) all interest, whether or not accruing after
the filing of any petition in bankruptcy or after the commencement of any
insolvency, reorganization or similar proceeding, and whether or not a claim for
post-filing or post-petition interest is allowed in any such proceeding, and
(c) all other fees, expenses (including fees, charges and disbursement of
counsel), interest, commissions, charges, costs, disbursements, indemnities and
reimbursement of amounts paid and other sums chargeable to such Loan Party under
any Loan Document (including those payable to L/C Issuers as described in
Section 2.11).
     “Other Taxes” has the meaning specified in Section 2.17(c).
     “Patents” means all rights, title and interests (and all related IP
Ancillary Rights) arising under any Requirement of Law in or relating to letters
patent and applications therefor.
     “PBGC” means the United States Pension Benefit Guaranty Corporation and any
successor thereto.
     “Permit” means, with respect to any Person, any permit, approval,
authorization, license, registration, certificate, concession, grant, franchise,
variance or permission from, and any other Contractual Obligations with, any
Governmental Authority, in each case whether or not having

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the force of law and applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
     “Permitted Acquisition” means any Proposed Acquisition satisfying each of
the following conditions: (a) the aggregate amounts payable in connection with,
and other consideration for (in each case, including all transaction costs and
all Indebtedness, liabilities and Guaranty Obligations incurred or assumed in
connection therewith or otherwise reflected in a Consolidated balance sheet of
the Borrower and the Proposed Acquisition Target), such Proposed Acquisition and
all other Permitted Acquisitions consummated on or prior to the date of the
consummation of such Proposed Acquisition shall not exceed $100,000,000,
provided that if immediately before and after giving effect to such Proposed
Acquisition the Borrower’s Consolidated Leverage Ratio is less than 4.25 to
1.00, no such Dollar limit shall apply; provided, further, for avoidance of
doubt, the parties agree and acknowledge that, if, at any time after
consummating Permitted Acquisitions with an aggregate consideration in excess of
$100,000,000 in accordance with the terms of this Agreement, the Borrower’s
Consolidated Leverage Ratio shall be more than 4.25 to 1.00, the Loan Parties
shall not be precluded from consummating additional Permitted Acquisitions
subject to the aforementioned $100,000,000 limit and the other terms hereof, and
if the Borrower’s Consolidated Leverage Ratio shall thereafter be less than 4.25
to 1.00, no such Dollar limit shall apply, (b) the Administrative Agent shall
have received reasonable advance notice of such Proposed Acquisition including a
reasonably detailed description thereof at least 30 days prior to the
consummation of such Proposed Acquisition (or such later date as may be agreed
by the Administrative Agent) and on or prior to the date of such Proposed
Acquisition, the Administrative Agent shall have received copies of the
acquisition agreement and related Contractual Obligations and other documents
(including financial information and analysis, environmental assessments and
reports, opinions, certificates and lien searches) and information reasonably
requested by the Administrative Agent and (c) as of the date of consummation of
any transaction as part of such Proposed Acquisition and after giving effect to
all transactions to occur on such date as part of such Proposed Acquisition, all
conditions set forth in clauses (i) and (ii) of Section 3.2(b) shall be
satisfied or duly waived and, after giving effect to such Permitted Acquisition,
the Borrower shall be in compliance with the financial covenants set forth in
Article V on a Pro Forma Basis as of the last day of the last Fiscal Quarter for
which Financial Statements have been delivered hereunder.
     “Permitted Indebtedness” means any Indebtedness of any Group Member that is
not prohibited by Section 8.1 or any other provision of any Loan Document.
     “Permitted Investment” means any Investment of any Group Member that is not
prohibited by Section 8.3 or any other provision of any Loan Document.
     “Permitted Lien” means any Lien on or with respect to the property of any
Group Member that is not prohibited by Section 8.2 or any other provision of any
Loan Document.
     “Permitted Refinancing” means Indebtedness constituting a refinancing or
extension of Permitted Indebtedness that (a) has an aggregate outstanding
principal amount not greater than the aggregate principal amount of such
Permitted Indebtedness outstanding at the time of such refinancing or extension,
(b) has a weighted average maturity (measured as of the date of such refinancing
or extension) and maturity no shorter than that of such Permitted Indebtedness,
(c) is not entered into as part of a Sale and Leaseback transaction, (d) is not
secured by any property or any Lien other than those securing such Permitted
Indebtedness and (e) is otherwise on terms no less favorable to the Group
Members, taken as a whole, than those of such Permitted

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Indebtedness; provided, however, that, notwithstanding the foregoing, (x) the
terms of such Permitted Indebtedness may be modified as part of such Permitted
Refinancing if such modification would have been permitted pursuant to
Section 8.11 and (y) no Guaranty Obligation for such Indebtedness shall
constitute part of such Permitted Refinancing unless similar Guaranty
Obligations with respect to such Permitted Indebtedness existed and constituted
Permitted Indebtedness prior to such refinancing or extension.
     “Permitted Mortgaged Property Reinvestment” means, with respect to the Net
Cash Proceeds of any Sale of Mortgaged Property, to acquire (or make Capital
Expenditures to finance the acquisition, repair, improvement or construction
of), to the extent otherwise permitted hereunder, real property useful in the
business of the Borrower or any of its Subsidiaries (including through a
Permitted Acquisition); provided that (i) the Administrative Agent shall have
received reasonable advance notice of the proposed acquisition of such real
property including a reasonably detailed description thereof at least 30 days
prior to the consummation of such acquisition (or such later date as the
Administrative Agent may reasonably agree), (ii) as determined by the Agent in
its reasonable discretion, the value of the real property to be acquired in
exchange for any Net Cash Proceeds is equal to or greater than the value of the
Mortgaged Property sold to generate such Net Cash Proceeds, (iii) before and
after giving effect to the acquisition of such real property, no Default or
Event of Default has occurred and is continuing, (iv) such real property, once
acquired, shall be subject to (a) a Mortgage and (b) all applicable Mortgage
Supporting Documents and (v) the Borrower shall obtain ALTA (or TLTA, if
applicable) as-built surveys for such real property (in form and as to date that
is sufficiently acceptable to the title insurer insuring title insurance to the
Administrative Agent for such title insurer to deliver endorsements to such
title insurance as reasonably requested by the Administrative Agent).
     “Permitted Reinvestment” means, with respect to the Net Cash Proceeds of
any Sale or Property Loss Event, to acquire (or make Capital Expenditures to
finance the acquisition, repair, improvement or construction of), to the extent
otherwise permitted hereunder, property useful in the business of the Borrower
or any of its Subsidiaries (including through a Permitted Acquisition) or, if
such Property Loss Event involves loss or damage to property, to repair such
loss or damage.
     “Person” means any individual, partnership, corporation (including a
business trust and a public benefit corporation), joint stock company, estate,
association, firm, enterprise, trust, limited liability company, unincorporated
association, joint venture and any other entity or Governmental Authority.
     “Primary Syndication” means the syndication by Arranger of at least
$25,000,000 of the aggregate Revolving Credit Commitments to two (2) or fewer
financial institutions identified by Arranger and Borrower prior to the Closing
Date.
     “Private Payor” means any insurance company, health maintenance
organization, professional provider organization or similar entity that is
obligated to make payments for goods or services provided to a patient, other
than a governmental entity.
     “Private Payor Arrangement” means an agreement or arrangement with a
Private Payor pursuant to which the Private Payor pays all or a portion of the
charges of the Borrower for providing goods and services to a patient.

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     “Pro Forma Balance Sheet” has the meaning specified in Section 4.4(d).
     “Pro Forma Basis” means, with respect to any determination for any period
and any Pro Forma Transaction, that such determination shall be made by giving
pro forma effect to each such Pro Forma Transaction, as if each such Pro Forma
Transaction had been consummated on the first day of such period, based on
historical results accounted for in accordance with GAAP and, to the extent
applicable, reasonable assumptions that are specified in detail in the relevant
Compliance Certificate, Financial Statement or other document provided to the
Administrative Agent or any Lender in connection herewith in accordance with
Regulation S-X of the Securities Act of 1933.
     “Pro Forma Transaction” means any transaction consummated as part of any
Permitted Acquisition, together with each other transaction relating thereto and
consummated in connection therewith, including any incurrence or repayment of
Indebtedness.
     “Projections” means, collectively, the Initial Projections and the
Additional Projections delivered pursuant to Section 6.1(e).
     “Property Loss Event” means, with respect to any property, any loss of or
damage to such property or any taking of such property or condemnation thereof.
     “Proposed Acquisition” means (a) any proposed acquisition that is
consensual and approved by the board of directors of such Proposed Acquisition
Target, of all or substantially all of the assets or Stock of any Proposed
Acquisition Target by the Borrower or any Subsidiary of the Borrower or (b) any
proposed merger of any Proposed Acquisition Target with or into the Borrower or
any Subsidiary of the Borrower (and, in the case of a merger with the Borrower,
with the Borrower being the surviving corporation).
     “Proposed Acquisition Target” means any Person or any brand, line of
business, division, branch, operating division or other unit operation of any
Person.
     “Pro Rata Outstandings”, of any Lender at any time, means the sum of
(a) the outstanding principal amount of Revolving Loans owing to such Lender and
(b) the amount of the participation of such Lender in the L/C Obligations
outstanding with respect to all Letters of Credit.
     “Pro Rata Share” means, with respect to any Lender at any time, the
percentage obtained by dividing (a) the sum of the Commitments (or, if such
Commitments in the Facility are terminated, the Pro Rata Outstandings therein)
of such Lender then in effect under the Facility by (b) the sum of the
Commitments (or, if such Commitments in the Facility are terminated, the Pro
Rata Outstandings therein) of all Lenders then in effect under the Facility;
provided, however, that, if there are no Commitments and no Pro Rata
Outstandings in the Facility, such Lender’s Pro Rata Share in the Facility shall
be determined based on the Pro Rata Share in the Facility most recently in
effect, after giving effect to any subsequent assignment and any subsequent
non-pro rata payments of any Lender pursuant to Section 2.18.
     “Register” has the meaning specified in Section 2.14(b).
     “Reinvestment Prepayment Amount” means, with respect to any Net Cash
Proceeds on the Reinvestment Prepayment Date therefor, the amount of such Net
Cash Proceeds less any amount paid or required to be paid by any Group Member to
make Permitted Reinvestments or

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Permitted Mortgaged Property Reinvestments with such Net Cash Proceeds pursuant
to a Contractual Obligation entered into prior to such Reinvestment Prepayment
Date with any Person that is not an Affiliate of the Borrower.
     “Reinvestment Prepayment Date” means, with respect to any portion of any
Net Cash Proceeds of any Sale or Property Loss Event, the earliest of (a) the
365th day after the completion of the portion of such Sale or Property Loss
Event corresponding to such Net Cash Proceeds, (b) the date that is 5 Business
Days after the date on which the Borrower shall have notified the Administrative
Agent of the Borrower’s determination not to make Permitted Reinvestments or
Permitted Mortgaged Property Reinvestments with such Net Cash Proceeds, (c) the
occurrence of any Event of Default set forth in Section 9.1(e)(ii) and (d) 5
Business Days after the delivery of a notice by the Administrative Agent or the
Required Lenders to the Borrower during the continuance of any other Event of
Default.
     “Related Documents” means all documents evidencing the Related
Transactions, including without limitation, that certain Separation Agreement
dated on or about November 10, 2006 between the Borrower and Extendicare.
     “Related Person” means, with respect to any Person, each Affiliate of such
Person and each director, officer, employee, agent, trustee, representative,
attorney, accountant and each insurance, environmental, legal, financial and
other advisor (including those retained in connection with the satisfaction or
attempted satisfaction of any condition set forth in Article III) and other
consultants and agents of or to such Person or any of its Affiliates, together
with, if such Person is the Administrative Agent, each other Person or
individual designated, nominated or otherwise mandated by or helping the
Administrative Agent pursuant to and in accordance with Section 10.4 or any
comparable provision of any Loan Document.
     “Related Transactions” means the separation of the assets of the Borrower
and Extendicare, the delivery of all Related Documents and the payment of all
related fees, costs and expenses.
     “Release” means any release, threatened release, spill, emission, leaking,
pumping, pouring, emitting, emptying, escape, injection, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of Hazardous Material into
or through the environment.
     “Remedial Action” means all actions required to (a) clean up, remove, treat
or in any other way address any Hazardous Material in the indoor or outdoor
environment, (b) prevent or minimize any Release so that a Hazardous Material
does not migrate or endanger or threaten to endanger public health or welfare or
the indoor or outdoor environment or (c) perform pre-remedial studies and
investigations and post-remedial monitoring and care with respect to any
Hazardous Material.
     “Required Lenders” means, at any time, Lenders having at such time in
excess of 50% of the sum of the aggregate Revolving Credit Commitments (or, if
such Commitments are terminated, the sum of the amounts of the participations in
Swing Loans, the principal amount of unparticipated portions of the Swing Loans
and the Pro Rata Outstandings in the Revolving Credit Facility) then in effect,
ignoring, in such calculation, the amounts held by any Non-Funding Lender;
provided, that so long as any single Lender’s Revolving Credit Commitment or
portion of Swing Loans and Pro Rata Outstandings, as applicable, shall exceed
50% of the total

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for all Lenders (other than Non-Funding Lenders), then the Required Lenders
shall mean such Lender plus at least one additional Lender.
     “Requirements of Law” means, with respect to any Person, collectively, the
common law and all federal, state, local, foreign, multinational or
international laws, statutes, codes, treaties, standards, rules and regulations,
guidelines, ordinances, orders, judgments, writs, injunctions, decrees
(including administrative or judicial precedents or authorities) and the
interpretation or administration thereof by, and other determinations,
directives, requirements or requests of, any Governmental Authority, in each
case whether or not having the force of law and that are applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.
     “Responsible Officer” means, with respect to any Person, any of the
president, chief executive officer, treasurer, assistant treasurer, controller,
managing member or general partner of such Person but, in any event, with
respect to financial matters, any such officer that is responsible for preparing
the Financial Statements delivered hereunder and, with respect to the Corporate
Chart and other documents delivered pursuant to Section 6.1(d), documents
delivered on the Closing Date and documents delivered pursuant to Section 7.10,
the secretary or assistant secretary of such Person or any other officer
responsible for maintaining the corporate and similar records of such Person.
     “Restricted Payment” means (a) any dividend, return of capital,
distribution or any other payment or Sale of property for less than fair market
value, whether direct or indirect (including through the use of Hedging
Agreements, the making, repayment, cancellation or forgiveness of Indebtedness
and similar Contractual Obligations) and whether in cash, Securities or other
property, on account of any Stock or Stock Equivalent of the Borrower or any of
its Subsidiaries, in each case now or hereafter outstanding, including with
respect to a claim for rescission of a Sale of such Stock or Stock Equivalent
and (b) any redemption, retirement, termination, defeasance, cancellation,
purchase or other acquisition for value, whether direct or indirect (including
through the use of Hedging Agreements, the making, repayment, cancellation or
forgiveness of Indebtedness and similar Contractual Obligations), of any Stock
or Stock Equivalent of any Group Member or of any direct or indirect parent
entity of the Borrower, now or hereafter outstanding, and any payment or other
transfer setting aside funds for any such redemption, retirement, termination,
cancellation, purchase or other acquisition, whether directly or indirectly and
whether to a sinking fund, a similar fund or otherwise.
     “Revolving Credit Availability” means at any time of determination, the
lesser of:
     (i) Five (5) times Consolidated EBITDA for the Borrower on a Pro Forma
Basis for the last period of four (4) consecutive Fiscal Quarters ending on or
before such date minus Consolidated Total Debt of the Borrower outstanding as of
such date determined on a Pro Forma Basis; and
     (ii) the amount that would cause the Loan To Value Ratio to exceed 75%.
     “Revolving Credit Commitment” means, with respect to each Revolving Credit
Lender, the commitment of such Lender to make Revolving Loans and acquire
interests in other Revolving Credit Outstandings, which commitment is in the
amount set forth opposite such Lender’s name on Schedule I under the caption
“Revolving Credit Commitment”, as amended to reflect Assignments and each
additional commitment by such Lender in the Revolving Credit

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Facility that is made as part of the Facility Increase and as such amount may be
reduced pursuant to this Agreement. The aggregate amount of the Revolving Credit
Commitments on the date hereof equals $100,000,000.
     “Revolving Credit Facility” means the Revolving Credit Commitments and the
provisions herein related to the Revolving Loans, Swing Loans and Letters of
Credit.
     “Revolving Credit Lender” means each Lender that has a Revolving Credit
Commitment, holds a Revolving Loan or participates in any Swing Loan or Letter
of Credit.
     “Revolving Credit Outstandings” means, at any time, the sum of, in each
case to the extent outstanding at such time, (a) the aggregate principal amount
of the Revolving Loans and Swing Loans and (b) the L/C Obligations for all
Letters of Credit.
     “Revolving Credit Termination Date” shall mean the earliest of (a) the
Scheduled Revolving Credit Termination Date, (b) the date of termination of the
Revolving Credit Commitments pursuant to Section 2.5 or 9.2 and (c) the date on
which the Obligations become due and payable pursuant to Section 9.2.
     “Revolving Loan” has the meaning specified in Section 2.1.
     “S&P” means Standard & Poor’s Rating Services.
     “Sale and Leaseback Transaction” means, with respect to any Person (the
“obligor”), any Contractual Obligation or other arrangement with any other
Person (the “counterparty”) consisting of a lease by such obligor of any
property that, directly or indirectly, has been or is to be Sold by the obligor
to such counterparty or to any other Person to whom funds have been advanced by
such counterparty based on a Lien on, or an assignment of, such property or any
obligations of such obligor under such lease.
     “Scheduled Revolving Credit Termination Date” means November 10, 2011.
     “Secured Hedging Agreements” means any Hedging Agreement that (a) is
entered into by the Borrower and any Person that, at the time such Person
entered into such Hedging Agreement, was the Administrative Agent, a Lender or
an Affiliate of a Lender, (b) in the case of any Person that is not the
Administrative Agent or an Affiliate of the Administrative Agent, is expressly
identified as being a “Secured Hedging Agreement” hereunder in a joint notice
from such Loan Party and such Person delivered to the Administrative Agent
reasonably promptly after the execution of such Hedging Agreement and (c) meets
the requirements of Section 8.1(g).
     “Secured Parties” means the Lenders, the L/C Issuers, the Administrative
Agent, each other Indemnitee and any other holder of any Obligation of any Loan
Party.
     “Security” means all Stock, Stock Equivalents, voting trust certificates,
bonds, debentures, instruments and other evidence of Indebtedness, whether or
not secured, convertible or subordinated, all certificates of interest, share or
participation in, all certificates for the acquisition of, and all warrants,
options and other rights to acquire, any Security.
     “Sell” means, with respect to any property, to sell, convey, transfer,
assign, license, lease or otherwise dispose of, any interest therein or to
permit any Person to acquire any such interest,

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including, in each case, through a Sale and Leaseback Transaction or through a
sale, factoring at maturity, collection of or other disposal, with or without
recourse, of any notes or accounts receivable. Conjugated forms thereof and the
noun “Sale” have correlative meanings.
     “Solvent” means, with respect to any Person as of any date of
determination, that, as of such date, (a) the value of the assets of such Person
(both at fair value and present fair saleable value) is greater than the total
amount of liabilities (including contingent and unliquidated liabilities) of
such Person, (b) such Person is able to pay all liabilities of such Person as
such liabilities mature and (c) such Person does not have unreasonably small
capital. In computing the amount of contingent or unliquidated liabilities at
any time, such liabilities shall be computed at the amount that, in light of all
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.
     “SPV” means any special purpose funding vehicle identified as such in a
writing by any Lender to the Administrative Agent.
     “Stock” means all shares of capital stock (whether denominated as common
stock or preferred stock), equity interests, beneficial, partnership or
membership interests, joint venture interests, participations or other ownership
or profit interests in or equivalents (regardless of how designated) of or in a
Person (other than an individual), whether voting or non-voting.
     “Stock Equivalents” means all securities convertible into or exchangeable
for Stock or any other Stock Equivalent and all warrants, options or other
rights to purchase, subscribe for or otherwise acquire any Stock or any other
Stock Equivalent, whether or not presently convertible, exchangeable or
exercisable.
     “Subordinated Debt” means any Indebtedness that is subordinated to the
payment in full of the Obligations on terms and conditions satisfactory to the
Administrative Agent.
     “Subsidiary” means, with respect to any Person, any corporation,
partnership, joint venture, limited liability company, association or other
entity, the management of which is, directly or indirectly, controlled by, or of
which an aggregate of more than 50% of the outstanding Voting Stock is, at the
time, owned or controlled directly or indirectly by, such Person or one or more
Subsidiaries of such Person.
     “Substitute Lender” has the meaning specified in Section 2.18(a).
     “SWDA” means the Solid Waste Disposal Act (42 U.S.C. §§ 6901 et seq.).
     “Swingline Commitment” means $10,000,000.
     “Swingline Lender” means, each in its capacity as Swingline Lender
hereunder, GE Capital or, upon the resignation of GE Capital as Administrative
Agent hereunder, any Lender (or Affiliate or Approved Fund of any Lender) that
agrees, with the approval of the Administrative Agent (or, if there is no such
successor Administrative Agent, the Required Lenders) and the Borrower, to act
as the Swingline Lender hereunder.
     “Swingline Request” has the meaning specified in Section 2.3(b).
     “Swing Loan” has the meaning specified in Section 2.3.

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     “Syndication Completion Date” means the earlier to occur of (a) the 31st
day following the Closing Date and (b) the date that the Arranger shall notify
the Borrower and the Administrative Agent that the Arranger has completed the
Primary Syndication.
     “Tax Affiliate” means, (a) the Borrower and its Subsidiaries and (b) any
Affiliate of the Borrower with which the Borrower files or is eligible to file
consolidated, combined or unitary tax returns.
     “Tax Return” has the meaning specified in Section 4.8.
     “Taxes” has the meaning specified in Section 2.17(a).
     “Title IV Plan” means a pension plan subject to Title IV of ERISA, other
than a Multiemployer Plan, to which any ERISA Affiliate incurs or otherwise has
any obligation or liability, contingent or otherwise.
     “Trademarks” means all rights, title and interests (and all related IP
Ancillary Rights) arising under any Requirement of Law in or relating to
trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos and other source
or business identifiers and, in each case, all goodwill associated therewith,
all registrations and recordations thereof and all applications in connection
therewith.
     “Trade Secrets” means all right, title and interest (and all related IP
Ancillary Rights) arising under any Requirement of Law in or relating to trade
secrets.
     “UCC” means the Uniform Commercial Code of any applicable jurisdiction and,
if the applicable jurisdiction shall not have any Uniform Commercial Code, the
Uniform Commercial Code as in effect in the State of New York.
     “United States” means the United States of America.
     “Unused Commitment Fee” has the meaning specified in Section 2.11.
     “U.S. Lender Party” means each of the Administrative Agent, each Lender,
each L/C Issuer, each SPV and each participant, in each case that is a Domestic
Person.
     “Voting Stock” means Stock of any Person having ordinary power to vote in
the election of members of the board of directors, managers, trustees or other
controlling Persons, of such Person (irrespective of whether, at the time, Stock
of any other class or classes of such entity shall have or might have voting
power by reason of the occurrence of any contingency).
     “Wholly Owned Subsidiary” of any Person means any Subsidiary of such
Person, all of the Stock of which (other than nominal holdings and director’s
qualifying shares) is owned by such Person, either directly or through one or
more Wholly Owned Subsidiaries of such Person.
     “Withdrawal Liability” means, at any time, any liability incurred (whether
or not assessed) by any ERISA Affiliate and not yet satisfied or paid in full at
such time with respect to any Multiemployer Plan pursuant to Section 4201 of
ERISA.

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     “Working Capital” means, for any Person at any date, its Consolidated
Current Assets at such date minus its Consolidated Current Liabilities at such
date.
     Section 1.2 UCC Terms. The following terms have the meanings given to them
in the applicable UCC: “commodity account”, “commodity contract”, “commodity
intermediary”, “deposit account”, “entitlement holder”, “entitlement order”,
“equipment”, “financial asset”, “general intangible”, “goods”, “instruments”,
“inventory”, “securities account”, “securities intermediary” and “security
entitlement”.
     Section 1.3 Accounting Terms and Principles. (a) GAAP. All accounting
determinations required to be made pursuant hereto shall, unless expressly
otherwise provided herein, be made in accordance with GAAP. No change in the
accounting principles used in the preparation of any Financial Statement
hereafter adopted by the Borrower shall be given effect if such change would
affect a calculation that measures compliance with any provision of Article V or
VIII unless the Borrower, the Administrative Agent and the Required Lenders
agree to modify such provisions to reflect such changes in GAAP and, unless such
provisions are modified, all Financial Statements, Compliance Certificates and
similar documents provided hereunder shall be provided together with a
reconciliation between the calculations and amounts set forth therein before and
after giving effect to such change in GAAP.
          (b) Pro Forma. All components of financial calculations made to
determine compliance with Article V shall be adjusted on a Pro Forma Basis to
include or exclude, as the case may be, without duplication, such components of
such calculations attributable to any Pro Forma Transaction consummated after
the first day of the applicable period of determination and prior to the end of
such period, as determined in good faith by the Borrower based on assumptions
expressed therein and that were reasonable based on the information available to
the Borrower at the time of preparation of the Compliance Certificate setting
forth such calculations.
     Section 1.4 Payments. The Administrative Agent may set up standards and
procedures to determine or redetermine the equivalent in Dollars of any amount
expressed in any currency other than Dollars and otherwise may, but shall not be
obligated to, rely on any determination made by any Loan Party or any L/C
Issuer. Any such determination or redetermination by the Administrative Agent
shall be conclusive and binding for all purposes, absent manifest error. No
determination or redetermination by any Secured Party or Loan Party and no other
currency conversion shall change or release any obligation of any Loan Party or
of any Secured Party (other than the Administrative Agent and its Related
Persons) under any Loan Document, each of which agrees to pay separately for any
shortfall remaining after any conversion and payment of the amount as converted.
     Section 1.5 Interpretation. (a) Certain Terms. Except as set forth in any
Loan Document, all accounting terms not specifically defined herein shall be
construed in accordance with GAAP (except for the term “property”, which shall
be interpreted as broadly as possible, including, in any case, cash, Securities,
other assets, rights under Contractual Obligations and Permits and any right or
interest in any property). The terms “herein”, “hereof” and similar terms refer
to this Agreement as a whole. In the computation of periods of time from a
specified date to a later specified date in any Loan Document, the terms “from”
means “from and including” and the words “to” and “until” each mean “to but
excluding” and the word “through” means “to and including.” In any other case,
the term “including” when used in any Loan

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Document means “including without limitation.” The term “documents” means all
writings, however evidenced and whether in physical or electronic form,
including all documents, instruments, agreements, notices, demands,
certificates, forms, financial statements, opinions and reports. The term
“incur” means incur, create, make, issue, assume or otherwise become directly or
indirectly liable in respect of or responsible for, in each case whether
directly or indirectly, and the terms “incurrence” and “incurred” and similar
derivatives shall have correlative meanings.
          (b) Certain References. Unless otherwise expressly indicated,
references (i) in this Agreement to an Exhibit, Schedule, Article, Section or
clause refer to the appropriate Exhibit or Schedule to, or Article, Section or
clause in, this Agreement and (ii) in any Loan Document, to (A) any agreement
shall include, without limitation, all exhibits, schedules, appendixes and
annexes to such agreement and, unless the prior consent of any Secured Party
required therefor is not obtained, any modification to any term of such
agreement, (B) any statute shall be to such statute as modified from time to
time and to any successor legislation thereto, in each case as in effect at the
time any such reference is operative and (C) any time of day shall be a
reference to New York time. Titles of articles, sections, clauses, exhibits,
schedules and annexes contained in any Loan Document are without substantive
meaning or content of any kind whatsoever and are not a part of the agreement
between the parties hereto. Unless otherwise expressly indicated, the meaning of
any term defined (including by reference) in any Loan Document shall be equally
applicable to both the singular and plural forms of such term.
ARTICLE II
THE FACILITY
     Section 2.1 The Commitments.
          (a) Revolving Credit Commitments. On the terms and subject to the
conditions contained in this Agreement, each Revolving Credit Lender severally,
but not jointly, agrees to make loans in Dollars (each a “Revolving Loan”) to
the Borrower from time to time on any Business Day during the period from the
date hereof until the Revolving Credit Termination Date in an aggregate
principal amount at any time outstanding for all such loans by such Lender not
to exceed such Lender’s Revolving Credit Commitment; provided, however, that at
no time shall any Revolving Credit Lender be obligated to make a Revolving Loan
in excess of such Lender’s Pro Rata Share of the amount by which the then
effective Revolving Credit Commitments exceeds the aggregate Revolving Credit
Outstandings at such time. Within the limits set forth in the first sentence of
this Section 2.1, amounts of Revolving Loans repaid may be reborrowed under this
Section 2.1.
          (b) Facility Increase.
               (i) After the Closing Date, the Borrower may deliver to the
Administrative Agent a Facility Increase Notice to request an increase (a
“Facility Increase”) in the aggregate Revolving Credit Commitments in a
principal amount not to exceed $50,000,000 in the aggregate for all such
requests; provided, however, that (A) no Facility Increase of the Revolving
Credit Facility shall be effective later than 180 Business Days prior to the
Scheduled Revolving Credit Termination Date, (B) no Facility

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Increase shall be effective earlier than 10 Business Days after the delivery of
the Facility Increase Notice to the Administrative Agent in respect of such
Facility Increase, (C) no more than two (2) Facility Increases shall be made
pursuant to this clause (b) and (D) no Facility Increase shall be in an amount
less than $20,000,000. Nothing in this Agreement shall be construed to obligate
any Lender to negotiate for (whether or not in good faith), solicit, provide or
consent to any increase in the Commitments, and any such increase may be subject
to changes in any term herein; provided, that, subject to the terms of
Section 3.3(d), if any portion of the Facility Increase is not subscribed for by
the Lenders, the Borrower may, with the consent of the Administrative Agent as
to any bank or financial institution that is not at such time a Lender (which
consent shall not be unreasonably withheld or delayed) offer to any existing
Lender or to one or more additional banks or financial institutions the
opportunity to provide all or a portion of such unsubscribed portion of the
Facility Increase.
               (ii) The Administrative Agent shall promptly notify each Lender
of the proposed Facility Increase and of the proposed terms and conditions
therefor agreed between the Borrower and the Administrative Agent. Each such
Lender (and each of their Affiliates and Approved Funds) may, in its sole
discretion, commit to participate in such Facility Increase by forwarding its
commitment to the Administrative Agent therefor in form and substance
satisfactory to the Administrative Agent. The Administrative Agent shall
allocate, in its sole discretion but in amounts not to exceed for each such
Lender the commitment received from such Lender, Affiliate or Approved Fund for
the Facility, the Commitments to be made as part of the Facility Increase in the
Facility to the Lenders from which it has received such commitments to
participate in the Facility. If the Administrative Agent does not receive
sufficient commitments for the Facility Increase from existing Lenders, their
Affiliates or Approved Funds, it may obtain commitments in the amount of any
deficiency in such Facility Increase commitments from other Eligible Assignees.
               (iii) Each Facility Increase shall become effective after the
satisfaction of the conditions precedent set forth in Section 3.3, on a date
agreed by the Borrower and the Administrative Agent (a “Facility Increase
Date”). The Administrative Agent shall notify the Lenders and the Borrower, on
or before 1:00 p.m. on the Business Day following the Facility Increase Date of
the effectiveness of the Facility Increase and shall record in the Register all
applicable additional information required to be registered therein because of
such Facility Increase.
               (iv) On the Facility Increase Date for any Facility Increase,
each Lender or Eligible Assignee participating in such Facility Increase shall
purchase from each existing Revolving Credit Lender having Revolving Loans
outstanding on such Facility Increase Date, without recourse or warranty, an
undivided interest and participation, to the extent of such Revolving Credit
Lender’s Pro Rata Share in the Revolving Credit Facility of the new Revolving
Credit Commitments (after giving effect to such Facility Increase), in the
aggregate outstanding Revolving Loans, so as to ensure that, on the Facility
Increase Date after giving effect to such Facility Increase, each Revolving
Credit Lender holds its Pro Rata Share in the Revolving Credit Facility and the
Revolving Loans outstanding on such Facility Increase Date.

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     Section 2.2 Borrowing Procedures.
          (a) Notice From the Borrower. Each Borrowing shall be made on notice
given by the Borrower to the Administrative Agent not later than 11:00 a.m. on
(i) the first Business Day, in the case of a Borrowing of Base Rate Loans and
(ii) the third Business Day, in the case of a Borrowing of Eurodollar Rate
Loans, prior to the date of the proposed Borrowing. Each such notice may be made
in a writing substantially in the form of Exhibit C (a “Notice of Borrowing”)
duly completed or by telephone if confirmed promptly, but in any event within
one Business Day and prior to such Borrowing, with such a Notice of Borrowing.
Loans shall be made as Base Rate Loans unless, outside of a suspension period
pursuant to Section 2.15, the Notice of Borrowing specifies that all or a
portion thereof shall be Eurodollar Rate Loans. Each Borrowing shall be in an
aggregate amount that is an integral multiple of $1,000,000. No Borrowing of any
Eurodollar Rate Loan shall be made prior to the Syndication Completion Date.
          (b) Notice to Each Lender. The Administrative Agent shall give to each
Lender prompt notice of the Administrative Agent’s receipt of a Notice of
Borrowing and, if Eurodollar Rate Loans are properly requested in such Notice of
Borrowing, prompt notice of the applicable interest rate. Each Lender shall,
before 11:00 a.m. on the date of the proposed Borrowing, make available to the
Administrative Agent at its address referred to in Section 11.11, such Lender’s
Pro Rata Share of such proposed Borrowing. Upon fulfillment or due waiver (i) on
the Closing Date, of the applicable conditions set forth in Section 3.1 and
(ii) on the Closing Date and any time thereafter, of the applicable conditions
set forth in Section 3.2, the Administrative Agent shall make such funds
available to the Borrower.
          (c) Non-Funding Lenders. Unless the Administrative Agent shall have
received notice from any Lender prior to the date such Lender is required to
make any payment hereunder with respect to any Loan or any participation in any
Swing Loan or Letter of Credit that such Lender will not make such payment (or
any portion thereof) available to the Administrative Agent, the Administrative
Agent may assume that such Lender has made such payment available to the
Administrative Agent on the date such payment is required to be made in
accordance with this Article II and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. The Borrower agrees to repay to the Administrative Agent
on demand such amount (until repaid by such Lender) with interest thereon for
each day from the date such amount is made available to the Borrower until the
date such amount is repaid to the Administrative Agent, at the interest rate
applicable to the Obligation that would have been created when the
Administrative Agent made available such amount to the Borrower had such Lender
made a corresponding payment available; provided, however, that such payment
shall not relieve such Lender of any obligation it may have to the Borrower, the
Swingline Lender or any L/C Issuer. In addition, any Lender that shall not have
made available to the Administrative Agent any portion of any payment described
above (any such Lender, a “Non-Funding Lender”) agrees to pay such amount to the
Administrative Agent on demand together with interest thereon, for each day from
the date such amount is made available to the Borrower until the date such
amount is repaid to the Administrative Agent, at the Federal Funds Rate for the
first Business Day and thereafter (i) in the case of a payment in respect of a
Loan, at the interest rate applicable at the time to such Loan and
(ii) otherwise, at the interest rate applicable to Base Rate Loans under the
Revolving Credit Facility. Such repayment shall then constitute the funding of
the corresponding Loan (including any Loan deemed to have been made hereunder
with such payment) or participation. The existence of any Non-Funding Lender
shall not relieve any other Lender of its obligations under any Loan Document,
but no other Lender shall be responsible for the failure of any Non-Funding
Lender to make any payment required under any Loan Document.

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     Section 2.3 Swing Loans.
          (a) Availability. On the terms and subject to the conditions contained
in this Agreement, the Swingline Lender may, in its sole discretion, make loans
in Dollars (each a “Swing Loan”) available to the Borrower under the Revolving
Credit Facility from time to time on any Business Day during the period from the
date hereof until the Revolving Credit Termination Date in an aggregate
principal amount at any time outstanding not to exceed its Swingline Commitment;
provided, however, that the Swingline Lender may not make any Swing Loan (x) to
the extent that after giving effect to such Swing Loan, the aggregate Revolving
Credit Outstandings would exceed the Revolving Credit Commitments and (y) in the
period commencing on the first Business Day after it receives notice from the
Administrative Agent or the Required Lenders that one or more of the conditions
precedent contained in Section 3.2 are not satisfied and ending when such
conditions are satisfied or duly waived. In connection with the making of any
Swing Loan, the Swingline Lender may but shall not be required to determine
that, or take notice whether, the conditions precedent set forth in Section 3.2
have been satisfied or waived. Each Swing Loan shall be a Base Rate Loan and
must be repaid in full on the earliest of (i) the funding date of any Borrowing
of Revolving Loans and (ii) the Revolving Credit Termination Date. Within the
limits set forth in the first sentence of this clause (a), amounts of Swing
Loans repaid may be reborrowed under this clause (a).
          (b) Borrowing Procedures. In order to request a Swing Loan, the
Borrower shall give to the Administrative Agent a notice to be received not
later than 1:00 p.m. on the day of the proposed borrowing, which may be made in
a writing substantially in the form of Exhibit D duly completed (a “Swingline
Request”) or by telephone if confirmed promptly but, in any event, prior to such
borrowing, with such a Swingline Request. In addition, if any Notice of
Borrowing requests a Borrowing of Base Rate Loans, the Swing Line Lender may,
notwithstanding anything else to the contrary in Section 2.2, make a Swing Loan
available to the Borrower in an aggregate amount not to exceed such proposed
Borrowing, and the aggregate amount of the corresponding proposed Borrowing
shall be reduced accordingly by the principal amount of such Swing Loan. The
Administrative Agent shall promptly notify the Swingline Lender of the details
of the requested Swing Loan. Upon receipt of such notice and subject to the
terms of this Agreement, the Swingline Lender may make a Swing Loan available to
the Borrower by making the proceeds thereof available to the Administrative
Agent and, in turn, the Administrative Agent shall make such proceeds available
to the Borrower on the date set forth in the relevant Swingline Request.
          (c) Refinancing Swing Loans. The Swingline Lender may at any time
forward a demand to the Administrative Agent (which the Administrative Agent
shall, upon receipt, forward to each Revolving Credit Lender) that each
Revolving Credit Lender pay to the Administrative Agent, for the account of the
Swingline Lender, such Revolving Credit Lender’s Pro Rata Share of all or a
portion of the outstanding Swing Loans. Each Revolving Credit Lender shall pay
such Pro Rata Share to the Administrative Agent for the account of the Swingline
Lender. Upon receipt by the Administrative Agent of such payment (other than
during the continuation of any Event of Default under Section 9.1(e)), such
Revolving Credit Lender shall be deemed to have made a Revolving Loan to the
Borrower, which, upon receipt of such payment by the Swingline Lender from the
Administrative Agent, the Borrower shall be deemed to have used in whole to
refinance such Swing Loan. In addition, regardless of whether any such demand is
made, upon the occurrence of any Event of Default under Section 9.1(e), each
Revolving Credit Lender shall be deemed to have acquired, without recourse or
warranty, an undivided interest and participation in each Swing Loan in an
amount equal to such Lender’s Pro Rata Share of such

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Swing Loan. If any payment made by any Revolving Credit Lender as a result of
any such demand is not deemed a Revolving Loan, such payment shall be deemed a
funding by such Lender of such participation. Such participation shall not be
otherwise required to be funded. Upon receipt by the Swingline Lender of any
payment from any Revolving Credit Lender pursuant to this clause (c) with
respect to any portion of any Swing Loan, the Swingline Lender shall promptly
pay over to such Revolving Credit Lender all payments of principal (to the
extent received after such payment by such Lender) and interest (to the extent
accrued with respect to periods after such payment) received by the Swingline
Lender with respect to such portion.
          (d) Obligation to Fund Absolute. Each Revolving Credit Lender’s
obligations pursuant to clause (c) above shall be absolute, unconditional and
irrevocable and shall be performed strictly in accordance with the terms of this
Agreement under any and all circumstances whatsoever, including (A) the
existence of any setoff, claim, abatement, recoupment, defense or other right
that such Lender, any Affiliate thereof or any other Person may have against the
Swing Loan Lender, any other Secured Party or any other Person, (B) the failure
of any condition precedent set forth in Section 3.2 to be satisfied or the
failure of the Borrower to deliver any notice set forth in Section 2.2(a) (each
of which requirements the Revolving Credit Lenders hereby irrevocably waive) and
(C) any adverse change in the condition (financial or otherwise) of any Loan
Party.
     Section 2.4 Letters of Credit.
          (a) Commitment and Conditions. On the terms and subject to the
conditions contained herein, each L/C Issuer agrees to Issue, at the request of
the Borrower, in accordance with such L/C Issuer’s usual and customary business
practices, and for the account of the Borrower (or, as long as the Borrower
remains responsible for the payment in full of all amounts drawn thereunder and
related fees, costs and expenses, for the account of any Group Member), Letters
of Credit (denominated in Dollars) from time to time on any Business Day during
the period from the Closing Date through the earlier of the Revolving Credit
Termination Date and 7 days prior to the Scheduled Revolving Credit Termination
Date; provided, however, that such L/C Issuer shall not be under any obligation
to Issue any Letter of Credit upon the occurrence of any of the following, after
giving effect to such Issuance:
               (i) (A) the aggregate Revolving Credit Outstandings would exceed
the aggregate Revolving Credit Commitments or (B) the L/C Obligations for all
Letters of Credit would exceed the L/C Sublimit;
               (ii) the expiration date of such Letter of Credit (A) is not a
Business Day, (B) is more than one year after the date of issuance thereof or
(C) is later than 7 days prior to the Scheduled Revolving Credit Termination
Date; provided, however, that any Letter of Credit with a term not exceeding one
year may provide for its renewal for additional periods not exceeding one year
as long as (x) each of the Borrower and such L/C Issuer have the option to
prevent such renewal before the expiration of such term or any such period and
(y) neither such L/C Issuer nor the Borrower shall permit any such renewal to
extend such expiration date beyond the date set forth in clause (C) above; or

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               (iii) (A) any fee due in connection with, and on or prior to,
such Issuance has not been paid, (B) such Letter of Credit is requested to be
Issued in a form that is not acceptable to such L/C Issuer or (C) such L/C
Issuer shall not have received, each in form and substance reasonably acceptable
to it and duly executed by the Borrower (and, if such Letter of Credit is issued
for the account of any other Group Member, such Group Member), the documents
that such L/C Issuer generally uses in the ordinary course of its business for
the Issuance of letters of credit of the type of such Letter of Credit
(collectively, the “L/C Reimbursement Agreement”).
For each such Issuance, the applicable L/C Issuer may, but shall not be required
to, determine that, or take notice whether, the conditions precedent set forth
in Section 3.2 have been satisfied or waived in connection with the Issuance of
any Letter of Credit; provided, however, that no Letter of Credit shall be
Issued during the period starting on the first Business Day after the receipt by
such L/C Issuer of notice from the Administrative Agent or the Required Lenders
that any condition precedent contained in Section 3.2 is not satisfied and
ending on the date all such conditions are satisfied or duly waived.
          (b) Notice of Issuance. The Borrower shall give the relevant L/C
Issuer and the Administrative Agent a notice of any requested Issuance of any
Letter of Credit, which shall be effective only if received by such L/C Issuer
and the Administrative Agent not later than 11:00 a.m. on the third Business Day
prior to the date of such requested Issuance. Such notice may be made in a
writing substantially the form of Exhibit E duly completed or in a writing in
any other form acceptable to such L/C Issuer (an “L/C Request”) or by telephone
if confirmed promptly, but in any event within one Business Day and prior to
such Issuance, with such an L/C Request.
          (c) Reporting Obligations of L/C Issuers. Each L/C Issuer agrees to
provide the Administrative Agent (which, after receipt, the Administrative Agent
shall provide to each Revolving Credit Lender), in form and substance
satisfactory to the Administrative Agent, each of the following on the following
dates: (i) on or prior to (A) any Issuance of any Letter of Credit by such L/C
Issuer, (B) any drawing under any such Letter of Credit or (C) any payment (or
failure to pay when due) by the Borrower of any related L/C Reimbursement
Obligation, notice thereof, which shall contain a reasonably detailed
description of such Issuance, drawing or payment, (ii) upon the request of the
Administrative Agent (or any Revolving Credit Lender through the Administrative
Agent), copies of any Letter of Credit Issued by such L/C Issuer and any related
L/C Reimbursement Agreement and such other documents and information as may
reasonably be requested by the Administrative Agent and (iii) on the first
Business Day of each calendar week, a schedule of the Letters of Credit Issued
by such L/C Issuer, in form and substance reasonably satisfactory to the
Administrative Agent, setting forth the L/C Obligations for such Letters of
Credit outstanding on the last Business Day of the previous calendar week.
          (d) Acquisition of Participations. Upon any Issuance of a Letter of
Credit in accordance with the terms of this Agreement resulting in any increase
in the L/C Obligations, each Revolving Credit Lender shall be deemed to have
acquired, without recourse or warranty, an undivided interest and participation
in such Letter of Credit and the related L/C Obligations in an amount equal to
such Lender’s Pro Rata Share of such L/C Obligations.

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          (e) Reimbursement Obligations of the Borrower. The Borrower agrees to
pay to the L/C Issuer of any Letter of Credit each L/C Reimbursement Obligation
owing with respect to such Letter of Credit no later than the first Business Day
after the Borrower receives notice from such L/C Issuer that payment has been
made under such Letter of Credit or that such L/C Reimbursement Obligation is
otherwise due (the “L/C Reimbursement Date”) with interest thereon computed as
set forth in clause (i) below. In the event that any L/C Issuer incurs any L/C
Reimbursement Obligation not repaid by the Borrower as provided in this clause
(e) (or any such payment by the Borrower is rescinded or set aside for any
reason), such L/C Issuer shall promptly notify the Administrative Agent of such
failure (and, upon receipt of such notice, the Administrative Agent shall
forward a copy to each Revolving Credit Lender) and, irrespective of whether
such notice is given, such L/C Reimbursement Obligation shall be payable on
demand by the Borrower with interest thereon computed (i) from the date on which
such L/C Reimbursement Obligation arose to the L/C Reimbursement Date, at the
interest rate applicable during such period to Revolving Loans that are Base
Rate Loans and (ii) thereafter until payment in full, at the interest rate
applicable during such period to past due Revolving Loans that are Base Rate
Loans.
          (f) Reimbursement Obligations of the Revolving Credit Lenders. Upon
receipt of the notice described in clause (e) above from the Administrative
Agent, each Revolving Credit Lender shall pay to the Administrative Agent for
the account of such L/C Issuer its Pro Rata Share of such L/C Reimbursement
Obligation. By making such payment (other than during the continuation of an
Event of Default under Section 9.1(e)), such Lender shall be deemed to have made
a Revolving Loan to the Borrower, which, upon receipt thereof by such L/C
Issuer, the Borrower shall be deemed to have used in whole to repay such L/C
Reimbursement Obligation. Any such payment that is not deemed a Revolving Loan
shall be deemed a funding by such Lender of its participation in the applicable
Letter of Credit and the related L/C Obligations. Such participation shall not
otherwise be required to be funded. Upon receipt by any L/C Issuer of any
payment from any Lender pursuant to this clause (f) with respect to any portion
of any L/C Reimbursement Obligation, such L/C Issuer shall promptly pay over to
such Lender all payments received after such payment by such L/C Issuer with
respect to such portion.
          (g) Obligations Absolute. The obligations of the Borrower and the
Revolving Credit Lenders pursuant to clauses (d), (e) and (f) above shall be
absolute, unconditional and irrevocable and performed strictly in accordance
with the terms of this Agreement irrespective of (i) (A) the invalidity or
unenforceability of any term or provision in any Letter of Credit, any document
transferring or purporting to transfer a Letter of Credit, any Loan Document
(including the sufficiency of any such instrument), or any modification to any
provision of any of the foregoing, (B) any document presented under a Letter of
Credit being forged, fraudulent, invalid, insufficient or inaccurate in any
respect or failing to comply with the terms of such Letter of Credit or (C) any
loss or delay, including in the transmission of any document, (ii) the existence
of any setoff, claim, abatement, recoupment, defense or other right that any
Person (including any Group Member) may have against the beneficiary of any
Letter of Credit or any other Person, whether in connection with any Loan
Document or any other Contractual Obligation or transaction, or the existence of
any other withholding, abatement or reduction; provided, in each such case, that
payment by the L/C Issuer under the applicable Letter of Credit shall not have
resulted solely from the gross negligence or willful misconduct of the L/C
Issuer under the circumstances in question (as determined by a final,
non-appealable judgment of a court of competent jurisdiction), (iii) in the case
of the obligations of any Revolving Credit Lender, (A) the failure of any
condition precedent set forth in Section 3.2 to be satisfied (each of which
conditions precedent the Revolving Credit Lenders hereby irrevocably waive) or
(B) any

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adverse change in the condition (financial or otherwise) of any Loan Party and
(iv) any other act or omission to act or delay of any kind of any Secured Party
or any other Person or any other event or circumstance whatsoever, whether or
not similar to any of the foregoing, that might, but for the provisions of this
Section 2.4, constitute a legal or equitable discharge of any obligation of the
Borrower or any Revolving Credit Lender hereunder.
     Section 2.5 Reduction and Termination of the Commitments.
          (a) Optional. The Borrower may, upon notice to the Administrative
Agent, terminate in whole or reduce in part ratably any unused portion of the
Revolving Credit Commitments; provided, however, that each partial reduction
shall be in an aggregate amount that is an integral multiple of $1,000,000.
          (b) Mandatory. All outstanding Commitments shall terminate on the
Scheduled Revolving Credit Termination Date.
          (c) Reductions for Mandatory Prepayments. The then current Revolving
Credit Commitments shall be reduced ratably on each date on which a prepayment
of Revolving Loans or Swing Loans is made pursuant to clause (b) (Equity and
Debt Issuances), (c) (Asset Sales and Property Loss Events) of Section 2.8 or
would be required to be made had the aggregate outstanding principal amount of
the Revolving Loans and Swing Loans been equal to the Revolving Credit
Commitments then in effect, in each case in the amount of such prepayment.
     Section 2.6 Repayment of Loans. The Borrower promises to repay the entire
unpaid principal amount of the Revolving Loans and the Swing Loans on the
Scheduled Revolving Credit Termination Date.
     Section 2.7 Optional Prepayments. The Borrower may prepay the outstanding
principal amount of any Loan in whole or in part at any time (together with any
breakage costs that may be owing pursuant to Section 2.16(a) after giving effect
to such prepayment); provided, however, that each partial prepayment that is not
of the entire outstanding amount under any Facility shall be in an aggregate
amount that is an integral multiple of $1,000,000 or such lesser amount as the
Administrative Agent may agree.
     Section 2.8 Mandatory Prepayments.
          (a) Sales of Mortgaged Property. Upon receipt on or after the Closing
Date by any Loan Party or any of its Subsidiaries of Net Cash Proceeds arising
from any Sale by any Group Member of any Mortgaged Property if, after giving
effect to any Sale by any Group Member of any Mortgaged Property, the Loan To
Value Ratio does not exceed 50%, the recipient thereof may retain such Net Cash
Proceeds for its own account; provided, however, if the Loan To Value Ratio
exceeds 50%, then the Borrower shall immediately pay or cause to be paid to the
Administrative Agent an amount equal to 100% of such Net Cash Proceeds; provided
further, however that, upon any such receipt, as long as no Event of Default
shall be continuing, any Group Member may make Permitted Mortgaged Property
Reinvestments with such Net Cash Proceeds and the Borrower shall not be required
to make or cause such payment to the extent (x) such Net Cash Proceeds are
intended to be used to make Permitted Mortgaged Property

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Reinvestments and (y) on each Reinvestment Prepayment Date for such Net Cash
Proceeds, the Borrower shall pay or cause to be paid to the Administrative Agent
an amount equal to the Reinvestment Prepayment Amount applicable to such
Reinvestment Prepayment Date and such Net Cash Proceeds.
          (b) Equity and Debt Issuances. Upon receipt on or after the Closing
Date by any Loan Party or any of its Subsidiaries of Net Cash Proceeds arising
from (i) the issuance or Sale by the Borrower of its own Stock (other than any
issuance of common Stock of the Borrower occurring in the ordinary course of
business to any director, member of the management or employee of the Borrower
or its Subsidiaries), the Borrower shall immediately pay or cause to be paid to
the Administrative Agent an amount equal to 50% of such Net Cash Proceeds or
(ii) the incurrence by any Loan Party or any of its Subsidiaries of Indebtedness
of the type specified in clause (a) or (b) of the definition thereof (other than
any such Indebtedness permitted hereunder in reliance upon any of clauses (a)
through (i) of Section 8.1), the Borrower shall immediately pay or cause to be
paid to the Administrative Agent an amount equal to 100% of such Net Cash
Proceeds.
          (c) Asset Sales and Property Loss Events. Upon receipt on or after the
Closing Date by any Loan Party or any of its Subsidiaries of Net Cash Proceeds
arising from (i) any Sale by any Group Member of any of its property other than
Sales of its own Stock, Sales of Mortgaged Property and Sales of other personal
property permitted hereunder in reliance upon any of clauses (a) through (e) of
Section 8.4 or (ii) any Property Loss Event with respect to any property of any
Group Member to the extent resulting, in the aggregate with all other such
Property Loss Events in any Fiscal Year, in the receipt by any of them of Net
Cash Proceeds in excess of $10,000,000, the Borrower shall immediately pay or
cause to be paid to the Administrative Agent an amount equal to 100% of such Net
Cash Proceeds; provided, however, that, upon any such receipt, as long as no
Event of Default shall be continuing, any Group Member may make Permitted
Reinvestments with such Net Cash Proceeds and the Borrower shall not be required
to make or cause such payment to the extent (x) such Net Cash Proceeds are
intended to be used to make Permitted Reinvestments and (y) on each Reinvestment
Prepayment Date for such Net Cash Proceeds, the Borrower shall pay or cause to
be paid to the Administrative Agent an amount equal to the Reinvestment
Prepayment Amount applicable to such Reinvestment Prepayment Date and such Net
Cash Proceeds.
          (d) Excess Outstandings. On any date on which the aggregate principal
amount of Revolving Credit Outstandings exceeds either: (i) the aggregate
Revolving Credit Commitments or (ii) the Revolving Credit Availability, the
Borrower shall pay to the Administrative Agent an amount equal to such excess.
          (e) Application of Payments. Any payments made to the Administrative
Agent pursuant to this Section 2.8 shall be applied to the Obligations in
accordance with Section 2.12(b).
     Section 2.9 Interest.
          (a) Rate. All Loans and the outstanding amount of all other
Obligations (other than pursuant to Secured Hedging Agreements) shall bear
interest, in the case of Loans, on the unpaid principal amount thereof from the
date such Loans are made and, in the case of such

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other Obligations, from the date such other Obligations are due and payable
until, in all cases, paid in full, except as otherwise provided in clause (c)
below, as follows: (i) in the case of Base Rate Loans, at a rate per annum equal
to the sum of the Base Rate and the Applicable Margin, each as in effect from
time to time, (ii) in the case of Eurodollar Rate Loans, at a rate per annum
equal to the sum of the Eurodollar Rate and the Applicable Margin, each as in
effect for the applicable Interest Period, and (iii) in the case of other
Obligations, at a rate per annum equal to the sum of the Base Rate and the
Applicable Margin for Revolving Loans that are Base Rate Loans, each as in
effect from time to time.
          (b) Payments. Interest accrued shall be payable in arrears (i) if
accrued on the principal amount of any Loan, (A) at maturity (whether by
acceleration or otherwise), and (B)(1) if such Loan is a Base Rate Loan
(including a Swing Loan), on the last day of each calendar quarter commencing on
the first such day following the making of such Loan, (2) if such Loan is a
Eurodollar Rate Loan, on the last day of each Interest Period applicable to such
Loan and, if applicable, on each date during such Interest Period occurring
every 3 months from the first day of such Interest Period and (ii) if accrued on
any other Obligation, on demand from any after the time such Obligation is due
and payable (whether by acceleration or otherwise).
          (c) Default Interest. Notwithstanding the rates of interest specified
in clause (a) above or elsewhere in any Loan Document, effective immediately
upon (A) the occurrence of any Event of Default under Section 9.1(e)(ii) or
(B) the delivery of a notice by the Administrative Agent or the Required Lenders
to the Borrower during the continuance of any other Event of Default and, in
each case, for as long as such Event of Default shall be continuing, the
principal balance of all Obligations (including any Obligation that bears
interest by reference to the rate applicable to any other Obligation) then due
and payable shall bear interest at a rate that is 2% per annum in excess of the
interest rate applicable to such Obligations from time to time, payable on
demand or, in the absence of demand, on the date that would otherwise be
applicable.
     Section 2.10 Conversion and Continuation Options.
          (a) Option. The Borrower may elect (i) in the case of any Eurodollar
Rate Loan, (A) to continue such Eurodollar Rate Loan or any portion thereof for
an additional Interest Period on the last day of the Interest Period applicable
thereto and (B) to convert such Eurodollar Rate Loan or any portion thereof into
a Base Rate Loan at any time on any Business Day, subject to the payment of any
breakage costs required by Section 2.16(a), and (ii) in the case of Base Rate
Loans (other than Swing Loans), to convert such Base Rate Loans or any portion
thereof into Eurodollar Rate Loans at any time on any Business Day upon 3
Business Days’ prior notice; provided, however, that, (x) for each Interest
Period, the aggregate amount of Eurodollar Rate Loans having such Interest
Period must be an integral multiple of $1,000,000 or, if less, the remaining
outstanding principal amount of the Revolving Loans and (y) no conversion in
whole or in part of Base Rate Loans to Eurodollar Rate Loans and no continuation
in whole or in part of Eurodollar Rate Loans shall be permitted at any time at
which (1) an Event of Default shall be continuing and the Administrative Agent
or the Required Lenders shall have determined in their sole discretion not to
permit such conversions or continuations, (2) such continuation or conversion
would be made during a suspension imposed by Section 2.15 or (3) prior to the
Syndication Completion Date.

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          (b) Procedure. Each such election shall be made by giving the
Administrative Agent at least 3 Business Days’ prior notice in substantially the
form of Exhibit F (a “Notice of Conversion or Continuation”) duly completed. The
Administrative Agent shall promptly notify each Lender of its receipt of a
Notice of Conversion or Continuation and of the options selected therein. If the
Administrative Agent does not receive a timely Notice of Conversion or
Continuation from the Borrower containing a permitted election to continue or
convert any Eurodollar Rate Loan, then, upon the expiration of the applicable
Interest Period, such Loan shall be automatically converted to a Base Rate Loan.
Each partial conversion or continuation shall be allocated ratably among the
Lenders in the applicable Facility in accordance with their Pro Rata Share.
     Section 2.11 Fees.
          (a) Unused Commitment Fee. The Borrower agrees to pay to each
Revolving Credit Lender a commitment fee on the actual daily amount by which the
Revolving Credit Commitment of such Lender exceeds its Pro Rata Share of the sum
of (i) the aggregate outstanding principal amount of Revolving Loans and
(ii) the outstanding amount of the L/C Obligations for all Letters of Credit
(the “Unused Commitment Fee”) from the date hereof through the Revolving Credit
Termination Date at a rate per annum equal to the Applicable Margin, payable in
arrears (x) on the last day of each calendar quarter and (y) on the Revolving
Credit Termination Date.
          (b) Letter of Credit Fees. The Borrower agrees to pay, with respect to
all Letters of Credit issued by any L/C Issuer, (i) to such L/C Issuer, certain
fees, documentary and processing charges as separately agreed between the
Borrower and such L/C Issuer or otherwise in accordance with such L/C Issuer’s
standard schedule in effect at the time of determination thereof and (ii) to the
Administrative Agent, for the benefit of the Revolving Credit Lenders according
to their Pro Rata Shares, a fee accruing at a rate per annum equal to the
Applicable Margin for Revolving Loans that are Eurodollar Rate Loans on the
maximum undrawn face amount of such Letters of Credit, payable in arrears (A) on
the last day of each calendar quarter, ending after the issuance of such Letter
of Credit and (B) on the Revolving Credit Termination Date; provided, however,
that the fee payable under this clause (ii) shall be increased by 2% per annum
and shall be payable, in addition to any date it is otherwise required to be
paid hereunder, on demand, effective immediately upon (x) the occurrence of any
Event of Default under Section 9.1(e)(ii) or (y) the delivery of a notice by the
Administrative Agent or the Required Lenders to the Borrower during the
continuance of any other Event of Default and, in each case, for as long as such
Event of Default shall be continuing.
          (c) Additional Fees. The Borrower shall pay to the Administrative
Agent and its Related Persons its reasonable and customary fees and expenses in
connection with any payments made pursuant to Section 2.16(a) (Breakage Costs)
and has agreed to pay the additional fees described in the Fee Letters.
     Section 2.12 Application of Payments.
          (a) Application of Voluntary Prepayments. Unless otherwise provided in
this Section 2.12 or elsewhere in any Loan Document, all payments and any other
amounts

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received by the Administrative Agent from or for the benefit of the Borrower
shall be applied to repay the Obligations the Borrower designates.
          (b) Application of Mandatory Prepayments. Subject to the provisions of
clause (c) below with respect to the application of payments during the
continuance of an Event of Default, any payment made by the Borrower to the
Administrative Agent pursuant to Section 2.8 or any other prepayment of the
Obligations required to be applied in accordance with this clause (b) shall be
applied first, (to repay the outstanding principal balance of the Revolving
Loans and the Swing Loans, second, in the case of any payment required pursuant
to Section 2.8(e), to provide cash collateral to the extent and in the manner in
Section 9.3 and, then, any excess shall be retained by the Borrower.
          (c) Application of Payments During an Event of Default. The Borrower
hereby irrevocably waives, and agrees to cause each Loan Party and each other
Group Member to waive, the right to direct the application during the
continuance of an Event of Default of any and all payments in respect of any
Obligation and any proceeds of Collateral and agrees that, notwithstanding the
provisions of clause (a) above, the Administrative Agent may, and, upon either
(A) the direction of the Required Lenders or (B) the termination of any
Commitment or the acceleration of any Obligation pursuant to Section 9.2, shall,
apply all payments in respect of any Obligation, all funds on deposit in any
Cash Collateral Account and all other proceeds of Collateral (i) first, to pay
Obligations in respect of any cost or expense reimbursements, fees or
indemnities then due to the Administrative Agent, (ii) second, to pay
Obligations in respect of any cost or expense reimbursements, fees or
indemnities then due to the Lenders and the L/C Issuers, (iii) third, to pay
interest then due and payable in respect of the Loans and L/C Reimbursement
Obligations, (iv) fourth, to repay the outstanding principal amounts of the
Loans and L/C Reimbursement Obligations, to provide cash collateral for Letters
of Credit in the manner and to the extent described in Section 9.3 and to pay
amounts owing with respect to Secured Hedging Agreements and (v) fifth, to the
ratable payment of all other Obligations.
          (d) Application of Payments Generally. All payments that would
otherwise be allocated to the Revolving Credit Lenders pursuant to this
Section 2.12 shall instead be allocated first, to repay interest on Swing Loans,
on any portion of the Revolving Loans that the Administrative Agent may have
advanced on behalf of any Lender and on any L/C Reimbursement Obligation, in
each case for which the Administrative Agent or, as the case may be, the L/C
Issuer has not then been reimbursed by such Lender or the Borrower, second to
pay the outstanding principal amount of the foregoing obligations and third, to
repay the Revolving Loans. All repayments of any Revolving Loans shall be
applied first, to repay such Loans outstanding as Base Rate Loans and then, to
repay such Loans outstanding as Eurodollar Rate Loans, with those Eurodollar
Rate Loans having earlier expiring Interest Periods being repaid prior to those
having later expiring Interest Periods. If sufficient amounts are not available
to repay all outstanding Obligations described in any priority level set forth
in this Section 2.12, the available amounts shall be applied, unless otherwise
expressly specified herein, to such Obligations ratably based on the proportion
of the Secured Parties’ interest in such Obligations. Any priority level set
forth in this Section 2.12 that includes interest shall include all such
interest, whether or not accruing after the filing of any petition in bankruptcy
or the commencement of any insolvency, reorganization or similar proceeding, and
whether or not a claim for post-filing or post-petition interest is allowed in
any such proceeding.

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     Section 2.13 Payments and Computations.
          (a) Procedure. The Borrower shall make each payment under any Loan
Document not later than 11:00 a.m. on the day when due to the Administrative
Agent by wire transfer to the following account (or at such other account or by
such other means to such other address as the Administrative Agent shall have
notified the Borrower in writing within a reasonable time prior to such payment)
in immediately available Dollars and without setoff or counterclaim:
ABA No. 
Account Number
Deutsche Bank Trust Company Americas, New York, New York
Account Name:
Reference: GE Capital Re Assisted Living Concepts, Inc.
The Administrative Agent shall promptly thereafter cause to be distributed
immediately available funds relating to the payment of principal, interest or
fees to the Lenders, in accordance with the application of payments set forth in
Section 2.12. The Lenders shall make any payment under any Loan Document in
immediately available Dollars and without setoff or counterclaim. Each Revolving
Credit Lender shall make each payment for the account of any L/C Issuer or
Swingline Lender required pursuant to Section 2.3 or 2.4 (A) if the notice or
demand therefor was received by such Lender prior to 11:00 a.m. on any Business
Day, on such Business Day and (B) otherwise, on the Business Day following such
receipt. Payments received by the Administrative Agent after 11:00 a.m. shall be
deemed to be received on the next Business Day.
          (b) Computations of Interests and Fees. All computations of interest
and of fees shall be made by the Administrative Agent on the basis of a year of
360 days (or, in the case of Base Rate Loans whose interest rate is calculated
based on the rate set forth in clause (a) of the definition of “Base Rate”,
365/366 days), in each case for the actual number of days (including the first
day but excluding the last day) occurring in the period for which such interest
and fees are payable. Each determination of an interest rate or the amount of a
fee hereunder shall be made by the Administrative Agent (including
determinations of a Eurodollar Rate or Base Rate in accordance with the
definitions of “Eurodollar Rate” and “Base Rate”, respectively) and shall be
conclusive, binding and final for all purposes, absent manifest error.
          (c) Payment Dates. Whenever any payment hereunder shall be stated to
be due on a day other than a Business Day, the due date for such payment shall
be extended to the next succeeding Business Day without any increase in such
payment as a result of additional interest or fees; provided, however, that such
interest and fees shall continue accruing as a result of such extension of time.
          (d) Advancing Payments. Unless the Administrative Agent shall have
received notice from the Borrower to the Lenders prior to the date on which any
payment is due hereunder that the Borrower will not make such payment in full,
the Administrative Agent may assume that the Borrower has made such payment in
full to the Administrative Agent on such date and the Administrative Agent may,
in reliance upon such assumption, cause to be distributed to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent that the Borrower shall not have made such payment in full to the
Administrative Agent, each Lender shall repay to the Administrative Agent on
demand such amount distributed to such Lender together with interest thereon (at
the Federal Funds Rate for the first Business Day and thereafter, at the rate
applicable to Base Rate Loans under the applicable Facility) for each

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day from the date such amount is distributed to such Lender until the date such
Lender repays such amount to the Administrative Agent.
          (e) Maximum Lawful Rate. Notwithstanding the provisions of
Section 2.9, in no event shall the rate of interest payable by Borrower with
respect to the Loan exceed the maximum rate of interest permitted to be charged
under applicable Requirements of Law (the “Maximum Lawful Rate”). If at any time
such interest exceeds the Maximum Lawful Rate, then, so long as the Maximum
Lawful Rate would be exceeded, the applicable rate of interest shall be equal to
the Maximum Lawful Rate. If at any time thereafter the applicable rate of
interest is less than the Maximum Lawful Rate, Borrower shall continue to pay
interest under the Loan at the Maximum Lawful Rate until such time as the total
interest paid by Borrower therefor is equal to the total interest that would
have been paid had applicable law not limited the interest rate payable under
this Agreement.
     Section 2.14 Evidence of Debt.
          (a) Records of Lenders. Each Lender shall maintain in accordance with
its usual practice accounts evidencing Indebtedness of the Borrower to such
Lender resulting from each Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement. In addition, each Lender having sold a participation
in any of its Obligations or having identified an SPV as such to the
Administrative Agent, acting as agent of the Borrower solely for this purpose
and solely for tax purposes, shall establish and maintain at its address
referred to in Section 11.11 (or at such other address as such Lender shall
notify the Borrower) a record of ownership, in which such Lender shall register
by book entry (A) the name and address of each such participant and SPV (and
each change thereto, whether by assignment or otherwise) and (B) the rights,
interest or obligation of each such participant and SPV in any Obligation, in
any Commitment and in any right to receive any payment hereunder.
          (b) Records of Administrative Agent. The Administrative Agent, acting
as agent of the Borrower solely for tax purposes and solely with respect to the
actions described in this Section 2.14, shall establish and maintain at its
address referred to in Section 11.11 (or at such other address as the
Administrative Agent may notify the Borrower) (A) a record of ownership (the
“Register”) in which the Administrative Agent agrees to register by book entry
the interests (including any rights to receive payment hereunder) of the
Administrative Agent, each Lender and each L/C Issuer in the Revolving Credit
Outstandings, each of their obligations under this Agreement to participate in
each Loan, Letter of Credit and L/C Reimbursement Obligation, and any assignment
of any such interest, obligation or right and (B) accounts in the Register in
accordance with its usual practice in which it shall record (1) the names and
addresses of the Lenders and the L/C Issuers (and each change thereto pursuant
to Section 2.18 (Substitution of Lenders) and Section 11.2 (Assignments and
Participations; Binding Effect)), (2) the Commitments of each Lender, (3) the
amount of each Loan and each funding of any participation described in clause
(A) above, for Eurodollar Rate Loans, the Interest Period applicable thereto,
(4) the amount of any principal or interest due and payable or paid, (5) the
amount of the L/C Reimbursement Obligations due and payable or paid and (6) any
other payment received by the Administrative Agent from the Borrower and its
application to the Obligations.

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          (c) Registered Obligations. Notwithstanding anything to the contrary
contained in this Agreement, the Loans (including any Notes evidencing such
Loans and the corresponding obligations to participate in L/C Obligations and
Swing Loans) and the L/C Reimbursement Obligations are registered obligations,
the right, title and interest of the Lenders and the L/C Issuers and their
assignees in and to such Loans or L/C Reimbursement Obligations, as the case may
be, shall be transferable only upon notation of such transfer in the Register
and no assignment thereof shall be effective until recorded therein. This
Section 2.14 and Section 11.2 shall be construed so that the Loans and L/C
Reimbursement Obligations are at all times maintained in “registered form”
within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and
any related regulations (and any successor provisions).
          (d) Prima Facie Evidence. The entries made in the Register and in the
accounts maintained pursuant to clauses (a) and (b) above shall, to the extent
permitted by applicable Requirements of Law, be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided, however,
that no error in such account and no failure of any Lender or the Administrative
Agent to maintain any such account shall affect the obligations of any Loan
Party to repay the Loans in accordance with their terms. In addition, the Loan
Parties, the Administrative Agent, the Lenders and the L/C Issuers shall treat
each Person whose name is recorded in the Register as a Lender or L/C Issuer, as
applicable, for all purposes of this Agreement. Information contained in the
Register with respect to any Lender or L/C Issuer shall be available for
inspection by the Borrower, the Administrative Agent, such Lender or such L/C
Issuer at any reasonable time and from time to time upon reasonable prior
notice.
          (e) Notes. Upon any Lender’s request, the Borrower shall promptly
execute and deliver Notes to such Lender evidencing the Loans of such Lender in
a Facility and substantially in the form of Exhibit B; provided, however, that
only one Note for each Facility shall be issued to each Lender, except (i) to an
existing Lender exchanging existing Notes to reflect changes in the Register
relating to such Lender, in which case the new Notes delivered to such Lender
shall be dated the date of the original Notes and (ii) in the case of loss,
destruction or mutilation of existing Notes and similar circumstances. Each
Note, if issued, shall only be issued as means to evidence the right, title or
interest of a Lender or a registered assignee in and to the related Loan, as set
forth in the Register, and in no event shall any Note be considered a bearer
instrument or obligation.
     Section 2.15 Suspension of Eurodollar Rate Option. Notwithstanding any
provision to the contrary in this Article II, the following shall apply:
          (a) Interest Rate Unascertainable, Inadequate or Unfair. In the event
that (A) the Administrative Agent determines that adequate and fair means do not
exist for ascertaining the applicable interest rates by reference to which the
Eurodollar Rate is determined or (B) the Required Lenders notify the
Administrative Agent that the Eurodollar Rate for any Interest Period will not
adequately reflect the cost to the Lenders of making or maintaining such Loans
for such Interest Period, the Administrative Agent shall promptly so notify the
Borrower and the Lenders, whereupon the obligation of each Lender to make or to
continue Eurodollar Rate Loans shall be suspended as provided in clause (c)
below until the Administrative Agent shall notify the Borrower that the Required
Lenders have determined that the circumstances causing such suspension no longer
exist.

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          (b) Illegality. If any Lender determines that the introduction of, or
any change in or in the interpretation of, any Requirement of Law after the date
of this Agreement shall make it unlawful, or any Governmental Authority shall
assert that it is unlawful, for any Lender or its applicable lending office to
make Eurodollar Rate Loans or to continue to fund or maintain Eurodollar Rate
Loans, then, on notice thereof and demand therefor by such Lender to the
Borrower through the Administrative Agent, the obligation of such Lender to make
or to continue Eurodollar Rate Loans shall be suspended as provided in clause
(c) below until such Lender shall, through the Administrative Agent, notify the
Borrower that it has determined that it may lawfully make Eurodollar Rate Loans.
          (c) Effect of Suspension. If the obligation of any Lender to make or
to continue Eurodollar Rate Loans is suspended, (A) the obligation of such
Lender to convert Base Rate Loans into Eurodollar Rate Loans shall be suspended,
(B) such Lender shall make a Base Rate Loan at any time such Lender would
otherwise be obligated to make a Eurodollar Rate Loan, (C) the Borrower may
revoke any pending Notice of Borrowing or Notice of Conversion or Continuation
to make or continue any Eurodollar Rate Loan or to convert any Base Rate Loan
into a Eurodollar Rate Loan and (D) each Eurodollar Rate Loan of such Lender
shall automatically and immediately (or, in the case of any suspension pursuant
to clause (a) above, on the last day of the current Interest Period thereof) be
converted into a Base Rate Loan.
     Section 2.16 Breakage Costs; Increased Costs; Capital Requirements.
          (a) Breakage Costs. The Borrower shall compensate each Lender, upon
demand from such Lender to such Borrower (with copy to the Administrative
Agent), for all Liabilities (including, in each case, those incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by such
Lender to prepare to fund, to fund or to maintain the Eurodollar Rate Loans of
such Lender to the Borrower but excluding any loss of the Applicable Margin on
the relevant Loans) that such Lender may incur (A) to the extent, for any reason
other than solely by reason of such Lender being a Non-Funding Lender, a
proposed Borrowing, conversion into or continuation of Eurodollar Rate Loans
does not occur on a date specified therefor in a Notice of Borrowing or a Notice
of Conversion or Continuation or in a similar request made by telephone by the
Borrower, (B) to the extent any Eurodollar Rate Loan is paid (whether through a
scheduled, optional or mandatory prepayment) or converted to a Base Rate Loan
(including because of Section 2.15) on a date that is not the last day of the
applicable Interest Period or (C) as a consequence of any failure by the
Borrower to repay Eurodollar Rate Loans when required by the terms hereof. For
purposes of this clause (a), each Lender shall be deemed to have funded each
Eurodollar Rate Loan made by it using a matching deposit or other borrowing in
the London interbank market.
          (b) Increased Costs. If at any time any Lender or L/C Issuer
determines that, after the date hereof, the adoption of, or any change in or in
the interpretation, application or administration of, or compliance with, any
Requirement of Law (other than any imposition or increase of Eurodollar Reserve
Requirements) from any Governmental Authority shall have the effect of
(i) increasing the cost to such Lender of making, funding or maintaining any
Eurodollar Rate Loan or to agree to do so or of participating, or agreeing to
participate, in extensions of credit, (ii) increasing the cost to such L/C
Issuer of Issuing or maintaining any Letter of Credit or of agreeing to do so or
(iii) imposing any other cost to such Lender or L/C Issuer with respect to
compliance with its obligations under any Loan Document, then, upon demand by
such Lender or L/C Issuer (with copy to the Administrative Agent), the Borrower
shall pay to the Administrative

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Agent for the account of such Lender or L/C Issuer amounts sufficient to
compensate such Lender or L/C Issuer for such increased cost.
          (c) Increased Capital Requirements. If at any time any Lender or L/C
Issuer determines that, after the date hereof, the adoption of, or any change in
or in the interpretation, application or administration of, or compliance with,
any Requirement of Law (other than any imposition or increase of Eurodollar
Reserve Requirements) from any Governmental Authority regarding capital
adequacy, reserves, special deposits, compulsory loans, insurance charges
against property of, deposits with or for the account of, Obligations owing to,
or other credit extended or participated in by, any Lender or L/C Issuer or any
similar requirement (in each case other than any imposition or increase of
Eurodollar Reserve Requirements) shall have the effect of reducing the rate of
return on the capital of such Lender’s or L/C Issuer (or any corporation
controlling such Lender or L/C Issuer) as a consequence of its obligations under
or with respect to any Loan Document or Letter of Credit to a level below that
which, taking into account the capital adequacy policies of such Lender, L/C
Issuer or corporation, such Lender, L/C Issuer or corporation could have
achieved but for such adoption or change, then, upon demand from time to time by
such Lender or L/C Issuer (with a copy of such demand to the Administrative
Agent), the Borrower shall pay to the Administrative Agent for the account of
such Lender amounts sufficient to compensate such Lender for such reduction.
          (d) Compensation Certificate. Each demand for compensation under this
Section 2.16 shall be accompanied by a certificate of the Lender or L/C Issuer
claiming such compensation, setting forth the amounts to be paid hereunder in
reasonable detail and the bases therefor, which certificate shall be conclusive,
binding and final for all purposes, absent manifest error. In determining such
amount, such Lender or L/C Issuer may use any reasonable averaging and
attribution methods.
     Section 2.17 Taxes.
          (a) Payments Free and Clear of Taxes. Except as otherwise provided in
this Section 2.17, each payment by any Loan Party under any Loan Document shall
be made free and clear of all present or future taxes, levies, imposts,
deductions, charges or withholdings and all liabilities with respect thereto
(and without deduction for any of them) (collectively, but excluding the taxes
set forth in clauses (i) and (ii) below, the “Taxes”) other than for (i) taxes
measured by net income (including branch profits taxes) and franchise taxes
imposed in lieu of net income taxes, in each case imposed on any Secured Party
as a result of a present or former connection between such Secured Party and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than such connection
arising solely from any Secured Party having executed, delivered or performed
its obligations or received a payment under, or enforced, any Loan Document) or
(ii) taxes that are directly attributable to the failure (other than as a result
of a change in any Requirement of Law) by any Secured Party to deliver the
documentation required to be delivered pursuant to clause (f) below.
          (b) Gross-Up. If any Taxes shall be required by law to be deducted
from or in respect of any amount payable under any Loan Document (other than any
Secured Hedging Agreement) to any Secured Party (i) such amount shall be
increased as necessary to ensure that, after all required deductions for Taxes
are made (including deductions applicable to any increases

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to any amount under this Section 2.17), such Secured Party receives the amount
it would have received had no such deductions been made, (ii) the relevant Loan
Party shall make such deductions, (iii) the relevant Loan Party shall timely pay
the full amount deducted to the relevant taxing authority or other authority in
accordance with applicable Requirements of Law and (iv) within 30 days after
such payment is made, the relevant Loan Party shall deliver to the
Administrative Agent an original or certified copy of a receipt evidencing such
payment; provided, however, that no such increase shall be made with respect to,
and no Loan Party shall be required to indemnify any such Secured Party pursuant
to clause (d) below for, withholding taxes to the extent that the obligation to
withhold amounts existed on the date that such Secured Party became a “Secured
Party” under this Agreement in the capacity under which such Secured Party makes
a claim under this clause (b), except in each case to the extent such Secured
Party is a direct or indirect assignee (other than pursuant to Section 2.18
(Substitution of Lenders)) of any other Secured Party that was entitled, at the
time the assignment of such other Secured Party became effective, to receive
additional amounts under this clause (b).
          (c) Other Taxes. In addition, the Borrower agrees to pay, and
authorizes the Administrative Agent to pay in its name, any stamp, documentary,
excise or property tax, charges or similar levies imposed by any applicable
Requirement of Law or Governmental Authority and all Liabilities with respect
thereto (including by reason of any delay in payment thereof), in each case
arising from the execution, delivery or registration of, or otherwise with
respect to, any Loan Document or any transaction contemplated therein
(collectively, “Other Taxes”). The Swingline Lender may, without any need for
notice, demand or consent from the Borrower, by making funds available to the
Administrative Agent in the amount equal to any such payment, make a Swing Loan
to the Borrower in such amount, the proceeds of which shall be used by the
Administrative Agent in whole to make such payment. Within 30 days after the
date of any payment of Taxes or Other Taxes by any Loan Party, the Borrower
shall furnish to the Administrative Agent, at its address referred to in
Section 11.11, the original or a certified copy of a receipt evidencing payment
thereof.
          (d) Indemnification. The Borrower shall reimburse and indemnify,
within 30 days after receipt of demand therefor (with copy to the Administrative
Agent), each Secured Party for all Taxes and Other Taxes (including any Taxes
and Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.17) paid by such Secured Party and any Liabilities arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. A certificate of the Secured Party (or of the
Administrative Agent on behalf of such Secured Party) claiming any compensation
under this clause (d), setting forth the amounts to be paid thereunder and
delivered to the Borrower with copy to the Administrative Agent, shall be
conclusive, binding and final for all purposes, absent manifest error. In
determining such amount, the Administrative Agent and such Secured Party may use
any reasonable averaging and attribution methods.
          (e) Mitigation. Any Lender claiming any additional amounts payable
pursuant to this Section 2.17 shall use its reasonable efforts (consistent with
its internal policies and Requirements of Law) to change the jurisdiction of its
lending office if such a change would reduce any such additional amounts (or any
similar amount that may thereafter accrue) and would not, in the sole
determination of such Lender, be otherwise disadvantageous to such Lender.
          (f) Tax Forms. (i) Each Non-U.S. Lender Party that, at any of the
following times, is entitled to an exemption from United States withholding tax
or, after a change in any

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Requirement of Law, is subject to such withholding tax at a reduced rate under
an applicable tax treaty, shall (w) on or prior to the date such Non-U.S. Lender
Party becomes a “Non-U.S. Lender Party” hereunder, (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 clause (i) and
(z) from time to time if requested by the Borrower or the Administrative Agent
(or, in the case of a participant or SPV, the relevant Lender), provide the
Administrative Agent and the Borrower (or, in the case of a participant or SPV,
the relevant Lender) with two completed originals of each of the following, as
applicable: (A) Forms W-8ECI (claiming exemption from U.S. withholding tax
because the income is effectively connected with a U.S. trade or business),
W-8BEN (claiming exemption from, or a reduction of, U.S. withholding tax under
an income tax treaty) or any successor forms, (B) in the case of a Non-U.S.
Lender Party claiming exemption under Sections 871(h) or 881(c) of the Code,
Form W-8BEN (claiming exemption from U.S. withholding tax under the portfolio
interest exemption) or any successor form and a certificate in form and
substance acceptable to the Administrative Agent that such Non-U.S. Lender Party
is not (1) a “bank” within the meaning of Section 881(c)(3)(A) of the Code,
(2) a “10 percent shareholder” of the Borrower within the meaning of
Section 881(c)(3)(B) of the Code or (3) a “controlled foreign corporation”
described in Section 881(c)(3)(C) of the Code or (C) any other applicable
document prescribed by the IRS certifying as to the entitlement of such Non-U.S.
Lender Party to such exemption from United States withholding tax or reduced
rate with respect to all payments to be made to such Non-U.S. Lender Party under
the Loan Documents. Unless the Borrower and the Administrative Agent have
received forms or other documents satisfactory to them indicating that payments
under any Loan Document to or for a Non-U.S. Lender Party are not subject to
United States withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Loan Parties and the Administrative Agent shall
withhold amounts required to be withheld by applicable Requirements of Law from
such payments at the applicable statutory rate.
               (i) Each U.S. Lender Party shall (A) on or prior to the date such
U.S. Lender Party becomes a “U.S. Lender Party” hereunder, (B) on or prior to
the date on which any such form or certification expires or becomes obsolete,
(C) after the occurrence of any event requiring a change in the most recent form
or certification previously delivered by it pursuant to this clause (f) and
(D) from time to time if requested by the Borrower or the Administrative Agent
(or, in the case of a participant or SPV, the relevant Lender), provide the
Administrative Agent and the Borrower (or, in the case of a participant or SPV,
the relevant Lender) with two completed originals of Form W-9 (certifying that
such U.S. Lender Party is entitled to an exemption from U.S. backup withholding
tax) or any successor form.
               (ii) Each Lender having sold a participation in any of its
Obligations or identified an SPV as such to the Administrative Agent shall
collect from such participant or SPV the documents described in this clause (f)
and provide them to the Administrative Agent.
     Section 2.18 Substitution of Lenders.
          (a) Substitution Right. In the event that any Lender in any Facility
that is not an Affiliate of the Administrative Agent (an “Affected Lender”),
(i) makes a claim under clause (b) (Increased Costs) or (c) (Increased Capital
Requirements) of Section 2.16, (ii) notifies the Borrower pursuant to Section
2.15(b) (Illegality) that it becomes illegal for such Lender to

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continue to fund or make any Eurodollar Rate Loan in such Facility, (iii) makes
a claim for payment pursuant to Section 2.17(b) (Taxes), (iv) becomes a
Non-Funding Lender with respect to such Facility or (v) does not consent to any
amendment, waiver or consent to any Loan Document for which the consent of the
Required Lenders is obtained but that requires the consent of other Lenders in
such Facility, the Borrower may either pay in full such Affected Lender with
respect to amounts due in such Facility with the consent of the Administrative
Agent or substitute for such Affected Lender in such Facility any Lender or any
Affiliate or Approved Fund of any Lender or any other Person acceptable (which
acceptance shall not be unreasonably withheld or delayed) to the Administrative
Agent (in each case, a “Substitute Lender”).
          (b) Procedure. To substitute such Affected Lender or pay in full the
Obligations owed to such Affected Lender under such Facility, the Borrower shall
deliver a notice to the Administrative Agent and such Affected Lender. The
effectiveness of such payment or substitution shall be subject to the delivery
to the Administrative Agent by the Borrower (or, as may be applicable in the
case of a substitution, by the Substitute Lender) of (i) payment for the account
of such Affected Lender, of, to the extent accrued through, and outstanding on,
the effective date for such payment or substitution, all Obligations owing to
such Affected Lender with respect to such Facility (including those that will be
owed because of such payment and all Obligations that would be owed to such
Lender if it was solely a Lender in such Facility), (ii) in the case of a
payment in full of the Obligations owing to such Affected Lender in the
Revolving Credit Facility, payment of any amount that, after giving effect to
the termination of the Commitment of such Affected Lender, is required to be
paid pursuant to Section 2.8(e) (Excess Outstandings) and (iii) in the case of a
substitution, (A) payment of the assignment fee set forth in Section 11.2(c) and
(B) an assumption agreement in form and substance satisfactory to the
Administrative Agent whereby the Substitute Lender shall, among other things,
agree to be bound by the terms of the Loan Documents and assume the Commitment
of the Affected Lender under such Facility.
          (c) Effectiveness. Upon satisfaction of the conditions set forth in
clause (b) above, the Administrative Agent shall record such substitution or
payment in the Register, whereupon (i) in the case of any payment in full in any
Facility, such Affected Lender’s Commitments in such Facility shall be
terminated and (ii) in the case of any substitution in any Facility, (A) the
Affected Lender shall sell and be relieved of, and the Substitute Lender shall
purchase and assume, all rights and claims of such Affected Lender under the
Loan Documents with respect to such Facility, except that the Affected Lender
shall retain such rights expressly providing that they survive the repayment of
the Obligations and the termination of the Commitments, (B) the Substitute
Lender shall become a “Lender” hereunder having a Commitment in such Facility in
the amount of such Affected Lender’s Commitment in such Facility and (C) the
Affected Lender shall execute and deliver to the Administrative Agent an
Assignment to evidence such substitution and deliver any Note in its possession
with respect to such Facility; provided, however, that the failure of any
Affected Lender to execute any such Assignment or deliver any such Note shall
not render such sale and purchase (or the corresponding assignment) invalid.

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ARTICLE III
CONDITIONS TO LOANS AND LETTERS OF CREDIT
     Section 3.1 Conditions Precedent to Initial Loans and Letters of Credit.
The obligation of each Lender to make any Loan and the obligation of each L/C
Issuer to Issue any Letter of Credit is subject to the satisfaction or due
waiver of each of the following conditions precedent on or prior to the Closing
Date:
          (a) Certain Documents. The Administrative Agent shall have received on
or prior to the Closing Date each of the following, each dated the Closing Date
unless otherwise agreed by the Administrative Agent, in form and substance
satisfactory to the Administrative Agent and each Lender:
               (i) this Agreement duly executed by the Borrower and, for the
account of each Lender having requested the same by notice to the Administrative
Agent and the Borrower received by each at least 3 Business Days prior to the
Closing Date (or such later date as may be agreed by the Borrower), Notes in
each applicable Facility conforming to the requirements set forth in
Section 2.14(e);
               (ii) the Guaranty and Security Agreement, duly executed by each
Guarantor, together with (A) copies of UCC, Intellectual Property and other
appropriate search reports and of all effective prior filings listed therein,
together with evidence of the termination of such prior filings and other
documents with respect to the priority of the security interest of the
Administrative Agent in the Collateral, in each case as may be reasonably
requested by the Administrative Agent, (B) all documents representing all
Securities being pledged pursuant to such Guaranty and Security Agreement and
related undated powers or endorsements duly executed in blank and (C) all
Control Agreements that, in the reasonable judgment of the Administrative Agent,
are required for the Loan Parties to comply with the Loan Documents as of the
Closing Date, each duly executed by, in addition to the applicable Loan Party,
the applicable financial institution;
               (iii) Mortgages for each real property of the Loan Parties
identified on Schedule 4.16 (except as may be agreed to by the Administrative
Agent), together with all Mortgage Supporting Documents relating thereto that
are available on the Closing Date;
               (iv) duly executed favorable opinions of counsel to the Loan
Parties in Arizona, Delaware, Idaho, Indiana, Nevada, Ohio, Pennsylvania, Texas,
Washington and Wisconsin, each addressed to the Administrative Agent, the L/C
Issuers and the Lenders and addressing such matters as the Administrative Agent
may reasonably request;
               (v) a copy of each Constituent Document of each Loan Party that
is on file with any Governmental Authority in any jurisdiction, certified as of
a recent date by such Governmental Authority, together with, if applicable,
certificates attesting to the good standing of such Loan Party in such
jurisdiction and each other jurisdiction where

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such Loan Party is qualified to do business as a foreign entity or where such
qualification is necessary (and, if appropriate in any such jurisdiction,
related tax certificates);
               (vi) a certificate of the secretary or other officer of each Loan
Party in charge of maintaining books and records of such Loan Party certifying
as to (A) the names and signatures of each officer of such Loan Party authorized
to execute and deliver any Loan Document, (B) the Constituent Documents of such
Loan Party attached to such certificate are complete and correct copies of such
Constituent Documents as in effect on the date of such certification (or, for
any such Constituent Document delivered pursuant to clause (v) above, that there
have been no changes from such Constituent Document so delivered) and (C) the
resolutions of such Loan Party’s board of directors or other appropriate
governing body approving and authorizing the execution, delivery and performance
of each Loan Document to which such Loan Party is a party;
               (vii) a certificate of a Responsible Officer of the Borrower to
the effect that (A) each condition set forth in Section 3.2(b) has been
satisfied, (B) both the Loan Parties taken as a whole and the Borrower are
Solvent after giving effect to the initial Loans and Letters of Credit, the
consummation of the Related Transactions, the application of the proceeds
thereof in accordance with Section 7.9 and the payment of all estimated legal,
accounting and other fees and expenses related hereto and thereto, and (C)
attached thereto are complete and correct copies of each Related Document;
               (viii) insurance certificates in form and substance satisfactory
to the Administrative Agent demonstrating that the insurance policies required
by Section 7.5 are in full force and effect and have all endorsements required
by such Section 7.5; and
               (ix) such other documents and information as any Lender through
the Administrative Agent may reasonably request.
          (b) Fee and Expenses. There shall have been paid to the Administrative
Agent, for the account of the Administrative Agent, its Related Persons, any L/C
Issuer or any Lender, as the case may be, all fees and all reimbursements of
costs or expenses, in each case due and payable under any Loan Document on or
before the Closing Date.
          (c) Consents. Each Group Member shall have received all consents and
authorizations required pursuant to any material Contractual Obligation with any
other Person and shall have obtained all Permits of, and effected all notices to
and filings with, any Governmental Authority, in each case, as may be necessary
in connection with the consummation of the transactions contemplated in any Loan
Document or Related Document (including the Related Transactions).
          (d) Minimum Consolidated EBITDA. The Pro Forma Adjusted Consolidated
EBITDA of the Borrower for the four Fiscal Quarter period most recently ended
prior to the Closing Date as shown on Schedule IV hereto shall exceed
$45,000,000.
          (e) Related Transactions. The Administrative Agent shall be satisfied
that as of the Closing Date, that the Related Transactions shall have been
consummated in accordance

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with the terms of the Related Documents in all material respects as determined
by the Administrative Agent in the exercise of its reasonable judgment.
          (f) No Material Adverse Effect. Since December 31, 2005, with respect
to the Borrower and its Subsidiaries taken as a whole, there has been no
Material Adverse Effect.
          Section 3.2 Conditions Precedent to Each Loan and Letter of Credit.
The obligation of each Lender on any date (including the Closing Date) to make
any Loan and of each L/C Issuer on any date (including the Closing Date) to
Issue any Letter of Credit is subject to the satisfaction of each of the
following conditions precedent:
          (a) Request. The Administrative Agent (and, in the case of any
Issuance, the relevant L/C Issuer) shall have received, to the extent required
by Article II, a written, timely and duly executed and completed Notice of
Borrowing, Swingline Request or, as the case may be, L/C Request.
          (b) Representations and Warranties; No Defaults. The following
statements shall be true on such date, both before and after giving effect to
such Loan or, as applicable, such Issuance: (i) the representations and
warranties set forth in any Loan Document shall be true and correct (A) if such
date is the Closing Date, on and as of such date and (B) otherwise, in all
material respects on and as of such date or, to the extent such representations
and warranties expressly relate to an earlier date, on and as of such earlier
date and (ii) no Default shall be continuing.
          (c) Availability. After giving pro forma effect to such Loan or
Issuance of such Letter of Credit, the aggregate outstanding Loans and L/C
Obligations will not exceed the Revolving Credit Availability.
          (d) Additional Matters. The Administrative Agent shall have received
such additional documents and information as any Lender, through the
Administrative Agent, may reasonably request.
The representations and warranties set forth in any Notice of Borrowing,
Swingline Request or L/C Request (or any certificate delivered in connection
therewith) shall be deemed to be made again on and as of the date of the
relevant Loan or Issuance and the acceptance of the proceeds thereof or of the
delivery of the relevant Letter of Credit.
     Section 3.3 Conditions Precedent to Each Facility Increase. The
effectiveness of each Facility Increase shall be subject to the satisfaction of
all of the following conditions precedent:
          (a) Loan To Value Ratio. The Loan To Value Ratio, after giving effect
to such Facility Increase, shall not exceed 75%.
          (b) Certain Documents. The Administrative Agent shall have received on
or prior to the Facility Increase Date for such Facility Increase each of the
following, each dated

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such Facility Increase Date unless otherwise indicated or agreed to by the
Administrative Agent, in form and substance satisfactory to the Administrative
Agent:
               (i) written commitments duly executed by existing Lenders or
Eligible Assignees in an aggregate amount equal to the amount of the proposed
Facility Increase (as agreed between the Borrower and the Administrative Agent
but in any case not to exceed, in the aggregate for all such Facility Increases,
the maximum amount set forth in the Facility Increase Notice) and, in the case
of each such Eligible Assignee, an assumption agreement in form and substance
satisfactory to the Administrative Agent and duly executed by the Borrower, the
Administrative Agent and such Eligible Assignee;
               (ii) an amendment to this Agreement (including to Schedule I),
effective as of the Facility Increase Date and executed by the Borrower and the
Administrative Agent, to the extent necessary to implement terms and conditions
of the Facility Increase (including interest rates, fees and scheduled repayment
dates and maturity), as agreed by the Borrower and the Administrative Agent but,
which, in any case, except for interest, fees, scheduled repayment dates and
maturity, shall not be applied materially differently to the Facility Increase
and the existing Facility;
               (iii) for the account of each Lender or Eligible Assignee
participating in such Facility Increase having requested the same by notice to
the Administrative Agent and the Borrower received by each at least three
Business Days prior to the Facility Increase Date (or such later date as may be
agreed by the Borrower), Notes in each applicable Facility conforming to the
requirements set forth in Section 2.14(e);
               (iv) for each Loan Party executing any Loan Document as part of
such Facility Increase, a certificate of the secretary or other officer of such
Loan Party in charge of maintaining books and records of such Loan Party
certifying as to the resolutions of such Loan Party’s board of directors or
other appropriate governing body approving and authorizing the execution,
delivery and performance of each document executed as part of such Facility
Increase to which such Loan Party is a party;
               (v) duly executed favorable opinions of counsel to the Loan
Parties, each addressed to the Administrative Agent, the L/C Issuers and the
Lenders and addressing such matters as the Administrative Agent may reasonably
request; provided that any opinions addressing matters addressed in the legal
opinions delivered on the Facility Increase Date shall be in form and substance
substantially similar to such legal opinions delivered on the Closing Date; and
               (vi) such other document as the Administrative Agent may
reasonably request or as any Lender participating in such Facility Increase may
reasonably require as a condition to its commitment in such Facility Increase.
          (c) Fee and Expenses. There shall have been paid to the Administrative
Agent, for the account of the Administrative Agent, the Arranger, any Lender
(including any Person becoming a Lender as part of such Facility Increase on
such Facility Increase Date) or any

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L/C Issuer, as the case may be, all fees and expenses due and payable on or
before the Facility Increase Date for such Facility Increase.
          (d) Conditions to Extensions of Credit. As of the Facility Increase
Date for such Facility Increase, (i) the conditions precedent set forth in
Section 3.2 shall have been satisfied both before and after giving effect to
such Facility Increase, (ii) such Facility Increase shall be made on the terms
and conditions set forth in Section 2.1(b)(i) and (iii) the Group Members shall
be in compliance with Article V as of the most recently ended Fiscal Quarter for
which Financial Statements were delivered hereunder on a pro forma basis both
before and after giving effect to such Facility Increase.
          (e) Yield Maintenance. As of the Facility Increase Date for such
Facility Increase, (i) the “all-in yield” (after taking into account commissions
and related fees, costs and expenses) to the Lenders participating in such
Facility Increase in any existing Facility shall not exceed such all-in yield
(on a marked-to-market basis) for such existing Facility (after giving effect to
any increase in the Applicable Margin applicable to such existing Facility that
becomes effective on the Facility Increase Date) and (ii) the weighted average
life of any facility modified or as part of such Facility Increase shall not be
shorter than the weighted average life for the corresponding Facility prior to
giving effect to such modification.
          Section 3.4 Determinations of Initial Borrowing Conditions. For
purposes of determining compliance with the conditions specified in Sections 3.1
and 3.3, each Lender shall be deemed to be satisfied with each document and each
other matter required to be satisfactory to such Lender unless, prior to the
Closing Date (or, as the case may be, the corresponding Facility Increase Date),
the Administrative Agent receives notice from such Lender specifying such
Lender’s objections and such Lender has not made available its Pro Rata Share of
any Borrowing scheduled to be made on the Closing Date (or, as the case may be,
the corresponding Facility Increase Date).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
          To induce the Lenders, the L/C Issuers and the Administrative Agent to
enter into the Loan Documents, the Borrower (and, to the extent set forth in any
other Loan Document, each other Loan Party) represents and warrants to each of
them each of the following on and as of each date applicable pursuant to
Section 3.2:
     Section 4.1 Corporate Existence; Compliance with Law. Each Group Member (a)
is duly organized, validly existing and in good standing or active status under
the laws of the jurisdiction of its organization, (b) is duly qualified to do
business as a foreign entity and in good standing under the laws of each
jurisdiction where such qualification is necessary, except where the failure to
be so qualified or in good standing would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect, (c) has all requisite power and
authority and the legal right to own, pledge, mortgage and operate its property,
to lease or sublease any property it operates under lease or sublease and to
conduct its business as now or currently proposed to be

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conducted, (d) is in compliance with its Constituent Documents, (e) is in
compliance with all applicable Requirements of Law except where the failure to
be in compliance would not reasonably be expected to have a Material Adverse
Effect and (f) has all necessary Permits from or by, has made all necessary
filings with, and has given all necessary notices to, each Governmental
Authority having jurisdiction, to the extent required for such ownership, lease,
sublease, operation, occupation or conduct of business, except where the failure
to obtain such Permits, make such filings or give such notices would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
     Section 4.2 Loan and Related Documents.
          (a) Power and Authority. The execution, delivery and performance by
each Loan Party of the Loan Documents and Related Documents to which it is a
party and the consummation of the Related Transactions and other transactions
contemplated therein (i) are within such Loan Party’s corporate or similar
powers and, at the time of execution thereof, have been duly authorized by all
necessary corporate and similar action (including, if applicable, consent of
holders of its Securities), (ii) do not (A) contravene such Loan Party’s
Constituent Documents, (B) violate any applicable Requirement of Law,
(C) conflict with, contravene, constitute a default or breach under, or result
in or permit the termination or acceleration of, any material Contractual
Obligation of any Loan Party or any of its Subsidiaries (including other Related
Documents or Loan Documents) other than those that would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect and are not created or
caused by, or a conflict, breach, default or termination or acceleration event
under, any Loan Document or (D) result in the imposition of any Lien (other than
a Permitted Lien) upon any property of any Loan Party or any of its Subsidiaries
and (iii) do not require any Permit of, or filing with, any Governmental
Authority or any consent of, or notice to, any Person, other than (A) with
respect to the Loan Documents, the filings required to perfect the Liens created
by the Loan Documents, (B) those listed on Schedule 4.2 and that have been, or
will be prior to the Closing Date, obtained or made, copies of which have been,
or will be prior to the Closing Date, delivered to the Administrative Agent, and
each of which on the Closing Date will be in full force and effect and (C) with
respect to the Related Transactions, those that, if not obtained, would not, in
the aggregate, have a Material Adverse Effect.
          (b) Due Execution and Delivery. From and after its delivery to the
Administrative Agent, each Loan Document has been duly executed and delivered to
the other parties thereto by each Loan Party party thereto, is the legal, valid
and binding obligation of such Loan Party and is enforceable against such Loan
Party in accordance with its terms.
          (c) Related Documents. Each representation and warranty in each
Related Document is true and correct in all material respects and no default, or
event that, with the giving of notice or lapse of time or both, would constitute
a default, has occurred thereunder. As of the Closing Date, all applicable
waiting periods in connection with the Related Transactions have expired or have
been terminated without any action being taken by any Governmental Authority.
     Section 4.3 Ownership of Loan Parties. Set forth on Schedule 4.3 is a
complete and accurate list showing, as of the Closing Date, for each Loan Party
and each Subsidiary of any Guarantor and each joint venture of any of them, its
jurisdiction of organization, the number of shares of each class of Stock
authorized (if applicable), the number outstanding on the Closing

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Date and the number and percentage of the outstanding shares of each such class
owned (directly or indirectly) by the Borrower. All outstanding Stock of each of
them (except in the case of the Borrower) has been validly issued, is fully paid
and non-assessable (to the extent applicable) and is owned beneficially and of
record by a Loan Party (or, in the case of Texas ALC Partners II, LP, by the
partners thereof) free and clear of all Liens other than the security interests
created by the Loan Documents and, in the case of joint ventures, Permitted
Liens. There are no Stock Equivalents with respect to the Stock of any Loan
Party or any Subsidiary of any Guarantor or any joint venture of any of them.
There are no Contractual Obligations or other understandings to which any Loan
Party, any Subsidiary of any Guarantor or any joint venture of any of them is a
party with respect to (including any restriction on) the issuance, voting, Sale
or pledge of any Stock or Stock Equivalent of any Loan Party or any such
Guarantor or joint venture.
     Section 4.4 Financial Statements.
          (a) Each of (i) the audited Consolidated balance sheet of the Borrower
as at December 31, 2005 and the related Consolidated statements of income,
retained earnings and cash flows of the Borrower for the Fiscal Year then ended,
certified by KPMG, and (ii) subject to the absence of footnote disclosure and
normal recurring year-end audit adjustments, the unaudited Consolidated balance
sheets of the Borrower as at June 30, 2006 and the related Consolidated
statements of income, retained earnings and cash flows of the Borrower for the
six months then ended, copies of each of which have been furnished to the
Administrative Agent, fairly present in all material respects the Consolidated
financial position, results of operations and cash flow of the Borrower as at
the dates indicated and for the periods indicated in accordance with GAAP.
          (b) [Reserved]
          (c) The Initial Projections have been prepared by the Borrower in
light of the past operations of the business of the Borrower and its
Subsidiaries and reflect projections for the 5 year period beginning on
January 1, 2007 on a year by year basis. As of the Closing Date, the Initial
Projections are based upon estimates and assumptions stated therein, all of
which the Borrower believes to be reasonable and fair in light of conditions and
facts known to the Borrower as of the Closing Date and reflect the good faith,
reasonable and fair estimates by the Borrower of the future Consolidated
financial performance of the Borrower and the other information projected
therein for the periods set forth therein.
          (d) The unaudited Consolidated balance sheet of the Borrower (the “Pro
Forma Balance Sheet”) delivered to the Administrative Agent prior to the date
hereof, has been prepared as of June 30, 2006 and reflects as of such date, on a
Pro Forma Basis for the transactions contemplated herein to occur on the Closing
Date, the Consolidated financial condition of the Borrower, and the assumptions
expressed therein are reasonable based on the information available to the
Borrower at such date and on the Closing Date.
     Section 4.5 Material Adverse Effect. Since December 31, 2005, there have
been no events, circumstances, developments or other changes in facts that
would, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
     Section 4.6 Solvency. Both before and after giving effect to (a) the Loans
and Letters of Credit made or Issued on or prior to the date this representation
and warranty is made,

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(b) the disbursement of the proceeds of such Loans and (c) the payment and
accrual of all transaction costs in connection with the foregoing, both the Loan
Parties taken as a whole and the Borrower are Solvent.
     Section 4.7 Litigation. There are no pending (or, to the knowledge of any
Group Member, threatened) actions, investigations, suits, proceedings, audits,
claims, demands, orders or disputes affecting the Borrower or any of its
Subsidiaries with, by or before any Governmental Authority other than those that
cannot reasonably be expected to affect the Obligations, the Loan Documents, the
Letters of Credit, the Related Documents, the Related Transactions and the other
transactions contemplated therein and would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
     Section 4.8 Taxes. All federal, state, local and foreign income and
franchise and other material tax returns, reports and statements (collectively,
the “Tax Returns”) required to be filed by any Tax Affiliate have been filed
with the appropriate Governmental Authorities in all jurisdictions in which such
Tax Returns are required to be filed, all such Tax Returns are true and correct
in all material respects, and all taxes, charges and other impositions reflected
therein or otherwise due and payable have been paid prior to the date on which
any Liability may be added thereto for non-payment thereof except for those
contested in good faith by appropriate proceedings diligently conducted and for
which adequate reserves are maintained on the books of the appropriate Tax
Affiliate in accordance with GAAP or state and local taxes involving an amount,
in the aggregate, of less than $50,000. No Tax Return is under audit or
examination by any Governmental Authority and no notice of such an audit or
examination or any assertion of any claim for Taxes has been given or made by
any Governmental Authority. Proper and accurate amounts have been withheld by
each Tax Affiliate from their respective employees for all periods in full and
complete compliance with the tax, social security and unemployment withholding
provisions of applicable Requirements of Law and such withholdings have been
timely paid to the respective Governmental Authorities. No Tax Affiliate has
participated in a “reportable transaction” within the meaning of Treasury
Regulation Section 1.6011-4(b) or has been a member of an affiliated, combined
or unitary group other than the group of which a Tax Affiliate is the common
parent.
     Section 4.9 Margin Regulations. The Borrower is not engaged in the business
of extending credit for the purpose of, and no proceeds of any Loan or other
extensions of credit hereunder will be used for the purpose of, buying or
carrying margin stock (within the meaning of Regulation U of the Federal Reserve
Board) or extending credit to others for the purpose of purchasing or carrying
any such margin stock, in each case in contravention of Regulation T, U or X of
the Federal Reserve Board.
     Section 4.10 No Burdensome Obligations; No Defaults. No Group Member is a
party to any Contractual Obligation, no Group Member has Constituent Documents
containing obligations, and, to the knowledge of any Group Member, there are no
applicable Requirements of Law, in each case the compliance with which would
reasonably be expected to have, in the aggregate, a Material Adverse Effect. No
Group Member (and, to the knowledge of each Group Member, no other party
thereto) is in default under or with respect to any Contractual Obligation of
any Group Member, other than those that would not, in the aggregate, reasonably
be expected to have a Material Adverse Effect.

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     Section 4.11 Investment Company Act; Public Utility Holding Company Act. No
Group Member is an “investment company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for, an “investment company”, as such
terms are defined in the Investment Company Act of 1940.
     Section 4.12 Labor Matters. There are no strikes, work stoppages, slowdowns
or lockouts existing, pending (or, to the knowledge of any Group Member,
threatened) against or involving any Group Member, except, for those that would
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
Except as set forth on Schedule 4.12, as of the Closing Date, (a) there is no
collective bargaining or similar agreement with any union, labor organization,
works council or similar representative covering any employee of any Group
Member, (b) no petition for certification or election of any such representative
is existing or pending with respect to any employee of any Group Member and
(c) no such representative has sought certification or recognition with respect
to any employee of any Group Member.
     Section 4.13 ERISA. Schedule 4.13 sets forth, as of the Closing Date, a
complete and correct list of, and that separately identifies, (a) all Title IV
Plans, (b) all Multiemployer Plans and (c) all material Benefit Plans. Each
Benefit Plan, and each trust thereunder, intended to qualify for tax exempt
status under Section 401 or 501 of the Code or other Requirements of Law so
qualifies. Except for those that would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect, (x) each Benefit Plan is in
compliance with applicable provisions of ERISA, the Code and other Requirements
of Law, (y) there are no existing or pending (or to the knowledge of any Group
Member, threatened) claims (other than routine claims for benefits in the normal
course), sanctions, actions, lawsuits or other proceedings or investigation
involving any Benefit Plan to which any Group Member incurs or otherwise has or
could have an obligation or any Liability and (z) no ERISA Event is reasonably
expected to occur. On the Closing Date, no ERISA Event has occurred in
connection with which obligations and liabilities (contingent or otherwise)
remain outstanding. No ERISA Affiliate would have any Withdrawal Liability as a
result of a complete withdrawal from any Multiemployer Plan on the date this
representation is made.
     Section 4.14 Environmental Matters. Except as set forth on Schedule 4.14,
(a) the operations of each Group Member are and have been in compliance with all
applicable Environmental Laws, including obtaining, maintaining and complying
with all Permits required by any applicable Environmental Law, other than
non-compliances that, in the aggregate, would not have a reasonable likelihood
of resulting in Material Environmental Liabilities, (b) no Group Member is party
to, and no Group Member and no real property currently (or to the knowledge of
any Group Member previously) owned, leased, subleased, operated or otherwise
occupied by or for any Group Member is subject to or the subject of, any
Contractual Obligation or any pending (or, to the knowledge of any Group Member,
threatened) order, action, investigation, suit, proceeding, audit, claim,
demand, dispute or notice of violation or of potential liability or similar
notice under or pursuant to any Environmental Law other than those that, in the
aggregate, are not reasonably likely to result in Material Environmental
Liabilities, (c) no Lien in favor of any Governmental Authority securing, in
whole or in part, Environmental Liabilities has attached to any property of any
Group Member and, to the knowledge of any Group Member, no facts, circumstances
or conditions exist that could reasonably be expected to result in any such Lien
attaching to any such property, (d) no Group Member has caused or suffered to
occur a Release of Hazardous Materials at, to or from any real property of any
Group Member and each such real property is free of contamination by any
Hazardous Materials except for such Release

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or contamination that could not reasonably be expected to result, in the
aggregate, in Material Environmental Liabilities, (e) no Group Member (i) is or
has been engaged in operations, or (ii) knows of any facts, circumstances or
conditions, including receipt of any information request or notice of potential
responsibility under CERCLA or similar Environmental Laws, that, in the
aggregate, would have a reasonable likelihood of resulting in Material
Environmental Liabilities and (f) each Group Member has made available to the
Administrative Agent copies of all existing environmental reports, reviews and
audits and all documents pertaining to actual or potential Environmental
Liabilities, in each case to the extent such reports, reviews, audits and
documents are in their possession, custody or control.
     Section 4.15 Intellectual Property. Each Group Member owns or licenses all
Intellectual Property that is necessary for the operations of its businesses. To
the knowledge of each Group Member, (a) the conduct and operations of the
businesses of each Group Member does not infringe, misappropriate, dilute,
violate or otherwise impair any Intellectual Property owned by any other Person
and (b) no other Person has contested any right, title or interest of any Group
Member in, or relating to, any Intellectual Property, other than, in each case,
as cannot reasonably be expected to affect the Loan Documents and the
transactions contemplated therein and would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect. In addition, (x) there are no
pending (or, to the knowledge of any Group Member, threatened) actions,
investigations, suits, proceedings, audits, claims, demands, orders or disputes
affecting any Group Member with respect to, (y) no judgment or order regarding
any such claim has been rendered by any competent Governmental Authority, no
settlement agreement or similar Contractual Obligation has been entered into by
any Group Member, with respect to and (z) no Group Member knows or has any
reason to know of any valid basis for any claim based on, any such infringement,
misappropriation, dilution, violation or impairment or contest, other than, in
each case, as cannot reasonably be expected to affect the Loan Documents and the
transactions contemplated therein and would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
     Section 4.16 Title; Real Property.
          (a) Each Group Member has good and marketable fee simple title to all
owned real property and valid leasehold interests in all leased real property,
and owns all personal property, in each case that is purported to be owned or
leased by it, including those reflected on the most recent Financial Statements
delivered by the Borrower, and none of such property is subject to any Lien
except Permitted Liens.
          (b) Set forth on Schedule 4.16 is, as of the Closing Date, (i) a
complete and accurate list of all real property owned in fee simple by any Group
Member or in which any Group Member owns a leasehold interest setting forth, for
each such real property, the current street address (including, where
applicable, county, state and other relevant jurisdictions), the record owner
thereof and, where applicable, each lessee and sublessee thereof, (ii) any
lease, sublease, license or sublicense of such real property by any Group Member
and (iii) for each such real property that the Administrative Agent has
requested be subject to a Mortgage or that is otherwise material to the business
of any Group Member, each non-contingent Contractual Obligation by any Group
Member to Sell such real property.

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     Section 4.17 Compliance With Healthcare Laws. Without limiting any other
representation or warranty made herein, each Group Member, each property owned
or managed by such Group Member, and, to the knowledge of Borrower, each Group
Member’s licensed employees and contractors (other than contracted agencies) in
the exercise of their respective duties on behalf of such Group Member, is in
compliance with all applicable Healthcare Laws except where the failure to
comply could not reasonably be expected to have a Material Adverse Effect. To
the extent applicable to itself or any property owned or managed by it, each
Group Member has maintained in all material respects all records required to be
maintained by all applicable licensing and accreditation agencies, Government
Reimbursement Programs, Private Payor Arrangements and Healthcare Laws, and, to
the knowledge of Borrower, there are no presently existing circumstances which
reasonably could be expected to constitute or result in a violation of any
license, accreditation, Private Payor Arrangement, or Healthcare Law in each
case that could reasonably be expected to have a Material Adverse Effect. Except
as disclosed on Schedule 4.17, no Group Member, and no property owned or managed
by any Group Member, is currently, or has in the past been, subject to any
federal, state, local governmental or private payor civil or criminal
inspections, investigations, inquiries or audits involving and/or related to
its, its activities’ or its compliance with Healthcare Laws. No Group Member:
(i) has had a civil monetary penalty assessed against it pursuant to 42 U.S.C.
§1320a 7a; (ii) has been excluded from participation in a Federal Health Care
Program (as that term is defined in 42 U.S.C. §1320a 7b); (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 (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 qui tam action brought pursuant to 31 U.S.C. §3729 et seq. Each Group Member
and the owners of the facilities and other businesses managed by each Group
Member have such permits, licenses, franchises, certificates and other approvals
or authorizations of governmental or regulatory authorities as are necessary
under applicable law to own its respective properties and to conduct its
respective business (including without limitation such permits as are required
under Healthcare Laws, and under such HMO or similar licensure laws and such
insurance laws and regulations, as are applicable thereto) except to the extent
that the failure to obtain or possess such approvals or authorizations could
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
     Section 4.18 HIPAA Compliance. To the extent that and for so long as any
Group Member is a “covered entity” within the meaning of HIPAA, such Group
Member (a) has undertaken or will promptly undertake all necessary surveys,
audits, inventories, reviews, analyses and/or assessments (including any
necessary risk assessments) of all areas of its business and operations required
by HIPAA and/or that could be adversely affected by the failure of such Group
Member to be HIPAA Compliant (as defined below); (b) has developed or will
promptly develop a detailed plan and time line for becoming HIPAA Compliant (a
“HIPAA Compliance Plan”); and (c) has implemented or will implement those
provisions of such HIPAA Compliance Plan in all material respects necessary to
ensure that such Group Member is or becomes HIPAA Compliant. For purposes
hereof, “HIPAA Compliant” shall mean that the Group Member (i) is or will be in
compliance with each of the applicable requirements of the so-called
“Administrative Simplification” provisions of HIPAA on and as of each date that
any part thereof, or any final rule or regulation thereunder, becomes effective
in accordance with its or their terms, as the case may be (each such date, a
“HIPAA Compliance Date”) and (ii) is not and could not reasonably be expected to
become, as of any date following any such HIPAA Compliance Date, the subject of
any civil or criminal penalty, process, claim, action or

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proceeding, or any administrative or other regulatory review, survey, process or
proceeding (other than routine surveys or reviews conducted by any government
health plan or other accreditation entity) that could reasonably be expected to
have a Material Adverse Effect.
     Section 4.19 Reimbursement From Third Party Payors. Each Group Member is in
compliance with the written material reimbursement policies, rules and
regulations of third party payors such as Medicare, Medicaid, private insurance
companies, health maintenance organizations, preferred provider organizations,
managed care systems and other third party payors, including, without
limitation, adjustments under any capitation arrangement, fee schedule, discount
formula or cost-based reimbursement the failure to comply with which would be
reasonably likely to have a Material Adverse Effect.
     Section 4.20 Fraud and Abuse. No Group Member, nor any stockholder, officer
or director, acting on behalf of any Group Member, has engaged on behalf of any
Group Member in any of the following, except where there could not reasonably be
expected to be a Material Adverse Effect: (a) knowing and willfully making or
causing to be made a false statement or representation of a material fact in any
applications for any benefit or payment under Medicare or Medicaid programs or
any other Government Reimbursement Program; (b) knowing and willfully making or
causing to be made any false statement or representation of a material fact for
use in determining rights to any benefit or payment under Medicare or Medicaid
programs or any other Government Reimbursement Program; (c) any knowing and
willful failure by any Group Member to disclose to the appropriate government
contractor any material overpayment or other improper payment received from the
Medicare and Medicaid program or any other Government Reimbursement Program; or
(iv) any knowing and willful violation of the Federal and State anti-kick-back
or fraud and abuse laws, the regulations promulgated thereunder.
     Section 4.21 Full Disclosure. The information prepared or furnished by or
on behalf of any Loan Party in connection with any Loan Document or Related
Document (including the information contained in any Financial Statement or
Disclosure Document) or the consummation of any Related Transaction or any other
transaction contemplated therein, does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
contained therein, in light of the circumstances when made, not misleading;
provided, however, that projections contained therein are not to be viewed as
factual and that actual results during the periods covered thereby may differ
from the results set forth in such projections by a material amount. All
projections that are part of such information (including those set forth in any
Projections delivered subsequent to the Closing Date) are based upon good faith
estimates and stated assumptions believed to be reasonable and fair as of the
date made in light of conditions and facts then known and, as of such date,
reflect good faith, reasonable and fair estimates of the information projected
for the periods set forth therein. All facts known to any Loan Party and
material to an understanding of the financial condition, business, property or
prospects of the Loan Party taken as one enterprise have been disclosed to the
Lenders.
ARTICLE V
FINANCIAL COVENANTS
          The Borrower (and, to the extent set forth in any other Loan Document,
each other Loan Party) agrees with the Lenders, the L/C Issuers and the
Administrative Agent to each of the following, as long as any Obligation or any
Commitment remains outstanding:

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     Section 5.1 Maximum Consolidated Leverage Ratio. The Borrower shall not at
any time have a Consolidated Leverage Ratio greater than 5.00 to 1.00.
     Section 5.2 [Reserved]
     Section 5.3 Minimum Consolidated Fixed Charge Coverage Ratio. The Borrower
shall not have, on the last day of any Fiscal Quarter, a Consolidated Fixed
Charge Coverage Ratio for the 4 Fiscal Quarter period ending on such day of less
than 1.40:1.00.
     Section 5.4 Capital Expenditures. The aggregate amount of all Consolidated
Growth Capital Expenditures and Permitted Acquisitions shall not exceed
$100,000,000; provided, that if immediately before and after giving effect to
any such Consolidated Growth Capital Expenditures the Borrower’s Consolidated
Leverage Ratio is less than 4.25 to 1.00, no such Dollar limit shall apply.
ARTICLE VI
REPORTING COVENANTS
          The Borrower (and, to the extent set forth in any other Loan Document,
each other Loan Party) agrees with the Lenders, the L/C Issuers and the
Administrative Agent to each of the following, as long as any Obligation or any
Commitment remains outstanding:
     Section 6.1 Financial Statements. The Borrower shall deliver to the
Administrative Agent each of the following:
          (a) Quarterly Financials. As soon as available, but in any event not
later than 45 days after the end of each of the first three quarterly periods of
each Fiscal Year of the Borrower, the unaudited consolidated balance sheet of
the Borrower and its consolidated Subsidiaries as at the end of such quarter and
the related unaudited consolidated statements of income and of cash flows for
such quarter and the portion of the fiscal year through the end of such quarter,
setting forth in each case in comparative form the figures as of the end of and
for the corresponding period in the previous year, certified by a Responsible
Officer as being fairly stated in all material respects (subject to normal year
end audit adjustments). The parties hereto acknowledge and agree that the
posting of the foregoing information on the Borrower’s website shall constitute
“delivery” to the Administrative Agent for purposes hereof.
          (b) Annual Financials. As soon as available, but in any event within
90 days after the end of each Fiscal Year of the Borrower, a copy of the audited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at the end of such year and the related audited consolidated statements of
income and of cash flows for such year, setting forth in each case in
comparative form the figures as of the end of and for the previous year,
reported on without a “going concern” or like qualification or exception, or
qualification arising out of the scope of the audit, by KPMG LLP or other
independent certified public accountants of nationally recognized standing. The
parties hereto acknowledge and agree that the posting of the foregoing

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information on the Borrower’s website shall constitute “delivery” to the
Administrative Agent for purposes hereof
          (c) Compliance Certificate. Together with each delivery of any
Financial Statement pursuant to clause (a) or (b) above, a Compliance
Certificate duly executed by a Responsible Officer of the Borrower that, among
other things, (i) shows in reasonable detail the calculations used in
determining the Consolidated Leverage Ratio, (ii) demonstrates compliance with
each financial covenant contained in Article V that is tested at least on a
quarterly basis and (iii) states that no Default is continuing as of the date of
delivery of such Compliance Certificate or, if a Default is continuing, states
the nature thereof and the action that the Borrower proposes to take with
respect thereto.
          (d) Corporate Chart and Other Collateral Updates. As part of the
Compliance Certificate delivered pursuant to clause (c) above, each in form and
substance satisfactory to the Administrative Agent, a certificate by a
Responsible Officer of the Borrower that (i) the Corporate Chart attached
thereto (or the last Corporate Chart delivered pursuant to this clause (d)) is
correct and complete as of the date of such Compliance Certificate, (ii) the
Loan Parties have delivered all documents (including updated schedules as to
locations of Collateral and acquisition of Intellectual Property or real
property) they are required to deliver pursuant to any Loan Document on or prior
to the date of delivery of such Compliance Certificate and (iii) complete and
correct copies of all documents modifying any term of any Constituent Document
of any Group Member or any Subsidiary or joint venture thereof on or prior to
the date of delivery of such Compliance Certificate have been delivered to the
Administrative Agent or are attached to such certificate.
          (e) Additional Projections. As soon as available, and in any event no
later than 45 days after the end of each Fiscal Year of the Borrower, a detailed
consolidated budget for the following Fiscal Year (including projected
consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as of the end of the following Fiscal Year, and the related
consolidated and consolidating statements of projected cash flow, projected
changes in financial position and projected income), and, as soon as available,
significant revisions, if any, of such budget and projections with respect to
such Fiscal Year (collectively, the “Additional Projections”), which Additional
Projections shall in each case be accompanied by a certificate of a Responsible
Officer stating that such Additional Projections are based on reasonable
estimates, information and assumptions and that such Responsible Officer has no
reason to believe that such Additional Projections are incorrect or misleading
in any material respect.
          (f) Management Discussion and Analysis. Together with each delivery of
any Compliance Certificate pursuant to clause (c) above, a discussion and
analysis of the financial condition and results of operations of the Group
Members for the portion of the Fiscal Year then elapsed and discussing the
reasons for any significant variations from the Projections for such period and
the figures for the corresponding period in the previous Fiscal Year.
          (g) Intercompany Loan Balances. Together with each delivery of any
Compliance Certificate pursuant to clause (c) above, a summary of the
outstanding balances of all intercompany Indebtedness as of the last day of the
Fiscal Quarter covered by such Financial Statement, certified as complete and
correct by a Responsible Officer of the Borrower as part of the Compliance
Certificate delivered in connection with such Financial Statements.

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          (h) Audit Reports, Management Letters, Etc. Together with each
delivery of any Financial Statement for any Fiscal Year pursuant to clause (b)
above, copies of each management letter, audit report or similar letter or
report received by any Group Member from any independent registered certified
public accountant (including the Group Members’ Accountants) in connection with
such Financial Statements or any audit thereof, each certified to be complete
and correct copies by a Responsible Officer of the Borrower as part of the
Compliance Certificate delivered in connection with such Financial Statements.
          (i) Insurance. Together with each delivery of any Financial Statement
for any Fiscal Year pursuant to clause (b) above, each in form and substance
satisfactory to the Administrative Agent and certified as complete and correct
by a Responsible Officer of the Borrower as part of the Compliance Certificate
delivered in connection with such Financial Statements, a summary of all
material insurance coverage maintained as of the date thereof by any Group
Member, together with such other related documents and information as the
Administrative Agent may reasonably require.
          (j) Real Property Valuation. (i) at least 5 Business Days prior to the
Sale of any Mortgaged Property (or such later date as the Administrative Agent
shall reasonably agree) and (ii) together with the delivery of a Facility
Increase Notice to the Administrative Agent, an updated valuation of all real
property subject to a Mortgage, using substantially the same methodology as was
used by the Administrative Agent in the original valuation of such real property
and substantially in the form of Exhibit I hereto (a “Mortgaged Property
Report”).
     Section 6.2 Other Events. The Borrower shall give the Administrative Agent
notice of each of the following (which may be made by telephone if promptly
confirmed in writing) promptly after any Responsible officer of any Group Member
knows or has reason to know of it: (a)(i) any Default and (ii) any event that
would reasonably be likely to have a Material Adverse Effect, specifying, in
each case, the nature and anticipated effect thereof and any action proposed to
be taken in connection therewith, (b) any event (other than any event involving
loss or damage to property) reasonably expected to result in a mandatory payment
of the Obligations pursuant to Section 2.8, stating the material terms and
conditions of such transaction and estimating the Net Cash Proceeds thereof,
(c) the commencement of, or any material developments in, any action,
investigation, suit, proceeding, audit, claim, demand, order or dispute with, by
or before any Governmental Authority affecting any Group Member or any property
of any Group Member that (i) seeks injunctive or similar relief, (ii) in the
reasonable judgment of the Borrower, exposes any Group Member to liability in an
aggregate amount in excess of $5,000,000 or (iii) if adversely determined would
reaonably be likely to have a Material Adverse Effect and (d) the acquisition of
any material real property or the entering into any material lease.
     Section 6.3 Copies of Notices and Reports. Within five (5) days after the
same are sent, copies of all financial statements and reports that the Borrower
sends to the holders of any class of its debt securities or public equity
securities and, within five (5) days after the same are filed, copies of all
Disclosure Documents.
     Section 6.4 Taxes. The Borrower shall give the Administrative Agent notice
of each of the following (which may be made by telephone if promptly confirmed
in writing) promptly after any Responsible Officer of any Group Member knows or
has reason to know of it: (a) the creation, or filing with the IRS or any other
Governmental Authority, of any Contractual

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Obligation or other document extending, or having the effect of extending, the
period for assessment or collection of any taxes with respect to any Tax
Affiliate and (b) the creation of any Contractual Obligation of any Tax
Affiliate, or the receipt of any request directed to any Tax Affiliate, to make
any adjustment under Section 481(a) of the Code, by reason of a change in
accounting method or otherwise, which would reasonably be likely to have a
Material Adverse Effect.
     Section 6.5 Labor Matters. The Borrower shall give the Administrative Agent
notice of each of the following (which may be made by telephone if promptly
confirmed in writing), promptly after, and in any event within 30 days after any
Responsible Officer of any Group Member knows or has reason to know of it:
(a) the commencement of any material labor dispute to which any Group Member is
or may become a party, including any strikes, lockouts or other disputes
relating to any of such Person’s plants and other facilities and (b) the
incurrence by any Group Member of any Worker Adjustment and Retraining
Notification Act or related or similar liability incurred with respect to the
closing of any plant or other facility of any such Person (other than, in the
case of this clause (b), those that would not, in the aggregate, be reasonably
likely to have a Material Adverse Effect).
     Section 6.6 ERISA Matters. The Borrower shall give the Administrative Agent
(a) on or prior to any filing by any ERISA Affiliate of any notice of intent to
terminate any Title IV Plan, a copy of such notice and (b) promptly, and in any
event within 10 days, after any Responsible Officer of any ERISA Affiliate knows
or has reason to know that a request for a minimum funding waiver under
Section 412 of the Code has been filed with respect to any Title IV Plan or
Multiemployer Plan, a notice (which may be made by telephone if promptly
confirmed in writing) describing such waiver request and any action that any
ERISA Affiliate proposes to take with respect thereto, together with a copy of
any notice filed with the PBGC or the IRS pertaining thereto.
     Section 6.7 Environmental Matters.
          (a) The Borrower shall provide the Administrative Agent notice of each
of the following (which may be made by telephone if promptly confirmed by the
Administrative Agent in writing) promptly after any Responsible Officer of any
Group Member knows or has reason to know of it (and, upon reasonable request of
the Administrative Agent, documents and information in connection therewith):
(i)(A) unpermitted Releases, (B) the receipt by any Group Member of any notice
of violation of or potential liability or similar notice under, or the existence
of any condition that could reasonably be expected to result in violations of or
liabilities under, any Environmental Law or (C) the commencement of, or any
material change to, any action, investigation, suit, proceeding, audit, claim,
demand, dispute alleging a violation of or liability under any Environmental
Law, that, for each of clauses (A), (B) and (C) above (and, in the case of
clause (C), if adversely determined), in the aggregate for each such clause,
could reasonably be expected to result in Environmental Liabilities in excess of
$250,000, (ii) the receipt by any Group Member of notification that any property
of any Group Member is subject to any Lien in favor of any Governmental
Authority securing, in whole or in part, Environmental Liabilities and (iii) any
proposed acquisition or lease of real property (except as part of any Permitted
Acquisition) if such acquisition or lease would have a reasonable likelihood of
resulting in aggregate Environmental Liabilities in excess of $250,000.

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          (b) Upon the reasonable request of the Administrative Agent, the
Borrower shall provide the Administrative Agent a report containing an update as
to the status of any environmental, health or safety compliance, hazard or
liability issue identified in any document delivered to any Secured Party
pursuant to any Loan Document or as to any condition reasonably believed by the
Administrative Agent to result in material Environmental Liabilities.
     Section 6.8 Other Information. The Borrower shall provide the
Administrative Agent with such other documents and information with respect to
the business, property, condition (financial or otherwise), legal, financial or
corporate or similar affairs or operations of any Group Member as the
Administrative Agent or such Lender through the Administrative Agent may from
time to time reasonably request.
ARTICLE VII
AFFIRMATIVE COVENANTS
          The Borrower (and, to the extent set forth in any other Loan Document,
each other Loan Party) agrees with the Lenders, the L/C Issuers and the
Administrative Agent to each of the following, as long as any Obligation or any
Commitment remains outstanding:
     Section 7.1 Maintenance of Corporate Existence. Each Group Member shall (a)
preserve and maintain its legal existence, except in the consummation of
transactions expressly permitted by Sections 8.4 and 8.7, and (b) preserve and
maintain it rights (charter and statutory), privileges franchises and Permits
necessary or desirable in the conduct of its business, except, in the case of
this clause (b), where the failure to do so would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
     Section 7.2 Compliance with Laws, Etc.
          (a) Each Group Member shall comply with all applicable Requirements of
Law, Contractual Obligations and Permits (including Healthcare Laws), except for
such failures to comply that would not, in the aggregate, reasonably expected to
have a Material Adverse Effect. Each Group Member will file all material
applicable Government Reimbursement Program and Private Payor Arrangement cost
reports in a timely and complete manner.
          (b) Each Group Member will maintain all certificates of need, provider
numbers, supplier numbers, and licenses necessary to conduct its business as
currently conducted, and take any steps required to comply with any such new or
additional requirements that may be imposed on providers of the types of
services such Group Member provides. If required, all Medicaid and Medicare cost
reports and claims will be properly filed, in all material respects.
          (c) Each Group Member shall maintain on its behalf, and shall allow
Administrative Agent and/or consultants of Administrative Agent to review upon
reasonable request: (i) a corporate healthcare regulatory compliance program
(“CCP”) that complies with the applicable guidelines developed by the Office of
the Inspector General of the Department of Health and Human Services for a
compliance programs, and (ii) a program that complies with the privacy standards
pertaining to health information as set forth at 45 C.F.R. part 164, subparts A

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and E, and an effective program that complies with the security standards
pertaining to health information as set forth at 45 C.F.R. part 164, subpart C.
     Section 7.3 Payment of Obligations. Each Group Member shall pay or
discharge before they become delinquent (a) all material claims, taxes,
assessments, charges and levies imposed by any Governmental Authority and
(b) all other lawful claims that if unpaid would, by the operation of applicable
Requirements of Law, become a Lien upon any property of any Group Member,
except, in each case, for those whose amount or validity is being contested in
good faith by proper proceedings diligently conducted and for which adequate
reserves are maintained on the books of the appropriate Group Member in
accordance with GAAP, or where the amounts in dispute are less than $50,000 in
the aggregate.
     Section 7.4 Maintenance of Property. Each Group Member shall maintain and
preserve (a) in good working order and condition all of its property necessary
in the conduct of its business and (b) all rights, permits, licenses, approvals
and privileges (including all Permits) necessary, used or useful, whether
because of its ownership, lease, sublease or other operation or occupation of
property or other conduct of its business, and shall make all necessary or
appropriate filings with, and give all required notices to, Government
Authorities, except for such failures to maintain and preserve the items set
forth in clauses (a) and (b) above that would not, in the aggregate, be
reasonably likely to have a Material Adverse Effect.
     Section 7.5 Maintenance of Insurance. Each Group Member shall (a) maintain
or cause to be maintained in full force and effect all policies of insurance of
any kind with respect to the property and businesses of the Group Members
(including policies of life, fire, theft, product liability, public liability,
property damage, other casualty, employee fidelity, workers’ compensation,
business interruption and employee health and welfare insurance) with
financially sound and reputable insurance companies or associations of a nature
and providing such coverage as is sufficient and as is customarily carried by
businesses of the size and character of the business of the Group Members and
(b) cause all such insurance relating to any property or business of any Loan
Party to name the Administrative Agent on behalf of the Secured Parties as
additional insured or loss payee, as appropriate, and to provide that no
cancellation, material addition in amount or material change in coverage shall
be effective until after 30 days’ notice thereof to the Administrative Agent.
     Section 7.6 Keeping of Books. The Group Members shall keep proper books of
record and account, in which full, true and correct entries shall be made in
accordance with GAAP and all other applicable Requirements of Law of all
financial transactions and the assets and business of each Group Member.
     Section 7.7 Access to Books and Property. Each Group Member shall permit
the Administrative Agent, the Lenders and any Related Person of any of them, as
often as reasonably requested, at any reasonable time during normal business
hours and with reasonable advance notice (except that, during the continuance of
an Event of Default, no such notice shall be required) to (a) visit and inspect
the property of each Group Member and examine and make copies of and abstracts
from, the corporate (and similar), financial, operating and other books

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and records of each Group Member, (b) discuss the affairs, finances and accounts
of each Group Member with any officer or director of any Group Member and
(c) communicate directly with any registered certified public accountants
(including the Group Members’ Accountants) of any Group Member. Each Group
Member shall authorize their respective registered certified public accountants
(including the Group Members’ Accountants) to communicate directly with the
Administrative Agent, the Lenders and their Related Persons and to disclose to
the Administrative Agent, the Lenders and their Related Persons all financial
statements and other documents and information as they might have and the
Administrative Agent or any Lender reasonably requests with respect to any Group
Member.
     Section 7.8 Environmental. Each Group Member shall comply with, and
maintain its real property, whether owned, leased, subleased or otherwise
operated or occupied, in compliance with, all applicable Environmental Laws
(including by implementing any Remedial Action necessary to achieve such
compliance or that is required by orders and directives of any Governmental
Authority) except for failures to comply that would not, in the aggregate, be
reasonably likely to have a Material Adverse Effect. Without limiting the
foregoing, if an Event of Default is continuing or if the Administrative Agent
at any time has a reasonable basis to believe that there exist violations of
Environmental Laws by any Group Member or that there exist any Environmental
Liabilities, in each case, that would be reasonably likely to have, in the
aggregate, a Material Adverse Effect, then each Group Member shall, promptly
upon receipt of request from the Administrative Agent, cause the performance of,
and allow the Administrative Agent and its Related Persons access to such real
property for the purpose of conducting, such environmental audits and
assessments, including subsurface sampling of soil and groundwater, and cause
the preparation of such reports, in each case as the Administrative Agent may
from time to time reasonably request. Such audits, assessments and reports, to
the extent not conducted by the Administrative Agent or any of its Related
Persons, shall be conducted and prepared by reputable environmental consulting
firms reasonably acceptable to the Administrative Agent and shall be in form and
substance reasonably acceptable to the Administrative Agent.
     Section 7.9 Use of Proceeds. The proceeds of the Loans shall be used by the
Borrower (and, to the extent distributed to them by the Borrower, each other
Group Member) solely (a) for the payment of transaction costs, fees and expenses
incurred in connection with the Loan Documents and the transactions contemplated
therein and (b) for working capital, Permitted Acquisitions, Permitted
Investments, Permitted Restated Payments, general corporate and similar
purposes, and other purposes permitted by the terms of this Agreement.
     Section 7.10 Additional Collateral and Guaranties. To the extent not
delivered to the Administrative Agent on or before the Closing Date (including
in respect of after-acquired property and Persons that become Subsidiaries of
any Loan Party after the Closing Date), each Loan Party shall, promptly, do each
of the following, unless otherwise agreed by the Administrative Agent:
          (a) deliver to the Administrative Agent such modifications to the
terms of the Loan Documents (or, to the extent applicable as determined by the
Administrative Agent, such other documents), in each case in form and substance
reasonably satisfactory to the Administrative Agent and as the Administrative
Agent deems necessary or advisable in order to ensure the following:

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          (i) (A) each Subsidiary of any Loan Party that has entered into
Guaranty Obligations with respect to any Indebtedness of the Borrower and
(B) each Wholly Owned Subsidiary of any Loan Party shall guaranty, as primary
obligor and not as surety, the payment of the Obligations of the Borrower; and
          (ii) each Loan Party (including any Person required to become a
Guarantor pursuant to clause (i) above) shall effectively grant to the
Administrative Agent, for the benefit of the Secured Parties, a valid and
enforceable security interest in all of its personal property, including all of
its Stock and Stock Equivalents and other Securities, as security for the
Obligations of such Loan Party;
provided, however, that, unless the Borrower and the Administrative Agent
otherwise agree, in no event shall (x) any Excluded Foreign Subsidiary be
required to guaranty the payment of any Obligation, (y) the Loan Parties,
individually or collectively, be required to pledge in excess of 66% of the
outstanding Voting Stock of any Excluded Foreign Subsidiary or (z) a security
interest be required to be granted on any property of any Excluded Foreign
Subsidiary as security for any Obligation;
          (b) deliver to the Administrative Agent all documents representing all
Stock, Stock Equivalents and other Securities pledged pursuant to the documents
delivered pursuant to clause (a) above, together with undated powers or
endorsements duly executed in blank;
          (c) to take all other actions necessary or advisable to ensure the
validity or continuing validity of any guaranty for any Obligation or any Lien
securing any Obligation, to perfect, maintain, evidence or enforce any Lien
securing any Obligation or to ensure such Liens have the same priority as that
of the Liens on similar Collateral set forth in the Loan Documents executed on
the Closing Date (or, for Collateral located outside the United States, a
similar priority acceptable to the Administrative Agent), including the filing
of UCC financing statements in such jurisdictions as may be required by the Loan
Documents or applicable Requirements of Law or as the Administrative Agent may
otherwise reasonably request; and
          (d) deliver to the Administrative Agent legal opinions relating to the
matters described in this Section 7.10, which opinions shall be as reasonably
required by, and in form and substance and from counsel reasonably satisfactory
to, the Administrative Agent.
     Section 7.11 Deposit Accounts; Securities Accounts and Cash Collateral
Accounts.
          (a) Each Loan Party (other than Excluded Foreign Subsidiaries) shall
(i) deposit all of its cash in deposit accounts that are Controlled Deposit
Accounts, provided, however, that each Loan Party may maintain zero-balance
accounts for the purpose of managing local disbursements and may maintain
payroll, withholding tax and other fiduciary accounts, (ii) deposit all of its
Cash Equivalents in securities accounts that are Controlled Securities Accounts,
in each case except for cash and Cash Equivalents the aggregate value of which
does not exceed $50,000 at any time.
          (b) The Administrative Agent shall not have any responsibility for, or
bear any risk of loss of, any investment or income of any funds in any Cash
Collateral Account. From

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time to time after funds are deposited in any Cash Collateral Account, the
Administrative Agent may apply funds then held in such Cash Collateral Account
to the payment of Obligations in accordance with Section 2.12. No Loan Party and
no Person claiming on behalf of or through any Loan Party shall have any right
to demand payment of any funds held in any Cash Collateral Account at any time
prior to the termination of all Commitments and the payment in full of all
Obligations and, in the case of L/C Cash Collateral Accounts, the termination of
all outstanding Letters of Credit.
     Section 7.12 Accreditation and Licensing.
          (a) Each Group Member shall (i) obtain and maintain all certificates
of need, provider numbers, supplier numbers, and permits and other licenses
required to operate such Person’s business and its business locations under
applicable laws, rules, and regulations and maintain such Person’s qualification
for participation in, and payment under, Medicare, Medicaid, Government
Reimbursement Program, or any private program providing for payment or
reimbursement for services rendered by such Person except to the extent such
loss or relinquishment could not reasonably be expected to have a Material
Adverse Effect, (ii) properly file all Medicaid/Medicare cost reports and
claims, and (iii) promptly furnish or cause to be furnished to the Agent copies
of all reports and correspondence that it sends or receives relating to any loss
or revocation (or threatened loss or revocation) of any qualification described
in this Section or any other violation or possible violation of Healthcare Laws.
          (b) Each Group Member shall (i) provide goods and services to its
customers in compliance with ethical standards, laws, rules and regulations
applicable to it or any facility or location it operates; (ii) assure that each
of its employees and each employee of such facility or location has all required
licenses, credentials, approvals and other certifications to perform his or her
duties and services for such location; and (iii) maintain all permits and other
licenses required to operate its facilities and locations and conduct its
business under applicable law; except to the extent, with respect to each of
clauses (i), (ii), and (iii) above, where the failure to comply, individually or
in the aggregate, has not had and could not reasonably be expected to have a
Material Adverse Effect.
          (c) Borrower shall notify Administrative Agent within two (2) Business
Days following the occurrence of any of the following events: (1) the
notification, through letter or otherwise, of a potential investigation relating
to any Group Member’s submission of claims to Medicare, Medicaid, other
Government Reimbursement Programs or any private payor; or (2) the voluntary
disclosure by any Group Member to the Office of the Inspector General of the
United States Department of Health and Human Services, a Medicare fiscal
intermediary or, any state’s Medicaid program, or any other governmental
authority or agency of a potential overpayment matter involving the submission
of claims toin connection with any such program or payor.
ARTICLE VIII
NEGATIVE COVENANTS
          The Borrower (and, to the extent set forth in any other Loan Document,
each other Loan Party) agrees with the Lenders, the L/C Issuers and the
Administrative Agent to each of the following, as long as any Obligation or any
Commitment remains outstanding:

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     Section 8.1 Indebtedness. No Group Member shall, directly or indirectly,
incur or otherwise remain liable with respect to or responsible for, any
Indebtedness except for the following:
          (a) the Obligations;
          (b) Indebtedness existing on the date hereof and set forth on
Schedule 8.1, together with any Permitted Refinancing of any Indebtedness
permitted hereunder in reliance upon this clause (b);
          (c) Indebtedness consisting of (A) secured Indebtedness owed to
Persons other than the Lenders and related Guaranty Obligations of any Group
Member in respect of such Indebtedness, (B) Capitalized Lease Obligations (other
than with respect to a lease entered into as part of a Sale and Leaseback
Transaction), (C) Indebtedness of any Person assumed in connection with any
Permitted Acquisitions; provided that (i) such Indebtedness is not created in
anticipation of any such Acquisition, and (ii) the amount of such Indebtedness
is not increased and (D) purchase money Indebtedness, in each case incurred by
any Group Member to finance the acquisition, repair, improvement or construction
of fixed or capital assets of such Group Member, together with any Permitted
Refinancing of any Indebtedness permitted hereunder in reliance upon this
Section 8.1(c); provided that the principal amount of such Indebtedness does not
exceed the lower of the cost or fair market value of the property so acquired or
built or of such repairs or improvements financed, whether directly or through a
Permitted Refinancing, with such Indebtedness (each measured at the time such
acquisition, repair, improvement or construction is made); provided, however,
that (i) the aggregate outstanding principal amount of all such Indebtedness in
this Section 8.1(c) does not exceed $175,000,000 at any time, and (ii) no
Indebtedness in this Section 8.1(c) is secured by Collateral on which any Lender
has a Lien;
          (d) Non-Recourse Indebtedness secured by real property acquired (in
conjunction with a Permitted Acquisition) or constructed after the Closing Date;
provided that such Indebtedness does not exceed an amount that would cause the
Borrower to violate the Maximum Consolidated Leverage Ratio at any time;
          (e) Capitalized Lease Obligations arising under Sale and Leaseback
Transactions permitted hereunder in reliance upon Section 8.4(b)(ii);
          (f) intercompany loans owing to any Group Member and constituting
Permitted Investments of such Group Member;
          (g) (i) obligations under Interest Rate Contracts entered into to
comply with Section 7.12 and (ii) obligations under other Hedging Agreements
entered into for the sole purpose of hedging in the normal course of business
and consistent with industry practices;
          (h) Guaranty Obligations of any Group Member with respect to
Indebtedness of any Group Member (other than Indebtedness permitted hereunder in
reliance upon clause (b) or (c) above, for which Guaranty Obligations may be
permitted to the extent set forth in such clauses);

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          (i) any unsecured Indebtedness of any Group Member; provided, however,
that the aggregate outstanding principal amount of all such unsecured
Indebtedness shall not exceed $10,000,000 at any time; and
          (j) any unsecured, subordinated Indebtedness of any Group Member
consisting of the issuance and sale of debt securities; provided, however, that
such Indebtedness is subject to a subordination agreement between such Group
Member, the holder and the Administrative Agent that is satisfactory to the
Administrative Agent in its reasonable discretion; provided, further, that the
aggregate outstanding principal amount of all such Indebtedness shall not exceed
$100,000,000 at any time.
     Section 8.2 Liens. No Group Member shall incur, maintain or otherwise
suffer to exist any Lien upon or with respect to any of its property, whether
now owned or hereafter acquired, or assign any right to receive income or
profits, except for the following:
          (a) Liens created pursuant to any Loan Document;
          (b) Customary Permitted Liens of Group Members;
          (c) Liens existing on the date hereof and set forth on Schedule 8.2;
          (d) Liens on the property of the Borrower or any of its Subsidiaries
securing Indebtedness permitted hereunder in reliance upon Section 8.1(c);
provided, however, that (i) such Liens exist prior to the acquisition of, or
attach substantially simultaneously with, or within 90 days after, the
acquisition, repair, improvement or construction of, such property financed,
whether directly or through a Permitted Refinancing, by such Indebtedness and
(ii) such Liens do not extend to any property of any Group Member other than the
property (and proceeds thereof) acquired or built, or the improvements or
repairs, financed, whether directly or through a Permitted Refinancing, by such
Indebtedness; provided, however, that in the case of Indebtedness permitted
pursuant to Section 8.1(c), Liens securing such Indebtedness may attach to
property of any Group Member so long as such property is not Collateral
otherwise subject to a Lien in favor of any Lender;
          (e) Liens on the property of the Borrower or any of its Subsidiaries
securing Indebtedness permitted hereunder, and liens on the Stock of a
Non-Recourse Subsidiary permitted hereunder, in each case, in reliance upon
Section 8.1(b) or Section 8.1(d); provided, however, that such Liens do not
extend to any property of any Group Member other than the property (and proceeds
thereof) acquired or built or securing the Indebtedness assumed, or the
improvements or repairs, financed, whether directly or through a Permitted
Refinancing, by such Indebtedness;
          (f) Liens on the property of the Borrower or any of its Subsidiaries
securing the Permitted Refinancing of any Indebtedness secured by any Lien on
such property permitted hereunder in reliance upon clause (c) , (d) or (e) above
without any change in the property subject to such Liens; and
          (g) Liens (i) on any property of the Borrower or any of its
Subsidiaries securing any of their Indebtedness or their other liabilities;
provided, however, that the aggregate

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outstanding principal amount of all such Indebtedness and other liabilities
shall not exceed $10,000,000 at any time, and (ii) that do not attach to any
Collateral.
     Section 8.3 Investments. No Group Member shall make or maintain, directly
or indirectly, any Investment except for the following:
          (a) Investments existing on the date hereof and set forth on
Schedule 8.3 (the “Existing Non-Guarantor Investments”);
          (b) Investments in cash and Cash Equivalents;
          (c) (i) endorsements for collection or deposit in the ordinary course
of business consistent with past practice, (ii) extensions of trade credit
(other than to Affiliates of the Borrower) arising or acquired in the ordinary
course of business and (iii) Investments received in settlements in the ordinary
course of business of such extensions of trade credit;
          (d) Investments made as part of a Permitted Acquisition;
          (e) Investments by (i) any Loan Party in any other Loan Party,
(ii) any Group Member that is not a Loan Party in any Group Member or in any
joint venture or (iii) any Loan Party in any Group Member that is not a Loan
Party or in any joint venture; provided, however, that the aggregate outstanding
amount of all Investments permitted pursuant to this clause (iii) shall not
exceed the sum of: (x) the principal amount of the Existing Non-Guarantor
Investments plus (y) $30,000,000 at any time; and provided, further, that any
Investment consisting of loans or advances to any Loan Party pursuant to clause
(ii) above shall be subordinated in full to the payment of the Obligations of
such Loan Party on terms and conditions satisfactory to the Administrative
Agent;
          (f) loans or advances to employees of the Borrower or any of its
Subsidiaries to finance travel, entertainment and relocation expenses and other
ordinary business purposes in the ordinary course of business as presently
conducted; provided, however, that the aggregate outstanding principal amount of
all loans and advances permitted pursuant to this clause (f) shall not exceed
$1,000,000 at any time; and
          (g) any Investment by the Borrower or any of its Subsidiaries not
identified in clauses (a) through (f), above; provided, however, that the
aggregate outstanding amount of all such Investments shall not exceed $5,000,000
at any time.
     Section 8.4 Asset Sales. No Group Member shall Sell any of its property
(other than cash) or issue shares of its own Stock, except for the following:
          (a) In each case to the extent entered into in the ordinary course of
business and made to a Person that is not an Affiliate of the Borrower,
(i) Sales of Cash Equivalents, inventory or property that has become obsolete or
worn out and (ii) non-exclusive licenses of Intellectual Property;

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          (b) (i) a true lease or sublease of real property not constituting
Indebtedness and not entered into as part of a Sale and Leaseback Transaction
and (ii) a Sale of real property acquired after the Closing Date and that does
not constitute Mortgaged Property pursuant to a Sale and Leaseback Transaction;
          (c) (i) any Sale of any property (other than (x) Mortgaged Property,
except to the extent Sold to a Loan Party or as otherwise permitted under clause
(e), and (y) their own Stock or Stock Equivalents) by any Group Member to any
other Group Member to the extent any resulting Investment constitutes a
Permitted Investment, (ii) any Restricted Payment by any Group Member permitted
pursuant to Section 8.5 and (iii) any distribution by the Borrower of the
proceeds of Restricted Payments from any other Group Member to the extent
permitted in Section 8.5;
          (d) (i) any Sale or issuance by any Subsidiary of the Borrower of its
own Stock to any Group Member, provided, however, that the proportion of such
Stock and of each class of such Stock (both on an outstanding and fully-diluted
basis) held by the Loan Parties, taken as a whole, does not change as a result
of such Sale or issuance and (ii) to the extent necessary to satisfy any
Requirement of Law in the jurisdiction of incorporation of any Subsidiary of the
Borrower, any Sale or issuance by such Subsidiary of its own Stock constituting
directors’ qualifying shares or nominal holdings; and
          (e) as long as no Default is continuing or would result therefrom
(including with respect to any Default under Section 9.1(h)), (i) any Sale of
property (other than as part of a Sale and Leaseback Transaction) of any Group
Member, (ii) any Sale or issuance of its own Stock by, any Non-Recourse
Subsidiary for fair market value payable in cash upon such sale, or (iii) any
Sale or issuance of its own Stock by, Borrower for fair market value payable in
cash upon such sale; provided, however, that the aggregate consideration
received during any Fiscal Year for all such Sales under (ii) above shall not
exceed $1,000,000.
     Section 8.5 Restricted Payments. No Group Member shall directly or
indirectly, declare, order, pay, make or set apart any sum for any Restricted
Payment except for the following:
          (a) (i) Restricted Payments (A) by any Group Member to any Loan Party
and (B) by any Group Member that is not a Loan Party to any Group Member and
(ii) dividends and distributions by any Subsidiary of the Borrower that is not a
Loan Party to any holder of its Stock, to the extent made to all such holders
ratably according to their ownership interests in such Stock;
          (b) dividends and distributions declared and paid on the common Stock
of any Group Member ratably to the holders of such common Stock and payable only
in common Stock of such Group Member;
          (c) cash payments for the purpose of funding the redemption, purchase
or other acquisition or retirement for value by the Borrower of its common Stock
(or Stock Equivalents with respect to its common Stock) from any present or
former employee, director or officer (or the assigns, estate, heirs or current
or former spouses thereof) of any Group Member upon the death, disability or
termination of employment of such employee, director or officer;

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provided, however, that the amount of such cash dividends paid in any Fiscal
Year shall not exceed $1,000,000 in the aggregate; and
          (d) Restricted Payments by the Borrower in any Fiscal Year in an
aggregate amount not exceeding $35,000,000; provided that if immediately before
and after giving effect to any such Restricted Payments the Borrower’s
Consolidated Leverage Ratio is less than 3.50 to 1.00, no such Dollar limit
shall apply.
provided, however, that no action that would otherwise be permitted hereunder in
reliance upon this clauses (c) or (d) above shall be permitted if (A) a Default
is then continuing or would result therefrom or (B) such action is otherwise
prohibited under any Loan Document or under the terms of any Indebtedness (other
than the Obligations) of any Group Member.
     Section 8.6 Prepayment of Indebtedness. No Group Member shall (x) prepay,
redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity
thereof any Indebtedness, (y) set apart any property for such purpose, whether
directly or indirectly and whether to a sinking fund, a similar fund or
otherwise, or (z) make any payment in violation of any subordination terms of
any Indebtedness; provided, however, that each Group Member may, to the extent
otherwise permitted by the Loan Documents, do each of the following:
          (a) (i) prepay the Obligations, or (ii) consummate a Permitted
Refinancing;
          (b) prepay, redeem, purchase, defease or otherwise satisfy prior to
the scheduled maturity thereof (or set apart any property for such purpose)
(A) in the case of any Group Member that is not a Loan Party, any Indebtedness
owing by such Group Member to any other Group Member and (B) otherwise, any
Indebtedness owing to any Loan Party;
          (c) make regularly scheduled or otherwise required repayments or
redemptions of Indebtedness (other than Indebtedness owing to any Affiliate of
the Borrower) but only, in the case of Subordinated Debt, to the extent
permitted by the subordination provisions thereof; and
          (d) prepay any other Indebtedness, other than Subordinated Debt;
provided that: (x) the Group Member determines, in good faith, that such
prepayment can be made on favorable economic terms and is in the best interests
of such Group Member and (y) if the Group Member making such prepayment is not
at the time thereof a Loan Party, it shall become a Loan Party pursuant to the
terms of Section 7.10 hereof.
     Section 8.7 Fundamental Changes. No Group Member shall (a) merge,
consolidate or amalgamate with any Person, (b) acquire all or substantially all
of the Stock or Stock Equivalents of any Person or (c) acquire any brand or all
or substantially all of the assets of any Person or all or substantially all of
the assets constituting any line of business, division, branch, operating
division or other unit operation of any Person, in each case except for the
following: (x) to consummated any Permitted Acquisition, (y) the merger,
consolidation or amalgamation of any Subsidiary of the Borrower into any Loan
Party and (z) the merger, consolidation or amalgamation of any Group Member for
the sole purpose, and with the sole material effect, of changing its State of
organization within the United States; provided, however, that (A) in the

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case of any merger, consolidation or amalgamation involving the Borrower, the
Borrower shall be the surviving Person and (B) in the case of any merger,
consolidation or amalgamation involving any other Loan Party, a Loan Party shall
be the surviving corporation and all actions required to maintain the perfection
of the Lien of the Administrative Agent on the Stock or property of such Loan
Party shall have been made.
     Section 8.8 Change in Nature of Business. No Group Member shall carry on
any business, operations or activities (whether directly, through a joint
venture, in connection with a Permitted Acquisition or otherwise) substantially
different from those carried on by the Borrower and its Subsidiaries at the date
hereof and business, operations and activities reasonably related thereto.
     Section 8.9 Transactions with Affiliates. No Group Member shall, except as
otherwise expressly permitted herein, enter into any other transaction directly
or indirectly with, or for the benefit of, any Affiliate of the Borrower that is
not a Loan Party (including Guaranty Obligations with respect to any obligation
of any such Affiliate), except for (a) transactions in the ordinary course of
business on a basis no less favorable to such Group Member as would be obtained
in a comparable arm’s length transaction with a Person not an Affiliate of the
Borrower, (b) Restricted Payments, the proceeds of which, if received by the
Borrower, are used as required by Section 8.5 and (c) reasonable salaries and
other reasonable director or employee compensation to officers and directors of
any Group Member.
     Section 8.10 Third-Party Restrictions on Indebtedness, Liens, Investments
or Restricted Payments. No Group Member shall incur or otherwise suffer to exist
or become effective or remain liable on or responsible for any Contractual
Obligation limiting the ability of (a) any Subsidiary of the Borrower to make
Restricted Payments to, or Investments in, or repay Indebtedness or otherwise
Sell property to, any Group Member or (b) any Group Member to incur or suffer to
exist any Lien upon any property of any Group Member, whether now owned or
hereafter acquired, securing any of its Obligations (including any “equal and
ratable” clause and any similar Contractual Obligation requiring, when a Lien is
granted on any property, another Lien to be granted on such property or any
other property), except, for each of clauses (a) and (b) above, (x) pursuant to
the Loan Documents and (y) limitations on Liens (other than those securing any
Obligation) on any property whose acquisition, repair, improvement or
construction is financed by purchase money Indebtedness, Capitalized Lease
Obligations or Permitted Refinancings permitted hereunder in reliance upon
Section 8.1(b) or (c) set forth in the Contractual Obligations governing such
Indebtedness, Capitalized Lease Obligations or Permitted Refinancing or Guaranty
Obligations with respect thereto.
     Section 8.11 Modification of Certain Documents. No Group Member shall do
any of the following:
          (a) waive or otherwise modify any term of any Related Document or any
Constituent Document of, or otherwise change the capital structure of, any Group
Member (including the terms of any of their outstanding Stock or Stock
Equivalents), in each case except for those modifications and waivers that
(x) do not elect, or permit the election, to treat the Stock or Stock
Equivalents of any limited liability company (or similar entity) as certificated
and (y) do not materially affect the rights and privileges of any Group Member
and do not materially affect the interests of any Secured Party under the Loan
Documents or in the Collateral; and

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          (b) waive or otherwise modify any term of any Subordinated Debt if the
effect thereof on such Subordinated Debt is to (i) increase the interest rate,
(ii) change the due dates for principal or interest, other than to extend such
dates, (iii) modify any default or event of default, other than to delete it or
make it less restrictive, (iv) add any covenant with respect thereto, (v) modify
any subordination provision, (vi) modify any redemption or prepayment provision,
other than to extend the dates therefor or to reduce the premiums payable in
connection therewith or (vii) materially increase any obligation of any Group
Member or confer additional material rights to the holder of such Subordinated
Debt in a manner adverse to any Group Member or any Secured Party.
     Section 8.12 Accounting Changes; Fiscal Year. No Group Member shall change
its (a) accounting treatment or reporting practices, except as required by GAAP
or any Requirement of Law, or (b) its fiscal year or its method for determining
fiscal quarters or fiscal months.
     Section 8.13 Margin Regulations. No Group Member shall use all or any
portion of the proceeds of any credit extended hereunder to purchase or carry
margin stock (within the meaning of Regulation U of the Federal Reserve Board)
in contravention of Regulation U of the Federal Reserve Board.
     Section 8.14 Compliance with ERISA. No ERISA Affiliate shall cause or
suffer to exist (a) any event that could result in the imposition of a Lien with
respect to any Title IV Plan or Multiemployer Plan or (b) any other ERISA Event,
that would, in the aggregate, have a Material Adverse Effect. No Group Member
shall cause or suffer to exist any event that could result in the imposition of
a Lien with respect to any Benefit Plan.
     Section 8.15 Hazardous Materials. No Group Member shall cause or suffer to
exist any Release of any Hazardous Material at, to or from any real property
owned, leased, subleased or otherwise operated or occupied by any Group Member
that would violate any Environmental Law, form the basis for any Environmental
Liabilities or otherwise adversely affect the value or marketability of any real
property (whether or not owned by any Group Member), other than such violations,
Environmental Liabilities and effects that would not, in the aggregate,
reasonably expected to have a Material Adverse Effect.
ARTICLE IX
EVENTS OF DEFAULT
     Section 9.1 Definition. Each of the following shall be an Event of Default:
          (a) the Borrower shall fail to pay (i) any principal of any Loan or
any L/C Reimbursement Obligation when the same becomes due and payable or
(ii) any interest on any Loan, any fee under any Loan Document or any other
Obligation (other than those set forth in clause (i) above) and, in the case of
this clause (ii), such non-payment continues for a period of 3 Business Days
after the due date therefor; or
          (b) any representation, warranty or certification made or deemed made
by or on behalf of any Loan Party in any Loan Document or by or on behalf of any
Loan Party (or any

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Responsible Officer thereof) in connection with any Loan Document (including in
any document delivered in connection with any Loan Document) shall prove to have
been incorrect in any material respect when made or deemed made; or
          (c) any Loan Party shall fail to comply with (i) any provision of
Article V (Financial Covenants), Section 6.1 (Financial Statements), 6.2(a)(i)
(Other Events), 7.1 (Maintenance of Corporate Existence), 7.9 (Application of
Loan Proceeds) or Article VIII (Negative Covenants) or (ii) any other provision
of any Loan Document if, in the case of this clause (ii), such failure shall
remain unremedied for 30 days after the earlier of (A) the date on which a
Responsible Officer of the Borrower becomes aware of such failure and (B) the
date on which notice thereof shall have been given to the Borrower by the
Administrative Agent or the Required Lenders; or
          (d) (i) any Group Member shall fail to make any payment when due
(whether due because of scheduled maturity, required prepayment provisions,
acceleration, demand or otherwise) on any Indebtedness of any Group Member
(other than the Obligations or any Hedging Agreement) and, in each case, such
failure relates to Indebtedness having a principal amount of $5,000,000 or more,
(ii) any other event shall occur or condition shall exist under any Contractual
Obligation relating to any such Indebtedness, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Indebtedness or (iii) any such Indebtedness shall become or be declared to
be due and payable, or be required to be prepaid, redeemed, defeased or
repurchased (other than by a regularly scheduled required prepayment), prior to
the stated maturity thereof; or
          (e) (i) any Group Member shall generally not pay its debts as such
debts become due, shall admit in writing its inability to pay its debts
generally or shall make a general assignment for the benefit of creditors,
(ii) any proceeding shall be instituted by or against any Group Member seeking
to adjudicate it a bankrupt or insolvent or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, composition of it
or its debts or any similar order, in each case under any Requirement of Law
relating to bankruptcy, insolvency or reorganization or relief of debtors or
seeking the entry of an order for relief or the appointment of a custodian,
receiver, trustee, conservator, liquidating agent, liquidator, other similar
official or other official with similar powers, in each case for it or for any
substantial part of its property and, in the case of any such proceedings
instituted against (but not by or with the consent of) any Group Member, either
such proceedings shall remain undismissed or unstayed for a period of 60 days or
more or any action sought in such proceedings shall occur or (iii) any Group
Member shall take any corporate or similar action or any other action to
authorize any action described in clause (i) or (ii) above; or
          (f) one or more judgments, orders or decrees (or other similar
process) shall be rendered against any Group Member (i)(A) in the case of money
judgments, orders and decrees, involving an aggregate amount (excluding amounts
adequately covered by insurance payable to any Group Member, to the extent the
relevant insurer has not denied coverage therefor) in excess of $5,000,000 or
(B) otherwise, that would have, in the aggregate, a Material Adverse Effect and
(ii)(A) enforcement proceedings shall have been commenced by any creditor upon
any such judgment, order or decree or (B) such judgment, order or decree shall
not have been vacated or discharged for a period of 30 consecutive days and
there shall not be in effect (by reason of a pending appeal or otherwise) any
stay of enforcement thereof; or

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          (g) except pursuant to a valid, binding and enforceable termination or
release permitted under the Loan Documents and executed by the Administrative
Agent or as otherwise expressly permitted under any Loan Document, (i) any
provision of any Loan Document shall, at any time after the delivery of such
Loan Document, fail to be valid and binding on, or enforceable against, any Loan
Party party thereto or (ii) any Loan Document purporting to grant a Lien to
secure any Obligation shall, at any time after the delivery of such Loan
Document, fail to create a valid and enforceable Lien on any Collateral
purported to be covered thereby or such Lien shall fail or cease to be a
perfected Lien with the priority required in the relevant Loan Document or, or
any Group Member shall state in writing that any of the events described in
clause (i) or (ii) above shall have occurred; or
          (h) there shall occur any Change of Control; or
          (i) any Group Member, to the extent, if any, presently participating
or required by law to participate, in Medicaid or Medicare programs is excluded
from or shall otherwise fail to be eligible for any reason to participate in
Medicaid or Medicare programs or to accept assignments or rights to
reimbursement under Requirements of Law applicable to Medicaid or Medicare, such
failure could reasonably be expected to have a Material Adverse Effect, and such
failure shall also continue beyond the completion of any appeal process
diligently pursued by such Group Member in good faith
     Section 9.2 Remedies. During the continuance of any Event of Default, the
Administrative Agent may, and, at the request of the Required Lenders, shall, in
each case by notice to the Borrower and in addition to any other right or remedy
provided under any Loan Document or by any applicable Requirement of Law, do
each of the following: (a) declare all or any portion of the Commitments
terminated, whereupon the Commitments shall immediately be reduced by such
portion or, in the case of a termination in whole, shall terminate together with
any obligation any Lender may have hereunder to make any Loan and any L/C Issuer
may have hereunder to Issue any Letter of Credit or (b) declare immediately due
and payable all or part of any Obligation (including any accrued but unpaid
interest thereon), whereupon the same shall become immediately due and payable,
without presentment, demand, protest or further notice or other requirements of
any kind, all of which are hereby expressly waived by the Borrower (and, to the
extent provided in any other Loan Document, other Loan Parties); provided,
however, that, effective immediately upon the occurrence of the Events of
Default specified in Section 9.1(e)(ii), (x) the Commitments of each Lender to
make Loans and the commitment of each L/C Issuer to Issue Letters of Credit
shall each automatically be terminated and (y) each Obligation (including in
each case any accrued all accrued but unpaid interest thereon) shall
automatically become and be due and payable, without presentment, demand,
protest or further notice or other requirement of any kind, all of which are
hereby expressly waived by the Borrower (and, to the extent provided in any
other Loan Document, any other Loan Party).
     Section 9.3 Actions in Respect of Letters of Credit. At any time (i) upon
the Revolving Credit Termination Date, (ii) after the Revolving Credit
Termination Date when the aggregate funds on deposit in L/C Cash Collateral
Accounts shall be less than 105% of the L/C Obligations for all Letters of
Credit at such time and (iii) as required by Section 2.12, the Borrower shall
pay to the Administrative Agent in immediately available funds at the
Administrative Agent’s office referred to in Section 11.11, for deposit in a L/C
Cash Collateral Account, the amount required so that, after such payment, the
aggregate funds on deposit in the L/C Cash Collateral Accounts equals or exceeds
105% of the L/C Obligations for all Letters of

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Credit at such time (not to exceed, in the case of clause (iii) above, the
payment to be applied pursuant to Section 2.12 to provide cash collateral for
Letters of Credit).
ARTICLE X
THE ADMINISTRATIVE AGENT
     Section 10.1 Appointment and Duties.
          (a) Appointment of Administrative Agent. Each Lender and each L/C
Issuer hereby appoints GE Capital (together with any successor Administrative
Agent pursuant to Section 10.9) as the Administrative Agent hereunder and
authorizes the Administrative Agent to (i) execute and deliver the Loan
Documents and accept delivery thereof on its behalf from any Group Member,
(ii) take such action on its behalf and to exercise all rights, powers and
remedies and perform the duties as are expressly delegated to the Administrative
Agent under such Loan Documents and (iii) exercise such powers as are reasonably
incidental thereto.
          (b) Duties as Collateral and Disbursing Agent. Without limiting the
generality of clause (a) above, the Administrative Agent shall have the sole and
exclusive right and authority (to the exclusion of the Lenders and L/C Issuers),
and is hereby authorized, to (i) act as the disbursing and collecting agent for
the Lenders and the L/C Issuers with respect to all payments and collections
arising in connection with the Loan Documents (including in any proceeding
described in Section 9.1(e)(ii) or any other bankruptcy, insolvency or similar
proceeding), and each Person making any payment in connection with any Loan
Document to any Secured Party is hereby authorized to make such payment to the
Administrative Agent, (ii) file and prove claims and file other documents
necessary or desirable to allow the claims of the Secured Parties with respect
to any Obligation in any proceeding described in Section 9.1(e)(ii) or any other
bankruptcy, insolvency or similar proceeding (but not to vote, consent or
otherwise act on behalf of such Secured Party), (iii) act as collateral agent
for each Secured Party for purposes of the perfection of all Liens created by
such agreements and all other purposes stated therein, (iv) manage, supervise
and otherwise deal with the Collateral, (v) take such other action as is
necessary or desirable to maintain the perfection and priority of the Liens
created or purported to be created by the Loan Documents, (vi) except as may be
otherwise specified in any Loan Document, exercise all remedies given to the
Administrative Agent and the other Secured Parties with respect to the
Collateral, whether under the Loan Documents, applicable Requirements of Law or
otherwise and (vii) execute any amendment, consent or waiver under the Loan
Documents on behalf of any Lender that has consented in writing to such
amendment, consent or waiver; provided, however, that the Administrative Agent
hereby appoints, authorizes and directs each Lender and L/C Issuer to act as
collateral sub-agent for the Administrative Agent, the Lenders and the L/C
Issuers for purposes of the perfection of all Liens with respect to the
Collateral, including any deposit account maintained by a Loan Party with, and
cash and Cash Equivalents held by, such Lender or L/C Issuer, and may further
authorize and direct the Lenders and the L/C Issuers to take further actions as
collateral sub-agents for purposes of enforcing such Liens or otherwise to
transfer the Collateral subject thereto to the Administrative Agent, and each
Lender and L/C Issuer hereby agrees to take such further actions to the extent,
and only to the extent, so authorized and directed.

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          (c) Limited Duties. Under the Loan Documents, the Administrative Agent
(i) is acting solely on behalf of the Lenders and the L/C Issuers (except to the
limited extent provided in Section 2.14(b) with respect to the Register and in
Section 10.11), with duties that are entirely administrative in nature,
notwithstanding the use of the defined term “Administrative Agent”, the terms
“agent”, “administrative agent” and “collateral agent” and similar terms in any
Loan Document to refer to the Administrative Agent, which terms are used for
title purposes only, (ii) is not assuming any obligation under any Loan Document
other than as expressly set forth therein or any role as agent, fiduciary or
trustee of or for any Lender, L/C Issuer or any other Secured Party and
(iii) shall have no implied functions, responsibilities, duties, obligations or
other liabilities under any Loan Document, and each Lender and L/C Issuer hereby
waives and agrees not to assert any claim against the Administrative Agent based
on the roles, duties and legal relationships expressly disclaimed in clauses (i)
through (iii) above.
     Section 10.2 Binding Effect. Each Lender and each L/C Issuer agrees that
(i) any action taken by the Administrative Agent or the Required Lenders (or, if
expressly required hereby, a greater proportion of the Lenders) in accordance
with the provisions of the Loan Documents, (ii) any action taken by the
Administrative Agent in reliance upon the instructions of Required Lenders (or,
where so required, such greater proportion) and (iii) the exercise by the
Administrative Agent or the Required Lenders (or, where so required, such
greater proportion) of the powers set forth herein or therein, together with
such other powers as are reasonably incidental thereto, shall be authorized and
binding upon all of the Secured Parties.
     Section 10.3 Use of Discretion.
          (a) No Action without Instructions. The Administrative Agent shall not
be required to exercise any discretion or take, or to omit to take, any action,
including with respect to enforcement or collection, except any action it is
required to take or omit to take (i) under any Loan Document or (ii) pursuant to
instructions from the Required Lenders (or, where expressly required by the
terms of this Agreement, a greater proportion of the Lenders).
          (b) Right Not to Follow Certain Instructions. Notwithstanding clause
(a) above, the Administrative Agent shall not be required to take, or to omit to
take, any action (i) unless, upon demand, the Administrative Agent receives an
indemnification satisfactory to it from the Lenders (or, to the extent
applicable and acceptable to the Administrative Agent, any other Secured Party)
against all Liabilities that, by reason of such action or omission, may be
imposed on, incurred by or asserted against the Administrative Agent or any
Related Person thereof or (ii) that is, in the opinion of the Administrative
Agent or its counsel, contrary to any Loan Document or applicable Requirement of
Law.
     Section 10.4 Delegation of Rights and Duties. The Administrative Agent may,
upon any term or condition it specifies, delegate or exercise any of its rights,
powers and remedies under, and delegate or perform any of its duties or any
other action with respect to, any Loan Document by or through any trustee,
co-agent, employee, attorney-in-fact and any other Person (including any Secured
Party). Any such Person shall benefit from this Article X to the extent provided
by the Administrative Agent.
     Section 10.5 Reliance and Liability.

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          (a) The Administrative Agent may, without incurring any liability
hereunder, (i) treat the payee of any Note as its holder until such Note has
been assigned in accordance with Section 11.2(e), (ii) rely on the Register to
the extent set forth in Section 2.14, (iii) consult with any of its Related
Persons and, whether or not selected by it, any other advisors, accountants and
other experts (including advisors to, and accountants and experts engaged by,
any Loan Party) and (iv) rely and act upon any document and information
(including those transmitted by Electronic Transmission) and any telephone
message or conversation, in each case believed by it to be genuine and
transmitted, signed or otherwise authenticated by the appropriate parties.
          (b) None of the Administrative Agent and its Related Persons shall be
liable for any action taken or omitted to be taken by any of them under or in
connection with any Loan Document, and each Lender, L/C Issuer and the Borrower
hereby waive and shall not assert (and the Borrower shall cause each other Loan
Party to waive and agree not to assert) any right, claim or cause of action
based thereon, except to the extent of liabilities resulting primarily from the
gross negligence or willful misconduct of the Administrative Agent or, as the
case may be, such Related Person (each as determined in a final, non-appealable
judgment by a court of competent jurisdiction) in connection with the duties
expressly set forth herein. Without limiting the foregoing, the Administrative
Agent:
          (i) shall not be responsible or otherwise incur liability for any
action or omission taken in reliance upon the instructions of the Required
Lenders or for the actions or omissions of any of its Related Persons selected
with reasonable care (other than employees, officers and directors of the
Administrative Agent, when acting on behalf of the Administrative Agent);
          (ii) shall not be responsible to any Secured Party for the due
execution, legality, validity, enforceability, effectiveness, genuineness,
sufficiency or value of, or the attachment, perfection or priority of any Lien
created or purported to be created under or in connection with, any Loan
Document;
          (iii) makes no warranty or representation, and shall not be
responsible, to any Secured Party for any statement, document, information,
representation or warranty made or furnished by or on behalf of any Related
Person, in or in connection with any Loan Document or any transaction
contemplated therein, whether or not transmitted by the Administrative Agent,
including as to completeness, accuracy, scope or adequacy thereof, or for the
scope, nature or results of any due diligence performed by the Administrative
Agent in connection with the Loan Documents; and
          (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any provision of any Loan Document, whether any
condition set forth in any Loan Document is satisfied or waived, as to the
financial condition of any Loan Party or as to the existence or continuation or
possible occurrence or continuation of any Default or Event of Default and shall
not be deemed to have notice or knowledge of such occurrence or continuation
unless it has received a notice from the Borrower, any Lender or L/C Issuer
describing such Default or Event of Default clearly labeled “notice of default”
(in which case the Administrative Agent shall promptly give notice of such
receipt to all Lenders);

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and, for each of the items set forth in clauses (i) through (iv) above, each
Lender, L/C Issuer and the Borrower hereby waives and agrees not to assert (and
the Borrower shall cause each other Loan Party to waive and agree not to assert)
any right, claim or cause of action it might have against the Administrative
Agent based thereon.
     Section 10.6 Administrative Agent Individually. The Administrative Agent
and its Affiliates may make loans and other extensions of credit to, acquire
Stock and Stock Equivalents of, engage in any kind of business with, any Loan
Party or Affiliate thereof as though it were not acting the Administrative Agent
and may receive separate fees and other payments therefor. To the extent the
Administrative Agent or any of its Affiliates makes any Loan or otherwise
becomes a Lender hereunder, it shall have and may exercise the same rights and
powers hereunder and shall be subject to the same obligations and liabilities as
any other Lender and the terms “Lender”, “Revolving Credit Lender” and “Required
Lender” and any similar terms shall, except where otherwise expressly provided
in any Loan Document, include, without limitation, the Administrative Agent or
such Affiliate, as the case may be, in its individual capacity as Lender,
Revolving Credit Lender or as one of the Required Lenders.
     Section 10.7 Lender Credit Decision. Each Lender and each L/C Issuer
acknowledges that it shall, independently and without reliance upon the
Administrative Agent, any Lender or L/C Issuer or any of their Related Persons
or upon any document (including the Disclosure Documents) solely or in part
because such document was transmitted by the Administrative Agent or any of its
Related Persons, conduct its own independent investigation of the financial
condition and affairs of each Loan Party and make and continue to make its own
credit decisions in connection with entering into, and taking or not taking any
action under, any Loan Document or with respect to any transaction contemplated
in any Loan Document, in each case based on such documents and information as it
shall deem appropriate.
     Section 10.8 Expenses; Indemnities.
          (a) Each Lender agrees to reimburse the Administrative Agent and each
of its Related Persons (to the extent not reimbursed by any Loan Party) promptly
upon demand for such Lender’s Pro Rata Share with respect to the Facility of any
costs and expenses (including fees, charges and disbursements of financial,
legal and other advisors and Other Taxes paid in the name of, or on behalf of,
any Loan Party) that may be incurred by the Administrative Agent or any of its
Related Persons in connection with the preparation, syndication, execution,
delivery, administration, modification, consent, waiver or enforcement (whether
through negotiations, through any work-out, bankruptcy, restructuring or other
legal or other proceeding or otherwise) of, or legal advice in respect of its
rights or responsibilities under, any Loan Document.
          (b) Each Lender further agrees to indemnify the Administrative Agent
and each of its Related Persons (to the extent not reimbursed by any Loan
Party), from and against such Lender’s aggregate Pro Rata Share with respect to
the Facility of the Liabilities (including taxes, interests and penalties
imposed for not properly withholding or backup withholding on payments made to
on or for the account of any Lender) that may be imposed on, incurred by or
asserted against the Administrative Agent or any of its Related Persons in any
matter relating to or arising out of, in connection with or as a result of any
Loan Document or any other act, event or transaction related, contemplated in or
attendant to any such document, or, in each case, any action taken or omitted to
be taken by the Administrative Agent or any of its Related Persons

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under or with respect to any of the foregoing; provided, however, that no Lender
shall be liable to the Administrative Agent or any of its Related Persons to the
extent such liability has resulted primarily from the gross negligence or
willful misconduct of the Administrative Agent or, as the case may be, such
Related Person, as determined by a court of competent jurisdiction in a final
non-appealable judgment or order.
     Section 10.9 Resignation of Administrative Agent or L/C Issuer.
          (a) The Administrative Agent may resign at any time by delivering
notice of such resignation to the Lenders and the Borrower, effective on the
date set forth in such notice or, if not such date is set forth therein, upon
the date such notice shall be effective. If the Administrative Agent delivers
any such notice, the Required Lenders shall have the right to appoint a
successor Administrative Agent. If, within 30 days after the retiring
Administrative Agent having given notice of resignation, no successor
Administrative Agent has been appointed by the Required Lenders that has
accepted such appointment, then the retiring Administrative Agent may, on behalf
of the Lenders, appoint a successor Administrative Agent from among the Lenders.
Each appointment under this clause (a) shall be subject to the prior consent of
the Borrower, which may not be unreasonably withheld but shall not be required
during the continuance of a Default.
          (b) Effective immediately upon its resignation, (i) the retiring
Administrative Agent shall be discharged from its duties and obligations under
the Loan Documents, (ii) the Lenders shall assume and perform all of the duties
of the Administrative Agent until a successor Administrative Agent shall have
accepted a valid appointment hereunder, (iii) the retiring Administrative Agent
and its Related Persons shall no longer have the benefit of any provision of any
Loan Document other than with respect to any actions taken or omitted to be
taken while such retiring Administrative Agent was, or because such
Administrative Agent had been, validly acting as Administrative Agent under the
Loan Documents and (iv) subject to its rights under Section 10.3, the retiring
Administrative Agent shall take such action as may be reasonably necessary to
assign to the successor Administrative Agent its rights as Administrative Agent
under the Loan Documents. Effective immediately upon its acceptance of a valid
appointment as Administrative Agent, a successor Administrative Agent shall
succeed to, and become vested with, all the rights, powers, privileges and
duties of the retiring Administrative Agent under the Loan Documents.
          (c) Any L/C Issuer may resign at any time by delivering notice of such
resignation to the Administrative Agent, effective on the date set forth in such
notice or, if no such date is set forth therein, on the date such notice shall
be effective. Upon such resignation, the L/C Issuer shall remain an L/C Issuer
and shall retain its rights and obligations in its capacity as such (other than
any obligation to Issue Letters of Credit but including the right to receive
fees or to have Lenders participate in any L/C Reimbursement Obligation thereof)
with respect to Letters of Credit issued by such L/C Issuer prior to the date of
such resignation and shall otherwise be discharged from all other duties and
obligations under the Loan Documents.
     Section 10.10 Release of Collateral or Guarantors. Each Lender and L/C
Issuer hereby consents to the release and hereby directs the Administrative
Agent to release (or, in the case of clause (b)(ii) below, release or
subordinate) the following:

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          (a) any Subsidiary of the Borrower from its guaranty of any Obligation
of any Loan Party if all of the Securities of such Subsidiary owned by any Group
Member are Sold in a Sale permitted under the Loan Documents (including pursuant
to a waiver or consent), to the extent that, after giving effect to such Sale,
such Subsidiary would not be required to guaranty any Obligations pursuant to
Section 7.10; and
          (b) any Lien held by the Administrative Agent for the benefit of the
Secured Parties against (i) any Collateral that is Sold by a Loan Party in a
Sale permitted by the Loan Documents (including pursuant to a valid waiver or
consent), to the extent all Liens required to be granted in such Collateral
pursuant to Section 7.10 after giving effect to such Sale have been granted,
(ii) any property subject to a Lien permitted hereunder in reliance upon Section
8.2(d) or (e) and (iii) all of the Collateral and all Loan Parties, upon (A)
termination of the Commitments, (B) payment and satisfaction in full of all
Loans, all L/C Reimbursement Obligations and all other Obligations that the
Administrative Agent has been notified in writing are then due and payable,
(C) deposit of cash collateral with respect to all contingent Obligations (or,
in the case of any L/C Obligation, a back-up letter of credit has been issued),
in amounts and on terms and conditions and with parties satisfactory to the
Administrative Agent and each Indemnitee that is owed such Obligations and
(D) to the extent requested by the Administrative Agent, receipt by the Secured
Parties of liability releases from the Loan Parties each in form and substance
acceptable to the Administrative Agent.
Each Lender and L/C Issuer hereby directs the Administrative Agent, and the
Administrative Agent hereby agrees, upon receipt of reasonable advance notice
from the Borrower, to execute and deliver or file such documents and to perform
other actions reasonably necessary to release the guaranties and Liens when and
as directed in this Section 10.10.
     Section 10.11 Additional Secured Parties. The benefit of the provisions of
the Loan Documents directly relating to the Collateral or any Lien granted
thereunder shall extend to and be available to any Secured Party that is not a
Lender or L/C Issuer as long as, by accepting such benefits, such Secured Party
agrees, as among the Administrative Agent and all other Secured Parties, that
such Secured Party is bound by (and, if requested by the Administrative Agent,
shall confirm such agreement in a writing in form and substance acceptable to
the Administrative Agent) this Article X, Section 11.8 (Right of Setoff),
Section 11.9 (Sharing of Payments) and Section 11.20 (Confidentiality) and the
decisions and actions of the Administrative Agent and the Required Lenders (or,
where expressly required by the terms of this Agreement, a greater proportion of
the Lenders) to the same extent a Lender is bound; provided, however, that,
notwithstanding the foregoing, (a) such Secured Party shall be bound by
Section 10.8 only to the extent of Liabilities, costs and expenses with respect
to or otherwise relating to the Collateral held for the benefit of such Secured
Party, in which case the obligations of such Secured Party thereunder shall not
be limited by any concept of Pro Rata Share or similar concept, (b) each of the
Administrative Agent, the Lenders and the L/C Issuers shall be entitled to act
at its sole discretion, without regard to the interest of such Secured Party,
regardless of whether any Obligation to such Secured Party thereafter remains
outstanding, is deprived of the benefit of the Collateral, becomes unsecured or
is otherwise affected or put in jeopardy thereby, and without any duty or
liability to such Secured Party or any such Obligation and (c) such Secured
Party shall not have any right to be notified of, consent to, direct, require or
be heard with respect to, any action taken or omitted in respect of the
Collateral or under any Loan Document.

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ARTICLE XI
MISCELLANEOUS
     Section 11.1 Amendments, Waivers, Etc.
          (a) No amendment or waiver of any provision of any Loan Document
(other than the Fee Letters, the Control Agreements, the L/C Reimbursement
Agreements and the Secured Hedging Agreements, the amendment of which shall be
determined by the terms thereof) and no consent to any departure by any Loan
Party therefrom shall be effective unless the same shall be in writing and
signed (1) in the case of an amendment, consent or waiver to cure any ambiguity,
omission, defect or inconsistency or granting a new Lien for the benefit of the
Secured Parties or extending an existing Lien over additional property, by the
Administrative Agent and the Borrower, (2) in the case of any other waiver or
consent, by the Required Lenders (or by the Administrative Agent with the
consent of the Required Lenders) and (3) in the case of any amendment necessary
to implement the terms of a Facility Increase in accordance with the terms
hereof, by the Borrower and the Administrative Agent and (4) in the case of any
other amendment, by the Required Lenders (or by the Administrative Agent with
the consent of the Required Lenders) and the Borrower; provided, however, that
no amendment, consent or waiver described in clause (2), (3) or (4) above shall,
unless in writing and signed by each Lender directly affected thereby (or by the
Administrative Agent with the consent of such Lender), in addition to any other
Person the signature of which is otherwise required pursuant to any Loan
Document, do any of the following:
          (i) waive any condition specified in Section 3.1, except any condition
referring to any other provision of any Loan Document;
          (ii) increase the Commitment of such Lender or subject such Lender to
any additional obligation;
          (iii) reduce (including through release, forgiveness, assignment or
otherwise) (A) the principal amount of, the interest rate on, or any obligation
of the Borrower to repay (whether or not on a fixed date), any outstanding Loan
owing to such Lender, (B) any fee or accrued interest payable to such Lender or
(C) if such Lender is a Revolving Credit Lender, any L/C Reimbursement
Obligation or any obligation of the Borrower to repay (whether or not on a fixed
date) any L/C Reimbursement Obligation; provided, however, that this clause
(iii) does not apply to (x) any change to any provision increasing any interest
rate or fee during the continuance of an Event of Default or to any payment of
any such increase or (y) any modification to any financial covenant set forth in
Article V or in any definition set forth therein or principally used therein;
          (iv) waive or postpone any scheduled maturity date or other scheduled
date fixed for the payment, in whole or in part, of principal of or interest on
any Loan or fee owing to such Lender or for the reduction of such Lender’s
Commitment; provided, however, that this clause (iv) does not apply to any
change to mandatory prepayments, including those required under Section 2.8, or
to the application of any payment, including as set forth in Section 2.12;

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          (v) except as provided in Section 10.10, release all or substantially
all of the Collateral or any Guarantor from its guaranty of any Obligation of
the Borrower;
          (vi) reduce or increase the proportion of Lenders required for the
Lenders (or any subset thereof) to take any action hereunder or change the
definition of the terms “Required Lenders”, “Pro Rata Share” or “Pro Rata
Outstandings”; or
          (vii) amend Section 10.10 (Release of Collateral or Guarantor),
Section 11.9 (Sharing of Payments) or this Section 11.1;
and provided, further, that (x)(A) any waiver of any payment applied pursuant to
Section 2.12(b) (Application of Mandatory Prepayments) to, and any modification
of the application of any such payment to the Loans shall require the consent of
the Required Revolving Credit Lenders, (B) any change to the definition of the
term “Required Lender” shall require the consent of the Required Lenders, (y) no
amendment, waiver or consent shall affect the rights or duties under any Loan
Document of, or any payment to, the Administrative Agent (or otherwise modify
any provision of Article X or the application thereof), the Swingline Lender,
any L/C Issuer or any SPV that has been granted an option pursuant to Section
11.2(f) unless in writing and signed by the Administrative Agent, the Swingline
Lender, such L/C Issuer or, as the case may be, such SPV in addition to any
signature otherwise required and (z) the consent of the Borrower shall not be
required to change any order of priority set forth in Section 2.12.
          (b) Each waiver or consent under any Loan Document shall be effective
only in the specific instance and for the specific purpose for which it was
given. No notice to or demand on any Loan Party shall entitle any Loan Party to
any notice or demand in the same, similar or other circumstances. No failure on
the part of any Secured Party to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right.
     Section 11.2 Assignments and Participations; Binding Effect.
          (a) Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrower and the Administrative Agent and when
the Administrative Agent shall have been notified by each Lender and L/C Issuer
that such Lender or L/C Issuer has executed it. Thereafter, it shall be binding
upon and inure to the benefit of, but only to the benefit of the Borrower (in
each case except for Article X), the Administrative Agent, each Lender and L/C
Issuer and, to the extent provided in Section 10.11, each other Indemnitee and
Secured Party and, in each case, their respective successors and permitted
assigns. Except as expressly provided in any Loan Document (including in
Section 10.9), none of the Borrower, any L/C Issuer or the Administrative Agent
shall have the right to assign any rights or obligations hereunder or any
interest herein.
          (b) Right to Assign. Each Lender may sell, transfer, negotiate or
assign all or a portion of its rights and obligations hereunder (including all
or a portion of its Commitments and its rights and obligations with respect to
Loans and Letters of Credit) to any of the following Persons (each an “Eligible
Assignee”) (i) any existing Lender, (ii) any Affiliate or Approved

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Fund of any existing Lender or (iii) any other Person acceptable (which
acceptance shall not be unreasonably withheld or delayed) to the Administrative
Agent and, as long as no Event of Default is continuing, the Borrower; provided,
however, that (x) such Sales must be ratable among the obligations owing to and
owed by such Lender with respect to the Facility and (y) the aggregate
outstanding principal amount (determined as of the effective date of the
applicable Assignment) of the Loans, Commitments and L/C Obligations subject to
any such Sale shall be an integral multiple of $1,000,000, unless such Sale is
made to an existing Lender or an Affiliate or Approved Fund of any existing
Lender, is of the assignor’s (together with its Affiliates and Approved Funds)
entire interest in such Facility or is made with the prior consent of the
Borrower and the Administrative Agent.
          (c) Procedure. The parties to each Sale made in reliance on clause (b)
above (other than those described in clause (e) or (f) below) shall execute and
deliver to the Administrative Agent (which shall keep a copy thereof) an
Assignment, together with any existing Note subject to such Sale (or any
affidavit of loss therefor acceptable to the Administrative Agent), any tax
forms required to be delivered pursuant to Section 2.17(f) and payment by the
assignee of an assignment fee in the amount of $3,500. Upon receipt of all the
foregoing, and conditioned upon such receipt and upon the Administrative Agent
consenting to such Assignment, from and after the effective date specified in
such Assignment, the Administrative Agent shall record or cause to be recorded
in the Register the information contained in such Assignment.
          (d) Effectiveness. Effective upon the entry of such record in the
Register, (i) such assignee shall become a party hereto and, to the extent that
rights and obligations under the Loan Documents have been assigned to such
assignee pursuant to such Assignment, shall have the rights and obligations of a
Lender, (ii) any applicable Note shall be transferred to such assignee through
such entry and (iii) the assignor thereunder shall, to the extent that rights
and obligations under this Agreement have been assigned by it pursuant to such
Assignment, relinquish its rights (except for those surviving the termination of
the Commitments and the payment in full of the Obligations) and be released from
its obligations under the Loan Documents, other than those relating to events or
circumstances occurring prior to such assignment (and, in the case of an
Assignment covering all or the remaining portion of an assigning Lender’s rights
and obligations under the Loan Documents, such Lender shall cease to be a party
hereto except that each Lender agrees to remain bound by Article X, Section 11.8
(Right of Setoff) and Section 11.9 (Sharing of Payments) to the extent provided
in Section 10.11 (Additional Beneficiaries of Collateral)).
          (e) Grant of Security Interests. In addition to the other rights
provided in this Section 11.2, each Lender may grant a security interest in, or
otherwise assign as collateral, any of its rights under this Agreement, whether
now owned or hereafter acquired (including rights to payments of principal or
interest on the Loans), to (A) any federal reserve bank (pursuant to
Regulation A of the Federal Reserve Board), without notice to the Administrative
Agent or (B) any holder of, or trustee for the benefit of the holders of, such
Lender’s Securities by notice to the Administrative Agent; provided, however,
that no such holder or trustee, whether because of such grant or assignment or
any foreclosure thereon (unless such foreclosure is made through an assignment
in accordance with clause (b) above), shall be entitled to any rights of such
Lender hereunder and no such Lender shall be relieved of any of its obligations
hereunder.

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          (f) Participants and SPVs. In addition to the other rights provided in
this Section 11.2, each Lender may, (x) with notice to the Administrative Agent,
grant to an SPV the option to make all or any part of any Loan that such Lender
would otherwise be required to make hereunder (and the exercise of such option
by such SPV and the making of Loans pursuant thereto shall satisfy the
obligation of such Lender to make such Loans hereunder) and such SPV may assign
to such Lender the right to receive payment with respect to any Obligation and
(y) without notice to or consent from the Administrative Agent or the Borrower,
sell participations to one or more Persons in or to all or a portion of its
rights and obligations under the Loan Documents (including all its rights and
obligations with respect to the Revolving Loans and Letters of Credit);
provided, however, that, whether as a result of any term of any Loan Document or
of such grant or participation, (i) no such SPV or participant shall have a
commitment, or be deemed to have made an offer to commit, to make Loans
hereunder, and, except as provided in the applicable option agreement, none
shall be liable for any obligation of such Lender hereunder, (ii) such Lender’s
rights and obligations, and the rights and obligations of the Loan Parties and
the Secured Parties towards such Lender, under any Loan Document shall remain
unchanged and each other party hereto shall continue to deal solely with such
Lender, which shall remain the holder of the Obligations in the Register, except
that (A) each such participant and SPV shall be entitled to the benefit of
Sections 2.16 (Breakage Costs; Increased Costs; Capital Requirements) and 2.17
(Taxes), but only to the extent such participant or SPV delivers the tax forms
such Lender is required to collect pursuant to Section 2.17(f) and then only to
the extent of any amount to which such Lender would be entitled in the absence
of any such grant or participation and (B) each such SPV may receive other
payments that would otherwise be made to such Lender with respect to Loans
funded by such SPV to the extent provided in the applicable option agreement and
set forth in a notice provided to the Administrative Agent by such SPV and such
Lender, provided, however, that in no case (including pursuant to clause (A) or
(B) above) shall an SPV or participant have the right to enforce any of the
terms of any Loan Document, and (iii) the consent of such SPV or participant
shall not be required (either directly, as a restraint on such Lender’s ability
to consent hereunder or otherwise) for any amendments, waivers or consents with
respect to any Loan Document or to exercise or refrain from exercising any
powers or rights such Lender may have under or in respect of the Loan Documents
(including the right to enforce or direct enforcement of the Obligations),
except for those described in clauses (iii) and (iv) of Section 11.1(a) with
respect to amounts, or dates fixed for payment of amounts, to which such
participant or SPV would otherwise be entitled and, in the case of participants,
except for those described in Section 11.1(a)(v) (or amendments, consents and
waivers with respect to Section 10.10 to release all or substantially all of the
Collateral). No party hereto shall institute against any SPV grantee of an
option pursuant to this clause (f) any bankruptcy, reorganization, insolvency,
liquidation or similar proceeding, prior to the date that is one year and one
day after the payment in full of all outstanding commercial paper of such SPV;
provided, however, that each Lender having designated an SPV as such agrees to
indemnify each Indemnitee against any Liability that may be incurred by, or
asserted against, such Indemnitee as a result of failing to institute such
proceeding (including a failure to get reimbursed by such SPV for any such
Liability). The agreement in the preceding sentence shall survive the
termination of the Commitments and the payment in full of the Obligations.
     Section 11.3 Costs and Expenses. Any action taken by any Loan Party under
or with respect to any Loan Document, even if required under any Loan Document
or at the request of any Secured Party, shall be at the expense of such Loan
Party, and no Secured Party shall be required under any Loan Document to
reimburse any Loan Party or Group Member therefor except as expressly provided
therein. In addition, the Borrower agrees to pay or reimburse upon

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demand (a) the Administrative Agent for all reasonable out-of-pocket costs and
expenses incurred by it or any of its Related Persons in connection with the
investigation, development, preparation, negotiation, syndication, execution,
interpretation or administration of, any modification of any term of or
termination of, any Loan Document, any commitment or proposal letter therefor,
any other document prepared in connection therewith or the consummation and
administration of any transaction contemplated therein (including periodic
audits in connection therewith and environmental audits and assessments), in
each case including the reasonable fees, charges and disbursements of legal
counsel to the Administrative Agent or such Related Persons, fees, costs and
expenses incurred in connection with Intralinks® or any other E-System and
allocated to the Facility by the Administrative Agent in its sole discretion and
fees, charges and disbursements of the auditors, appraisers, printers and other
of their Related Persons retained by or on behalf of any of them or any of their
Related Persons, (b) the Administrative Agent for all reasonable costs and
expenses incurred by it or any of its Related Persons in connection with
internal audit reviews, field examinations and Collateral examinations (which
shall be reimbursed, in addition to the out-of-pocket costs and expenses of such
examiners, at the per diem rate per individual charged by the Administrative
Agent for its examiners) and (c) each of the Administrative Agent, its Related
Persons, and each Lender and L/C Issuer for all costs and expenses incurred in
connection with (i) any refinancing or restructuring of the credit arrangements
provided hereunder in the nature of a “work-out”, (ii) the enforcement or
preservation of any right or remedy under any Loan Document, any Obligation,
with respect to the Collateral or any other related right or remedy or (iii) the
commencement, defense, conduct of, intervention in, or the taking of any other
action with respect to, any proceeding (including any bankruptcy or insolvency
proceeding) related to any Group Member, Loan Document or Obligation (or the
response to and preparation for any subpoena or request for document production
relating thereto), including fees and disbursements of counsel (including
allocated costs of internal counsel).
     Section 11.4 Indemnities.
          (a) The Borrower agrees to indemnify, hold harmless and defend the
Administrative Agent, each Lender, each L/C Issuer, each Person (other than the
Borrower) party to a Secured Hedging Agreement, each Person that each L/C Issuer
causes to Issue Letters of Credit hereunder and each of their respective Related
Persons (each such Person being an “Indemnitee”) from and against all
Liabilities (including brokerage commissions, fees and other compensation) that
may be imposed on, incurred by or asserted against any such Indemnitee in any
matter relating to or arising out of, in connection with or as a result of
(i) any Loan Document, any Disclosure Document, any Obligation (or the repayment
thereof), any Letter of Credit, the use or intended use of the proceeds of any
Loan or the use of any Letter of Credit, or any securities filing of, or with
respect to, any Group Member, (ii) any commitment letter, proposal letter or
term sheet with any Person or any Contractual Obligation, arrangement or
understanding with any broker, finder or consultant, in each case entered into
by or on behalf of any Group Member or any Affiliate of any of them in
connection with any of the foregoing and any Contractual Obligation entered into
in connection with any E-Systems or other Electronic Transmissions, (iii) any
actual or prospective investigation, litigation or other proceeding, whether or
not brought by any such Indemnitee or any of its Related Persons, any holders of
Securities or creditors (and including reasonable attorneys’ fees in any case),
whether or not any such Indemnitee, Related Person, holder or creditor is a
party thereto, and whether or not based on any securities or commercial law or
regulation or any other Requirement of Law or theory thereof, including common
law, equity, contract, tort or otherwise, or (iv) any other act, event or

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transaction related, contemplated in or attendant to any of the foregoing
(collectively, the “Indemnified Matters”); provided, however, that the Borrower
shall not have any liability under this Section 11.4 to any Indemnitee with
respect to any Indemnified Matter, and no Indemnitee shall have any liability
with respect to any Indemnified Matter other than (to the extent otherwise
liable), to the extent such liability has resulted primarily from the gross
negligence or willful misconduct of such Indemnitee, as determined by a court of
competent jurisdiction in a final non-appealable judgment or order. Furthermore,
the Borrower waives and agrees not to assert against any Indemnitee, and shall
cause each other Loan Party to waive and not assert against any Indemnitee, any
right of contribution with respect to any Liabilities that may be imposed on,
incurred by or asserted against any Related Person.
          (b) Without limiting the foregoing, “Indemnified Matters” includes all
Environmental Liabilities, including those arising from, or otherwise involving,
any property of any Related Person or any actual, alleged or prospective damage
to property or natural resources or harm or injury alleged to have resulted from
any Release of Hazardous Materials on, upon or into such property or natural
resource or any property on or contiguous to any real property of any Related
Person, whether or not, with respect to any such Environmental Liabilities, any
Indemnitee is a mortgagee pursuant to any leasehold mortgage, a mortgagee in
possession, the successor-in-interest to any Related Person or the owner, lessee
or operator of any property of any Related Person through any foreclosure
action, in each case except to the extent such Environmental Liabilities (i) are
incurred solely following foreclosure by any Secured Party or following any
Secured Party having become the successor-in-interest to any Loan Party and
(ii) are attributable solely to acts of such Indemnitee.
     Section 11.5 Survival. Any indemnification or other protection provided to
any Indemnitee pursuant to any Loan Document (including pursuant to Section 2.17
(Taxes), Section 2.16 (Breakage Costs; Increased Costs; Capital Requirements),
Article X (The Administrative Agent), Section 11.3 (Costs and Expenses),
Section 11.4 (Indemnities) or this Section 11.5) and all representations and
warranties made in any Loan Document shall (A) survive the termination of the
Commitments and the payment in full of other Obligations and (B) inure to the
benefit of any Person that at any time held a right thereunder (as an Indemnitee
or otherwise) and, thereafter, its successors and permitted assigns.
     Section 11.6 Limitation of Liability for Certain Damages. In no event shall
any Indemnitee be liable on any theory of liability for any special, indirect,
consequential or punitive damages (including any loss of profits, business or
anticipated savings). The Borrower hereby waives, releases and agrees (and shall
cause each other Loan Party to waive, release and agree) not to sue upon any
such claim for any special, indirect, consequential or punitive damages, whether
or not accrued and whether or not known or suspected to exist in its favor.
     Section 11.7 Lender-Creditor Relationship. The relationship between the
Lenders, the L/C Issuers and the Administrative Agent, on the one hand, and the
Loan Parties, on the other hand, is solely that of lender and creditor. No
Secured Party has any fiduciary relationship or duty to any Loan Party arising
out of or in connection with, and there is no agency, tenancy or joint venture
relationship between the Secured Parties and the Loan Parties by virtue of, any
Loan Document or any transaction contemplated therein.

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     Section 11.8 Right of Setoff. Each of the Administrative Agent, each
Lender, each L/C Issuer and each Affiliate (including each branch office
thereof) of any of them is hereby authorized, without notice or demand (each of
which is hereby waived by the Borrower), at any time and from time to time
during the continuance of any Event of Default and to the fullest extent
permitted by applicable Requirements of Law, to set off and apply any and all
deposits (whether general or special, time or demand, provisional or final) at
any time held and other Indebtedness, claims or other obligations at any time
owing by the Administrative Agent, such Lender, such L/C Issuer or any of their
respective Affiliates to or for the credit or the account of the Borrower
against any Obligation of any Loan Party now or hereafter existing, whether or
not any demand was made under any Loan Document with respect to such Obligation
and even though such Obligation may be unmatured. Each of the Administrative
Agent, each Lender and each L/C Issuer agrees promptly to notify the Borrower
and the Administrative Agent after any such setoff and application made by such
Lender or its Affiliates; provided, however, that the failure to give such
notice shall not affect the validity of such setoff and application. The rights
under this Section 11.8 are in addition to any other rights and remedies
(including other rights of setoff) that the Administrative Agent, the Lenders
and the L/C Issuers and their Affiliates and other Secured Parties may have.
     Section 11.9 Sharing of Payments, Etc. If any Lender, directly or through
an Affiliate or branch office thereof, obtains any payment of any Obligation of
any Loan Party (whether voluntary, involuntary or through the exercise of any
right of setoff or the receipt of any Collateral or “proceeds” (as defined under
the applicable UCC) of Collateral) other than pursuant to Sections 2.16
(Breakage Costs; Increased Costs; Capital Requirements), 2.17 (Taxes) and 2.18
(Substitution of Lenders) and such payment exceeds the amount such Lender would
have been entitled to receive if all payments had gone to, and been distributed
by, the Administrative Agent in accordance with the provisions of the Loan
Documents, such Lender shall purchase for cash from other Secured Parties such
participations in their Obligations as necessary for such Lender to share such
excess payment with such Secured Parties to ensure such payment is applied as
though it had been received by the Administrative Agent and applied in
accordance with this Agreement (or, if such application would then be at the
discretion of the Borrower, applied to repay the Obligations in accordance
herewith); provided, however, that (a) if such payment is rescinded or otherwise
recovered from such Lender or L/C Issuer in whole or in part, such purchase
shall be rescinded and the purchase price therefor shall be returned to such
Lender or L/C Issuer without interest and (b) such Lender shall, to the fullest
extent permitted by applicable Requirements of Law, be able to exercise all its
rights of payment (including the right of setoff) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
     Section 11.10 Marshaling; Payments Set Aside. No Secured Party shall be
under any obligation to marshal any property in favor of any Loan Party or any
other party or against or in payment of any Obligation. To the extent that any
Secured Party receives a payment from the Borrower, from the proceeds of the
Collateral, from the exercise of its rights of setoff, any enforcement action or
otherwise, and such payment is subsequently, in whole or in part, invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, receiver or any other party, then to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor, shall be revived and continued in full force and
effect as if such payment had not occurred.
     Section 11.11 Notices.

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          (a) Addresses. All notices, demands, requests, directions and other
communications required or expressly authorized to be made by this Agreement
shall, whether or not specified to be in writing but unless otherwise expressly
specified to be given by any other means, be given in writing and (i) addressed
to (A) if to the Borrower, to Assisted Living Concepts, Inc., 111 West Michigan
Street, Milwaukee, WI 53203, Attention: Chief Financial Officer, Fax:
414-908-7123, with copy to Quarles & Brady, LLP, Attention: David L. Bourne,
Tel: 414-277-5343, Fax: 414-978-8743, (B) if to the Administrative Agent or the
Swingline Lender, to General Electric Capital Corporation, 500 West Monroe
Street, Chicago, Illinois 60661, Attention: Assisted Living Concepts Account
Manager, Tel: 312-441-6979, Fax: 312-441-7598, with copy to General Electric
Capital Corporation, Healthcare Financial Services, 2 Bethesda Metro Center,
Suite 600, Bethesda, Maryland 20814, Attention: Legal Department, Tel:
(301) 961-1640, Fax: (301) 664-9866 and (C) otherwise to the party to be
notified at its address specified opposite its name on Schedule II or on the
signature page of any applicable Assignment, (ii) posted to Intralinks® (to the
extent such system is available and set up by or at the direction of the
Administrative Agent prior to posting) in an appropriate location by uploading
such notice, demand, request, direction or other communication to
www.intralinks.com, faxing it to 866-545-6600 with an appropriate bar-coded fax
coversheet or using such other means of posting to Intralinks® as may be
available and reasonably acceptable to the Administrative Agent prior to such
posting, (iii) posted to any other E-System set up by or at the direction of the
Administrative Agent in an appropriate location or (iv) addressed to such other
address as shall be notified in writing (A) in the case of the Borrower, the
Administrative Agent and the Swingline Lender, to the other parties hereto and
(B) in the case of all other parties, to the Borrower and the Administrative
Agent. Transmission by electronic mail (including E-Fax, even if transmitted to
the fax numbers set forth in clause (i) above) shall not be sufficient or
effective to transmit any such notice under this clause (a) unless such
transmission is an available means to post to any E-System.
          (b) Effectiveness. All communications described in clause (a) above
and all other notices, demands, requests and other communications made in
connection with this Agreement shall be effective and be deemed to have been
received (i) if delivered by hand, upon personal delivery, (ii) if delivered by
overnight courier service, one Business Day after delivery to such courier
service, (iii) if delivered by mail, when deposited in the mails, (iv) if
delivered by facsimile (other than to post to an E-System pursuant to clause
(a)(ii) or (a)(iii) above), upon sender’s receipt of confirmation of proper
transmission, and (v) if delivered by posting to any E-System, on the later of
the date of such posting in an appropriate location and the date access to such
posting is given to the recipient thereof in accordance with the standard
procedures applicable to such E-System; provided, however, that no
communications to the Administrative Agent pursuant to Article II or Article X
shall be effective until received by the Administrative Agent.
     Section 11.12 Electronic Transmissions.
          (a) Authorization. Subject to the provisions of Section 11.11(a), each
of the Administrative Agent, the Borrower, the Lenders, the L/C Issuers and each
of their Related Persons is authorized (but not required) to transmit, post or
otherwise make or communicate, in its sole discretion, Electronic Transmissions
in connection with any Loan Document and the transactions contemplated therein.
The Borrower and each Secured Party hereby acknowledges and agrees, and the
Borrower shall cause each other Group Member to acknowledge and agree, that the
use of Electronic Transmissions is not necessarily secure and that there are
risks

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associated with such use, including risks of interception, disclosure and abuse
and each indicates it assumes and accepts such risks by hereby authorizing the
transmission of Electronic Transmissions.
          (b) Signatures. Subject to the provisions of Section 11.11(a), (i)(A)
no posting to any E-System shall be denied legal effect merely because it is
made electronically, (B) each E-Signature on any such posting shall be deemed
sufficient to satisfy any requirement for a “signature” and (C) each such
posting shall be deemed sufficient to satisfy any requirement for a “writing”,
in each case including pursuant to any Loan Document, any applicable provision
of any UCC, the federal Uniform Electronic Transactions Act, the Electronic
Signatures in Global and National Commerce Act and any substantive or procedural
Requirement of Law governing such subject matter, (ii) each such posting that is
not readily capable of bearing either a signature or a reproduction of a
signature may be signed, and shall be deemed signed, by attaching to, or
logically associating with such posting, an E-Signature, upon which each Secured
Party and Loan Party may rely and assume the authenticity thereof, (iii) each
such posting containing a signature, a reproduction of a signature or an
E-Signature shall, for all intents and purposes, have the same effect and weight
as a signed paper original and (iv) each party hereto or beneficiary hereto
agrees not to contest the validity or enforceability of any posting on any
E-System or E-Signature on any such posting under the provisions of any
applicable Requirement of Law requiring certain documents to be in writing or
signed; provided, however, that nothing herein shall limit such party’s or
beneficiary’s right to contest whether any posting to any E-System or
E-Signature has been altered after transmission.
          (c) Separate Agreements. All uses of an E-System shall be governed by
and subject to, in addition to Section 11.11 and this Section 11.12, separate
terms and conditions posted or referenced in such E-System and related
Contractual Obligations executed by Secured Parties and Group Members in
connection with the use of such E-System.
          (d) LIMITATION OF LIABILITY. ALL E-SYSTEMS AND ELECTRONIC
TRANSMISSIONS SHALL BE PROVIDED “AS IS” AND “AS AVAILABLE”. NONE OF
ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PERSONS WARRANTS THE ACCURACY,
ADEQUACY OR COMPLETENESS OF ANY E-SYSTEMS OR ELECTRONIC TRANSMISSION, AND EACH
DISCLAIMS ALL LIABILITY FOR ERRORS OR OMISSIONS THEREIN. NO WARRANTY OF ANY KIND
IS MADE BY THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PERSONS IN CONNECTION
WITH ANY E-SYSTEMS OR ELECTRONIC COMMUNICATION, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF
THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS. THE BORROWER
AND EACH SECURED PARTY AGREES (AND THE BORROWER SHALL CAUSE EACH OTHER LOAN
PARTY TO AGREE) THAT THE ADMINISTRATIVE AGENT HAS NO RESPONSIBILITY FOR
MAINTAINING OR PROVIDING ANY EQUIPMENT, SOFTWARE, SERVICES OR ANY TESTING
REQUIRED IN CONNECTION WITH ANY ELECTRONIC TRANSMISSION OR OTHERWISE REQUIRED
FOR ANY E-SYSTEM.
     Section 11.13 Governing Law. This Agreement, each other Loan Document that
does not expressly set forth its applicable law, and the rights and obligations
of the parties hereto and thereto shall be governed by, and construed and
interpreted in accordance with, the law of the State of Illinois.

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     Section 11.14 Jurisdiction.
          (a) Submission to Jurisdiction. Any legal action or proceeding with
respect to any Loan Document may be brought in the courts of the State of
Illinois located in the City of Chicago, Illinois, or of the United States of
America sitting in the City of Chicago, Illinois and, by execution and delivery
of this Agreement, the Borrower hereby accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The parties hereto (and, to the extent set forth in any other Loan
Document, each other Loan Party) hereby irrevocably waive any objection,
including any objection to the laying of venue or based on the grounds of forum
non conveniens, that any of them may now or hereafter have to the bringing of
any such action or proceeding in such jurisdictions.
          (b) Service of Process. The Borrower (and, to the extent set forth in
any other Loan Document, each other Loan Party) hereby irrevocably waives
personal service of any and all legal process, summons, notices and other
documents and other service of process of any kind and consents to such service
in any suit, action or proceeding brought in the United States of America with
respect to or otherwise arising out of or in connection with any Loan Document
by any means permitted by applicable Requirements of Law, including by the
mailing thereof (by registered or certified mail, postage prepaid) to the
address of Borrower specified in Section 11.11 (and shall be effective when such
mailing shall be effective, as provided therein). The Borrower (and, to the
extent set forth in any other Loan Document, each other Loan Party) 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.
          (c) Non-Exclusive Jurisdiction. Nothing contained in this
Section 11.14 shall affect the right of the Administrative Agent or any Lender
to serve process in any other manner permitted by applicable Requirements of Law
or commence legal proceedings or otherwise proceed against any Loan Party in any
other jurisdiction.
     Section 11.15 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING WITH RESPECT TO, OR
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, ANY LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREIN OR RELATED THERETO (WHETHER
FOUNDED IN CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO OTHER PARTY AND NO RELATED PERSON 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 THE LOAN DOCUMENTS,
AS APPLICABLE, BY THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.15.
     Section 11.16 Severability. Any provision of any Loan Document being held
illegal, invalid or unenforceable in any jurisdiction shall not affect any part
of such provision not held illegal, invalid or unenforceable, any other
provision of any Loan Document or any part of such provision in any other
jurisdiction.

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     Section 11.17 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Signature
pages may be detached from multiple separate counterparts and attached to a
single counterpart. Delivery of an executed signature page of this Agreement by
facsimile transmission or Electronic Transmission shall be as effective as
delivery of a manually executed counterpart hereof.
     Section 11.18 Entire Agreement. The Loan Documents embody the entire
agreement of the parties and supersede all prior agreements and understandings
relating to the subject matter thereof and any prior letter of interest,
commitment letter, fee letter, confidentiality and similar agreements involving
any Loan Party and any of the Administrative Agent, any Lender or any L/C Issuer
or any of their respective Affiliates relating to a financing of substantially
similar form, purpose or effect. In the event of any conflict between the terms
of this Agreement and any other Loan Document, the terms of this Agreement shall
govern (unless such terms of such other Loan Documents are necessary to comply
with applicable Requirements of Law, in which case such terms shall govern to
the extent necessary to comply therewith).
     Section 11.19 Use of Name. The Borrower agrees, and shall cause each other
Loan Party to agree, that it shall not, and none of its Affiliates shall, issue
any press release or other public disclosure (other than any document filed with
any Governmental Authority relating to a public offering of the Securities of
any Loan Party) using the name, logo or otherwise referring to GE Capital or of
any of its Affiliates, the Loan Documents or any transaction contemplated
therein to which the Secured Parties are party without at least 2 Business Days’
prior notice to GE Capital and without the prior consent of GE Capital except to
the extent required to do so under applicable Requirements of Law and then, only
after consulting with GE Capital prior thereto.
     Section 11.20 Non-Public Information; Confidentiality.
          (a) Each Lender and L/C Issuer acknowledges and agrees that it may
receive material non-public information hereunder concerning the Loan Parties
and their Affiliates and Securities and agrees to use such information in
compliance with all relevant policies, procedures and Contractual Obligations
and applicable Requirements of Laws (including United States federal and state
security laws and regulations).
          (b) Each Lender, L/C Issuer and the Administrative Agent agrees to use
all reasonable efforts to maintain, in accordance with its customary practices,
the confidentiality of information obtained by it pursuant to any Loan Document
and designated in writing by any Loan Party as confidential, except that such
information may be disclosed (i) with the Borrower’s consent, (ii) to Related
Persons of such Lender, L/C Issuer or the Administrative Agent, as the case may
be, or to any Person that any L/C Issuer causes to Issue Letters of Credit
hereunder, that are advised of the confidential nature of such information and
are instructed to keep such information confidential, (iii) to the extent such
information presently is or hereafter becomes available to such Lender, L/C
Issuer or the Administrative Agent, as the case may be, on a non-confidential
basis from a source other than any Loan Party, (iv) to the extent disclosure is
required by applicable Requirements of Law or other legal process or requested
or demanded by any Governmental Authority, (v) to the extent necessary or
customary for inclusion in league

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table measurements or in any tombstone or other advertising materials (and the
Loan Parties consent to the publication of such tombstone or other advertising
materials by the Administrative Agent, any Lender, any L/C Issuer or any of
their Related Persons), (vi) to the National Association of Insurance
Commissioners or any similar organization, any examiner or any nationally
recognized rating agency or otherwise to the extent consisting of general
portfolio information that does not identify borrowers, (vii) to current or
prospective assignees, SPVs grantees of any option described in Section 11.2(f)
or participants, direct or contractual counterparties to any Hedging Agreement
permitted hereunder and to their respective Related Persons, in each case to the
extent such assignees, participants, counterparties or Related Persons agree to
be bound by the provisions of this Section 11.20 and (viii) in connection with
the exercise of any remedy under any Loan Document. In the event of any conflict
between the terms of this Section 11.20 and those of any other Contractual
Obligation entered into with any Loan Party (whether or not a Loan Document),
the terms of this Section 11.20 shall govern.
     Section 11.21 Patriot Act Notice. Each Lender subject to the USA Patriot
Act of 2001 (31 U.S.C. 5318 et seq.) hereby notifies the Borrower that, pursuant
to Section 326 thereof, it is required to obtain, verify and record information
that identifies the Borrower, including the name and address of the Borrower and
other information allowing such Lender to identify the Borrower in accordance
with such act.
[SIGNATURE PAGES FOLLOW]

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

            ASSISTED LIVING CONCEPTS, INC.,
as Borrower
      By:   /s/ Walter A. Levonowich       Name:   Walter A. Levonowich      
Title:   Vice President, Controller and Assistant Treasurer    

            GENERAL ELECTRIC CAPITAL CORPORATION         as Administrative
Agent, Swingline Lender
and Lender
      By:   /s/ John Dale       Name:   John Dale       Title:   Duly Authorized
Signatory  

            U. S. BANK NATIONAL ASSOCIATION,         as Lender and as L/C Issuer
      By:   /s/ Matthew J. Schulz       Name:   Matthew J. Schulz       Title:  
Vice President  

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            OTHER LENDERS:

CIBC INC., as Lender
      By:   /s/ Doug Cornett       Name:   Doug Cornett       Title:  
Authorized Signatory    

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