EXHIBIT 10.1

AMENDMENT AND RESTATEMENT AGREEMENT dated as of April 9, 2010 (this
“Agreement”), among SKILLED HEALTHCARE GROUP, INC., a Delaware corporation
(“Company”), THE SUBSIDIARY GUARANTORS LISTED ON THE SIGNATURE PAGES HERETO, THE
LENDERS LISTED ON THE SIGNATURE PAGES HERETO and CREDIT SUISSE AG, as
Administrative Agent for Lenders and as Collateral Agent for Lenders.

WHEREAS, Company, Administrative Agent and certain lenders (“Existing Lenders”)
are party to the Second Amended and Restated First Lien Credit Agreement dated
as of December 27, 2005, as amended by the First Amendment dated as of
January 31, 2007 and the Second Amendment dated as of April 28, 2009 (the
“Existing Credit Agreement”);

WHEREAS, Company, Collateral Agent and certain subsidiaries of Company party
thereto (the “Subsidiary Guarantors”) are party to (a) the Amended and Restated
First Lien Security Agreement dated as of June 15, 2005 (the “Security
Agreement”), and (b) the Amended and Restated First Lien Subsidiary Guaranty
dated as of June 15, 2005 (the “Subsidiary Guaranty” and, together with the
Security Agreement and the Collateral Documents (as defined in the Existing
Credit Agreement), the “Existing Collateral Documents”);

WHEREAS, upon the terms and subject to the conditions set forth herein, Company
and certain lenders under the Existing Credit Agreement, who immediately prior
to the Effective Time (as defined below), comprise Requisite Lenders under and
as defined in the Existing Credit Agreement (the “Existing Requisite Lenders”),
desire to amend the Existing Credit Agreement to, among other things, permit
Company to incur new incremental commitments and loans thereunder and to waive a
Potential Event of Default thereunder (such amendment and waiver, the
“Amendment”);

WHEREAS, substantially simultaneously with the effectiveness of the Amendment
and upon the terms and subject to the conditions set forth herein, the lenders
listed on Schedule 1 hereto (“New Lenders”) have agreed to extend $330,000,000
in incremental term loans (“New Term Loans”), $30,000,000 in delayed draw term
loan commitments (“New Delayed Draw Commitments”) and $100,000,000 in
incremental revolving commitments (“New Revolving Commitments” and, together
with New Term Loans and New Delayed Draw Commitments, “New Credit Extensions”)
to Company (the “Incremental Credit Extensions”);

WHEREAS, substantially simultaneously with the effectiveness of the Incremental
Credit Extensions and upon the terms and subject to the conditions set forth
herein, Company wishes to use the proceeds of New Term Loans to repay all
Obligations other than Unasserted Obligations (each as defined in the Existing
Credit Agreement) in effect immediately prior to the Effective Time (the
“Pay-Out Obligations”) and simultaneously terminate in whole all Revolving Loan
Commitments outstanding immediately prior to the Effective Time (such repayment
and termination, the “Pay-Out”);

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WHEREAS, substantially simultaneously with the effectiveness of the Pay-Out and
upon the terms and subject to the conditions set forth herein, Company,
Administrative Agent and New Lenders wish to amend and restate the Existing
Credit Agreement in its entirety (the “Amendment and Restatement”) in the form
of the Third Amended and Restated Credit Agreement attached hereto as Exhibit A
(the “Restated Credit Agreement”);

WHEREAS, substantially simultaneously with the effectiveness of the Amendment
and Restatement and upon the terms and subject to the conditions set forth
herein, each of the respective Loan Parties wishes to affirm and confirm its
guarantee, pledge, grant and other agreements under the Existing Collateral
Documents (the “Collateral Documents Reaffirmation”);

WHEREAS, it is the intention of all parties hereto that the Amendment, the
Incremental Credit Extensions, the Pay-Out, the Amendment and Restatement and
the Collateral Documents Reaffirmation (collectively, the “Transactions”) occur
substantially simultaneously and become fully effective as of the Effective
Time; and

WHEREAS, it is the intention of all parties hereto that, following the
Transactions, the Restated Credit Agreement is a continuation of the Existing
Credit Agreement and the Collateral securing the Obligations under the Existing
Credit Agreement will continue to secure, with equal priority, the Obligations
under the Restated Credit Agreement.

NOW, THEREFORE, in consideration of the mutual agreements herein contained and
other good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, the parties hereto hereby agree as follows:

Section 1. DEFINITIONS.

Capitalized terms used and not defined herein shall have the meanings assigned
to such terms in the Restated Credit Agreement. The rules of construction set
forth in subsection 1.3 of the Restated Credit Agreement are hereby incorporated
by reference herein, mutatis mutandis.

Section 2. AMENDMENT OF THE EXISTING CREDIT AGREEMENT AND WAIVER.

A. Amendment. At the Effective Time, Company and Existing Requisite Lenders
hereby agree to amend the Existing Credit Agreement as follows:

(i) Subsection 2.1A(iv)(1) is amended by deleting the figure “$150,000,000” and
replacing it with the figure “$460,000,000”.

 

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(ii) Subsections 2.1A(iv)(4), 2.1A(iv)(5), 2.1A(iv)(6)(ii) and 2.1A(iv)(7) are
each hereby deleted in their entirety and replaced with “[Intentionally
Omitted]”.

B. Waiver. At the Effective Time, Existing Requisite Lenders hereby waive any
Potential Event of Default existing at such time and attributable to the failure
of Company to timely provide any notice required pursuant to subsection 2.4B of
the Existing Credit Agreement in connection with the mandatory prepayment to be
made by Company under subsection 2.4B(iii)(e) of the Existing Credit Agreement
for the fiscal year ended December 31, 2009.

Section 3. INCREMENTAL CREDIT EXTENSIONS

A. Each New Lender hereby agrees, severally and not jointly, to, at the
Effective Time and after giving effect to the Amendment, extend New Term Loans,
New Delayed Draw Commitments and New Revolving Commitments to Company in the
amounts set forth next to such New Lender’s name on Schedule 1 hereto.

B. All such New Credit Extensions shall be subject to the terms and conditions
set forth in the Restated Credit Agreement (including subsection 2.1 thereof).

C. The proceeds of New Term Loans shall be used by Company (i) first, to repay
in full the Pay-Out Obligations, and (ii) thereafter as may be permitted by the
terms and conditions of the Restated Credit Agreement.

D. Each of Administrative Agent, Existing Requisite Lenders, New Lenders and
Company consents to the Transactions and each hereby acknowledges and agrees
that, notwithstanding anything to the contrary set forth in the Existing Credit
Agreement (including subsection 2.1A(iv) thereof), as of the Effective Time,
subject to the terms and conditions set forth herein and in the Restated Credit
Agreement, Company shall be permitted to incur Incremental Credit Extensions
under the Existing Credit Agreement.

Section 4. PAY-OUT.

A. In connection with the foregoing and as of the Effective Time, Company shall
cause a payment in an amount equal to the total amount set forth on Schedule 2
hereto (the “Pay-Out Amount”) representing all amounts owing in connection with
the Pay-Out Obligations as of 4:00 p.m. (New York City time) on April 9, 2010,
including any and all amounts of principal, interest to date, fees, penalties,
if any, costs of counsel and indemnity amounts (all as set forth in detail on
Schedule 2 hereto) (but, for the avoidance of doubt, excluding any Unasserted
Obligations, including possible breakage costs which may be invoiced at a later
date (the “Excluded Breakage Costs”) and expense reimbursement and contingent
indemnity obligations which by the terms of the Existing Credit Agreement or any
other Loan Document expressly survive), to Administrative Agent.

 

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B. Company hereby authorizes and directs Administrative Agent (and
Administrative Agent hereby agrees), to apply proceeds of New Term Loans held by
Administrative Agent at the Effective Time to pay the Pay-Out Obligations.

C. The Pay-Out Amount has been calculated assuming payment on April 9, 2010 (the
“Pay-Out Date”). If the Pay-Out Amount is not paid to Administrative Agent as
provided above by 4:00 p.m. (New York City time) on the Pay-Out Date, the
Pay-Out Amount shall be recalculated to reflect changes thereto, including
additional interest in the amount of $22,294.74 per day for each day after the
Pay-Out Date.

D. New Lenders hereby irrevocably waive any right they may have under the
Existing Credit Agreement, Restated Credit Agreement or any other Loan Document
to receive any portion of the proceeds of the Pay-Out.

E. Company and each of the other Loan Parties hereby acknowledge and agree that
the obligations and liabilities of the Loan Parties under the Existing Credit
Agreement and other Loan Documents shall be reinstated with full force and
effect if, at any time on or after the Pay-Out Date, all or any portion of the
Pay-Out Amount paid to Administrative Agent or any Existing Lender is voided or
rescinded or must otherwise be returned by Administrative Agent or any Existing
Lender to Company or any other Loan Party upon Company’s or any other Loan
Party’s insolvency, bankruptcy or reorganization or otherwise, all as though
such payment had not been made; provided that each of the parties hereto hereby
acknowledges and agrees that any such reinstatement shall not effect the
validity of this Agreement, the Amendment and Restatement, Restated Credit
Agreement or any other Loan Document.

F. Each of Company, New Lenders, Existing Requisite Lenders and Administrative
Agent hereby agrees to the foregoing and each hereby acknowledges and agrees
that, notwithstanding anything to the contrary set forth in the Existing Credit
Agreement (including subsection 2.4B thereof), as of the Effective Time, all
notice and documentation requirements applicable to the Pay-Out shall be deemed
fully satisfied and completed.

Section 5. AMENDMENT AND RESTATEMENT OF THE EXISTING CREDIT AGREEMENT.

New Lenders, Company and Administrative Agent hereby agree that, as of the
Effective Time and after giving effect to the Amendment, Incremental Credit
Extensions and Pay-Out (at which time New Lenders will be the only Lenders under
the Existing Credit Agreement), the Existing Credit Agreement shall be amended
and restated in its entirety in the form of the Restated Credit Agreement
attached hereto as Exhibit A.

Section 6. COLLATERAL DOCUMENTS REAFFIRMATION

A. Each Loan Party hereby acknowledges that it expects to realize substantial
direct and indirect benefits as a result of the Transactions and the extension
of credit to Company in the form of the Incremental Credit Extensions.

 

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B. Each Loan Party hereby acknowledges its receipt of the Restated Credit
Agreement and its review of the terms and conditions thereof and consents to the
terms and conditions of this Agreement, the Restated Credit Agreement and the
Transactions contemplated hereby and thereby, including the extension of credit
to Company in the form of the Incremental Credit Extensions.

C. Each Loan Party hereby, to the extent a party to any Existing Collateral
Document, (i) affirms and confirms its guarantee, pledge, grant and other
agreements under each such Existing Collateral Document (including, without
limitations, its grants of security interests under the Existing Collateral
Documents) and (ii) agrees that, notwithstanding the effectiveness of this
Agreement or the Restated Credit Agreement or the occurrence of the
Transactions, (a) each such Existing Collateral Document shall continue to be in
full force and effect and (b) all guarantees, pledges, grants and other
agreements thereunder shall continue to be in full force and effect in respect
of, and to secure, the Incremental Credit Extensions and the other Obligations
under the Existing Credit Agreement and the Restated Credit Agreement, all for
the benefit of Collateral Agent and Beneficiaries.

Section 7. EFFECTIVENESS; AMENDMENTS; COUNTERPARTS.

A. This Agreement shall become effective as of the time (the “Effective Time”)
when Administrative Agent has received (i) counterparts of this Agreement that,
when taken together, bear the signatures of (a) Company, (b) Existing Requisite
Lenders, (c) each of the New Lenders, (d) Administrative Agent, (e) Collateral
Agent and (f) each of the Subsidiary Guarantors, (ii) the proceeds of the New
Term Loans, (iii) evidence satisfactory to Administrative Agent that the
conditions set forth in subsections 4.1, 4.2 and 4.3 of the Restated Credit
Agreement have been satisfied and (iv) any other certificates or documents that
Administrative Agent shall reasonably request, each in form and substance
reasonably satisfactory to Administrative Agent.

B. This Agreement may not be amended nor may any provision hereof be waived
except pursuant to a writing signed by Company, Administrative Agent and New
Lenders; provided that any amendment to Section 2 hereof shall also require the
consent of Existing Requisite Lenders.

C. This Agreement may be executed in one or more counterparts, each of which
shall constitute an original but all of which when taken together shall
constitute a single agreement. Delivery of an executed counterpart of a
signature page of this Agreement by facsimile, PDF file or other electronic
transmission shall be effective as delivery of a manually executed counterpart
of this Agreement.

Section 8. EFFECT OF THIS AGREEMENT.

A. None of the Transactions, this Agreement, the Existing Credit Agreement, the
Restated Credit Agreement nor any other Loan Document shall release, limit or
impair in any way the priority of any security interests and liens held by
Administrative Agent and/or Collateral Agent for the benefit of all or any
Lenders against any assets of

 

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Company or any of Company’s Subsidiaries arising under the Existing Credit
Agreement, the Restated Credit Agreement, the Existing Collateral Documents or
any other Loan Document, in each case as such documents may be amended, modified
or supplemented from time to time.

B. The Letters of Credit outstanding under the Existing Credit Agreement (the
“Existing Letters of Credit”) shall remain outstanding following the Effective
Time. Pursuant to the Restated Credit Agreement, each Existing Letter of Credit
will automatically, without any action on the part of any person, be deemed to
be a Letter of Credit issued under the Restated Credit Agreement for the account
of Company for all purposes of the Restated Credit Agreement and the other Loan
Documents. The parties hereto (including Administrative Agent, in its capacity
as Issuing Bank in respect of Existing Letters of Credit), agree that as of the
Effective Time each Existing Lender shall irrevocably and automatically be
released from its obligations under the Existing Credit Agreement in respect of
Existing Letters of Credit (including participations therein).

C. Except as expressly set forth herein, this Agreement shall not by implication
or otherwise limit, impair, constitute a waiver of, or otherwise affect the
rights and remedies of Lenders, Collateral Agent or Administrative Agent under
the Existing Credit Agreement, the Restated Credit Agreement or any other Loan
Document. Nothing herein shall be deemed to entitle Company or any Loan Party to
a consent to, or a waiver, amendment, modification or other change of, any of
the terms, conditions, obligations, covenants or agreements contained in the
Existing Credit Agreement, the Restated Credit Agreement or any other Loan
Document in similar or different circumstances.

D. For the avoidance of doubt, nothing contained in this Agreement shall
terminate or otherwise impair Company’s obligations (i) in respect of any
Unasserted Obligations under the Existing Credit Agreement, (ii) relating to New
Credit Extensions or (iii) otherwise arising under the terms of the Restated
Credit Agreement.

E. This Agreement shall constitute a “Loan Document” under the Existing Credit
Agreement and the Restated Credit Agreement for all purposes.

Section 9. EXPENSES; INDEMNITY; APPLICABLE LAW; WAIVER OF JURY TRIAL.

The provisions of subsections 10.2, 10.3, 10.15, 10.16, 10.17 and 10.18 of the
Restated Credit Agreement pertaining to expenses, indemnity, applicable law
construction, consent to jurisdiction and service of process, and waiver of jury
trial are hereby incorporated by reference herein, mutatis mutandis.

[Remainder of page intentionally left blank]

 

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

 

  SKILLED HEALTHCARE GROUP, INC.   by      

/s/ Dev Ghose

    Name:   Dev Ghose     Title:   Treasurer and Chief Financial Officer
Subsidiaries:    

ALBUQUERQUE HEIGHTS HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

   

ALEXANDRIA CARE CENTER, LLC,

a Delaware limited liability company

   

ALTA CARE CENTER, LLC

dba ALTA GARDENS CARE CENTER,

a Delaware limited liability company

   

ANAHEIM TERRACE CARE CENTER, LLC,

a Delaware limited liability company

   

BALDWIN HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

   

BAY CREST CARE CENTER, LLC,

a Delaware limited liability company

   

BELEN MEADOWS HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

   

BLUE RIVER REHABILITATION CENTER, LLC,

a Delaware limited liability company

   

BRIARCLIFF NURSING AND

REHABILITATION CENTER GP, LLC,

a Delaware limited liability company

[Skilled Healthcare Group, Inc. - Signature Page to

Amendment and Restatement Agreement]

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BRIARCLIFF NURSING AND

REHABILITATION CENTER, LP,

a Delaware limited partnership

By:   Briarcliff Nursing and Rehabilitation  

Center GP, LLC,

its General Partner

BRIER OAK ON SUNSET, LLC,

a Delaware limited liability company

CAMERON NURSING AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

CANYON TRANSITIONAL

REHABILITATION CENTER, LLC,

a Delaware limited liability company

CAREHOUSE HEALTHCARE CENTER, LLC,

a Delaware limited liability company

CARMEL HILLS HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

CHESTNUT PROPERTY, LLC,

a Delaware limited liability company

CITY VIEW VILLA, LLC,

a Delaware limited liability company (fka

Hancock Park Senior Assisted Living, LLC)

CLAIRMONT BEAUMONT GP, LLC,

a Delaware limited liability company

CLAIRMONT BEAUMONT, LP,

a Delaware limited partnership

By:   Clairmont Beaumont GP, LLC,   its General Partner

CLAIRMONT LONGVIEW GP, LLC,

a Delaware limited liability company

[Skilled Healthcare Group, Inc. - Signature Page to

Amendment and Restatement Agreement]

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CLAIRMONT LONGVIEW, LP,

a Delaware limited partnership

By:   Clairmont Longview GP, LLC,   its General Partner

CLOVIS HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

COLONIAL NEW BRAUNFELS CARE

CENTER, LP dba COLONIAL MANOR

CARE CENTER,

a Delaware limited partnership

By:   Colonial New Braunfels GP, LLC,   its General Partner

COLONIAL NEW BRAUNFELS GP, LLC,

a Delaware limited liability company

COLONIAL TYLER CARE CENTER, LP,

a Delaware limited partnership

By:   Colonial Tyler GP, LLC,   its General Partner

COLONIAL TYLER GP, LLC,

a Delaware limited liability company

CORONADO NURSING CENTER GP, LLC,

a Delaware limited liability company

CORONADO NURSING CENTER, LP,

a Delaware limited partnership

By:   Coronado Nursing Center GP, LLC,   its General Partner

DEVONSHIRE CARE CENTER, LLC,

a Delaware limited liability company

EAST SUNRISE PROPERTY, LLC,

a Delaware limited liability company

EAST RUSHOLME PROPERTY, LLC,

a Delaware limited liability company

[Skilled Healthcare Group, Inc. - Signature Page to

Amendment and Restatement Agreement]

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EAST WALNUT PROPERTY, LLC,

a Delaware limited liability company

ELMCREST CARE CENTER, LLC,

a Delaware limited liability company

EUCLID PROPERTY, LLC,

a Delaware limited liability company

EUREKA HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

FLATONIA OAK MANOR GP, LLC,

a Delaware limited liability company

FLATONIA OAK MANOR, LP

dba OAK MANOR NURSING CENTER,

a Delaware limited partnership

By:   Flatonia Oak Manor GP, LLC,   its General Partner

FORT WORTH CENTER OF

REHABILITATION, LLC

a Delaware limited liability company

FOUNTAIN CARE CENTER, LLC,

a Delaware limited liability company

FOUNTAIN SENIOR ASSISTED LIVING, LLC,

a Delaware limited liability company

FOUNTAIN VIEW SUBACUTE AND

NURSING CENTER, LLC,

a Delaware limited liability company

GLEN HENDREN PROPERTY, LLC,

a Delaware limited liability company

GRANADA HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

[Skilled Healthcare Group, Inc. - Signature Page to

Amendment and Restatement Agreement]

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GUADALUPE VALLEY NURSING

CENTER GP, LLC,

a Delaware limited liability company

GUADALUPE VALLEY NURSING

CENTER, LP,

a Delaware limited partnership

By:   Guadalupe Valley Nursing Center GP,   LLC, its General Partner

HALLETTSVILLE REHABILITATION AND

NURSING CENTER, LP,

a Delaware limited partnership

By:   Hallettsville Rehabilitation GP, LLC,   its General Partner

HALLETTSVILLE REHABILITATION GP, LLC,

a Delaware limited liability company

HALLMARK INVESTMENT GROUP, INC.,

a Delaware corporation

HALLMARK REHABILITATION GP, LLC,

a Delaware limited liability company

HANCOCK PARK REHABILITATION

CENTER, LLC,

a Delaware limited liability company

HEMET SENIOR ASSISTED LIVING, LLC,

a Delaware limited liability company

HIGHLAND HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

HOLMESDALE HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

HOLMESDALE PROPERTY, LLC,

a Delaware limited liability company

[Skilled Healthcare Group, Inc. - Signature Page to

Amendment and Restatement Agreement]

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HOSPICE CARE INVESTMENTS, LLC,

a Delaware limited liability company

HOSPICE CARE OF THE WEST, LLC,

a Delaware limited liability company

HOSPITALITY NURSING AND

REHABILITATION CENTER, LP

dba LUBBOCK HOSPITALITY HOUSE

NURSING AND REHABILITATION

CENTER,

a Delaware limited partnership

By:   Hospitality Nursing GP, LLC,   its General Partner

HOSPITALITY NURSING GP, LLC,

a Delaware limited liability company

LEASEHOLD RESOURCE GROUP, LLC,

a Delaware limited liability company

LIBERTY TERRACE HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

LIVE OAK NURSING CENTER GP, LLC,

a Delaware limited liability company

LIVE OAK NURSING CENTER, LP,

a Delaware limited partnership

By:   Live Oak Nursing Center GP, LLC,   its General Partner

LOUISBURG HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

MONTEBELLO CARE CENTER, LLC,

a Delaware limited liability company

[Skilled Healthcare Group, Inc. - Signature Page to

Amendment and Restatement Agreement]

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MONUMENT REHABILITATION AND

NURSING CENTER, LP

dba MONUMENT HILL REHABILITATION

AND NURSING CENTER,

a Delaware limited partnership

By:   Monument Rehabilitation GP, LLC,   its General Partner

MONUMENT REHABILITATION GP, LLC,

a Delaware limited liability company

OAK CREST NURSING CENTER GP, LLC,

a Delaware limited liability company

OAK CREST NURSING CENTER, LP,

a Delaware limited partnership

By:   Oak Crest Nursing Center GP, LLC,   its General Partner

OAKLAND MANOR NURSING CENTER, LP,

a Delaware limited partnership

By:   Oakland Manor GP, LLC,   its General Partner

OAKLAND MANOR GP, LLC,

a Delaware limited liability company

PACIFIC HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

PREFERRED DESIGN, LLC,

a Delaware limited liability company

RICHMOND HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

RIO HONDO SUBACUTE AND

NURSING CENTER, LLC,

a Delaware limited liability company

[Skilled Healthcare Group, Inc. - Signature Page to

Amendment and Restatement Agreement]

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RIVERVIEW DES MOINES PROPERTY, LLC,

a Delaware limited liability company

ROSSVILLE HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

ROYALWOOD CARE CENTER, LLC,

a Delaware limited liability company

SANDPIPER HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

SEAVIEW HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

SHARON CARE CENTER, LLC,

a Delaware limited liability company

SHAWNEE GARDENS HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

SHG RESOURCES, LP,

a Delaware limited partnership

By:   Leasehold Resource Group, LLC,   its General Partner

SKIES HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

SKILLED HEALTHCARE, LLC,

a Delaware limited liability company

SOUTH SWOPE PROPERTY, LLC,

a Delaware limited liability company

SOUTHWEST PAYROLL SERVICES, LLC,

a Delaware limited liability company

SOUTHWOOD CARE CENTER GP, LLC,

a Delaware limited liability company

[Skilled Healthcare Group, Inc. - Signature Page to

Amendment and Restatement Agreement]

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SOUTHWOOD CARE CENTER, LP,

a Delaware limited partnership

By:   Southwood Care Center GP, LLC,   its General Partner

SPRING SENIOR ASSISTED LIVING, LLC,

a Delaware limited liability company

ST. ANTHONY HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

ST. CATHERINE HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

ST. ELIZABETH HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

ST. JOHN HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

ST. JOSEPH TRANSITIONAL

REHABILITATION CENTER, LLC,

a Delaware limited liability company

ST. LUKE HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

ST. MARY HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

ST. THERESA HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

SUMMIT CARE CORPORATION,

a Delaware corporation

SUMMIT CARE PHARMACY, INC.

dba SKILLED CARE PHARMACY,

a Delaware corporation

[Skilled Healthcare Group, Inc. - Signature Page to

Amendment and Restatement Agreement]

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SYCAMORE PARK CARE CENTER, LLC,

a Delaware limited liability company

TEXAS CITYVIEW CARE CENTER GP, LLC,

a Delaware limited liability company

TEXAS CITYVIEW CARE CENTER, LP

dba CITYVIEW CARE CENTER,

a Delaware limited partnership

By:   Texas Cityview Care Center GP, LLC,   its General Partner

TEXAS HERITAGE OAKS NURSING AND

REHABILITATION CENTER GP, LLC,

a Delaware limited liability company

TEXAS HERITAGE OAKS NURSING AND

REHABILITATION CENTER, LP

dba HERITAGE OAKS NURSING AND

REHABILITATION CENTER,

a Delaware limited partnership

By:   Texas Heritage Oaks Nursing  

and Rehabilitation Center GP, LLC,

its General Partner

THE CLAIRMONT TYLER GP, LLC,

a Delaware limited liability company

THE CLAIRMONT TYLER, LP,

a Delaware limited partnership

By:   The Clairmont Tyler GP, LLC,   its General Partner

THE DALLAS CENTER OF

REHABILITATION, LLC

a Delaware limited liability company

THE EARLWOOD, LLC,

a Delaware limited liability company

THE HEIGHTS OF SUMMERLIN, LLC,

a Delaware limited liability company

[Skilled Healthcare Group, Inc. - Signature Page to

Amendment and Restatement Agreement]

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THE REHABILITATION CENTER OF

ALBUQUERQUE, LLC,

a Delaware limited liability company

THE REHABILITATION CENTER OF DES

MOINES, LLC,

a Delaware limited liability company

THE REHABILITATION CENTER OF

INDEPENDENCE, LLC,

a Delaware limited liability company

THE REHABILITATION CENTER OF

RAYMORE, LLC,

a Delaware limited liability company

THE WOODLANDS HEALTHCARE

CENTER, LP,

a Delaware limited partnership

By:   The Woodlands Healthcare Center GP, LLC,   its General Partner

THE WOODLANDS HEALTHCARE

CENTER GP, LLC,

a Delaware limited liability company

TOWN AND COUNTRY MANOR GP, LLC,

a Delaware limited liability company

TOWN AND COUNTRY MANOR, LP,

a Delaware limited partnership

By:   Town and Country Manor GP, LLC,   its General Partner

VALLEY HEALTHCARE CENTER, LLC,

a Delaware limited liability company

VILLA MARIA HEALTHCARE CENTER, LLC

dba VILLA MARIA CARE CENTER,

a Delaware limited liability company

VINTAGE PARK AT ATCHISON, LLC,

a Delaware limited liability company

[Skilled Healthcare Group, Inc. - Signature Page to

Amendment and Restatement Agreement]

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VINTAGE PARK AT BALDWIN CITY, LLC,

a Delaware limited liability company

VINTAGE PARK AT EUREKA, LLC,

a Delaware limited liability company

VINTAGE PARK AT FREDONIA, LLC,

a Delaware limited liability company

VINTAGE PARK AT GARDNER, LLC,

a Delaware limited liability company

VINTAGE PARK AT HIAWATHA, LLC,

a Delaware limited liability company

VINTAGE PARK AT HOLTON, LLC,

a Delaware limited liability company

VINTAGE PARK AT LENEXA, LLC,

a Delaware limited liability company

VINTAGE PARK AT LOUISBURG, LLC,

a Delaware limited liability company

VINTAGE PARK AT NEODESHA, LLC,

a Delaware limited liability company

VINTAGE PARK AT OSAGE CITY, LLC,

a Delaware limited liability company

VINTAGE PARK AT OSAWATOMIE, LLC,

a Delaware limited liability company

VINTAGE PARK AT OTTAWA, LLC,

a Delaware limited liability company

VINTAGE PARK AT PAOLA, LLC,

a Delaware limited liability company

VINTAGE PARK AT STANLEY, LLC,

a Delaware limited liability company

VINTAGE PARK AT TONGANOXIE, LLC,

a Delaware limited liability company

[Skilled Healthcare Group, Inc. - Signature Page to

Amendment and Restatement Agreement]

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VINTAGE PARK AT WAMEGO, LLC,

a Delaware limited liability company

VINTAGE PARK AT WATERFRONT, LLC,

a Delaware limited liability company

WATHENA HEALTHCARE AND

REHABILITATION CENTER, LLC,

a Delaware limited liability company

WEST SIDE CAMPUS OF CARE GP, LLC,

a Delaware limited liability company

WEST SIDE CAMPUS OF CARE, LP,

a Delaware limited partnership

By:   West Side Campus of Care GP, LLC,   its General Partner

WILLOW CREEK HEALTHCARE CENTER, LLC,

a Delaware limited liability company

WOODLAND CARE CENTER, LLC,

a Delaware limited liability company

By:  

/s/ Zachary Larson

  on behalf of each of the entities listed above Name:   Zachary Larson Title:  
Assistant Secretary of each entity above listed

[Skilled Healthcare Group, Inc. - Signature Page to

Amendment and Restatement Agreement]

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CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as Administrative Agent and Collateral
Agent and in its individual capacity as a Lender,

by

   

/s/ Karim Blasetti

 

Name:

 

Karim Blasetti

 

Title:

 

Vice President by

by

   

/s/ Mikhail Faybusovich

 

Name:

 

Mikhail Faybusovich

 

Title:

 

Vice President

[Skilled Healthcare Group, Inc. - Signature Page to

Amendment and Restatement Agreement]

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EXISTING LENDERS SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT DATED
AS OF THE DATE FIRST WRITTEN ABOVE TO THE SKILLED HEALTHCARE GROUP, INC. SECOND
AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF DECEMBER 27, 2005, AS AMENDED.

 

Name of Institution:  

JPMORGAN CHASE BANK, N.A.

by    

/s/ Dawn Lee Lum

  Name:   Dawn Lee Lum   Title:   Executive Director For any Lender requiring a
second signature line: by       Name:  

 

  Title:  

 

[Skilled Healthcare Group, Inc. - Signature Page to

Amendment and Restatement Agreement]

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NEW LENDERS SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT DATED AS
OF THE DATE FIRST WRITTEN ABOVE TO THE SKILLED HEALTHCARE GROUP, INC. SECOND
AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF DECEMBER 27, 2005, AS AMENDED.

 

Name of Institution:  

GENERAL ELECTRIC CAPITAL CORPORATION

by    

/s/ Dianne Miller

  Name:   Dianne Miller   Title:   Duly Authorized Signatory For any Lender
requiring a second signature line: by     Name:  

 

  Title:  

 

[Skilled Healthcare Group, Inc. - Signature Page to

Amendment and Restatement Agreement]

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NEW LENDERS SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT DATED AS
OF THE DATE FIRST WRITTEN ABOVE TO THE SKILLED HEALTHCARE GROUP, INC. SECOND
AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF DECEMBER 27, 2005, AS AMENDED.

 

Name of Institution:  

Bank of America, N.A.

by  

/s/ Jill J. Hogan

  Name:   Jill J. Hogan   Title:   Vice President For any Lender requiring a
second signature line: by       Name:  

 

  Title:  

 

[Skilled Healthcare Group, Inc. - Signature Page to

Amendment and Restatement Agreement]

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NEW LENDERS SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT DATED AS
OF THE DATE FIRST WRITTEN ABOVE TO THE SKILLED HEALTHCARE GROUP, INC. SECOND
AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF DECEMBER 27, 2005, AS AMENDED.

 

Name of Institution:  

Wells Fargo Bank, NA

by  

/s/ Kenneth C. Coulter

  Name:   Kenneth C. Coulter   Title:   Senior Vice President For any Lender
requiring a second signature line: by     Name:  

 

  Title:  

 

[Skilled Healthcare Group, Inc. - Signature Page to

Amendment and Restatement Agreement]

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NEW LENDERS SIGNATURE PAGE TO THE AMENDMENT AND RESTATEMENT AGREEMENT DATED AS
OF THE DATE FIRST WRITTEN ABOVE TO THE SKILLED HEALTHCARE GROUP, INC. SECOND
AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF DECEMBER 27, 2005, AS AMENDED.

 

Name of Institution:  

BARCLAYS BANK PLC

by    

/s/ John Skrobe

  Name:   John Skrobe   Title:   Managing Director For any Lender requiring a
second signature line: by     Name:  

 

  Title:  

 

[Skilled Healthcare Group, Inc. - Signature Page to

Amendment and Restatement Agreement]

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EXHIBIT A

Restated Credit Agreement

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SKILLED HEALTHCARE GROUP, INC.

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

This THIRD AMENDED AND RESTATED CREDIT AGREEMENT is dated as of April 9, 2010
and entered into by and among SKILLED HEALTHCARE GROUP, INC., a Delaware
corporation (“Company”), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE
PAGES TO THE AMENDMENT AND RESTATEMENT AGREEMENT (as defined below) (each
individually referred to herein as a “Lender” and collectively as “Lenders”),
and CREDIT SUISSE AG (“CS”), as administrative agent for Lenders (in such
capacity, “Administrative Agent”) and as collateral agent for Lenders (in such
capacity, “Collateral Agent”).

RECITALS

WHEREAS, Company, Administrative Agent and certain lenders (“Previous Lenders”)
are party to the Existing Credit Agreement (capitalized terms used in these
recitals without definition are defined in subsection 1.1 of this Agreement);

WHEREAS, on the Effective Date, Company, Subsidiary Guarantors, Administrative
Agent, Collateral Agent, Requisite Lenders under and as defined in the Existing
Credit Agreement and all Lenders hereunder executed and delivered the Amendment
and Restatement Agreement;

WHEREAS, pursuant to the Amendment and Restatement Agreement, (i) Company and
Requisite Lenders under and as defined in the Existing Credit Agreement amended
the Existing Credit Agreement to, among other things, permit Company to incur
incremental commitments of up to $460,000,000, (ii) Lenders hereunder extended
$330,000,000 in incremental term loans ( “New Term Loans”), $30,000,000 in
delayed draw term loan commitments and $100,000,000 in incremental revolving
commitments ( “New Revolving Commitments”) under the Existing Credit Agreement
(with the terms of such incremental loans and commitments to be governed by the
terms of this Agreement), (iii) the proceeds of New Term Loans were used to
repay all obligations of Company owed to Previous Lenders under the Existing
Credit Agreement (other than Unasserted Obligations, as defined in the Existing
Credit Agreement) and pay related fees and expenses, (iv) the revolving loan
commitments under the Existing Credit Agreement were terminated and replaced by
New Revolving Commitments, (v) Company, Subsidiary Guarantors, Administrative
Agent, Collateral Agent and all Lenders hereunder as of the Effective Date,
amended and restated the Existing Credit Agreement in its entirety to appear in
the form of this Agreement and reaffirmed all obligations of Company and
Subsidiaries arising under the Collateral Documents (clauses (i) through
(v) above, collectively, the “Transactions”) and (vi) all the Transactions were
deemed to have occurred substantially simultaneously on the Effective Date;

WHEREAS, it is the intention of all parties to the Amendment and Restatement
Agreement that following the Transactions, the Collateral securing the
obligations under the Existing Credit Agreement will continue to secure, with
equal priority, the Obligations hereunder and under the other Loan Documents;

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NOW, THEREFORE, in consideration of the premises and the agreements, provisions
and covenants herein contained, Company, Lenders and Administrative Agent hereby
agree as follows:

Section 1. DEFINITIONS

 

  1.1 Certain Defined Terms.

The following terms used in this Agreement shall have the following meanings:

“Account” means all present and future accounts, general intangibles, chattel
paper, documents and instruments, as such terms are defined in the UCC, of
Company or a Subsidiary of Company, including, without limitation, all
obligations for the payment of money arising out of the sale, lease, license or
other disposition of goods or other property or the rendering of services and
all proceeds thereof.

“Additional Mortgaged Property” has the meaning set forth in subsection 6.9.

“Additional Mortgages” has the meaning set forth in subsection 6.9.

“Adjusted Net Operating Income” means, with respect to any Facility as of any
date of determination, (a) the Net Operating Income attributable to such
Facility for the applicable Measurement Period less (b) the total revenue from
the operation of such Facility for the applicable Measurement Period multiplied
by 0.05 less (c) $500 multiplied by the number of beds in such Facility as of
such date.

“Administrative Agent” has the meaning assigned to that term in the introduction
to this Agreement and also means and includes any successor Administrative Agent
appointed pursuant to subsection 9.5.

“Affected Lender” has the meaning assigned to that term in subsection 2.6C.

“Affected Loans” has the meaning assigned to that term in subsection 2.6C.

“Affiliate”, as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, “control” (including, with
correlative meanings, the terms “controlling”, “controlled by” and “under common
control with”), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.

“Agents” means Administrative Agent, Collateral Agent and Lead Arrangers.

“Agreement” means this Third Amended and Restated Credit Agreement dated as of
April 9, 2010.

 

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“Amendment and Restatement Agreement” means the Amendment and Restatement
Agreement dated as of April 9, 2010, among Company, the Subsidiary Guarantors,
the Lenders party thereto, Administrative Agent and Collateral Agent.

“Applicable Margin” means with respect to any Loan, the rate per annum set forth
in the table below under the caption “Applicable Margin for Eurodollar Rate
Loans” or “Applicable Margin for Base Rate Loans”, as the case may be, opposite
the Consolidated Leverage Ratio for the four-Fiscal Quarter period for which the
applicable Pricing Certificate has been delivered pursuant to subsection
6.1(iv):

 

Consolidated Leverage Ratio

   Applicable
Margin for
Eurodollar Rate
Loans     Applicable
Margin for Base
Rate Loans  

Greater than 3.25 to 1.00

   3.75 %    2.75 % 

Equal to or less than 3.25 to 1.00

   3.50 %    2.50 % 

; provided that until the delivery of financial statements pursuant to
subsection 6.1(ii) and a Pricing Certificate pursuant to subsection 6.1(iv), in
each case covering the fiscal period ending on June 30, 2010, the Applicable
Margins shall be the maximum percentage amount for the relevant Loan set forth
above; provided further that upon delivery of each Pricing Certificate by
Company to Administrative Agent pursuant to subsection 6.1(iv) covering any
fiscal period ending on or after June 30, 2010 the Applicable Margins shall
automatically be adjusted in accordance with such Pricing Certificate, such
adjustment to become effective on the next succeeding Business Day following the
receipt by Administrative Agent of such Pricing Certificate; provided further
that, if at any time a Pricing Certificate is not delivered at the time required
pursuant to subsection 6.1(iv), from the time such Pricing Certificate was
required to be delivered until the Business Day next succeeding delivery of such
Pricing Certificate, the Applicable Margins shall be the maximum percentage
amount for the relevant Loan set forth above.

“Approved Fund” means a Fund that is administered or managed by (i) a Lender,
(ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an entity
that administers or manages a Lender.

“Asset Sale” means the sale by Company or any of its Subsidiaries to any Person
other than Company or any of the Subsidiary Guarantors of (i) any of the Equity
Interests of any of Company’s Subsidiaries, (ii) substantially all of the assets
of any division or line of business of Company or any of its Subsidiaries, or
(iii) any other assets (whether tangible or intangible) of Company or any of its
Subsidiaries (other than (a) inventory sold in the ordinary course of business,
(b) sales, assignments, transfers or dispositions of accounts in the ordinary
course of

 

3

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business for purposes of collection and (c) any such other assets to the extent
that the aggregate value of such assets sold in any single transaction or
related series of transactions is equal to $1,000,000 or less).

“Asset Value” means, at any date of determination, (a) with respect to any
Facility (other than a Development Asset) that has been owned by Company, any of
its Subsidiaries or any HUD Subsidiary and in operation for more than one full
Fiscal Quarter, the Adjusted Net Operating Income of such Facility divided by
0.13; and (b) with respect to any Facility (other than a Development Asset) that
has not been owned by such Persons and operated for more than one full Fiscal
Quarter, the book value of such Facility as determined in accordance with GAAP;
and (c) with respect to any Development Asset, the book value of such
Development Asset as determined in accordance with GAAP.

“Assignment Agreement” means an Assignment and Assumption in substantially the
form of Exhibit IX annexed hereto.

“Bankruptcy Code” means Title 11 of the United States Code entitled
“Bankruptcy”, as now and hereafter in effect, or any successor statute.

“Base Rate” means, at any time, the highest of (i) the Prime Rate, (ii) the rate
which is  1/2 of 1% in excess of the Federal Funds Effective Rate and (iii) the
Eurodollar Rate applicable for an Interest Period of three months commencing on
such day plus 1.00%; provided that, solely for purposes of the foregoing, the
Eurodollar Rate for any day shall be based on the rate set forth on such day at
approximately 11:00 a.m. (London time) by reference to the British Bankers’
Association Interest Settlement Rates for deposits in dollars (as set forth by
any service selected by Administrative Agent that has been nominated by the
British Bankers’ Association as an authorized vendor for the purpose of
displaying such rates). If Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate or Eurodollar Rate, as the case may
be, for any reason, including the inability or failure of Administrative Agent
to obtain sufficient quotations in accordance with the terms of the definition
thereof, the Base Rate shall be determined without regard to clause (ii) or
(iii), as applicable, of the preceding sentence until the circumstances giving
rise to such inability no longer exist. Any change in the Base Rate due to a
change in the Prime Rate, the Federal Funds Effective Rate or the Eurodollar
Rate shall be effective on the effective date of such change in the Prime Rate,
the Federal Funds Effective Rate or the Eurodollar Rate, as the case may be.

“Base Rate Loans” means Loans bearing interest at rates determined by reference
to the Base Rate as provided in subsection 2.2A.

“Beneficiary” has the meaning assigned to that term in the Security Agreement.

“Business Day” means (i) for all purposes other than as covered by clause (ii)
below, any day excluding Saturday, Sunday and any day which is a legal holiday
under the laws of the State of New York or California or is a day on which
banking institutions located in New York, New York or Los Angeles, California
are authorized or required by law or other governmental action to close, and
(ii) with respect to all notices, determinations, fundings and

 

4

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payments in connection with the Eurodollar Rate or any Eurodollar Rate Loans,
any day that is a Business Day described in clause (i) above and that is also a
day for trading by and between banks in Dollar deposits in the London interbank
market.

“Capital Lease”, as applied to any Person, means any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.

“Cash” means money, currency or a credit balance in a Deposit Account.

“Cash Equivalents” means, as at any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to interest
and principal by the United States Government or (b) issued by any agency of the
United States the obligations of which are backed by the full faith and credit
of the United States, in each case maturing within one year after such date;
(ii) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year after such date
and having, at the time of the acquisition thereof, the highest rating
obtainable from either S&P or Moody’s; (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody’s; (iv) certificates of deposit or bankers’ acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that (a) is at least “adequately
capitalized” (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; (v) shares of any money market mutual fund that (a) has
at least 95% of its assets invested continuously in the types of investments
referred to in clauses (i), (ii) and (iii) above, (b) has net assets of not less
than $500,000,000, and (c) has the highest rating obtainable from either S&P or
Moody’s; and (vi) repurchase agreements with a term of not more than 30 days for
the types of investments referred to in clause (i) or (ii) above with any Lender
or any commercial bank referred to in clause (iv).

“Change in Control” means:

(a) a Person, either individually or acting in concert with one or more other
Persons, excluding Permitted Holders, shall beneficially own and control more
than 30% of the total voting power (without regard to the occurrence of any
contingency) represented by the issued and outstanding Equity Interests of
Company, unless Permitted Holders shall beneficially own and control a greater
percentage of such voting power of Company;

(b) the occurrence of a change in the composition of the Governing Body of
Company such that a majority of the members of any such Governing Body are not
Continuing Members; or

(c) the occurrence of any “Change in Control” as defined in the Senior
Subordinated Note Indenture or any Permitted Refinancing Indebtedness.

 

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As used herein, the term “beneficially own” or “beneficial ownership” shall have
the meaning set forth in the Exchange Act and the rules and regulations
promulgated thereunder.

“Class”, as applied to Lenders, means each of the following two classes of
Lenders: (i) Lenders having Revolving Loan Exposure and (ii) Lenders having Term
Loan Exposure; provided that (x) until the expiration or earlier termination in
full of the Delayed Draw Term Loan Commitments, Lenders having Delayed Draw Term
Loan Commitments shall be treated as a separate Class and (y) if any
Non-Conforming Credit Extensions are made pursuant to subsection 2.1A(iii), the
Lenders having such Non-Conforming Credit Extensions shall also be treated as a
separate Class.

“Collateral” means, collectively, all of the real, personal and mixed property
in which Liens are purported to be granted pursuant to the Collateral Documents
as security for the Obligations.

“Collateral Account” has the meaning assigned to that term in the Security
Agreement.

“Collateral Agent” has the meaning assigned to that term in the introduction to
this Agreement and also means and includes any successor Collateral Agent
appointed pursuant to subsection 9.5.

“Collateral Documents” means the Security Agreement, the Foreign Pledge
Agreements, the Deposit Account Instruction Agreements, the Mortgages, the
Control Agreements and all other instruments or documents delivered by any Loan
Party pursuant to this Agreement or any of the other Loan Documents in order to
grant to Collateral Agent, on behalf of Lenders, a Lien on any real, personal or
mixed property of that Loan Party as security for the Obligations.

“Commercial Letter of Credit” means any letter of credit or similar instrument
issued for the purpose of providing the primary payment mechanism in connection
with the purchase of any materials, goods or services by Company or any of its
Subsidiaries in the ordinary course of business of Company or such Subsidiary.

“Commitments” means the commitments of Lenders to make Revolving Loans as set
forth in subsections 2.1A and 3.3 and, to the extent applicable, the Term Loan
Commitments.

“Company” means Skilled Healthcare Group, Inc., a Delaware corporation.

“Compliance Certificate” means a certificate substantially in the form of
Exhibit VII annexed hereto.

“Compliance Program” means a corporate compliance program that is modeled after
the requirements of the Federal Sentencing Guidelines and is based upon the
applicable OIG Compliance Program Guidance (for example, the OIG Compliance
Program Guidance for Hospitals at 63 Fed. Reg. 8987 (Feb. 23, 1998)).

 

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“Confidential Information Memorandum” means the Confidential Information
Memorandum dated March 2010 relating to the credit facilities evidenced by this
Agreement.

“Conforming Leasehold Interest” means any Recorded Leasehold Interest as to
which the lessor has agreed in writing for the benefit of Administrative Agent
and Collateral Agent (which writing has been delivered and is reasonably
acceptable to Administrative Agent and Collateral Agent), whether under the
terms of the applicable lease, under the terms of a Landlord Consent and
Estoppel, or otherwise, to permit the encumbrance of the leasehold interest and
the transfer of the leasehold interest in a foreclosure, to give Administrative
Agent notice of default and a reasonable opportunity to cure and such other
matters as Administrative Agent shall reasonable request which interest, if a
subleasehold or sub-subleasehold interest, is not subject to any contrary
restrictions contained in a superior lease or sublease.

“Consolidated Capital Expenditures” means, for any period, the sum of the
aggregate of all expenditures (whether paid in cash or other consideration or
accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of Company and its Subsidiaries)
by Company and its Subsidiaries during that period that, in conformity with
GAAP, are included in “additions to property, plant or equipment” or comparable
items reflected in the consolidated statement of cash flows of Company and its
Subsidiaries; provided that Consolidated Capital Expenditures shall not include
any expenditures incurred in connection with (i) any Converted Capital Lease;
(ii) the exercise by any Loan Party of a purchase option under any lease with
respect to any existing Facility; or (iii) any Permitted Acquisition. For
purposes of this definition, the purchase price of equipment that is purchased
simultaneously with the trade-in or sale of existing equipment or with insurance
proceeds shall be included in Consolidated Capital Expenditures only to the
extent of the gross amount of such purchase price less the credit granted by the
seller of such equipment for the equipment being traded in at such time or the
amount of such proceeds, as the case may be.

“Consolidated Cash Interest Expense” means, for any period, Consolidated
Interest Expense on Indebtedness of Company and its Subsidiaries for such period
excluding, however, any interest expense not payable in Cash (including
amortization of discount and amortization of debt issuance costs).

“Consolidated Current Assets” means, as at any date of determination, (i) the
total assets of Company and its Subsidiaries on a consolidated basis which may
properly be classified as current assets in conformity with GAAP (excluding Cash
and Cash Equivalents) plus (ii) Cash, Cash Equivalents and investments held in
“restricted accounts” plus (iii) deposits made by Company and its Subsidiaries
on Operating Leases and Capital Leases and other deposits to secure liabilities
in the ordinary course of business plus (iv) investments in APS-Summit Care
Pharmacy, LLC.

“Consolidated Current Liabilities” means, as at any date of determination,
(i) the total liabilities of Company and its Subsidiaries on a consolidated
basis which may properly be classified as current liabilities in conformity with
GAAP, excluding the current portions of Indebtedness that by its terms matures
more than one year from the date of its creation and Capital Leases plus
(ii) long term liabilities related to accrued insurance.

 

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“Consolidated EBITDA” means, for any period, Consolidated Net Income for such
period, plus (a) without duplication and to the extent deducted in determining
such Consolidated Net Income, the sum of (i) Consolidated Interest Expense for
such period, (ii) provisions for taxes based on income, (iii) total depreciation
expense, (iv) total amortization expense, (v) other non-cash expenses (other
than any such non-cash expense to the extent it represents an accrual of or
reserve for cash expenditures in any future period), (vi) losses from the sale
of fixed assets, (vii) Transaction Costs, (viii) Consolidated Financing Fees,
(ix) customary fees, costs and expenses incurred in connection with any equity
or debt offering (including the public registration of any securities issued in,
or exchanged for, any such equity or debt offering), Investment,
recapitalization or Indebtedness (in each case, as permitted by this Agreement)
or in connection with the consummation of Permitted Acquisitions, (x) other
non-recurring or extraordinary costs and expenses (including non-recurring
startup losses incurred in connection with Permitted Acquisitions or initial
opening of facilities), and costs attributable to discontinued operations
(including operations disposed of during such period, whether or not such
operations were classified as discontinued) incurred in such period, provided
that the aggregate amount of such costs included pursuant to this clause
(x) shall not exceed $7,000,000 in any one Fiscal Year, (xi) expenses incurred
by Company and its Subsidiaries in connection with defense, judgment or
settlement costs arising out of the case of Lavender v. Skilled Healthcare
Group, Inc. and (xii) consulting fees paid to Onex or any Affiliate of Onex, to
the extent such fees are permitted to be paid pursuant to subsection 7.8, less
(b) without duplication and to the extent added in determining such Consolidated
Net Income, the sum of (i) non-cash income and gains (other than any such
non-cash income and gains to the extent it will result in the receipt of cash
payments in any future period), and (ii) gains from the sale of fixed assets,
all of the foregoing as determined on a consolidated basis for Company and its
Subsidiaries in conformity with GAAP.

“Consolidated Excess Cash Flow” means, for any period, an amount (if positive)
equal to (i) the sum, without duplication, of the amounts for such period of
(a) Consolidated EBITDA and (b) the Consolidated Working Capital Adjustment
minus (ii) the sum, without duplication, of the amounts for such period of
(a) voluntary and scheduled repayments of Consolidated Total Debt (excluding
repayments of Revolving Loans except to the extent the Revolving Loan Commitment
Amount is permanently reduced in connection with such repayments),
(b) Consolidated Capital Expenditures (net of any proceeds of any related
financings with respect to such expenditures), (c) Consolidated Cash Interest
Expense, (d) taxes based on income of Company and its Subsidiaries and paid in
cash during such period, (e) Investments made in cash during such period and
permitted pursuant to subsection 7.3(vi) or 7.3(vii) net of proceeds of any
related financings, (f) cash paid by Company or any of its Subsidiaries upon the
exercise of a purchase option under any lease with respect to any existing
Facility, (g) cash paid by Company to repurchase Equity Interests, to the extent
permitted pursuant to subsection 7.5(ii)(b), and (i) the amounts described in
clauses (vii) through (xii) of the definition of “Consolidated EBITDA” to the
extent paid in cash in such period and included in Consolidated EBITDA for such
period.

“Consolidated Financing Fees” means any amounts referred to in subsection 2.3 of
this Agreement, or the corresponding provisions of the Existing Credit
Agreement, in each case only to the extent paid in cash.

 

8

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“Consolidated Fixed Charge Coverage Ratio” means, for any period, the ratio of
(a) Consolidated EBITDA for such period minus Consolidated Capital Expenditures
for such period to (b) Consolidated Cash Interest Expense for such period,
provided that Consolidated Capital Expenditures that represent the addition by
Company of one or more new Facilities (including new Facilities constructed by
Company) or the renovation of Facilities purchased by Company within 180 days
prior to the commencement of such renovation (but excluding Facilities which,
prior to such purchase, had been leased or otherwise operated by Company), in an
amount not to exceed $10,000,000 for any such period, shall be excluded from the
calculation in clause (a) above.

“Consolidated Interest Expense” means, for any period, total interest expense
(including that portion attributable to Capital Leases in accordance with GAAP
and capitalized interest) of Company and its Subsidiaries on a consolidated
basis with respect to all outstanding Indebtedness of Company and its
Subsidiaries, including all commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers’ acceptance financing and net
costs under Interest Rate Agreements, but excluding, however, any Consolidated
Financing Fees.

“Consolidated Leverage Ratio” means, as of the last day of any Fiscal Quarter,
the ratio of (i) Consolidated Total Debt minus Designated Restricted Cash as at
such day to (ii) Consolidated EBITDA, calculated on a Pro Forma Basis, for the
consecutive four Fiscal Quarters ending on such day.

“Consolidated Net Income” means, for any period, the net income (or loss) of
Company and its Subsidiaries on a consolidated basis for such period taken as a
single accounting period determined in conformity with GAAP; provided that there
shall be excluded (i) the income (or loss) of any Person (other than a
Subsidiary of Company or APS – Summit Care Pharmacy L.L.C., a Delaware limited
liability company) in which any other Person (other than Company or any of its
Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Company or is merged
into or consolidated with Company or any of its Subsidiaries or that Person’s
assets are acquired by Company or any of its Subsidiaries, (iii) the income of
any Subsidiary of Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, except to the extent of the amount of dividends
or other distributions actually paid to Company or any of its Subsidiaries by
such Person during such period, (iv) any after-tax gains or losses attributable
to asset sales or returned surplus assets of any Pension Plan, (v) any income or
loss attributable to the early extinguishment of Indebtedness and (vi) (to the
extent not included in clauses (i) through (v) above) any net extraordinary
gains or losses. For the avoidance of doubt, Consolidated Net Income for any
period shall not include the net income (or loss) of any HUD Subsidiary, except
to the extent of the amount of any dividends or distributions thereof made to
Company or any Subsidiary during such period (less the amount of any Investment
made by Company or its Subsidiaries in such HUD Subsidiary after the initial
designation of such HUD Subsidiary and during such period).

 

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“Consolidated Revenues” means, for any period, an amount equal to the revenues
of Company and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP; provided that, for purposes of such determination, the
revenues of any Permitted Acquisition made during such period shall be
determined on a Pro Forma Basis.

“Consolidated Secured Leverage Ratio” means, as of the last day of any Fiscal
Quarter, the ratio of (i) Consolidated Total Debt as at such day that is secured
by a Lien on any assets of Company or any of its Subsidiaries to
(ii) Consolidated EBITDA, calculated on a Pro Forma Basis, for the consecutive
four Fiscal Quarters ending on such day.

“Consolidated Total Debt” means, as at any date of determination, the sum of the
aggregate stated balance sheet amount of all Indebtedness of Company and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP. For
the avoidance of doubt, Consolidated Total Debt shall not include the
Indebtedness of any HUD Subsidiary.

“Consolidated Working Capital” means, as at any date of determination, the
excess (or deficit) of Consolidated Current Assets over Consolidated Current
Liabilities.

“Consolidated Working Capital Adjustment” means, for any period on a
consolidated basis, the amount (which may be a negative number) by which
Consolidated Working Capital as of the beginning of such period exceeds (or is
less than) Consolidated Working Capital as of the end of such period.

“Contingent Obligation”, as applied to any Person, means any direct or indirect
liability, contingent or otherwise, of that Person (i) with respect to any
Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof,
(ii) with respect to any letter of credit issued for the account of that Person
or as to which that Person is otherwise liable for reimbursement of drawings, or
(iii) under Hedge Agreements. Contingent Obligations shall include (a) the
direct or indirect guaranty, endorsement (otherwise than for collection or
deposit in the ordinary course of business), co-making, discounting with
recourse or sale with recourse by such Person of the obligation of another,
(b) the obligation to make take-or-pay or similar payments if required
regardless of non-performance by any other party or parties to an agreement, and
(c) any liability of such Person for the obligation of another through any
agreement (contingent or otherwise) (1) to purchase, repurchase or otherwise
acquire such obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation (whether in the form of loans, advances,
stock purchases, capital contributions or otherwise) or (2) to maintain the
solvency or any balance sheet item, level of income or financial condition of
another if, in the case of any agreement described under subclauses (1) or
(2) of this sentence, the primary purpose or intent thereof is as described in
the preceding sentence. The amount of any Contingent Obligation shall be equal
to the amount of the obligation so guaranteed or otherwise supported or, if
less, the amount to which such Contingent Obligation is specifically limited.

 

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“Continuing Member” means, as of any date of determination any member of the
Governing Body of Company who (i) was a member of such Governing Body on the
Effective Date, (ii) was nominated for election or elected to such Governing
Body with the affirmative vote of a majority of the members who were either
members of such Governing Body on the Effective Date or whose nomination or
election was previously so approved or (iii) was nominated by a Permitted
Holder.

“Contractual Obligation”, as applied to any Person, means any provision of any
Security issued by that Person or of any material indenture, mortgage, deed of
trust, contract, undertaking, agreement or other instrument to which that Person
is a party or by which it or any of its material properties is bound or to which
it or any of its material properties is subject.

“Control Agreement” means an agreement, reasonably satisfactory in form and
substance to Administrative Agent and Collateral Agent and executed by the
financial institution or securities intermediary at which a Deposit Account or a
Securities Account, as the case may be, is maintained, pursuant to which such
financial institution or securities intermediary confirms and acknowledges
Collateral Agent’s security interest in such account, and agrees that the
financial institution or securities intermediary, as the case may be, will
comply with instructions originated by Collateral Agent as to disposition of
funds in such account, without further consent by Company or any Subsidiary.

“Converted Capital Lease” means a Capital Lease that was converted from an
Operating Lease (whether such conversion occurs as the result of an amendment or
modification of an existing Operating Lease or of a Loan Party entering into a
new lease with respect to any existing Facility).

“CS” has the meaning assigned to that term in the introduction to this
Agreement.

“Currency Agreement” means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement to which Company or any of its Subsidiaries is a party.

“Defaulting Lender” means any Lender that (i) defaults in its obligation to make
any Delayed Draw Term Loan or Revolving Loan required to be made by it
hereunder, (ii) defaults in its obligation to fund a participation in any
unreimbursed Letter of Credit drawing pursuant to subsection 3.3C, (iii) has
notified Administrative Agent or any Loan Party in writing that it does not
intend to satisfy any such obligations or (iv) in the case of a Revolving Lender
or a Lender with a Delayed Draw Term Loan Commitment, has become the subject of
a bankruptcy or insolvency proceeding, or has had a receiver, conservator,
trustee, custodian, administrator, assignee for the benefit of creditors or
similar Person charged with reorganization or liquidation of its business,
appointed for it, or has taken any action in furtherance of, or indicating its
consent to, approval of or acquiescence in any such proceeding or appointment or
has a parent company that has become the subject of a bankruptcy or insolvency
proceeding, or has had a receiver, conservator, trustee, custodian,
administrator, assignee for the benefit of creditors or similar Person charged
with reorganization or liquidation of its business, appointed for it, or has
taken any action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment; provided that if a Lender
would be a “Defaulting Lender”

 

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solely by reason of events relating to a parent company of such Lender or solely
because a Government Authority has been appointed as receiver, conservator,
trustee or custodian for such Lender, Administrative Agent may, in its
discretion, determine that such Lender is not a “Defaulting Lender” if and for
so long as Administrative Agent is satisfied that such Lender will continue to
perform its funding obligations hereunder.

“Delayed Draw Commitment Termination Date” means January 9, 2011.

“Delayed Draw Term Loan Commitment” means, with respect to each Lender, the
commitment of such Lender to make Delayed Draw Term Loans hereunder as set forth
on Schedule 2.1, or in the Assignment and Acceptance pursuant to which such
Lender assumed its Delayed Draw Term Loan Commitment, as applicable, as the same
may be reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to subsection 10.1B, or reductions pursuant to subsection
2.4.

“Delayed Draw Term Loans” means the terms loans made by Lenders to Company
pursuant to subsection 2.1(a)(iv).

“Deposit Account” means a demand, time, savings, passbook or similar account
maintained with a Person engaged in the business of banking, including a savings
bank, savings and loan association, credit union or trust company.

“Deposit Account Instruction Agreement” means an agreement, which may be
terminated upon reasonable notice to Collateral Agent, reasonably satisfactory
in form and substance to Administrative Agent and Collateral Agent and executed
by Company or a Subsidiary of Company and the financial institution at which a
Government Reimbursement Deposit Account is maintained, pursuant to which such
financial institution agrees that it will, on a daily basis (or such other
periodic basis as may be reasonably acceptable to Collateral Agent), transfer,
without further instruction from Company or any such Subsidiary, all funds that
at such time are on deposit in such Government Reimbursement Deposit Account to
a Deposit Account specified in such agreement, which Deposit Account is subject
to a Control Agreement.

“Designated Restricted Cash” has the meaning assigned to such term in subsection
7.1(vi).

“Development Asset” means any Real Property Asset acquired for development into
a Facility that, in accordance with GAAP, would be classified as a development
property on a consolidated balance sheet of Company and its Subsidiaries.

“Dollars” and the sign “$” mean the lawful money of the United States of
America.

“Domestic Subsidiary” means any Subsidiary of Company that is incorporated or
organized under the laws of the United States of America, any state thereof or
the District of Columbia.

“Drawing Date” has the meaning assigned to that term in subsection 3.3B.

 

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“Drawing Notice” has the meaning assigned to that term in subsection 3.3B.

“Effective Date” has the meaning set forth in subsection 4.1.

“Eligible Assignee” means (i) any Lender, any Affiliate of any Lender and any
Approved Fund of any Lender; and (ii) (a) a commercial bank organized under the
laws of the United States or any state thereof; (b) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof; (c) a commercial bank organized under the laws of any other
country or a political subdivision thereof; provided that (1) such bank is
acting through a branch or agency located in the United States or (2) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (d) any other entity that is an “accredited investor” (as defined
in Regulation D under the Securities Act) that extends credit or buys loans as
one of its businesses including insurance companies, mutual funds and lease
financing companies; provided that neither Company nor any Affiliate of Company
shall be an Eligible Assignee.

“Employee Benefit Plan” means any “employee benefit plan” as defined in
Section 3(3) of ERISA which is or was maintained or contributed to by Company,
any of its Subsidiaries or any of their respective ERISA Affiliates.

“Environmental Claim” means any inquiry, investigation, notice, notice of
violation, claim, action, suit, proceeding, demand, abatement order or other
order or directive (conditional or otherwise), by any Government Authority or
any other Person, arising (i) pursuant to or in connection with any actual or
alleged violation of any Environmental Law, (ii) in connection with any actual
or alleged exposure to Hazardous Materials or any actual or alleged Hazardous
Materials Activity, or (iii) in connection with any actual or alleged damage,
injury, threat or harm to health, safety, natural resources or the environment.

“Environmental Laws” means any and all current or future statutes, ordinances,
orders, rules, regulations, binding guidance documents, judgments, Governmental
Authorizations, or any other requirements of any Government Authority relating
to (i) environmental matters, including those arising out of or relating to any
Hazardous Materials Activity, or (ii) human safety and health, industrial
hygiene or the protection of human, plant or animal health or welfare, in any
manner applicable to Company or any of its Subsidiaries or any Facility.

“Equity Interests” means the capital stock of or other equity interests in a
Person.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and any successor thereto.

“ERISA Affiliate”, as applied to any Person, means (i) any corporation that is a
member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) that is a member of a
group of trades or businesses under common control within the meaning of
Section 414(c) of the Internal Revenue Code of which that Person is a

 

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member; and (iii) any member of an affiliated service group within the meaning
of Section 414(m) or (o) of the Internal Revenue Code of which that Person, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above is a member. Any former ERISA Affiliate of a Person or any of
its Subsidiaries shall continue to be considered an ERISA Affiliate of such
Person or such Subsidiary within the meaning of this definition with respect to
the period such entity was an ERISA Affiliate of such Person or such Subsidiary
and with respect to liabilities arising after such period for which such Person
or such Subsidiary could be liable under the Internal Revenue Code or ERISA.

“ERISA Event” means (i) a “reportable event” within the meaning of Section 4043
of ERISA and the regulations issued thereunder with respect to any Pension Plan
(excluding those for which the provision for 30-day notice to the PBGC has been
waived by regulation); (ii) the failure of Company, any of its Subsidiaries or
any of their respective ERISA Affiliates to meet the minimum funding standard of
Section 412 of the Internal Revenue Code with respect to any Pension Plan
(whether or not waived in accordance with Section 412(c) of the Internal Revenue
Code) or the failure of Company, any of its Subsidiaries or any of their
respective ERISA Affiliates to make any required contribution to a Multiemployer
Plan; (iii) the filing pursuant to Section 412(c) of the Code or Section 302(c)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Pension Plan; (iv) the provision by the administrator of any
Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to
terminate such Pension Plan in a distress termination described in
Section 4041(c) of ERISA; (v) the withdrawal by Company, any of its Subsidiaries
or any of their respective ERISA Affiliates from any Pension Plan with two or
more contributing sponsors or the termination of any Pension Plan resulting in
liability to Company, any of its Subsidiaries or any of their respective ERISA
Affiliates pursuant to Section 4063 or 4064 of ERISA, respectively; (vi) the
institution by the PBGC of proceedings to terminate any Pension Plan, or the
occurrence of any event or condition which would constitute grounds for the
termination of, or the appointment of a trustee to administer, any Pension Plan
under Section 4042 of ERISA; (vii) the incurrence by Company, any of its
Subsidiaries or any of their respective ERISA Affiliates of any liability with
respect to the withdrawal or partial withdrawal from any Pension Plan;
(viii) the imposition of liability on Company, any of its Subsidiaries or any of
their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA
or by reason of the application of Section 4212(c) of ERISA, (ix) the withdrawal
of Company, any of its Subsidiaries or any of their respective ERISA Affiliates
in a complete or partial withdrawal (within the meaning of Sections 4203 and
4205 of ERISA, respectively) from any Multiemployer Plan if there is any direct
or indirect liability to Company, any of its Subsidiaries or any of their
respective ERISA Affiliates therefor, or the receipt by Company, any of its
Subsidiaries or any of their respective ERISA Affiliates of notice from any
Multiemployer Plan concerning the imposition of withdrawal liability or notice
that such Multiemployer Plan is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA, respectively, or that any Multiemployer Plan is
in “endangered” or “critical” status (within the meaning of Section 432 of the
Code or Section 305 of ERISA), or that such Multiemployer Plan intends to
terminate or has terminated under Section 4041A or 4042 of ERISA, if there is
any liability to Company, any of its Subsidiaries or any of their respective
ERISA Affiliates therefor; (x) receipt from the Internal Revenue Service of
notice of the failure of any Pension Plan (or any other Employee Benefit Plan
(other than a Multiemployer Plan) intended to be qualified under Section 401(a)
of the Internal Revenue Code) to qualify under Section 401(a) of the Internal
Revenue Code, or the failure of any trust forming part of any

 

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Pension Plan to qualify for exemption from taxation under Section 501(a) of the
Internal Revenue Code; (xi) a determination that any Pension Plan is, or is
expected to be, in “at risk” status (as defined in Section 430(i)(4) of the Code
or Section 303(i)(4) of ERISA; or (xii) the imposition of a Lien on Company, any
of its Subsidiaries or any of their respective ERISA Affiliates pursuant to
ERISA with respect to any Pension Plan.

“Eurodollar Rate” means, for any Interest Rate Determination Date, with respect
to any Eurodollar Rate Loan for any Interest Period, the rate per annum obtained
by dividing (i) the rate per annum determined by Administrative Agent at
approximately 11:00 a.m. (London time) on the date that is two Business Days
prior to the beginning of such Interest Period by reference to the British
Bankers’ Association Interest Settlement Rate for deposits in Dollars (as set
forth by any service selected by Administrative Agent which has been nominated
by the British Bankers’ Association as an authorized information vendor for the
purpose of displaying such rates) for a period equal to such Interest Period;
provided that, to the extent that an interest rate is not ascertainable pursuant
to the foregoing provisions of this definition the “Eurodollar Rate” shall be
the interest rate per annum determined by Administrative Agent to be the average
of the rates per annum at which deposits in Dollars are offered for such
Interest Period to major banks in the London interbank market in London, England
at approximately 11:00 a.m. (London time) on the date that is two Business Days
prior to the beginning of such Interest Period by (ii) a percentage equal to
100% minus the stated maximum rate of all reserve requirements (including any
marginal, emergency, supplemental, special or other reserves) applicable on such
Interest Rate Determination Date to any member bank of the Federal Reserve
System in respect of “Eurocurrency liabilities” as defined in Regulation D (or
any successor category of liabilities under Regulation D); provided that if such
rate per annum would be less than 1.50% at any time, such rate per annum shall
be deemed to be 1.50% at such time. Each determination by Administrative Agent
pursuant to this definition shall be conclusive absent manifest error.

“Eurodollar Rate Loans” means Loans bearing interest at rates determined by
reference to the Eurodollar Rate as provided in subsection 2.2A.

“Event of Default” means each of the events set forth in Section 8.

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

“Excluded Tax” means, in the case of a Lender or Administrative Agent, (i) Taxes
that are measured by or imposed on overall gross receipts, net income or net
profits (including franchise or other similar Taxes imposed in lieu thereof)
(a) by the United States or any political subdivision thereof, (b) by any other
Government Authority under the laws of which such Lender or Administrative Agent
is organized or has its principal office or maintains its applicable lending
office, or (c) by any jurisdiction solely as a result of a present or former
connection between such Lender or Administrative Agent and such jurisdiction
(other than any such connection arising solely from such Lender or
Administrative Agent having executed, delivered or performed its obligations or
received a payment under, or enforced, any of the Loan Documents), (ii) any
branch profits Taxes imposed by the United States or any similar Tax imposed by
any other jurisdiction in which such Lender or Administrative Agent is located
and (iii) any transfer Taxes imposed as a result of an assignment or transfer of
any interest under any Loan Document (other than an assignment that occurs as a
result of a request by Company pursuant to subsection 2.9).

 

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“Existing Credit Agreement” means the Second Amended and Restated First Lien
Credit Agreement, dated as of December 27, 2005, as amended by the First
Amendment dated as of January 31, 2007 and the Second Amendment dated as of
April 28, 2009, by and among Company, SHG Holding Solutions, Inc., the financial
institutions party thereto as lenders, and CS, as administrative agent and
collateral agent.

“Existing Mortgage” means each Mortgage executed in connection with the Existing
Credit Agreement (or any predecessor credit agreement) encumbering an Existing
Mortgaged Property to secure the Obligations.

“Existing Mortgaged Properties” means collectively the Real Property Assets
listed in Schedule 1.1.

“FATCA” means Sections 1471 through 1474 of the Internal Revenue Code and any
Treasury Regulations thereunder or official governmental interpretations
thereof.

“Facilities” means any and all real property (including all buildings, fixtures
or other improvements located thereon) now, hereafter or heretofore owned,
leased, operated or used by Company or any of its Subsidiaries or any of their
respective predecessors or Affiliates.

“Federal Funds Effective Rate” means, for any period, a fluctuating interest
rate 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 published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by Administrative Agent from three Federal funds brokers
of recognized standing selected by Administrative Agent.

“Financial Plan” has the meaning assigned to that term in subsection 6.1(xi).

“First Priority” means, with respect to any Lien purported to be created in any
Collateral pursuant to any Collateral Document, that (i) such Lien is perfected
and has priority over any other Lien on such Collateral (other than Liens
permitted pursuant to subsection 7.2A (excluding Liens described in clause
(vi) thereof)) and (ii) such Lien is the only Lien (other than Liens permitted
pursuant to subsection 7.2A) to which such Collateral is subject.

“Fiscal Quarter” means a fiscal quarter of any Fiscal Year.

“Fiscal Year” means the fiscal year of Company and its Subsidiaries ending on
December 31 of each calendar year. For purposes of this Agreement, any
particular Fiscal Year shall be designated by reference to the calendar year in
which such Fiscal Year ends.

 

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“Flood Hazard Property” means an Existing Mortgaged Property or an Additional
Mortgaged Property located in an area designated by the Federal Emergency
Management Agency as having special flood or mud slide hazards.

“Foreign Pledge Agreement” means each pledge agreement or similar instrument
governed by the laws of a country other than the United States, executed in
connection with the Existing Credit Agreement (or any predecessor credit
agreement to secure the Obligations), or from time to time thereafter in
accordance with subsection 6.8 by Company or any Domestic Subsidiary that owns
Equity Interests of one or more Foreign Subsidiaries organized in such country,
in form and substance reasonably satisfactory to Administrative Agent.

“Foreign Subsidiary” means any Subsidiary of Company that is not a Domestic
Subsidiary.

“Fund” means any Person (other than a natural Person) that is (or will be)
engaged primarily in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of its
business.

“Funding and Payment Account” means the account specified in the payment
instructions appearing below Administrative Agent’s signature herein or at the
account designated as such in any other written notice delivered by
Administrative Agent to Company and each Lender.

“Funding and Payment Office” means the office of Administrative Agent located at
Eleven Madison Avenue, New York, New York 10010 or such other office of
Administrative Agent as may from time to time hereafter be designated as such in
a written notice delivered by Administrative Agent to Company and each Lender.

“Funding Date” means the date of funding of a Loan.

“GAAP” means, subject to the limitations on the application thereof set forth in
subsection 1.2, generally accepted accounting principles set forth in opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting profession,
in each case as the same are applicable to the circumstances as of the date of
determination.

“Governing Body” means the board of directors or other body having the power to
direct or cause the direction of the management and policies of a Person that is
a corporation, partnership, trust, limited liability company, association, Joint
Venture or other business entity.

“Government Authority” means any political subdivision or department thereof,
any other governmental or regulatory body, commission, central bank, board,
bureau, organ or instrumentality or any court, in each case whether federal,
state, local or foreign (including supra-national bodies such as the European
Union or the European Central Bank).

 

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“Governmental Authorization” means any permit, license, registration,
authorization, plan, directive, accreditation, consent, order or consent decree
of or from, or notice to, any Government Authority.

“Government Reimbursement Deposit Account” means a Deposit Account into which
proceeds of receivables from Government Reimbursement Programs are deposited.

“Government Reimbursement Program” means (i) the Medicare program established
under the Title XVIII of the Federal Social Security Act, 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) the Medicaid program of any state or the District of
Columbia acting pursuant to a health plan adopted pursuant to title XIX of the
Federal Social Security Act or (iii) any agent, administrator intermediary or
carrier for any of the foregoing.

“Hazardous Materials” means (i) any chemical, material or substance at any time
defined as or included in the definition of “hazardous substances”, “hazardous
wastes”, “hazardous materials”, “extremely hazardous waste”, “acutely hazardous
waste”, “radioactive waste”, “biohazardous waste”, “pollutant”, “toxic
pollutant”, “contaminant”, “restricted hazardous waste”, “infectious waste”,
“medical waste”, “toxic substances”, or any other term or expression intended to
define, list or classify substances by reason of properties harmful to health,
safety or the indoor or outdoor environment (including harmful properties such
as ignitability, corrosivity, reactivity, carcinogenicity, toxicity,
reproductive toxicity, “TCLP toxicity” or “EP toxicity” or words of similar
import under any applicable Environmental Laws); (ii) any oil, petroleum,
petroleum fraction or petroleum derived substance; (iii) any flammable
substances or explosives; (iv) any radioactive materials; (v) any
asbestos-containing materials; (vi) urea formaldehyde foam insulation;
(vii) electrical equipment which contains any oil or dielectric fluid containing
polychlorinated biphenyls; (viii) pesticides; and (ix) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any Government Authority or which may or could pose a hazard to the health and
safety of the owners, occupants or any Persons in the vicinity of any Facility
or to the indoor or outdoor environment.

“Hazardous Materials Activity” means any past, current, proposed or threatened
activity, event or occurrence involving any Hazardous Materials, including the
use, manufacture, possession, storage, holding, presence, existence, location,
Release, threatened Release, discharge, placement, generation, transportation,
processing, treatment, abatement, removal, remediation, disposal, disposition or
handling of any Hazardous Materials, and any corrective action or response
action with respect to any of the foregoing.

“Healthcare Authorizations” means any and all Governmental Authorizations and
permits, licenses, authorizations, certificates, certificates of need,
accreditations and plans of third-party accreditation agencies (such as the
Joint Commission on Accreditation of Healthcare Organizations) and
Nongovernmental Payors (i) necessary to enable Company or any of its
Subsidiaries to engage in the Healthcare Service Business, participate in and
receive payment under Government Reimbursement Programs and plans of
Nongovernmental Payors or otherwise

 

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continue to conduct its business as it is conducted on the Effective Date or
(ii) required under any Law relating to any Government Reimbursement Program or
Law applicable to HMOs, healthcare-related insurance companies, or Persons
engaged in the Healthcare Service Business.

“Healthcare Regulations” means any and all current or future Laws relating to
HMOs, healthcare service providers, Government Reimbursement Programs, Persons
engaged in the Healthcare Service Business, healthcare-related insurance
companies, or any other similar Person and any rule, regulation, directive,
order or decision promulgated or issued pursuant thereto. Healthcare Regulations
shall include the Food, Drug and Cosmetic Act (21 U.S.C. § 301 et seq.), the
federal anti-kickback statute (42 U.S.C. § 1320a-7b), the False Claims Act (31
U.S.C. §§ 3729 et seq.), the Health Insurance Portability and Accountability Act
of 1996 (Pub. L. No. 104-191, 110 Stat. 1936 (1996)) and the federal physician
self-referral laws (42 U.S.C. § 1395nn).

“Healthcare Service Business” means a business, the majority of whose revenues
are derived from providing or arranging to provide or administering, managing or
monitoring healthcare services, long-term care or any business or activity that
is reasonably similar thereto or a reasonable extension, development or
expansion thereof or ancillary thereto.

“Hedge Agreement” means an Interest Rate Agreement or a Currency Agreement
designed to hedge against fluctuations in interest rates or currency values,
respectively.

“HMO” means any person doing business as a health maintenance organization (or
required to qualify or be licensed as such) under applicable Healthcare
Regulations.

“HUD Asset Pool Value” means, with respect to any HUD Financing, the aggregate
Asset Value of all of the Facilities that are collateral for such HUD Financing.

“HUD Facility” means a Facility and the tangible personal property related
thereto, including the fixtures, furnishings and equipment therein, Healthcare
Authorizations related thereto and accounts receivable arising from the
operations thereof, which is subject to HUD Financing.

“HUD Financing” means mortgage Indebtedness (i) guaranteed by the United States
Department of Housing and Urban Development (such Indebtedness, a “Final HUD
Financing”) or (ii) which is a bridge loan made in anticipation of incurring a
Final HUD Financing (such Indebtedness, a “Bridge HUD Financing”), in each case
incurred by a HUD Subsidiary or group of HUD Subsidiaries that is not guaranteed
by (other than customary non-recourse guarantees) or otherwise recourse to,
Company or any Subsidiary (or any of their respective assets) other than one or
more HUD Subsidiaries and HUD Facilities. For purposes of subsection 7.3(xii),
the amount of a Final HUD Financing that refinances a Bridge HUD Financing shall
be the excess of principal amount, if any, of the Final HUD Financing over the
principal amount of the Bridge HUD Financing.

“HUD Subsidiary” means a wholly-owned Subsidiary or group of Subsidiaries of
Company substantially all the assets of which consist of a HUD Facility.

 

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“Indebtedness”, as applied to any Person, means (i) all indebtedness for
borrowed money, (ii) that portion of obligations with respect to Capital Leases
that is properly classified as a liability on a balance sheet in conformity with
GAAP, (iii) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money, (iv) any obligation
owed for all or any part of the deferred purchase price of property or services
(excluding any such obligations incurred under ERISA), which purchase price is
(a) due more than six months from the date of incurrence of the obligation in
respect thereof or (b) evidenced by a note or similar written instrument,
(v) Synthetic Lease Obligations, and (vi) all indebtedness secured by any Lien
on any property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person. Obligations under Interest Rate
Agreements and Currency Agreements constitute (1) in the case of Hedge
Agreements, Contingent Obligations, and (2) in all other cases, Investments, and
in neither case constitute Indebtedness.

“Indemnified Liabilities” has the meaning assigned to that term in
subsection 10.3.

“Indemnified Tax” means any Tax other than an Excluded Tax.

“Indemnitee” has the meaning assigned to that term in subsection 10.3.

“Initial Yield” means with respect to Term Loans or Revolving Loan Commitments
extended pursuant to subsection 2.1(A)(iii), the amount (as determined by
Administrative Agent) equal to the sum of (a) the margin above the Eurodollar
Rate on such Term Loans or the Revolving Loans to be made under such Revolving
Loan Commitments, as applicable (including as margin the effect of any “LIBOR
floor” applicable on the date of the calculation), and (b) the amount of any
Up-Front Fees on such Term Loans or Revolving Loan Commitments, as applicable
(including any fee or discount received by Lenders in connection with the
initial extension thereof), divided by the lesser of (x) the Weighted Average
Life to Maturity of such Term Loans or Revolving Loan Commitments, as
applicable, and (y) four.

“Intellectual Property” means all patents, trademarks, tradenames, copyrights,
technology, software, know-how and processes used in or necessary for the
conduct of the business of Company and its Subsidiaries.

“Interest Payment Date” means (i) with respect to any Base Rate Loan, the last
Business Day of each of March, June, September and December of each year,
commencing with June 30, 2010, and (ii) with respect to any Eurodollar Rate
Loan, the last day of each Interest Period applicable to such Loan; provided
that in the case of any Eurodollar Rate Loan with an Interest Period of longer
than three months “Interest Payment Date” shall also include each date that
would have been an Interest Payment Date had successive Interest Periods of
three months’ duration been applicable to such Eurodollar Rate Loan.

“Interest Period” has the meaning assigned to that term in subsection 2.2B.

 

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“Interest Rate Agreement” means any interest rate swap agreement, interest rate
cap agreement, interest rate collar agreement or other similar agreement or
arrangement to which Company or any of its Subsidiaries is a party.

“Interest Rate Determination Date”, with respect to any Interest Period, means
the second Business Day prior to the first day of such Interest Period.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended to
the date hereof and from time to time hereafter, and any successor statute.

“Investment” means (i) any direct or indirect purchase or other acquisition by
Company or any of its Subsidiaries of, or of a beneficial interest in, any
Securities of any other Person (including any Subsidiary of Company), (ii) any
direct or indirect redemption, retirement, purchase or other acquisition for
value, by any Subsidiary of Company from any Person other than Company or any of
the Subsidiary Guarantors, of any equity Securities of such Subsidiary,
(iii) any direct or indirect loan, advance (other than advances to employees for
moving, entertainment and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution by
Company or any of its Subsidiaries to any other Person, including all
indebtedness and accounts receivable from that other Person that are not current
assets or did not arise from sales to that other Person in the ordinary course
of business, or (iv) Interest Rate Agreements or Currency Agreements not
constituting Hedge Agreements. The amount of any Investment shall be the
original cost of such Investment plus the cost of all additions thereto, without
any adjustments for increases or decreases in value, or write-ups, write-downs
or write-offs with respect to such Investment (other than adjustments for the
repayment of, or the refund of capital with respect to, the original amount of
any such Investment).

“IP Collateral” means, collectively, the Intellectual Property that constitutes
Collateral under the Security Agreement.

“IP Filing Office” means the United States Patent and Trademark Office, the
United States Copyright Office or any successor or substitute office in which
filings are necessary or, in the opinion of Administrative Agent, desirable in
order to create or perfect Liens on any IP Collateral.

“Issuing Lender”, with respect to any Letter of Credit, means the Lender that
agrees or is otherwise obligated to issue such Letter of Credit, determined as
provided in subsection 3.1B(ii).

“Joint Venture” means a joint venture, partnership or other similar arrangement,
whether in corporate, partnership or other legal form.

“Landlord Consent and Estoppel”, with respect to any Leasehold Property, means a
letter, certificate or other instrument in writing from the lessor under the
related lease, reasonably satisfactory in form and substance to Administrative
Agent and Collateral Agent.

“Law” means any constitutional provision, statute or other law, code, ordinance,
rule, regulation, Governmental Authorization or interpretation of any
Governmental Authority or any decree, decision, notice, injunction, judgment,
order, ruling, assessment or writ of any Governmental Authority.

 

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“Lead Arrangers” means Credit Suisse Securities (USA) LLC, Banc of America
Securities LLC, Barclays Capital, the investment banking division of Barclays
Bank PLC and J.P. Morgan Securities Inc., in their capacities as joint lead
arrangers and joint bookrunners.

“Leasehold Property” means any leasehold interest of any Loan Party as lessee
under any lease of real property.

“Lender” and “Lenders” means the Persons identified as “Lenders” and listed on
the signature pages of the Amendment and Restatement Agreement, together with
their successors and permitted assigns pursuant to subsection 10.1; provided
that the term “Lenders”, when used in the context of a particular Commitment,
shall mean Lenders having that Commitment.

“Letter of Credit” or “Letters of Credit” means Commercial Letters of Credit and
Standby Letters of Credit issued or to be issued by Issuing Lenders for the
account of Company or any Subsidiary of Company pursuant to subsection 3.1.

“Letter of Credit Usage” means, as at any date of determination, the sum of
(i) the maximum aggregate amount which is or at any time thereafter may become
available for drawing under all Letters of Credit then outstanding plus (ii) the
aggregate amount of all drawings under Letters of Credit honored by Issuing
Lenders and not theretofore reimbursed out of the proceeds of Revolving Loans
pursuant to subsection 3.3B or otherwise reimbursed by Company.

“Lien” means any lien, mortgage, pledge, assignment, security interest, charge
or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest) and any option, call, trust or other preferential
arrangement having the practical effect of any of the foregoing.

“Loan” or “Loans” means one or more Term Loans and one or more of the Loans made
by Lenders to Company pursuant to subsection 2.1A.

“Loan Documents” means this Agreement, the Amendment and Restatement Agreement,
the Notes, the Letters of Credit (and any applications for or other documents or
certificates executed by Company in favor of an Issuing Lender relating to, the
Letters of Credit), the Subsidiary Guaranty, the Collateral Documents and all
amendments, waivers and consents relating thereto.

“Loan Party” means each of Company and any of Company’s Subsidiaries from time
to time executing a Loan Document, and “Loan Parties” means all such Persons,
collectively.

“Margin Stock” has the meaning assigned to that term in Regulation U of the
Board of Governors of the Federal Reserve System as in effect from time to time.

 

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“Material Adverse Effect” means (i) a material adverse effect upon the business,
operations, properties, assets, condition (financial or otherwise) or prospects
of Company and its Subsidiaries taken as a whole or (ii) the impairment in any
material respect of the ability of any Loan Party to perform, or of
Administrative Agent, Collateral Agent or Lenders to enforce, the Obligations.

“Material Leasehold Property” means a Leasehold Property (i) with annual rent
payable thereunder of $500,000 or more or (ii) with respect to which both the
lessor and lessee are Loan Parties.

“Material Subsidiary” means (a) each Subsidiary of Company that (i) for the most
recent Fiscal Year accounted for more than 3% of the Consolidated Revenues of
Company and its Subsidiaries or (ii) as at the end of such Fiscal Year, was the
owner of more than 3% of the consolidated assets of Company and its Subsidiaries
or (b) any Subsidiaries of Company which, in the aggregate, (i) for the most
recent Fiscal Year accounted for more than 5% of the Consolidated Revenues of
Company and its Subsidiaries or (ii) as at the end of such Fiscal Year, were the
owners of more than 5% of the consolidated assets of Company and its
Subsidiaries.

“Measurement Period” means, as of any date, the four Fiscal Quarter period
ending as of the last date of the most recent Fiscal Quarter for which financial
statements have been, or were required to be, delivered pursuant to
Section 6.1(ii) or Section 6.1(iii).

“Moody’s” means Moody’s Investor Services, Inc. or any successor thereto.

“Mortgage” means (i) a security instrument (whether designated as a deed of
trust or a mortgage or by any similar title) executed and delivered by any Loan
Party, substantially in the form of Exhibit XI annexed hereto or in such other
form as may be approved by Administrative Agent in its reasonable discretion, in
each case with such changes thereto as may be reasonably recommended by
Administrative Agent’s local counsel based on local laws or customary local
mortgage or deed of trust practices or (ii) at Administrative Agent’s option, in
the case of an Additional Mortgaged Property, an amendment to an existing
Mortgage, in form reasonably satisfactory to Administrative Agent, adding such
Additional Mortgaged Property to the Real Property Assets encumbered by such
existing Mortgage. “Mortgages” means all such instruments, including the
Existing Mortgages and any Additional Mortgages, collectively.

“Multiemployer Plan” means any Employee Benefit Plan that is a “multiemployer
plan” as defined in Section 3(37) of ERISA and is subject to Title IV of ERISA.

“Net Asset Sale Proceeds”, with respect to any Asset Sale, means Cash or Cash
Equivalent payments (including any Cash or Cash Equivalent received by way of
deferred payment pursuant to, or by monetization of, a note receivable or
otherwise, but only as and when so received) received from such Asset Sale, net
of any bona fide direct costs incurred in connection with such Asset Sale,
including (i) income taxes reasonably estimated to be actually payable within
two years of the date of such Asset Sale as a result of any gain recognized in
connection with such Asset Sale and (ii) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any Indebtedness (other
than the Loans) that is (a) secured by a Lien on the stock or assets in question
and that is required to be repaid under the

 

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terms thereof as a result of such Asset Sale and (b) actually paid at the time
of receipt of such cash payment to a Person that is not an Affiliate of any Loan
Party or an Affiliate of any Affiliate of a Loan Party.

“Net Indebtedness Proceeds” means Cash proceeds (net of all taxes and
underwriting discounts, fees and commissions and other reasonable costs and
expenses associated therewith, including reasonable legal fees and expenses)
from the issuance or incurrence of Indebtedness by Company, any of its
Subsidiaries or any HUD Subsidiaries.

“Net Insurance/Condemnation Proceeds” means any Cash payments or proceeds
received by Company or any of its Domestic Subsidiaries (i) under any casualty
insurance policy in respect of a covered loss thereunder or (ii) as a result of
the taking of any assets of Company or any of its Subsidiaries by any Person
pursuant to the power of eminent domain, condemnation or otherwise, or pursuant
to a sale of any such assets to a purchaser with such power under threat of such
a taking, in each case net of any bona fide direct costs incurred by Company or
any of its Subsidiaries in connection with the adjustment or settlement of any
claims of Company or such Subsidiary in respect thereof, including (x) income
taxes reasonably estimated to be realized within two years of the date of such
adjustment or settlement as a result of any gain recognized in connection
therewith and (y) payment of the outstanding principal amount of, premium or
penalty, if any, and interest on any Indebtedness (other than the Loans) that is
(A) secured by a Lien on the assets in question and that is required to be
repaid under the terms thereof as a result of such adjustment or settlement and
(B) actually paid at the time of receipt of such cash payment to a Person that
is not an Affiliate of any Loan Party or an Affiliate of any Affiliate of a Loan
Party.

“Net Operating Income” means, with respect to any Facility, (a) the total
revenue and other income from the operation of such Facility for the applicable
Measurement Period, minus (b) all expenses and other proper charges incurred in
connection with the operation and maintenance of such Facility during the
applicable Measurement Period, including, without limitation, repairs, real
estate and chattel taxes and bad debt expenses, but before payment or provision
for debt service charges, income taxes and depreciation, amortization and other
non-cash expenses, all as determined in accordance with GAAP, but excluding from
the calculations in (a) and (b) any intercompany expenses and charges; provided
that with respect to any Facility that has not been owned by the Loan Parties
for a full Measurement Period, or that has not been in operation for a full
Measurement Period, Net Operating Income shall be calculated on an annualized
basis based on the full Fiscal Quarters during which such Facility has been
owned or in operation.

“New Revolving Commitments” has the meaning assigned to that term in the
recitals to this Agreement.

“New Term Loans” has the meaning assigned to that term in the recitals to this
Agreement.

“Nongovernmental Payors” means third-party payors (other than the Government
Reimbursement Programs) that reimburse providers for healthcare goods and
services rendered in the Healthcare Service Business, such as private insurers
and managed care organizations.

 

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“Non-Conforming Credit Extensions” has the meaning assigned to such term in
subsection 2.1A(iii).

“Non-US Lender” means a Lender that is organized under the laws of any
jurisdiction other than the United States or any state thereof or the District
of Columbia.

“Notes” means one or more of the Term Notes or Revolving Notes or any
combination thereof.

“Notice of Borrowing” means a notice substantially in the form of Exhibit I
annexed hereto.

“Notice of Conversion/Continuation” means a notice substantially in the form of
Exhibit II annexed hereto.

“Notice of Prepayment” means a notice substantially in the form of Exhibit VI
annexed hereto.

“Obligations” means all obligations of every nature of each Loan Party from time
to time owed to Administrative Agent, Collateral Agent, Lenders or any of them
under the Loan Documents, whether for principal, interest, reimbursement of
amounts drawn under Letters of Credit, fees, expenses, indemnification or
otherwise.

“Officer” means the president, chief executive officer, a vice president, chief
financial officer, treasurer, general partner (if an individual), managing
member (if an individual) or other individual appointed by the Governing Body or
the Organizational Documents of a corporation, partnership, trust or limited
liability company to serve in a similar capacity to the foregoing (or, on the
Effective Date, to execute Loan Documents and related documents).

“Officer’s Certificate”, as applied to any Person that is a corporation,
partnership, trust or limited liability company, means a certificate executed on
behalf of such Person by one or more Officers of such Person or one or more
Officers of a general partner or a managing member if such general partner or
managing member is a corporation, partnership, trust or limited liability
company.

“Onex” means Onex Corporation, an Ontario corporation, and Onex Partners LP, a
Delaware limited partnership.

“Operating Lease”, as applied to any Person, means any lease (including leases
that may be terminated by the lessee at any time) of any property (whether real,
personal or mixed) that is not a Capital Lease other than any such lease under
which that Person is the lessor.

“Organizational Documents” means the documents (including Bylaws, if applicable)
pursuant to which a Person that is a corporation, partnership, trust or limited
liability company is organized.

 

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“Participant” means a purchaser of a participation in the rights and obligations
under this Agreement pursuant to subsection 10.1C.

“Participant Register” has the meaning assigned to such term in subsection 2.1D.

“Patriot Act” means the Uniting And Strengthening America By Providing
Appropriate Tools Required To Intercept And Obstruct Terrorism (USA Patriot Act)
Act of 2001.

“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan,
that is subject to Section 412 of the Internal Revenue Code or Section 302 of
ERISA.

“Perfection Certificate” means the Perfection Certificate substantially in the
form of Exhibit XII to this Agreement.

“Permitted Acquisition” means collectively, the acquisition of all or any
portion of the business and assets, or all of the Equity Interests, of any
Person which acquisition is permitted pursuant to clause (vi) of subsection 7.3.

“Permitted Encumbrances” means the following types of Liens (excluding any such
Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue
Code or by ERISA, any such Lien relating to or imposed in connection with any
Environmental Claim, and any such Lien expressly prohibited by any applicable
terms of any of the Collateral Documents):

(i) Liens for Taxes, assessments or governmental charges or claims the payment
of which is not, at the time, required by subsection 6.3;

(ii) statutory Liens of landlords, Liens of collecting banks under the UCC on
items in the course of collection, statutory Liens and rights of set-off of
banks, statutory Liens of carriers, warehousemen, mechanics, repairmen, workmen
and materialmen, and other Liens imposed by law, in each case incurred in the
ordinary course of business (a) for amounts not yet overdue by more than thirty
days or (b) for amounts that are being contested in good faith by appropriate
proceedings, so long as (1) such reserves or other appropriate provisions, if
any, as shall be required by GAAP shall have been made for any such contested
amounts, and (2) in the case of a Lien with respect to any portion of the
Collateral, such contest proceedings conclusively operate to stay the sale of
any portion of the Collateral on account of such Lien;

(iii) deposits made in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other types of social
security, or to secure the performance of statutory obligations, bids, leases,
government contracts, trade contracts, and other similar obligations (exclusive
of obligations for the payment of borrowed money), so long as no foreclosure,
sale or similar proceedings have been commenced with respect to any portion of
the Collateral on account thereof;

 

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(iv) any attachment or judgment Lien not constituting an Event of Default under
subsection 8.8;

(v) licenses (with respect to Intellectual Property and other property), leases
or subleases granted to third parties in accordance with any applicable terms of
the Collateral Documents and not interfering in any material respect with the
ordinary conduct of the business of Company or any of its Subsidiaries or
resulting in a material diminution in the value of any Collateral as security
for the Obligations;

(vi) easements, rights-of-way, restrictions, encroachments, and other minor
defects or irregularities in title, in each case which do not and will not
interfere in any material respect with the ordinary conduct of the business of
Company or any of its Subsidiaries or result in a material diminution in the
value of any Collateral as security for the Obligations;

(vii) any (a) interest or title of a lessor or sublessor under any lease not
prohibited by this Agreement, (b) Lien or restriction that the interest or title
of such lessor or sublessor may be subject to, or (c) subordination of the
interest of the lessee or sublessee under such lease to any Lien or restriction
referred to in the preceding clause (b), so long as the holder of such Lien or
restriction agrees to recognize the rights of such lessee or sublessee under
such lease;

(viii) Liens arising from filing UCC financing statements relating solely to
leases not prohibited by this Agreement;

(ix) Liens in favor of customs and revenue authorities arising as a matter of
law to secure payment of customs duties in connection with the importation of
goods;

(x) any zoning or similar law or right reserved to or vested in any governmental
office or agency to control or regulate the use of any real property;

(xi) Liens granted pursuant to the Collateral Documents;

(xii) Liens securing obligations (other than obligations representing
Indebtedness for borrowed money) under operating, reciprocal easement or similar
agreements entered into in the ordinary course of business of Company and its
Subsidiaries; and

(xiii) Liens acceptable to Administrative Agent disclosed as exceptions to
coverage in the final title policies and endorsements issued to Administrative
Agent with respect to the Existing Mortgaged Properties and any Additional
Mortgaged Properties.

 

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“Permitted Holders” means Onex or any officer of any Loan Party or any of the
Permitted Transferees of any of the foregoing Persons.

“Permitted Refinancing Indebtedness” means any modification, refinancing,
refunding, renewal or extension of the Senior Subordinated Notes or any
Permitted Refinancing Indebtedness thereof; provided that (a) the principal
amount (or accreted value, if applicable) thereof does not exceed the principal
amount (or accreted value, if applicable) of the Indebtedness so modified,
refinanced, refunded, renewed or extended except by an amount equal to unpaid
accrued interest and premium thereon plus other reasonable amounts paid, and
fees and expenses reasonably incurred, in connection with such modification,
refinancing, refunding, renewal or extension, (b) such modification,
refinancing, refunding, renewal or extension has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of
(i) the Indebtedness being modified, refinanced, refunded, renewed or extended
and (ii) the Term Loans, (c) such modification, refinancing, refunding, renewal
or extension has a final maturity date equal to or later than (i) the final
maturity date of the Indebtedness being modified, refinanced, refunded, renewed
or extended and (ii) the date 180 days after the later of the Revolving Loan
Commitment Termination Date and the Term Loan Maturity Date, and (d) (i) such
modification, refinancing, refunding, renewal or extension is unsecured and
subordinated in right of payment to the Obligations on terms at least as
favorable to Lenders as those contained in the documentation governing the
Indebtedness being modified, refinanced, refunded, renewed or extended, (ii) the
terms and conditions (excluding as to interest rate and redemption premium) of
any such modified, refinanced, refunded, renewed or extended Indebtedness, taken
as a whole, are not materially less favorable to Loan Parties or Lenders than
the terms and conditions of the Indebtedness being modified, refinanced,
refunded, renewed or extended; provided that a certificate of an Officer
delivered to Administrative Agent at least five Business Days prior to the
incurrence of such Permitted Refinancing Indebtedness, together with a
reasonably detailed description of the material terms and conditions of such
Permitted Refinancing Indebtedness or drafts of the documentation relating
thereto, stating that Company has determined in good faith that such terms and
conditions satisfy the foregoing requirement shall be conclusive evidence that
such terms and conditions satisfy the foregoing requirement unless
Administrative Agent notifies Company within such five Business Day period that
it disagrees with such determination (including a reasonable description of the
basis upon which it disagrees).

“Permitted Transferees” means, with respect to any Person, (i) any Affiliate of
such Person, (ii) the heirs, executors, administrators, testamentary trustees,
legatees or beneficiaries of any such Person or (iii) a trust, the beneficiaries
of which, or a corporation or partnership, the stockholders, or general and
limited partners, of which, or a limited liability company, the members of
which, include only such Person or his or her spouse or lineal descendants, in
each case to whom such Person has transferred the beneficial ownership of any
Securities of Company.

“Person” means and includes natural persons, corporations, limited partnerships,
general partnerships, limited liability companies, limited liability
partnerships, joint stock companies, Joint Ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and Government Authorities.

 

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“Pledged Collateral” means, collectively, the “Pledged Collateral” as defined in
the Security Agreement and any Foreign Pledge Agreement.

“Potential Event of Default” means a condition or event that, after notice or
lapse of time or both, would constitute an Event of Default.

“Previous Lenders” has the meaning assigned to that term in the recitals to this
Agreement.

“Pricing Certificate” means an Officer’s Certificate of Company certifying the
Consolidated Leverage Ratio as at the last day of any Fiscal Quarter and setting
forth the calculation of such Consolidated Leverage Ratio in reasonable detail.

“Prime Rate” means the rate that CS announces from time to time as its prime
lending rate, as in effect from time to time. The Prime Rate is a reference rate
and does not necessarily represent the lowest or best rate actually charged to
any customer. CS or any other Lender may make commercial loans or other loans at
rates of interest at, above or below the Prime Rate.

“Proceedings” means any action, suit, proceeding (whether administrative,
judicial or otherwise), governmental investigation or arbitration.

“Pro Forma Basis” means, with respect to compliance with any test or covenant
hereunder, compliance with such test or covenant after giving effect to (a) the
Transactions, (b) any proposed Permitted Acquisition, (c) any Asset Sale of a
Subsidiary or operating entity for which historical financial statements for the
relevant period are available and any related payment of Indebtedness, (d) any
incurrence of Indebtedness or (e) any designation of a HUD Subsidiary in
accordance with subsection 7.3(xii) (including pro forma adjustments arising out
of events which are directly attributable to the proposed Permitted Acquisition,
Asset Sale, incurrence of Indebtedness or designation of a HUD Subsidiary, are
factually supportable and are expected to have a continuing impact, in each case
as determined on a basis consistent with Article 11 of Regulation S-X of the
Securities Act, as interpreted by the Staff of the Securities and Exchange
Commission, and such other adjustments as are reasonably satisfactory to
Administrative Agent, in each case as certified by the chief financial officer
of Company) using, for purposes of determining such compliance, the historical
financial statements of all entities or assets so acquired, sold or designated
and the consolidated financial statements of Company or any of its Subsidiaries
which shall be reformulated as if such Permitted Acquisitions, Asset Sale or
designation of a HUD Subsidiary, and all other Permitted Acquisitions, Asset
Sales or designations of HUD Subsidiaries that have been consummated during the
period, and any Indebtedness or other liabilities to be incurred in connection
therewith had been consummated and incurred at the beginning of such period.

“Pro Forma Compliance” means, at any date of determination, that Company shall
be in pro forma compliance with any or all of the covenants set forth in
subsections 7.6A and 7.6B, as applicable, as of (unless otherwise specifically
stated herein) the last day of the most recently completed Fiscal Quarter
(computed on the basis of (a) balance sheet amounts as of such date and
(b) income statement amounts for the most recently completed period of four

 

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consecutive Fiscal Quarters for which financial statements shall have been
delivered to Administrative Agent and calculated on a Pro Forma Basis in respect
of the event giving rise to such determination). For purposes of the foregoing,
if Pro Forma Compliance is required at any time prior to June 30, 2010, then the
ratios required for the period ending on June 30, 2010 under subsections 7.6A
and 7.6B shall be used for purposes of determining such Pro Forma Compliance.

“Pro Rata Share” means (i) with respect to all payments, computations and other
matters relating to the Term Loan Commitment or the Term Loan of any Lender of
any Class, the percentage obtained by dividing (x) the applicable Term Loan
Exposure of that Lender by (y) the aggregate Term Loan Exposure of all Lenders
of such Class, (ii) with respect to all payments, computations and other matters
relating to the Revolving Loan Commitment or the Revolving Loans of any Lender
of any Class or any Letters of Credit issued or participations therein deemed
purchased by any Lender, the percentage obtained by dividing (x) the applicable
Revolving Loan Exposure of that Lender by (y) the aggregate applicable Revolving
Loan Exposure of all Lenders of such Class, and (iii) for all other purposes
with respect to each Lender, the percentage obtained by dividing (x) the sum of
the Term Loan Exposure of that Lender plus the Revolving Loan Exposure of that
Lender by (y) the sum of the aggregate Term Loan Exposure of all Lenders plus
the aggregate Revolving Loan Exposure of all Lenders, in any such case as the
applicable percentage may be adjusted by assignments permitted pursuant to
subsection 10.1.

“Real Property Asset” means, at any time of determination, any interest then
owned by any Loan Party in any real property.

“Recorded Leasehold Interest” means a Leasehold Property with respect to which a
Record Document (as hereinafter defined) has been recorded in all places
necessary or desirable, in Administrative Agent’s reasonable judgment, to give
constructive notice of such Leasehold Property to third-party purchasers and
encumbrancers of the affected real property. For purposes of this definition,
the term “Record Document” means, with respect to any Leasehold Property,
(a) the lease evidencing such Leasehold Property or a memorandum thereof, or
(b) if such Leasehold Property was acquired or subleased from the holder of a
Recorded Leasehold Interest, the applicable assignment or sublease document, in
each case in form sufficient to give such constructive notice upon recordation
and otherwise in form reasonably satisfactory to Administrative Agent.

“Register” has the meaning assigned to that term in subsection 2.1D.

“Regulation D” means Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time.

“Reimbursement Date” has the meaning assigned to that term in subsection 3.3B.

“Release” means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials into the indoor or outdoor environment
(including the abandonment or

 

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disposal of any barrels, containers, tanks or other closed receptacles
containing any Hazardous Materials), including the movement or migration of any
Hazardous Materials through the air, soil, surface water or groundwater.

“Remaining Asset Pool Value” means, at any time, the aggregate Asset Value of
all of the Facilities and Development Assets with respect to which (a) the Loan
Parties own the fee interest in the Real Property Assets where such Facilities
are located and (b) such Real Property Assets are not collateral for a HUD
Financing or any other Indebtedness that has a Lien prior to the Lien of the
Collateral Agent on such Real Property Assets.

“Request for Issuance” means a request substantially in the form of Exhibit III
annexed hereto.

“Requisite Class Lenders” means, at any time of determination (i) for the Class
of Lenders having Revolving Loan Exposure, Lenders having or holding more than
50% of the aggregate Revolving Loan Exposure of all Lenders, provided that the
Revolving Loan Exposure of any Defaulting Lender shall be disregarded in the
determination of the Requisite Class Lenders at any time, and (ii) for the Class
of Lenders having Term Loan Exposure, Lenders having or holding more than 50% of
the aggregate Term Loan Exposure of all Lenders, provided that the Delayed Draw
Term Loan Commitment of any Defaulting Lender shall be disregarded in the
determination of the Requisite Class Lenders at any time.

“Requisite Lenders” means Lenders having or holding more than 50% of the sum of
the aggregate Term Loan Exposure of all Lenders plus the aggregate Revolving
Loan Exposure of all Lenders, provided that the Revolving Loan Exposure and the
Delayed Draw Term Loan Commitment of any Defaulting Lender shall be disregarded
in the determination of the Requisite Lenders at any time.

“Restricted Junior Payment” means (i) any dividend or other distribution, direct
or indirect, on account of any Equity Interests of Company now or hereafter
outstanding, except a dividend payable solely in shares of that class of Equity
Interests to the holders of that class, (ii) any redemption, retirement, sinking
fund or similar payment, purchase or other acquisition for value, direct or
indirect, of any Equity Interests of Company now or hereafter outstanding,
(iii) any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire Equity Interests of Company now or
hereafter outstanding and (iv) any payment or prepayment of principal of,
premium, if any, or interest on, or redemption, purchase, retirement, defeasance
(including in-substance or legal defeasance), sinking fund or similar payment
with respect to, any Subordinated Indebtedness.

“Revolving Lender” means a Lender that has a Revolving Loan Commitment and/or
that has an outstanding Revolving Loan.

“Revolving Loan Commitment” means the commitment of a Lender to make Revolving
Loans to Company pursuant to subsection 2.1A(ii), and “Revolving Loan
Commitments” means such commitments of all Lenders in the aggregate.

“Revolving Loan Commitment Amount” means, at any date, the aggregate amount of
the Revolving Loan Commitments of all Revolving Lenders.

 

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“Revolving Loan Commitment Termination Date” means April 9, 2015; provided that
if any Senior Subordinated Notes remain outstanding on October 14, 2013, the
Revolving Loan Commitment Termination Date shall be October 14, 2013.

“Revolving Loan Exposure”, with respect to any Revolving Lender, means, as of
any date of determination (i) prior to the termination of the Revolving Loan
Commitments, the amount of that Lender’s Revolving Loan Commitment, and
(ii) after the termination of the Revolving Loan Commitments, the sum of (a) the
aggregate outstanding principal amount of the Revolving Loans of that Lender
plus (b) in the event that Lender is an Issuing Lender, the aggregate Letter of
Credit Usage in respect of all Letters of Credit issued by that Lender (in each
case net of any participations purchased by other Lenders in such Letters of
Credit or in any unreimbursed drawings thereunder) plus (c) the aggregate amount
of all participations purchased by that Lender in any outstanding Letters of
Credit or any unreimbursed drawings under any Letters of Credit.

“Revolving Loans” means the Loans made by Lenders to Company pursuant to
subsection 2.1A(ii).

“Revolving Notes” means any promissory notes of Company issued pursuant to
subsection 2.1E to evidence the Revolving Loans of any Lenders, substantially in
the form of Exhibit V annexed hereto.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., or any successor thereto.

“Secured Obligations” has the meaning assigned to that term in the Security
Agreement.

“Securities” means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit-sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated,
certificated or uncertificated, or otherwise, or in general any instruments
commonly known as “securities” or any certificates of interest, shares or
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.

“Securities Account” means an account to which a financial asset is or may be
credited in accordance with an agreement under which the Person maintaining the
account undertakes to treat the Person for whom the account is maintained as
entitled to exercise the rights that comprise the financial asset.

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and any successor statute.

“Security Agreement” means the Amended and Restated First Lien Security
Agreement, dated as of June 15, 2005, by and among Company, the Subsidiaries
party thereto and Collateral Agent, as such agreement may have been amended or
may be amended from time to time hereafter.

 

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“Senior Subordinated Note Indenture” means the Indenture, dated as of
December 27, 2005, by and among SHG Acquisition Corp., Wells Fargo Bank, N.A.
and certain Subsidiaries of Company, as such Indenture may have been amended or
may be amended from time to time hereafter to the extent permitted under
subsection 7.11A.

“Senior Subordinated Notes” means the Senior Subordinated Notes of Company
issued pursuant to the Senior Subordinated Note Indenture.

“Solvent”, with respect to any Person, means that as of the date of
determination both (i)(a) the then fair saleable value of the property of such
Person is (1) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (2) not less than the amount that will be
required to pay the probable liabilities on such Person’s then existing debts as
they become absolute and due considering all financing alternatives and
potential asset sales reasonably available to such Person; (b) such Person’s
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (c) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (ii) such Person is
“solvent” within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.

“Standby Letter of Credit” means any letter of credit or similar instrument
other than a Commercial Letter of Credit.

“Subject Lender” has the meaning assigned to that term in Section 2.9.

“Subordinated Indebtedness” means any Indebtedness of Company incurred from time
to time and subordinated in right of payment to the Obligations.

“Subsidiary”, with respect to any Person, means any corporation, partnership,
trust, limited liability company, association, Joint Venture or other business
entity of which more than 50% of the total voting power of shares of stock or
other ownership interests entitled (without regard to the occurrence of any
contingency) to vote in the election of the members of the Governing Body is at
the time owned or controlled, directly or indirectly, by that Person or one or
more of the other Subsidiaries of that Person or a combination thereof; provided
that HUD Subsidiaries shall not be considered Subsidiaries of Company or its
Subsidiaries.

“Subsidiary Guarantor” means any Subsidiary of Company that is a party to the
Subsidiary Guaranty on the Effective Date or that executes and delivers a
counterpart of the Subsidiary Guaranty from time to time thereafter pursuant to
subsection 6.8.

“Subsidiary Guaranty” means the Amended and Restated First Lien Subsidiary
Guaranty, dated as of June 15, 2005, entered into by the Subsidiaries party
thereto for the benefit of the Collateral Agent and the Beneficiaries, and to be
executed and delivered by additional Subsidiaries of Company from time to time
in accordance with subsection 6.8.

 

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“Supplemental Collateral Agent” has the meaning assigned to that term in
subsection 9.1B.

“Swap Counterparty” means a Lender, Administrative Agent or Collateral Agent or
an Affiliate of a Lender, Administrative Agent or Collateral Agent that has
entered into a Hedge Agreement with Company or one of its Subsidiaries.

“Synthetic Lease Obligation” means the monetary obligation of a Person under
(i) a so-called synthetic, off-balance sheet or tax retention lease, or (ii) an
agreement for the use or possession of property creating obligations that do not
appear on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

“Tax” or “Taxes” means any present or future tax, levy, impost, duty, charge,
fee, deduction or withholding of any nature and whatever called, by whomsoever,
on whomsoever and wherever imposed, levied, collected, withheld or assessed,
including interest, penalties, additions to tax and any similar liabilities with
respect thereto.

“Term Loan Commitment” means the commitment of a Lender to make a Term Loan
(including a Delayed Draw Term Loan) to Company pursuant to this Agreement, if
any.

“Term Loan Exposure”, with respect to any Lender, means, as of any date of
determination, the outstanding principal amount of the Term Loans and Term Loan
Commitments of that Lender.

“Term Loan Maturity Date” means April 9, 2016; provided that if any Senior
Subordinated Notes remain outstanding on October 14, 2013, the Term Loan
Maturity Date shall be deemed to be October 14, 2013.

“Term Loans” means the Loans made by Lenders to Company referenced in subsection
2.1A (including Delayed Draw Term Loans).

“Term Notes” means any promissory notes of Company issued pursuant to subsection
2.1E to evidence the Term Loans of any Lenders, substantially in the form of
Exhibit IV annexed hereto.

“Title Company” means one or more title insurance companies reasonably
satisfactory to Administrative Agent.

“Total Credit Agreement Indebtedness” means the sum of the aggregate Term Loan
Exposure of all Lenders plus the aggregate Revolving Loan Exposure of all
Lenders.

“Total Utilization of Revolving Loan Commitments” means, as at any date of
determination, the sum of (i) the aggregate principal amount of all outstanding
Revolving Loans plus (ii) the Letter of Credit Usage.

“Transactions” has the meaning assigned to that term in the recitals to this
Agreement.

 

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“Transaction Costs” means the actual non-recurring fees, costs and expenses paid
by Company in connection with the Transactions.

“Treasury Regulations” means the United States Treasury regulations promulgated
under the Internal Revenue Code.

“UCC” means the Uniform Commercial Code as in effect in any applicable
jurisdiction.

“Unasserted Obligations” means, at any time, Obligations for Taxes, costs,
indemnifications, reimbursements, damages and other liabilities (except for
(i) the principal of and interest on, and fees relating to, any Indebtedness and
(ii) contingent reimbursement obligations in respect of amounts that may be
drawn under Letters of Credit) in respect of which no claim or demand for
payment has been made (or, in the case of Obligations for indemnification, no
notice for indemnification has been issued by the Indemnitee) at such time.

“Up-Front Fees” means the amount of any fees or discounts received by Lenders in
connection with the making of loans or extensions of credit, expressed as a
percentage of such loan or extension of credit.

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

 

  1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
Agreement.

Except as otherwise expressly provided in this Agreement, all accounting terms
not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP. Financial statements and other information required to be
delivered by Company to Lenders pursuant to clauses (ii), (iii), and (xi) of
subsection 6.1 shall be prepared in accordance with GAAP as in effect at the
time of such preparation (and delivered together with the reconciliation
statements provided for in subsection 6.1(v), if applicable). Calculations in
connection with the definitions, covenants and other provisions of this
Agreement shall utilize GAAP as in effect on the date of determination, applied
in a manner consistent with that used in preparing the financial statements
referred to in subsection 5.3. If at any time any change in GAAP would affect
the computation of any financial ratio or requirement set forth in any Loan
Document, and Company, Administrative Agent or Requisite Lenders shall so
request, Administrative Agent, Lenders and Company shall negotiate in good faith
to amend such ratio or requirement to preserve the original intent thereof in
light of such change in GAAP (subject to the approval of Requisite Lenders),
provided that, until so amended, such ratio or requirement shall continue to be
computed in accordance with GAAP prior to such change therein and Company shall
provide to Administrative Agent reconciliation statements provided for in
subsection 6.1(v).

 

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  1.3 Other Definitional Provisions and Rules of Construction.

A. Any of the terms defined herein may, unless the context otherwise requires,
be used in the singular or the plural, depending on the reference.

B. References to “Sections” and “subsections” shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.

C. The use in any of the Loan Documents of the word “include” or “including”,
when following any general statement, term or matter, shall not be construed to
limit such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
nonlimiting language (such as “without limitation” or “but not limited to” or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that fall within the broadest
possible scope of such general statement, term or matter.

D. Unless otherwise expressly provided herein, references to Organizational
Documents, agreements (including the Loan Documents) and other contractual
instruments shall be deemed to include all subsequent amendments, restatements,
extensions, supplements and other modifications thereto, in each case which are
not prohibited by this Agreement.

Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS

 

  2.1 Commitments; Making of Loans; the Register; Optional Notes.

A. Commitments.

(i) Term Loans. The New Term Loans advanced under the Existing Credit Agreement
pursuant to the Amendment and Restatement Agreement shall remain outstanding
immediately following the Effective Date and shall be deemed the “Term Loans”
hereunder at such time. The original aggregate principal amount of Term Loans is
$330,000,000. The amount of each Lender’s Term Loan Exposure is set forth in the
Register; provided that the amount of the Term Loan Exposure of each Lender
shall be adjusted to give effect to any assignment of Term Loans pursuant to
subsection 10.1B, any making of Delayed Draw Term Loans and any making of Term
Loans contemplated by subsection 2.1A(iii). Term Loans repaid or prepaid may not
be reborrowed.

(ii) Revolving Loans. The New Revolving Commitments assumed under the Existing
Credit Agreement pursuant to the Amendment and Restatement Agreement shall
remain outstanding immediately following the Effective Date and shall be deemed
the “Revolving Commitments” hereunder at such time. Each Revolving Lender
severally and not jointly agrees, subject to the limitations set forth below
with respect to the maximum amount of Revolving Loans permitted to be
outstanding from time to time, to

 

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lend to Company Revolving Loans from time to time during the period from the
Effective Date to but excluding the Revolving Loan Commitment Termination Date,
an aggregate amount not exceeding its Pro Rata Share of the aggregate amount of
the Revolving Loan Commitments. Proceeds of the Revolving Loans will be used for
the purposes identified in subsection 2.5B. The original amount of each
Revolving Lender’s Revolving Loan Commitment (after giving effect to this
Agreement) is set forth opposite its name on Schedule 2.1 annexed hereto and the
original Revolving Loan Commitment Amount is $100,000,000; provided that the
amount of the Revolving Loan Commitment of each Revolving Lender shall be
adjusted to give effect to any assignment of such Revolving Loan Commitment
pursuant to subsection 10.1B and shall be reduced from time to time by the
amount of any reductions thereto made pursuant to subsection 2.4 and shall be
increased from time to time by the amount of any increases thereto made pursuant
to subsection 2.1A(iii). Each Revolving Lender’s Revolving Loan Commitment shall
expire on the Revolving Loan Commitment Termination Date and all Revolving Loans
and all other amounts owed hereunder with respect to the Revolving Loans and the
Revolving Loan Commitments shall be paid in full no later than that date.
Amounts borrowed under this subsection 2.1A(ii) may be repaid and reborrowed to
but excluding the Revolving Loan Commitment Termination Date.

Anything contained in this Agreement to the contrary notwithstanding, the
Revolving Loans and the Revolving Loan Commitments shall be subject to the
limitation that in no event shall the Total Utilization of Revolving Loan
Commitments at any time exceed the Revolving Loan Commitment Amount then in
effect.

(iii) Increases of the Commitments. Company may, not more than five times on or
after the Effective Date, increase, in a minimum amount of at least $10,000,000,
at Company’s request, the then effective aggregate principal amount of the
Revolving Loan Commitments and/or Term Loan Commitments; provided that (1) the
aggregate principal amount of the increases in the Revolving Loan Commitments
and/or Term Loan Commitments pursuant to this subsection 2.1A(iii) shall not
exceed $150,000,000, (2) such increases shall be for the purpose of funding
Permitted Acquisitions or for general corporate purposes, (3) Company shall
execute and deliver such documents and instruments and take such other actions
as may be reasonably requested by Administrative Agent in connection with such
increases and at the time of any such proposed increase, including the execution
and delivery of any requested Mortgage amendments, (4) no Potential Event of
Default or Event of Default shall have occurred and be continuing or would occur
after giving effect to such increase, (5) Company and its Subsidiaries shall be
in Pro Forma Compliance with each of the financial covenants specified in
subsection 7.6; (6) (i) the Term Loans made under this subsection 2.1A(iii)
shall have a maturity date no earlier than the Term Loan Maturity Date, and
shall have a Weighted Average Life to Maturity no shorter than the Term Loans
referenced under subsection 2.1A(i), and (ii) the Revolving Loan Commitments
provided under this subsection 2.1A(iii) shall expire on the same date as the
existing Revolving Loan Commitments under subsection 2.1A(ii); (7) if the
Initial Yield applicable to the Term Loans or Revolving Loan Commitments
extended pursuant to this subsection 2.1A(iii) exceeds by more than 50 basis
points the sum of the Applicable Margin (as adjusted to give effect to any
“LIBOR floor” applicable on the date of the calculation) then in effect

 

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for Eurodollar Rate Term Loans or Eurodollar Rate Revolving Loans, as the case
may be, plus one fourth of the Up-Front Fees paid in respect of the Term Loans
or the Revolving Loan Commitments, as the case may be, incurred pursuant to
subsections 2.1(A)(i) and 2.1(A)(ii) hereunder, then the Applicable Margin of
the Term Loans or Revolving Loans, as applicable, shall increase by the amount
necessary to reduce such difference to 50 basis points; (8) all other terms and
conditions with respect to the Revolving Loan Commitments and/or Term Loans
provided pursuant to this subsection 2.1A(iii) shall be satisfactory to
Administrative Agent; (9) the Revolving Loan Commitments (and related Revolving
Loans) and Term Loans provided pursuant to this subsection 2.1A(iii) shall be
permitted indebtedness under the Senior Subordinated Note Indenture or any
Permitted Refinancing Indebtedness, as applicable, and shall constitute “Senior
Indebtedness” (as defined in the Senior Subordinated Note Indenture or the
definitive documents governing any Permitted Refinancing Indebtedness) for
purposes of the Senior Subordinated Note Indenture or such Permitted Refinancing
Indebtedness; and (10) Company and its Subsidiaries would have a Consolidated
Secured Leverage Ratio of less than 3.25:1.00 on a Pro Forma Basis for such
increase. Any request under this subsection 2.1A(iii) shall be submitted by
Company to Administrative Agent (which shall promptly forward copies to
Lenders). Company may also, but is not required to, specify any fees offered to
those Lenders (the “Increasing Lenders”) which agree to increase the principal
amount of their Revolving Loan Commitments and/or Term Loan Commitments, which
fees may be variable based upon the amount by which any such Lender is willing
to increase the principal amount of its Revolving Loan Commitment and/or Term
Loan Commitment, as applicable. No Lender shall have any obligation, express or
implied, to offer to increase the aggregate principal amount of its Revolving
Loan Commitment and/or Term Loan Commitment. Only the consent of each Increasing
Lender shall be required for an increase in the aggregate principal amount of
the Revolving Loan Commitments and/or Term Loan Commitments, as applicable,
pursuant to this subsection 2.1A(iii). No Lender which declines to increase the
principal amount of its Revolving Loan Commitment and/or Term Loan Commitment
may be replaced in respect to its existing Revolving Loan Commitment and/or Term
Loan Commitment, as applicable, as a result thereof without such Lender’s
consent.

Each Increasing Lender shall as soon as practicable specify the amount of the
proposed increase that it is willing to assume. Company may accept some or all
of the offered amounts or designate new lenders that qualify as Eligible
Assignees and that are reasonably acceptable to Administrative Agent as
additional Lenders hereunder in accordance with this subsection 2.1A(iii) (each
such new lender being a “New Lender”), which New Lenders may assume all or a
portion of the increase in the aggregate principal amount of the applicable
Revolving Loan Commitments and/or Term Loan Commitments. Company and
Administrative Agent shall have discretion jointly to adjust the allocation of
the increased aggregate principal amount of the Revolving Loan Commitments
and/or Term Loan Commitments among Increasing Lenders and New Lenders.

Subject to the foregoing, any increase requested by Company shall be effective
upon delivery to Administrative Agent of each of the following documents: (i) an
originally executed copy of an instrument of joinder signed by a duly authorized
officer of each

 

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New Lender, in form and substance reasonably acceptable to Administrative Agent;
(ii) a notice to the Increasing Lenders and New Lenders, in form and substance
reasonably acceptable to Administrative Agent, signed by a duly authorized
officer of Company; (iii) an Officer’s Certificate of Company, in form and
substance reasonably acceptable to Administrative Agent; (iv) to the extent
requested by any New Lender or Increasing Lender, executed Revolving Notes or
Term Notes, as applicable, issued by Company in accordance with subsection 2.1E
hereof; and (v) any other certificates or documents that Administrative Agent
shall reasonably request, in form and substance reasonably satisfactory to
Administrative Agent. Any such increase shall be in a principal amount equal to
(A) the principal amount that Increasing Lenders are willing to assume as
increases to the principal amount of their Revolving Loan Commitments and/or
Term Loan Commitments, as applicable plus (B) the principal amount offered by
New Lenders with respect to the Revolving Loan Commitments and/or Term Loan
Commitments, in either case as adjusted by Company and Administrative Agent
pursuant to this subsection 2.1A(iii). Upon effectiveness of any such increase,
the Commitments and Pro Rata Share of each Lender will be adjusted to give
effect to the increase in the Revolving Loan Commitments and/or Term Loan
Commitments, as applicable.

If any new Term Loans or Revolving Loan Commitments incurred pursuant to this
subsection 2.1A(iii) are to have terms that are different from the Term Loans or
Revolving Loan Commitments, as applicable, outstanding immediately prior to such
incurrence (any such new Term Loans or Revolving Loan Commitments,
“Non-Conforming Credit Extensions”), all such terms shall be as set forth in a
separate assumption agreement among Company, the Lenders providing such new Term
Loans or Revolving Commitments and Administrative Agent, the execution and
delivery of which agreement shall be a condition to the effectiveness of the
Non-Conforming Credit Extensions. The scheduled principal payments on the Term
Loans to be made pursuant to subsection 2.4A shall be ratably increased after
the making of any new Term Loans (other than Term Loans that are Non-Conforming
Credit Extensions) under this subsection 2.1A(iii) by the aggregate principal
amount of such new Term Loans. After the incurrence of any Non-Conforming Credit
Extensions that are Term Loans, (x) all optional prepayments of Term Loans may
be allocated between the then-outstanding Term Loans and such Non-Conforming
Credit Extensions as Company may elect and (y) all mandatory prepayments of Term
Loans shall be allocated ratably between the then-outstanding Term Loans and the
then-outstanding Non-Conforming Credit Extensions. If Company incurs new
Revolving Loan Commitments under this subsection 2.1A(iii), regardless of
whether such Revolving Loan Commitments are Non-Conforming Credit Extensions,
Company shall, after such time, incur and repay Revolving Loans ratably as
between the new Revolving Loan Commitments and the Revolving Loan Commitments
outstanding immediately prior to such incurrence. Notwithstanding anything to
the contrary in subsection 10.6, Administrative Agent is expressly permitted to
amend the Loan Documents to the extent necessary to give effect to any increases
pursuant to this subsection 2.1A(iii) and mechanical changes necessary or
advisable in connection therewith (including amendments to implement the
requirements in the preceding two sentences, amendments to ensure pro rata
allocations of Eurodollar Rate Loans and Base Rate Loans between Loans incurred
pursuant to this subsection 2.1A(iii) and Loans outstanding immediately prior to
any such incurrence and amendments to implement

 

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ratable participation in Letters of Credit between the Non-Conforming Credit
Extensions consisting of Revolving Loan Commitments and the Revolving Loan
Commitments outstanding immediately prior to any such incurrence).

(iv) Delayed Draw Term Loans. Subject to the terms and conditions and relying
upon the representations and warranties set forth herein, each Lender having a
Delayed Draw Term Loan Commitment agrees, severally and not jointly, to make
Delayed Draw Term Loans to Company on one and only one occasion during the
period commencing on the first Business Day after the Effective Date and ending
on the Delayed Draw Commitment Termination Date, in an aggregate principal
amount not to exceed its Delayed Draw Term Loan Commitment. Amounts paid or
prepaid in respect of Delayed Draw Term Loans may not be reborrowed. The Delayed
Draw Term Loan Commitments shall be terminated upon the earlier of (A) the
Delayed Draw Commitment Termination Date and (B) the initial incurrence by
Company of Delayed Draw Term Loans (regardless of the aggregate principal amount
of such incurrence). Except as expressly set forth in this Agreement, the
Delayed Draw Term Loans shall have the same terms as the Term Loans referred to
in subsection 2.1A(i).

B. Borrowing Mechanics. Loans made as Base Rate Loans on any Funding Date (other
than Revolving Loans made pursuant to subsection 3.3B) shall be in an aggregate
minimum amount of $1,000,000 and integral multiples of $500,000 in excess of
that amount. Loans made on any Funding Date as Eurodollar Rate Loans with a
particular Interest Period shall be in an aggregate minimum amount of $2,000,000
and integral multiples of $500,000 in excess of that amount. Whenever Company
desires that Lenders make Loans it shall deliver to Administrative Agent a duly
executed Notice of Borrowing no later than 1:00 P.M. (New York City time) at
least three Business Days in advance of the proposed Funding Date (in the case
of a Eurodollar Rate Loan) or no later than 1:00 P.M. (New York City time) on
the proposed Funding Date (in the case of a Base Rate Loan). Term Loans and
Revolving Loans may be continued as or converted into Base Rate Loans and
Eurodollar Rate Loans in the manner provided in subsection 2.2D. In lieu of
delivering a Notice of Borrowing, Company may give Administrative Agent
telephonic notice by the required time of any proposed borrowing under this
subsection 2.1B; provided that such notice shall be promptly confirmed in
writing by delivery of a duly executed Notice of Borrowing to Administrative
Agent on or before the applicable Funding Date.

Neither Administrative Agent nor any Lender shall incur any liability to Company
in acting upon any telephonic notice referred to above that Administrative Agent
believes in good faith to have been given by an Officer or other person
authorized to borrow on behalf of Company or for otherwise acting in good faith
under this subsection 2.1B or under subsection 2.2D, and upon funding of Loans
by Lenders, and upon conversion or continuation of the applicable basis for
determining the interest rate with respect to any Loans pursuant to subsection
2.2D, in each case in accordance with this Agreement, pursuant to any such
telephonic notice Company shall have effected Loans or a conversion or
continuation, as the case may be, hereunder.

Company shall notify Administrative Agent prior to the funding of any Loans in
the event that any of the matters to which Company is required to certify in the
applicable Notice

 

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of Borrowing is no longer true and correct as of the applicable Funding Date,
and the acceptance by Company of the proceeds of any Loans shall constitute a
re-certification by Company, as of the applicable Funding Date, as to the
matters to which Company is required to certify in the applicable Notice of
Borrowing.

Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice of
Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu thereof)
shall be irrevocable and Company shall be bound to make a borrowing in
accordance therewith.

C. Disbursement of Funds. All Term Loans and Revolving Loans under this
Agreement and the Amendment and Restatement Agreement shall be made by Lenders
simultaneously and proportionately to their respective Pro Rata Shares, it being
understood that (i) the failure of any Lender to make its Pro Rata Share of any
Loan shall not relieve any other Lender of its obligations hereunder and
(ii) neither Administrative Agent nor any Lender shall be responsible for any
default by any other Lender in that other Lender’s obligation to make a Loan
requested hereunder nor shall the amount of the Commitment of any Lender to make
the particular type of Loan requested or Pro Rata Share of any Lender be
increased or decreased as a result of a default by any other Lender in that
other Lender’s obligation to make a Loan requested hereunder.

Promptly after receipt by Administrative Agent of a Notice of Borrowing pursuant
to subsection 2.1B (or telephonic notice in lieu thereof), Administrative Agent
shall notify each Lender for that type of Loan of the proposed borrowing. Each
such Lender shall make the amount of its Loan available to Administrative Agent
at the Funding and Payment Office not later than 1:00 p.m. (New York City time)
on the applicable Funding Date in same day funds in Dollars, at the Funding and
Payment Office. Except as provided in subsection 3.3B with respect to Revolving
Loans used to reimburse any Issuing Lender for the amount of a drawing under a
Letter of Credit issued by it, upon satisfaction or waiver of the conditions
precedent specified in subsections 4.1 (in the case of Loans made on the
Effective Date) and 4.2 (in the case of all Loans), Administrative Agent shall
make the proceeds of such Loans available to Company on the applicable Funding
Date by causing an amount of same day funds in Dollars equal to the proceeds of
all such Loans received by Administrative Agent from Lenders to be credited to
the account designated by Company in the applicable Notice of Borrowing.

Unless Administrative Agent shall have been notified by any Lender prior to a
Funding Date for any Loans that such Lender does not intend to make available to
Administrative Agent the amount of such Lender’s Loan requested on such Funding
Date, Administrative Agent may assume that such Lender has made such amount
available to Administrative Agent on such Funding Date and Administrative Agent
may, in its sole discretion, but shall not be obligated to, make available to
Company a corresponding amount on such Funding Date. If such corresponding
amount is not in fact made available to Administrative Agent by such Lender,
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Administrative Agent, at the
customary rate set by Administrative Agent for the correction of errors among
banks for three Business Days and thereafter at the Base Rate. If such Lender
does not pay such corresponding amount forthwith upon Administrative Agent’s
demand therefor, Administrative Agent shall

 

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promptly notify Company and Company shall immediately pay such corresponding
amount to Administrative Agent together with interest thereon, for each day from
such Funding Date until the date such amount is paid to Administrative Agent, at
the rate payable under this Agreement for Base Rate Loans. Nothing in this
subsection 2.1C shall be deemed to relieve any Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that Company may
have against any Lender as a result of any default by such Lender hereunder.

D. The Register. Administrative Agent, acting for these purposes solely as an
agent of Company (it being acknowledged that Administrative Agent, in such
capacity, and its officers, directors, employees, agent and affiliates shall
constitute Indemnitees under subsection 10.3), shall maintain (and make
available for inspection by Company and Lenders upon reasonable prior notice at
reasonable times) at its address referred to in subsection 10.8 a register for
the recordation of, and shall record, the names and addresses of Lenders and the
respective amounts of the Term Loan Commitment, Revolving Loan Commitment, Term
Loans and Revolving Loans of each Lender from time to time (the “Register”).
Company, Administrative Agent, Collateral Agent and Lenders shall, absent
manifest error, deem and treat the Persons listed as Lenders in the Register as
the holders and owners of the corresponding Commitments and Loans listed therein
for all purposes hereof; all amounts owed with respect to any Commitment or Loan
shall be owed to the Lender listed in the Register as the owner thereof, and any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is listed in the Register as a
Lender shall be conclusive and binding on any subsequent holder, assignee or
transferee of the corresponding Commitments or Loans. Each Lender shall record
on its internal records the amount of its Loans and Commitments and each payment
in respect hereof, and any such recordation shall be conclusive and binding on
Company, absent manifest error, subject to the entries in the Register, which
shall, absent manifest error, govern in the event of any inconsistency with any
Lender’s records. Failure to make any recordation in the Register or in any
Lender’s records, or any error in such recordation, shall not affect any Loans
or Commitments or any Obligations in respect of any Loans. Each Lender that
sells a participation, or grants an option to an SPC, shall, acting solely for
this purpose as an agent of Company, maintain a register on which it enters the
name and address of each participant and each SPC, and the principal amounts
(and stated interest) of each participant’s interest in the Loans or other
obligations under this Agreement and of the interest underlying each option
granted to an SPC (the “Participant Register”). The entries in the Participant
Register shall be conclusive absent manifest error, and such Lender shall treat
each Person whose name is recorded in the Participant Register as the owner of
such participation or such SPC option grant for all purposes of this Agreement
notwithstanding any notice to the contrary.

E. Optional Notes. If so requested by any Lender by written notice to Company
(with a copy to Administrative Agent) at least two Business Days prior to the
Effective Date or at any time thereafter, Company shall execute and deliver to
such Lender (and/or, if applicable and if so specified in such notice, to any
Person who is an assignee of such Lender pursuant to subsection 10.1) on the
Effective Date (or, if such notice is delivered after the Effective Date,
promptly after Company’s receipt of such notice) a promissory note or promissory
notes to evidence such Lender’s Term Loan or Revolving Loans, substantially in
the form of Exhibit IV or Exhibit V annexed hereto, respectively, with
appropriate insertions.

 

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  2.2 Interest on the Loans.

A. Rate of Interest. Subject to the provisions of subsections 2.6 and 2.7, each
Term Loan and each Revolving Loan shall bear interest on the unpaid principal
amount thereof from the date made through maturity (whether by acceleration or
otherwise) at a rate determined by reference to the Base Rate or the Eurodollar
Rate. The applicable basis for determining the rate of interest with respect to
any Term Loan or any Revolving Loan shall be selected by Company initially at
the time a Notice of Borrowing is given with respect to such Loan pursuant to
subsection 2.1B, and the basis for determining the interest rate with respect to
any Term Loan or any Revolving Loan may be changed from time to time pursuant to
subsection 2.2D. If on any day a Term Loan or Revolving Loan is outstanding with
respect to which notice has not been delivered to Administrative Agent in
accordance with the terms of this Agreement specifying the applicable basis for
determining the rate of interest, then for that day that Loan shall bear
interest determined by reference to the Base Rate. Notwithstanding anything
herein to the contrary, the Eurodollar Rate for each initial Interest Period for
Delayed Draw Term Loans that are Eurodollar Rate Loans shall be equal to the
Eurodollar Rate in respect of the corresponding Interest Periods to which such
Delayed Draw Term Loans are allocated as contemplated by subsection 2.2B(x).
Subject to the provisions of subsections 2.2E, 2.2G and 2.7, the Term Loans and
the Revolving Loans shall bear interest through maturity as follows:

(a) if a Base Rate Loan, then at the sum of the Base Rate plus the Applicable
Margin for Base Rate Loans; or

(b) if a Eurodollar Rate Loan, then at the sum of the Eurodollar Rate plus the
Applicable Margin for Eurodollar Rate Loans.

B. Interest Periods. In connection with each Eurodollar Rate Loan, Company may,
pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
“Interest Period”) to be applicable to such Loan, which Interest Period shall
be, at Company’s option, either a one, two, three or six month period; provided
that:

(i) the initial Interest Period for any Eurodollar Rate Loan shall commence on
the Funding Date in respect of such Loan, in the case of a Loan initially made
as a Eurodollar Rate Loan, or on the date specified in the applicable Notice of
Conversion/Continuation, in the case of a Loan converted to a Eurodollar Rate
Loan;

(ii) in the case of immediately successive Interest Periods applicable to a
Eurodollar Rate Loan continued as such pursuant to a Notice of
Conversion/Continuation, each successive Interest Period shall commence on the
day on which the next preceding Interest Period expires;

(iii) if an Interest Period would otherwise expire on a day that is not a
Business Day, such Interest Period shall expire on the next succeeding Business
Day; provided that, if any Interest Period would otherwise expire on a day that
is not a Business Day but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;

 

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(iv) 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, subject to clause
(v) of this subsection 2.2B, end on the last Business Day of a calendar month;

(v) no Interest Period with respect to any portion of the Term Loans shall
extend beyond the Term Loan Maturity Date, and no Interest Period with respect
to any portion of the Revolving Loans shall extend beyond the Revolving Loan
Commitment Termination Date;

(vi) no Interest Period with respect to any type of Term Loans shall extend
beyond a date on which Company is required to make a scheduled payment of
principal of such type of Term Loans, unless the sum of (a) the aggregate
principal amount of such type of Term Loans that are Base Rate Loans plus
(b) the aggregate principal amount of such type of Term Loans that are
Eurodollar Rate Loans with Interest Periods expiring on or before such date
equals or exceeds the principal amount required to be paid on such type of Term
Loans on such date;

(vii) there shall be no more than ten Interest Periods outstanding at any time;

(viii) in the event Company fails to specify an Interest Period for any
Eurodollar Rate Loan in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, Company shall be deemed to have selected an Interest
Period of one month;

(ix) prior to the Delayed Draw Commitment Termination Date (or earlier
termination of all the Delayed Draw Term Loan Commitments), Company may not
elect an Interest Period for any Term Loan longer than three months; and

(x) Delayed Draw Term Loans, if and when made, shall be allocated ratably to the
then outstanding Interest Periods applicable to the outstanding Term Loans
referenced in subsection 2.1A(i) (and, to the extent any of such Term Loans are
Base Rate Loans, allocated ratably as Base Rate Loans), with the initial
Interest Periods for such Delayed Draw Term Loans allocated as Eurodollar Rate
Loans to be the periods commencing on (and including) the date of borrowing of
such Delayed Draw Term Loans and ending on (and including) the last day of the
Interest Periods applicable to such Term Loans outstanding immediately prior to
the date of borrowing, notwithstanding anything to the contrary contained in the
definition of the term “Interest Period”.

C. Interest Payments. Subject to the provisions of subsection 2.2E, interest on
each Loan shall be payable in arrears on and to each Interest Payment Date
applicable to that Loan, upon any prepayment of that Loan (to the extent accrued
on the amount being prepaid) and at maturity (including final maturity);
provided that, in the event any Revolving Loans that are Base Rate Loans are
prepaid pursuant to subsection 2.4B(i), interest accrued on such Loans through
the date of such prepayment shall be payable on the next succeeding Interest
Payment Date applicable to Base Rate Loans (or, if earlier, at final maturity).

 

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D. Conversion or Continuation. Subject to the provisions of subsection 2.6,
Company shall have the option (i) to convert at any time all or any part of its
outstanding Term Loans or Revolving Loans that are Base Rate Loans to Eurodollar
Rate Loans in amounts equal to $2,000,000 and integral multiples of $500,000 in
excess of that amount or (ii) upon the expiration of any Interest Period
applicable to a Eurodollar Rate Loan, to continue all or any portion of such
Loan equal to $2,000,000 and integral multiples of $500,000 in excess of that
amount as a Eurodollar Rate Loan or convert all or any portion of such Loan
equal to $1,000,000 and integral multiples of $500,000 in excess of that amount
to a Base Rate Loan; provided, however, that a Eurodollar Rate Loan may only be
converted into a Base Rate Loan on the expiration date of an Interest Period
applicable thereto.

Company shall deliver a duly executed Notice of Conversion/Continuation to
Administrative Agent no later than 1:00 P.M. (New York City time) on the
Business Day of the proposed conversion date (in the case of a conversion to a
Base Rate Loan) and at least three Business Days in advance of the proposed
conversion/continuation date (in the case of a conversion to, or a continuation
of, a Eurodollar Rate Loan). In lieu of delivering a Notice of
Conversion/Continuation, Company may give Administrative Agent telephonic notice
by the required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly confirmed in
writing by delivery of a duly executed Notice of Conversion/Continuation to
Administrative Agent on or before the proposed conversion/continuation date.
Administrative Agent shall notify each Lender of any Loan subject to a Notice of
Conversion/Continuation.

Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice of
Conversion/Continuation for conversion to, or continuation of, a Eurodollar Rate
Loan (or telephonic notice in lieu thereof) shall be irrevocable and Company
shall be bound to effect a conversion or continuation in accordance therewith.

E. Default Rate. Upon the occurrence and during the continuation of any Event of
Default, the outstanding principal amount of all Loans and, to the extent
permitted by applicable law, any interest payments thereon not paid when due and
any fees and other amounts then due and payable hereunder, shall thereafter bear
interest (including post-petition interest in any proceeding under the
Bankruptcy Code or other applicable bankruptcy laws) payable upon demand by
Administrative Agent at a rate that is 2% per annum in excess of the interest
rate otherwise payable under this Agreement with respect to the applicable Loans
(or, in the case of any such fees and other amounts, at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans); provided that, in the case of Eurodollar Rate Loans, upon the
expiration of the Interest Period in effect at the time any such increase in
interest rate is effective such Eurodollar Rate Loans shall thereupon become
Base Rate Loans and shall thereafter bear interest payable upon demand by
Administrative Agent at a rate which is 2% per annum in excess of the interest
rate otherwise payable under this Agreement for Base Rate Loans. Payment or
acceptance of the increased rates of interest provided for in this
subsection 2.2E is not a permitted alternative to timely payment and shall not
constitute a waiver of any Event of Default or otherwise prejudice or limit any
rights or remedies of Administrative Agent or any Lender.

 

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F. Computation of Interest. Interest on the Loans shall be computed (i) in the
case of Base Rate Loans based on the Prime Rate, on the basis of a 365-day or
366-day year, as the case may be, and (ii) in the case of Eurodollar Rate Loans
and other Base Rate Loans, on the basis of a 360-day year, in each case for the
actual number of days elapsed in the period during which it accrues. In
computing interest on any Loan, the date of the making of such Loan or the first
day of an Interest Period applicable to such Loan or, with respect to a Base
Rate Loan being converted from a Eurodollar Rate Loan, the date of conversion of
such Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be
included, and the date of payment of such Loan or the expiration date of an
Interest Period applicable to such Loan or, with respect to a Base Rate Loan
being converted to a Eurodollar Rate Loan, the date of conversion of such Base
Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded;
provided that if a Loan is repaid on the same day on which it is made, one day’s
interest shall be paid on that Loan.

G. Maximum Rate. Notwithstanding the foregoing provisions of this subsection
2.2, in no event shall the rate of interest payable by Company with respect to
any Loan exceed the maximum rate of interest permitted to be charged under
applicable law.

 

  2.3 Fees.

A. Commitment Fees. Company agrees to pay to Administrative Agent, for
distribution to each Revolving Lender in proportion to that Lender’s Pro Rata
Share, commitment fees for the period from and including the Effective Date to
and excluding the date the Revolving Loan Commitments are terminated under this
Agreement equal to the average of the daily excess of the Revolving Loan
Commitment Amount over the sum of (i) the aggregate principal amount of
outstanding Revolving Loans plus (ii) the Letter of Credit Usage multiplied by a
rate equal to 0.50% per annum, such commitment fees to be calculated on the
basis of a 360-day year and the actual number of days elapsed and to be payable
quarterly in arrears on the last Business Day of each March, June, September and
December of each year, commencing on June 30, 2010, and on the date the
Revolving Loan Commitments are terminated under this Agreement. Notwithstanding
the foregoing, the Pro Rata Share of the Revolving Loan Commitment Amount and
outstanding Revolving Loans attributable to any Defaulting Lender shall be
excluded from the calculations above, and such Defaulting Lender shall not be
entitled to the fees described above, for so long as, and with respect to the
period during which, such Lender is a Defaulting Lender.

B. Other Fees. Company agrees to pay to Administrative Agent such fees in the
amounts and at the times separately agreed upon.

C. Delayed Draw Unused Fees. Company agrees to pay to Administrative Agent, for
distribution to each Lender, in arrears on the last Business Day of March, June,
September and December in each year and on the date on which the Delayed Draw
Term Loan Commitment of such Lender shall expire or be terminated as provided
herein, an unused fee equal to 1.875% per annum on the daily unused amount of
the Delayed Draw Term Loan Commitment of such Lender during the preceding
quarter (or other period commencing with the date hereof or ending with the
Delayed Draw Commitment Termination Date or the date on which the Delayed Draw
Term Loan Commitment of such Lender shall expire or be terminated), provided
that no Defaulting Lender shall be entitled to the fees described above, for so
long as, and with respect to the period during which, such Lender is a
Defaulting Lender.

 

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  2.4 Repayments, Prepayments and Reductions of Revolving Loan Commitment
Amount; General Provisions Regarding Payments; Application of Proceeds of
Collateral and Payments Under Subsidiary Guaranty.

A. Scheduled Payments of Term Loans.

Company shall make principal payments on the Term Loans in installments of 0.25%
of the initial principal amount thereof on the last Business Day of each March,
June, September and December, commencing on June 30, 2010; provided that the
initial principal amount of the Term Loans for purposes of this subsection 2.4A
shall be deemed increased by the initial principal amount of any Delayed Draw
Term Loans on the date such Delayed Draw Term Loans are first incurred; provided
further that such scheduled installments of principal of the Term Loans shall be
reduced in connection with any voluntary or mandatory prepayments of the Term
Loans in accordance with subsection 2.4B(iv); and provided further that the Term
Loans and all other amounts owed hereunder with respect to the Term Loans shall
be paid in full no later than the Term Loan Maturity Date, and the final
installment payable by Company in respect of the Term Loans on such date shall
be in an amount sufficient to repay all amounts owing by Company under this
Agreement with respect to the Term Loans.

B. Prepayments of Loans and Reductions in Revolving Loan Commitment Amount.

(i) Voluntary Prepayments. Company may, upon written or telephonic notice to
Administrative Agent on or prior to 1:00 P.M. (New York City time) on the date
of prepayment, in the case of Base Rate Loans, and on or prior to 1:00 P.M.
(New York City time) on the day three Business Days prior to such prepayment, in
the case of Eurodollar Rate Loans, in each case given to Administrative Agent
and, if given by telephone, promptly confirmed in writing to Administrative
Agent, who will promptly notify each Lender whose Loans are to be prepaid of
such prepayment, at any time and from time to time prepay any Term Loans or
Revolving Loans on any Business Day in whole or in part in an aggregate minimum
amount of $1,000,000 and integral multiples of $500,000 in excess of that
amount; provided, however, that a Eurodollar Rate Loan may only be prepaid on
the expiration of the Interest Period applicable thereto unless Company
compensates Lenders for all breakage costs resulting from such payment or
conversion pursuant to subsection 2.6D. All written notices delivered pursuant
to this subsection 2.4B(i) shall be in the form of a Notice of Prepayment and
all notices whether written or telephonic delivered pursuant to this subsection
2.4B(i) shall be irrevocable, and once given as aforesaid, the principal amount
of the Loans specified in such notice shall become due and payable on the
prepayment date specified therein; provided that in connection with the
termination of all commitments under this Agreement and the repayment in full of
all Obligations under this Agreement (including the cash collateralization of
all Letters of Credit in an amount equal to 105% of the maximum amount which may
be drawn thereunder), such repayment may be made conditional on

 

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the closing of the transaction from which the funds required for such repayment
are to be received. Any such voluntary prepayment shall be applied as specified
in subsection 2.4B(iv).

(ii) Voluntary Reductions of Commitments. Company may, upon not less than three
Business Days’ prior written or telephonic notice confirmed in writing to
Administrative Agent, or upon such lesser number of days’ prior written or
telephonic notice, as determined by Administrative Agent in its sole discretion,
at any time and from time to time, terminate in whole or permanently reduce in
part, without premium or penalty, the Revolving Loan Commitment Amount in an
amount up to the amount by which the Revolving Loan Commitment Amount exceeds
the Total Utilization of Revolving Loan Commitments at the time of such proposed
termination or reduction; provided that any such partial reduction of the
Revolving Loan Commitment Amount shall be in an aggregate minimum amount of
$1,000,000 and integral multiples of $500,000 in excess of that amount. The
Notice of Prepayment shall designate the date (which shall be a Business Day) of
such termination or reduction and the amount of any partial reduction, and such
termination or reduction shall be effective on the date specified in Company’s
notice and shall reduce the amount of the Revolving Loan Commitment of each
Revolving Lender proportionately to its Pro Rata Share. Administrative Agent
will promptly notify each Revolving Lender of such notice. Any such voluntary
reduction of the Revolving Loan Commitment Amount shall be applied as specified
in subsection 2.4B(iv). All written notices delivered pursuant to this
subsection 2.4B(ii) shall be in the form of a Notice of Prepayment, all notices,
whether written or telephonic, delivered pursuant to this subsection 2.4B(ii)
shall be irrevocable and Company shall be bound to the termination or reduction
of the Revolving Loan Commitments referenced in such notice; provided that in
connection with the termination of all commitments under this Agreement and the
repayment in full of all Obligations under this Agreement (including the cash
collateralization of all Letters of Credit in an amount equal to 105% of the
maximum amount which may be drawn thereunder), any related termination may be
made conditional on the closing of the transaction from which the funds required
for such repayment are to be received. In addition, Company may, upon not less
than three Business Days’ prior written or telephonic notice confirmed in
writing to Administrative Agent, or upon such lesser number of days’ prior
written or telephonic notice, as determined by Administrative Agent in its sole
discretion, at any time and from time to time, terminate in whole or permanently
reduce in part, without premium or penalty, the Delayed Draw Term Loan
Commitment. The Notice of Prepayment with respect to the termination or
reduction of the Delayed Draw Term Loan Commitment shall designate the date
(which shall be a Business Day) of such termination or reduction and such
termination or reduction shall be effective on the date specified in Company’s
notice, which notice shall be irrevocable. Administrative Agent will promptly
notify each Lender with a Delayed Draw Term Loan Commitment of such notice.

(iii) Mandatory Prepayments. The Term Loans shall be prepaid and (subject to
subsection 2.4B(iv)(b)) after the Term Loans have been paid in full, Revolving
Loans shall be prepaid (but without a reduction of the Revolving Loan
Commitments) and, after all Revolving Loans have been paid, outstanding Letters
of Credit shall be Cash

 

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collateralized in an amount equal to 105% of the maximum amount which may be
drawn thereunder, in each case in the amounts and under the circumstances
(including the giving of the Notice of Prepayment and Officer’s Certificate
required by subsection 2.4B(iii)(e)), set forth below, all such prepayments to
be applied as set forth below or as more specifically provided in subsection
2.4B(iv) and subsection 2.4D:

(a) Prepayments and Reductions From Net Asset Sale Proceeds. No later than the
tenth Business Day following the date of receipt by Company or any of its
Subsidiaries of any Net Asset Sale Proceeds in respect of any Asset Sale,
Company shall either (1) prepay the Term Loans in an aggregate amount equal to
such Net Asset Sale Proceeds (provided that Company may defer making any such
prepayment until the cumulative amount of such Net Asset Sale Proceeds to be
applied to the prepayment of the Term Loans exceeds $1,500,000) or (2) so long
as no Potential Event of Default or Event of Default shall have occurred and be
continuing, deliver to Administrative Agent an Officer’s Certificate setting
forth that portion of such Net Asset Sale Proceeds that Company or such
Subsidiary intends to reinvest in equipment or other productive assets of the
general type used in the business of Company and its Subsidiaries or in
connection with Permitted Acquisitions within 270 days of such date of receipt,
and Company shall, or shall cause one or more of its Subsidiaries to, promptly
and diligently apply such portion to such reinvestment purposes; provided,
however, that, pending such reinvestment, such portion of the Net Asset Sale
Proceeds may be applied to prepay outstanding Revolving Loans (without a
reduction in the Revolving Loan Commitment Amount) to the full extent thereof.
In addition, to the extent that such Net Asset Sale Proceeds have not
theretofore been applied to the Obligations or that have not been so reinvested
as provided above, Company shall make an additional prepayment of the Term Loans
in an amount equal to such unapplied Net Asset Sale Proceeds.

(b) Prepayments and Reductions from Net Insurance/Condemnation Proceeds. No
later than the tenth Business Day following the date of receipt by
Administrative Agent or by Company or any of its Subsidiaries of any Net
Insurance/Condemnation Proceeds that are required to be applied to prepay the
Term Loans pursuant to the provisions of subsection 6.4C, Company shall either
(1) prepay the Term Loans in an aggregate amount equal to such Net
Insurance/Condemnation Proceeds (provided that Company may defer making any such
prepayment until the cumulative amount of such Net Insurance/Condemnation
Proceeds to be applied to the prepayment of the Term Loans exceeds $1,500,000)
or (2) so long as no Potential Event of Default or Event of Default shall have
occurred and be continuing, deliver to Administrative Agent an Officer’s
Certificate setting forth that portion of such Net Insurance/Condemnation
Proceeds that Company or such Subsidiary intends to reinvest in equipment or
other productive assets of the general type used in the business of Company and
its Subsidiaries or in connection with Permitted Acquisitions within 270 days of
such date of receipt, and Company shall, or shall cause one or more of its
Subsidiaries to, promptly and diligently apply such portion to such reinvestment
purpose; provided, however, that, pending such

 

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reinvestment, such portion of the Net Insurance/Condemnation Proceeds may be
applied to prepay outstanding Revolving Loans (without a reduction in the
Revolving Loan Commitment Amount) to the full extent thereof. In addition, to
the extent that such Net Insurance/Condemnation Proceeds have not theretofore
been applied to the Obligations or that have not been so reinvested as provided
above, Company shall make an additional prepayment of the Term Loans in an
amount equal to such unapplied Net Insurance/Condemnation Proceeds.

(c) Prepayments and Reductions Due to Issuance of Indebtedness. No later than
(i) the tenth Business Day following the date of receipt by Company or any of
its Subsidiaries of the Net Indebtedness Proceeds from the issuance or
incurrence of any Indebtedness of Company or any of its Subsidiaries after the
Effective Date, other than Indebtedness permitted pursuant to subsection 7.1,
and (ii) the tenth Business Day following the date of receipt by any HUD
Subsidiary of the Net Indebtedness Proceeds from the issuance or incurrence of
any HUD Financing, Company shall prepay the Term Loans in an aggregate amount
equal to such Net Indebtedness Proceeds.

(d) Prepayments and Reductions from Consolidated Excess Cash Flow. In the event
that there shall be Consolidated Excess Cash Flow for any Fiscal Year
(commencing with the Fiscal Year ending December 31, 2010), Company shall, no
later than the tenth Business Day after the date by which Company is required to
deliver the financial statements contemplated by subsection 6.1(iii), prepay the
Term Loans in an aggregate amount equal to 50% of such Consolidated Excess Cash
Flow; provided that for any Fiscal Year in which the Consolidated Leverage Ratio
as of the last day of such Fiscal Year is less than 3.00:1.00 the percentage of
Consolidated Excess Cash Flow required to be used to prepay the Term Loans
pursuant to this subsection 2.4B(iii)(d) shall be 25%.

(e) Calculations of Net Proceeds Amounts; Additional Prepayments and Reductions
Based on Subsequent Calculations. Company shall provide Administrative Agent
with not less than ten Business Days’ prior written notice by delivery of a
Notice of Prepayment or prior telephonic notice promptly confirmed in writing by
the delivery of a Notice of Prepayment, of any prepayment of the Term Loans
pursuant to subsections 2.4B(iii)(a)-(d). Such written or telephonic notice
shall be irrevocable and Company shall be bound to make the mandatory prepayment
referenced in such notice on the date indicated in such notice. Administrative
Agent shall promptly notify each Lender of such prepayment and of the amount of
the prepayment proposed to be applied to such Lender’s Term Loans. Concurrently
with any prepayment of the Term Loans pursuant to subsections 2.4B(iii)(a)-(d),
Company shall deliver to Administrative Agent an Officer’s Certificate
demonstrating the calculation of the amount of the applicable Net Asset Sale
Proceeds, Net Insurance/Condemnation Proceeds, Net Indebtedness Proceeds or
Consolidated Excess Cash Flow, as the case may be, that gave rise to such
prepayment. In the event that Company shall subsequently determine that the
actual amount was greater than the amount set forth in such

 

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Officer’s Certificate, Company shall promptly make an additional prepayment of
the Term Loans in an amount equal to the amount of such excess, and Company
shall concurrently therewith deliver to Administrative Agent an Officer’s
Certificate demonstrating the derivation of the additional amount resulting in
such excess.

(f) Prepayments Due to Reductions of Revolving Loan Commitment Amount. Company
shall from time to time prepay the Revolving Loans (and, after prepaying all
Revolving Loans, Cash collateralize any outstanding Letters of Credit by
depositing the requisite amount in the Collateral Account) to the extent
necessary so that the Total Utilization of Revolving Loan Commitments shall not
at any time exceed the Revolving Loan Commitment Amount then in effect. At such
time as the Total Utilization of Revolving Loan Commitments shall be equal to or
less than the Revolving Loan Commitment Amount, if no Event of Default has
occurred and is continuing, to the extent any Cash collateral was provided by
Company and has not been applied to any Obligations as provided in the Security
Agreement, such amount may, at the request of Company, be released to Company.

(iv) Application of Prepayments.

(a) Application of Voluntary Prepayments by Type of Loans and Order of Maturity.
Any voluntary prepayments pursuant to subsection 2.4B(i) shall be applied as
specified by Company in the applicable Notice of Prepayment; provided that all
such voluntary prepayments shall, irrespective of any application specified by
Company, first be applied to repay any amounts owing to Issuing Lenders due to
the failure of any Revolving Lender to (A) fund a Revolving Loan for the purpose
of repaying any unreimbursed amounts of a drawing under a Letter of Credit
pursuant to subsection 3.3B or (B) fund a participation in any such unreimbursed
Letter of Credit drawing pursuant to subsection 3.3C; provided further that in
the event Company fails to specify the Loans to which any such prepayment shall
be applied, such prepayment shall be applied first to repay outstanding
Revolving Loans to the full extent thereof, and second to repay outstanding Term
Loans to the full extent thereof. Any voluntary prepayments of the Term Loans
pursuant to subsection 2.4B(i) shall be applied to reduce the scheduled
installments of principal of the Term Loans as specified by Company in the
applicable Notice of Prepayment and if no application is specified, such
voluntary prepayment shall be applied to reduce the scheduled installments of
principal of the Term Loans set forth in subsection 2.4A on a pro rata basis (in
accordance with the respective outstanding principal amounts thereof) to each
remaining scheduled installment of principal of the Term Loans set forth in
subsection 2.4A.

(b) Application of Mandatory Prepayments of Term Loans to the Scheduled
Installments of Principal Thereof and to Revolving Loans and Cash
Collateralization of Letters of Credit

 

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(1) Except as provided in subsection 2.4D, any mandatory prepayments of the Term
Loans pursuant to subsections 2.4B(iii)(a)-(d) shall be applied to reduce the
scheduled installments of principal of the Term Loans set forth in subsection
2.4A as follows: (i) first in direct order of maturity against installments of
principal due within 12 months after the date of any such prepayment and
(ii) thereafter on a pro rata basis (in accordance with the respective
outstanding principal amounts thereof) to each scheduled installment of
principal of the Term Loans set forth in subsection 2.4A that remains unpaid.
Notwithstanding the foregoing, in the case of any mandatory prepayment of the
Term Loans, Lenders of the Term Loans may waive the right to receive the amount
of such mandatory prepayment by providing written notice to Administrative Agent
of such waiver by 2:00 P.M. (New York City time) at least eight Business Days
prior to the date such mandatory prepayment is to be made. If any Lender or
Lenders elect to waive the right to receive the amount of such mandatory
prepayment, all of the amount that otherwise would have been applied to
mandatorily prepay the Term Loans of such Lender or Lenders shall be offered on
a pro rata basis to each Lender that initially accepted such mandatory
prepayment and such Lenders shall have the right to waive such additional
mandatory prepayment offer by providing written notice to Administrative Agent
of such waiver by 2:00 P.M. (New York City time) at least six Business Days
prior to the date such mandatory prepayment is to be made. If any Lender or
Lenders that are offered such additional mandatory prepayment waive the right to
receive the amount of such additional mandatory prepayment, all of the amount
that otherwise would have been applied to mandatorily prepay the Term Loans of
such Lender or Lenders may be retained by Company.

(2) Notwithstanding the provisions in subsection 2.4B, after the Term Loans have
been repaid in full, all mandatory prepayments (or the excess portion thereof if
the Terms Loans are repaid in full in connection with a mandatory prepayment)
shall be applied first to repay outstanding Revolving Loans to the full extent
thereof (but without a reduction of the Revolving Loan Commitments), and second
to Cash collateralize any outstanding Letters of Credit by depositing an amount
equal to 105% of the maximum amount which may be drawn thereunder in the
Collateral Account and amounts not applied in accordance with the foregoing may
be retained by Company.

(c) Application of Prepayments to Base Rate Loans and Eurodollar Rate Loans. In
connection with any voluntary prepayments by Company pursuant to subsection
2.4B(i) and considering Term Loans and Revolving Loans being prepaid separately,
any voluntary prepayment thereof shall be applied first to Base Rate Loans to
the full extent thereof before application to Eurodollar Rate Loans, in each
case in a manner that minimizes the amount of any payments required to be made
by Company pursuant to subsection 2.6D. In connection with any mandatory
prepayments by Company of the Term Loans pursuant to subsections

 

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2.4B(iii)(a)-(d), such prepayments shall be applied on a pro rata basis to the
then outstanding Term Loans being prepaid irrespective of whether such
outstanding Term Loans are Base Rate Loans or Eurodollar Rate Loans; provided
that if no Lenders exercise the right to waive a given mandatory prepayment of
the Term Loans pursuant to subsection 2.4B(iv)(b), then, with respect to such
mandatory prepayment, the amount of such mandatory prepayment shall be applied
first to Term Loans that are Base Rate Loans to the full extent thereof before
application to Term Loans that are Eurodollar Rate Loans in a manner that
minimizes the amount of any payments required to be made by Company pursuant to
subsection 2.6D.

C. General Provisions Regarding Payments.

(i) Manner and Time of Payment. All payments by Company of principal, interest,
fees and other Obligations shall be made in Dollars in same day funds, without
defense, setoff or counterclaim, free of any restriction or condition, and
delivered to Administrative Agent not later than 1:00 P.M. (New York City time)
on the date due at the Funding and Payment Account for the account of Lenders;
funds received by Administrative Agent after that time on such due date shall be
deemed to have been paid by Company on the next succeeding Business Day at
Administrative Agent’s sole discretion. Company hereby authorizes Administrative
Agent to charge its accounts with Administrative Agent in order to cause timely
payment to be made to Administrative Agent of all principal, interest, fees and
expenses due hereunder (subject to sufficient funds being available in its
accounts for that purpose).

(ii) Application of Payments to Principal and Interest. Except as provided in
subsection 2.2C, all payments in respect of the principal amount of any Loan
shall include payment of accrued interest on the principal amount being repaid
or prepaid, and all such payments shall be applied to the payment of interest
before application to principal.

(iii) Apportionment of Payments. Aggregate principal and interest payments in
respect of Term Loans and Revolving Loans shall be apportioned among all
outstanding Loans to which such payments relate, in each case proportionately to
Lenders’ respective Pro Rata Shares; provided, that all payments in respect of
Revolving Loans shall first be applied to repay any amounts owing to Issuing
Lenders due to the failure of any Revolving Lender to (A) fund a Revolving Loan
for the purpose of repaying any unreimbursed amounts of a drawing under a Letter
of Credit pursuant to subsection 3.3B or (B) fund a participation in any such
unreimbursed Letter of Credit drawing pursuant to subsection 3.3C; provided
further that any payments on the Revolving Loans remaining after the application
of the foregoing proviso shall be allocated to each Revolving Lender, excluding
Defaulting Lenders, in an amount equal to each such Revolving Lender’s Pro Rata
Share of the aggregate payments on the Revolving Loans prior to the application
of the foregoing proviso and each Defaulting Lender shall be entitled to receive
its Pro Rata Share of any such payments less the amount applied in accordance
with the forgoing proviso attributable to such Defaulting Lender. Administrative
Agent shall promptly distribute to each Lender, at the account

 

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specified in the payment instructions delivered to Administrative Agent by such
Lender, its Pro Rata Share of all such payments received by Administrative Agent
and the commitment fees and letter of credit fees of such Lender, if any, when
received by Administrative Agent pursuant to subsections 2.3 and 3.2.
Notwithstanding the foregoing provisions of this subsection 2.4C(iii), if,
pursuant to the provisions of subsection 2.6C, any Notice of
Conversion/Continuation is withdrawn as to any Affected Lender or if any
Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any
Eurodollar Rate Loans, Administrative Agent shall give effect thereto in
apportioning interest payments received thereafter.

(iv) Payments on Business Days. Whenever any payment to be made hereunder shall
be stated to be due on a day that is not a Business Day, such payment shall be
made on the next preceding Business Day.

(v) Notation of Payment. Each Lender agrees that, before disposing of any Note
held by it, or any part thereof (other than by granting participations therein),
Lender will make a notation thereon of all Loans evidenced by that Note and all
principal payments previously made thereon and of the date to which interest
thereon has been paid; provided that the failure to make (or any error in the
making of) a notation of any Loan made under such Note shall not limit or
otherwise affect the obligations of Company hereunder or under such Note with
respect to any Loan or any payments of principal or interest on such Note.

D. Application of Proceeds of Collateral. (a) Upon acceleration of the
Obligations pursuant to Section 8, all payments received by Administrative Agent
or Collateral Agent, whether from Company or any Subsidiary Guarantor or
otherwise, and (b) all proceeds received by Administrative Agent or Collateral
Agent in respect of any sale of, collection from, or other realization upon all
or any part of the Collateral under any Collateral Document shall be applied in
full or in part by Administrative Agent, in the following order of priority:

(i) to the payment of all costs and expenses of such sale, collection or other
realization, all other expenses, liabilities and advances made or incurred by
Administrative Agent or Collateral Agent in connection therewith, and all
amounts for which Administrative Agent or Collateral Agent is entitled to
compensation (including the fees described in subsection 2.3), reimbursement and
indemnification under any Loan Document and all advances made by Administrative
Agent or Collateral Agent thereunder for the account of the applicable Loan
Party, and to the payment of all costs and expenses paid or incurred by
Administrative Agent or Collateral Agent in connection with the Loan Documents,
all in accordance with subsections 9.4, 10.2 and 10.3 and the other terms of
this Agreement and the Loan Documents;

(ii) thereafter, to the payment of all other Secured Obligations (including the
cash collateralization of any outstanding Letters of Credit in an amount equal
to 105% of the maximum amount that may be drawn under such Letters of Credit);
and

 

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(iii) thereafter, to the payment to or upon the order of such Loan Party or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.

 

  2.5 Use of Proceeds.

A. Term Loans. The proceeds of the Term Loans referenced in subsection 2.1A(i)
were applied by Company to repay all Obligations owed to Previous Lenders under
the Existing Credit Agreement and pay Transaction Costs.

B. Revolving Loans. The proceeds of any Revolving Loans shall be applied by
Company for working capital and other general corporate purposes, which may
include the making of intercompany loans to any of Company’s wholly-owned
Subsidiaries, in accordance with subsection 7.1(iv), for their own general
corporate purposes.

C. Margin Regulations. No portion of the proceeds of any borrowing under this
Agreement shall be used by Company or any of its Subsidiaries in any manner that
might cause the borrowing or the application of such proceeds to violate
Regulation U, Regulation T or Regulation X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board or to violate the
Exchange Act, in each case as in effect on the date or dates of such borrowing
and such use of proceeds.

D. Delayed Draw Term Loans. The proceeds of any Delayed Draw Term Loans shall be
applied solely to the making of Permitted Acquisitions and the payment of
related fees and expenses.

 

  2.6 Special Provisions Governing Eurodollar Rate Loans.

Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to Eurodollar Rate Loans as to
the matters covered:

A. Determination of Applicable Interest Rate. On each Interest Rate
Determination Date, Administrative Agent shall determine in accordance with the
terms of this Agreement (which determination shall, absent manifest error, be
conclusive and binding upon all parties) the interest rate that shall apply to
the Eurodollar Rate Loans for which an interest rate is then being determined
for the applicable Interest Period and shall promptly give notice thereof (in
writing or by telephone confirmed in writing) to Company and each applicable
Lender.

B. Inability to Determine Applicable Interest Rate. In the event that
Administrative Agent shall have determined (which determination shall be
conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date that by reason of circumstances affecting the London
interbank market adequate and fair means do not exist for ascertaining the
interest rate applicable to such Loans on the basis provided for in the
definition of Eurodollar Rate, Administrative Agent shall on such date give
notice (by telefacsimile or by telephone confirmed in writing) to Company and
each Lender of such determination, whereupon (i) no Loans may be made as, or
converted to, Eurodollar Rate Loans until such time as Administrative Agent
notifies Company and Lenders that the circumstances giving rise to such

 

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notice no longer exist and (ii) any Notice of Borrowing or Notice of
Conversion/Continuation given by Company with respect to the Loans in respect of
which such determination was made shall be deemed to be for a Base Rate Loan.

C. Illegality or Impracticability of Eurodollar Rate Loans. In the event that on
any date any Lender shall have determined (which determination shall be
conclusive and binding upon all parties hereto but shall be made only after
consultation with Company and Administrative Agent) that the making, maintaining
or continuation of its Eurodollar Rate Loans (i) has become unlawful as a result
of compliance by such Lender in good faith with any law, treaty, governmental
rule, regulation, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful) or (ii) has
become impracticable, or would cause such Lender material hardship, as a result
of contingencies occurring after the date of this Agreement which materially and
adversely affect the London interbank market or the position of such Lender in
that market, then, and in any such event, such Lender shall be an “Affected
Lender” and it shall on that day give notice (by telefacsimile or by telephone
confirmed in writing) to Company and Administrative Agent of such determination.
Administrative Agent shall promptly notify each other Lender of the receipt of
such notice. Thereafter (a) the obligation of the Affected Lender to make Loans
as, or to convert Loans to, Eurodollar Rate Loans shall be suspended until such
notice shall be withdrawn by the Affected Lender, (b) to the extent such
determination by the Affected Lender relates to a Eurodollar Rate Loan then
being requested by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, the Affected Lender shall make such Loan as (or convert
such Loan to, as the case may be) a Base Rate Loan, (c) the Affected Lender’s
obligation to maintain its outstanding Eurodollar Rate Loans (the “Affected
Loans”) shall be terminated at the earlier to occur of the expiration of the
Interest Period then in effect with respect to the Affected Loans or when
required by law, and (d) the Affected Loans shall automatically convert into
Base Rate Loans on the date of such termination. Notwithstanding the foregoing,
to the extent a determination by an Affected Lender as described above relates
to a Eurodollar Rate Loan then being requested by Company pursuant to a Notice
of Borrowing or a Notice of Conversion/Continuation, Company shall have the
option, subject to the provisions of subsection 2.6D, to rescind such Notice of
Borrowing or Notice of Conversion/Continuation as to all Lenders by giving
notice (by telefacsimile or by telephone confirmed in writing) to Administrative
Agent of such rescission on the date on which the Affected Lender gives notice
of its determination as described above. Administrative Agent shall promptly
notify each other Lender of the receipt of such notice. Except as provided in
the immediately preceding sentence, nothing in this subsection 2.6C shall affect
the obligation of any Lender other than an Affected Lender to make or maintain
Loans as, or to convert Loans to, Eurodollar Rate Loans in accordance with the
terms of this Agreement.

D. Compensation For Breakage or Non-Commencement of Interest Periods. Company
shall compensate each Lender, upon written request by that Lender pursuant to
subsection 2.8, for all reasonable losses, expenses and liabilities (including
any interest paid by that Lender to lenders of funds borrowed by it to make or
carry its Eurodollar Rate Loans and any loss, expense or liability sustained by
that Lender in connection with the liquidation or re-employment of such funds)
which that Lender may sustain: (i) if for any reason (other than a default by
that Lender) a borrowing of any Eurodollar Rate Loan does not occur on a date

 

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specified therefor in a Notice of Borrowing or a telephonic request therefor, or
a conversion to or continuation of any Eurodollar Rate Loan does not occur on a
date specified therefor in a Notice of Conversion/Continuation or a telephonic
request therefor, (ii) if any prepayment or other principal payment or any
conversion of any of its Eurodollar Rate Loans (including any prepayment or
conversion occasioned by the circumstances described in subsection 2.6C) occurs
on a date prior to the last day of an Interest Period applicable to that Loan,
(iii) if any prepayment of any of its Eurodollar Rate Loans is not made on any
date specified in a Notice of Prepayment given by Company, or (iv) as a
consequence of any other default by Company in the repayment of its Eurodollar
Rate Loans when required by the terms of this Agreement.

E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or transfer
Eurodollar Rate Loans at, to, or for the account of any of its branch offices or
the office of an Affiliate of that Lender.

F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation of all
amounts payable to a Lender under this subsection 2.6 and under subsection 2.7A
shall be made as though that Lender had funded each of its Eurodollar Rate Loans
through the purchase of a Eurodollar deposit bearing interest at the rate
obtained pursuant to clause (i) of the definition of Eurodollar Rate in an
amount equal to the amount of such Eurodollar Rate Loan and having a maturity
comparable to the relevant Interest Period, whether or not its Eurodollar Rate
Loans had been funded in such manner.

G. Eurodollar Rate Loans After Default. After the occurrence of and during the
continuation of a Potential Event of Default or an Event of Default, (i) Company
may not elect to have a Loan be made or maintained as, or converted to, a
Eurodollar Rate Loan after the expiration of any Interest Period then in effect
for that Loan and (ii) subject to the provisions of subsection 2.6D, any Notice
of Borrowing or Notice of Conversion/Continuation given by Company with respect
to a requested borrowing or conversion/continuation that has not yet occurred
shall be deemed to be for a Base Rate Loan or, if the conditions to making a
Loan set forth in subsection 4.2 cannot then be satisfied, to be rescinded by
Company.

 

  2.7 Increased Costs; Taxes; Capital Adequacy.

A. Compensation for Increased Costs. Subject to the provisions of subsection
2.7B (which shall be controlling with respect to the matters covered thereby),
in the event that any Lender (including any Issuing Lender) shall determine
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) that any law, treaty or governmental rule,
regulation or order, or any change therein or in the interpretation,
administration or application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or any determination of
a court or other Government Authority, in each case that becomes effective after
the date hereof, or compliance by such Lender with any guideline, request or
directive issued or made after the date hereof by any central bank or other
Government Authority (whether or not having the force of law):

(i) subjects such Lender to any additional Tax with respect to this Agreement or
any of its obligations hereunder (including with respect to issuing or
maintaining any Letters of Credit or purchasing or maintaining any
participations therein or maintaining any Commitment hereunder) or any payments
to such Lender of principal, interest, fees or any other amount payable
hereunder;

 

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(ii) imposes, modifies or holds applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets held by,
or deposits or other liabilities in or for the account of, or advances or loans
by, or other credit extended by, or any other acquisition of funds by, any
office of such Lender (other than any such reserve or other requirements with
respect to Eurodollar Rate Loans that are reflected in the definition of
Eurodollar Rate); or

(iii) imposes any other condition (other than with respect to Taxes) on or
affecting such Lender or its obligations hereunder or the London interbank
market;

and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining its Loans or Commitments or agreeing to
issue, issuing or maintaining any Letter of Credit or agreeing to purchase,
purchasing or maintaining any participation therein or to reduce any amount
received or receivable by such Lender with respect thereto, then, in any such
case, from time to time, within five Business Days after receipt from such
Lender of the statement referred to in subsection 2.8A, Company shall pay such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
reasonable discretion shall determine) as may be necessary to compensate such
Lender for any such increased cost or reduction in amounts received or
receivable hereunder and any tax incurred or payable by such Lender as a result
of the obligation of Company to pay such additional amounts.

B. Taxes.

(i) Payments to Be Free and Clear. All sums payable by any Loan Party under this
Agreement and the other Loan Documents shall be paid free and clear of, and
without any deduction or withholding on account of, any Tax imposed, levied,
collected, withheld or assessed by or within the United States of America or any
political subdivision in or of the United States of America or any other
jurisdiction from or to which a payment is made by or on behalf of Company or by
any federation or organization of which the United States of America or any such
jurisdiction is a member at the time of payment, unless such deduction or
withholding is required by law.

(ii) Grossing-up of Payments. If any Loan Party or Administrative Agent
determines, in its sole discretion exercised in good faith, that it is required
by law to make any deduction or withholding on account of any Tax from any sum
paid or payable by it under any of the Loan Documents:

(a) Such Loan Party shall notify Administrative Agent of any such requirement or
any change in any such requirement within a reasonable time after such Loan
Party becomes aware of it;

(b) Such Loan Party or Administrative Agent, as the case may be, shall pay the
full amount of any such Tax when such Tax is due, such payment to be made (if
the liability to pay is imposed on such Loan Party) for its own account or (if
that liability is imposed on Administrative Agent or a Lender, as the case may
be) on behalf of and in the name of Administrative Agent or such Lender;

 

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(c) if the Tax is an Indemnified Tax, the sum payable by such Loan Party in
respect of which the relevant deduction, withholding or payment is required
shall be increased to the extent necessary to ensure that, after the making of
that deduction, withholding or payment (including Taxes imposed on or asserted
on or attributable to amounts payable under this subsection 2.7B(ii)),
Administrative Agent or the applicable Lender, as the case may be, receives on
the due date a net sum equal to what it would have received had no such
deduction, withholding or payment been required or made; and

(d) as soon as practicable after any payment of such Tax to a Governmental
Authority, such Loan Party shall deliver to Administrative Agent and any
affected party the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of the return reporting
such payment or other evidence of such payment reasonably satisfactory to
Administrative Agent and such affected party;

provided that no such additional amount shall be required to be paid to any
Lender under this subsection 2.7B(ii) except to the extent that any change after
the date on which such Lender became a Lender in any such requirement for a
deduction, withholding or payment as is mentioned herein shall result in an
increase in the rate of such deduction, withholding or payment from that in
effect on the date on which such Lender became a Lender in respect of payments
to such Lender.

(iii) Indemnification by Company. Company shall indemnify, without duplication,
Administrative Agent and each Lender, within ten days after demand therefor, for
the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or
asserted on or attributable to amounts payable under this subsection 2.7) paid
by Administrative Agent or such Lender, as the case may be, and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to Company by a Lender (with a copy to
Administrative Agent), or by Administrative Agent on its own behalf or on behalf
of a Lender, shall be conclusive absent manifest error.

(iv) Indemnification by Lenders. Each Lender shall severally indemnify
Administrative Agent, within ten days after written demand therefor, for the
full amount of any Taxes for which no additional amounts are required to be paid
under subsection 2.7B(ii) that are attributable to such Lender and are paid by
Administrative Agent in connection with any Loan Document, whether or not such
Taxes were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such Taxes delivered to Lender by
Administrative Agent shall be conclusive absent manifest error.

 

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(v) Evidence of Exemption from U.S. Withholding Tax and Backup Withholding.

(a) Each Non-US Lender shall deliver to Administrative Agent and to Company, on
or prior to the Effective Date (in the case of each Lender listed on the
signature pages of the Amendment and Restatement Agreement), or on or prior to
the date of the Assignment Agreement pursuant to which it becomes a Lender (in
the case of each other Lender), and at such other times as may be reasonably
requested by Company or Administrative Agent, two original copies of Internal
Revenue Service Form W-8BEN or W-8ECI (or any successor forms) properly
completed and duly executed by such Lender, or, in the case of a Non-US Lender
claiming exemption from United States federal withholding tax under
Section 871(h) or 881(c) of the Internal Revenue Code with respect to payments
of “portfolio interest”, a form W-8BEN, and a certificate of such Lender
certifying that such Lender is not (i) a “bank” for purposes of Section 881(c)
of the Internal Revenue Code, (ii) a ten-percent shareholder (within the meaning
of Section 871(h)(3)(B) of the Internal Revenue Code) of Company or (iii) a
controlled foreign corporation related to Company (within the meaning of
Section 864(d)(4) of the Internal Revenue Code), in each case together with any
other certificate or statement of exemption required under the Internal Revenue
Code or the regulations issued thereunder to establish that such Lender is not
subject to United States withholding tax with respect to any payments to such
Lender of interest payable under any of the Loan Documents.

(b) Each Non-US Lender, to the extent it does not act or ceases to act for its
own account with respect to any portion of any sums paid or payable to such
Lender under any of the Loan Documents (for example, in the case of a typical
participation by such Lender), shall deliver to Administrative Agent and to
Company, on or prior to the Effective Date (in the case of each Lender listed on
the signature pages of the Amendment and Restatement Agreement), on or prior to
the date of the Assignment Agreement pursuant to which it becomes a Lender (in
the case of each other Lender), or on such later date when such Lender ceases to
act for its own account with respect to any portion of any such sums paid or
payable, and at such other times as may be reasonably requested by Company or
Administrative Agent, (1) two original copies of the forms or statements
required to be provided by such Lender under subsection 2.7B(v)(a), properly
completed and duly executed by such Lender, to establish the portion of any such
sums paid or payable with respect to which such Lender acts for its own account
that is not subject to United States withholding tax, and (2) two original
copies of Internal Revenue Service Form W-8IMY (or any successor forms) properly
completed and duly executed by such Lender, together with any information, if
any, such Lender chooses to transmit with such form, and any other certificate
or statement of exemption required under the Internal Revenue Code or the
regulations issued thereunder, to establish that such Lender is not acting for
its own account with respect to a portion of any such sums payable to such
Lender.

 

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(c) Each Non-US Lender hereby agrees, from time to time after the initial
delivery by such Lender of such forms, whenever a lapse in time or change in
circumstances renders such forms, certificates or other evidence so delivered
obsolete or inaccurate in any material respect, that such Lender shall promptly
(1) deliver to Administrative Agent and to Company two original copies of
renewals, amendments or additional or successor forms, properly completed and
duly executed by such Lender, together with any other certificate or statement
of exemption required in order to confirm or establish that such Lender is not
subject to United States withholding tax with respect to payments to such Lender
under the Loan Documents and, if applicable, that such Lender does not act for
its own account with respect to any portion of such payment, or (2) notify
Administrative Agent and Company of its inability to deliver any such forms,
certificates or other evidence.

(d) Each Lender that is not a Non-US Lender hereby agrees that it shall, on or
prior to the Effective Date (in the case of each Lender listed on the signature
pages hereof), or on or prior to the date of the Assignment Agreement pursuant
to which it becomes a Lender (in the case of each other Lender), deliver to
Administrative Agent and to Company two accurate, complete and signed copies of
Internal Revenue Service Form W-9 (or any successor forms) properly completed
and duly executed by such Lender, together with any other certificate or
statement of exemption required in order to confirm or establish that such
Lender is not subject to United States withholding tax or backup withholding
with respect to payments to such Lender under the Loan Documents.

(e) Company shall not be required to pay any additional amount to any Lender
under subsection 2.7B(ii), (1) with respect to any Tax required to be deducted
or withheld on the basis of the information, certificates or statements of
exemption such Lender chooses to transmit with an Internal Revenue Service Form
W-8IMY pursuant to subsection 2.7B(v)(b)(2) or (2) if such Lender shall have
failed to satisfy the requirements of clause (a), (b), (c)(1) or (d) of this
subsection 2.7B(v); provided that if such Lender shall have satisfied the
requirements of subsection 2.7B(v)(a) on the date such Lender became a Lender,
nothing in this subsection 2.7B(v)(e) shall relieve Company of its obligation to
pay any amounts pursuant to subsection 2.7B(ii)(c) in the event that, as a
result of any change in any applicable law, treaty or governmental rule,
regulation or order, or any change in the interpretation, administration or
application thereof, such Lender is no longer properly entitled to deliver
forms, certificates or other evidence at a subsequent date establishing the fact
that such Lender is not subject to withholding as described in subsection
2.7B(v)(a).

(f) If a payment made to any Lender under any Loan Document would be subject to
United States federal withholding Tax imposed by FATCA if such Lender fails to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as
applicable), such Lender shall deliver to Administrative Agent (1) a
certification signed by the chief financial officer, principal accounting
officer,

 

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treasurer or controller of such Lender and (2) other documentation reasonably
requested by Administrative Agent sufficient for Administrative Agent to comply
with its obligations under FATCA and to determine that such Lender has complied
with such applicable reporting requirements to the extent required to obtain the
maximum available exemption from any United States federal withholding Tax that
is available to payments received by or on behalf of such Lender.

C. Capital Adequacy Adjustment. If any Lender shall have determined that the
adoption, effectiveness, phase-in or applicability after the date hereof of any
law, rule or regulation (or any provision thereof) regarding capital adequacy,
or any change therein or in the interpretation or administration thereof by any
Government Authority charged with the interpretation or administration thereof,
or compliance by any Lender with any guideline, request or directive regarding
capital adequacy (whether or not having the force of law) of any such Government
Authority, has or would have the effect of reducing the rate of return on the
capital of such Lender or any corporation controlling such Lender as a
consequence of, or with reference to, such Lender’s Loans or Commitments or
Letters of Credit or participations therein or other obligations hereunder with
respect to the Loans or the Letters of Credit to a level below that which such
Lender or such controlling corporation could have achieved but for such
adoption, effectiveness, phase-in, applicability, change or compliance (taking
into consideration the policies of such Lender or such controlling corporation
with regard to capital adequacy), then from time to time, within five Business
Days after receipt by Company from such Lender of the statement referred to in
subsection 2.8A, Company shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such controlling corporation for such
reduction, increased to the extent necessary to take into account any tax
incurred or payable by such Lender as a result of the obligation of Company to
pay such additional amounts.

D. Treatment of Certain Refunds. If Administrative Agent or a Lender determines,
in its sole discretion, that it has received a refund of any Taxes as to which
it has been indemnified by Company or with respect to which Company has paid
additional amounts pursuant to this subsection 2.7, it shall pay to Company an
amount equal to such refund (but only to the extent of indemnity payments made,
or additional amounts paid, by Company under this subsection 2.7 with respect to
the Taxes giving rise to such refund), net of all out-of-pocket expenses of
Administrative Agent or such Lender, as the case may be, and without interest
(other than any interest paid by the relevant Governmental Authority with
respect to such refund), provided that Company, upon the request of
Administrative Agent or such Lender, agrees to repay the amount paid over to
Company (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to Administrative Agent or such Lender in the event
Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. This paragraph shall not be construed to require
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes that it deems confidential) to Company
or any other Person.

 

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  2.8 Statement of Lenders; Obligation of Lenders and Issuing Lenders to
Mitigate.

A. Statements. Each Lender claiming compensation or reimbursement pursuant to
subsection 2.6D, 2.7 or 2.8C shall deliver to Company (with a copy to
Administrative Agent) a written statement, setting forth in reasonable detail
the basis of the calculation of such compensation or reimbursement, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.

B. Limitation on Recovery. Notwithstanding anything to the contrary contained in
this Agreement, Company shall not be required to compensate any Lender for
compensation or reimbursement claimed pursuant to subsection 2.6D, 2.7 or 2.8C
which relates to a period more than 180 days prior to the date of delivery of
the statement under subsection 2.8A related to such compensation or
reimbursement.

C. Mitigation. Each Lender and Issuing Lender agrees that, as promptly as
practicable after the officer of such Lender or Issuing Lender responsible for
administering the Loans or Letters of Credit of such Lender or Issuing Lender,
as the case may be, becomes aware of the occurrence of an event or the existence
of a condition that would cause such Lender to become an Affected Lender or that
would entitle such Lender or Issuing Lender to receive payments under subsection
2.7, it will use reasonable efforts to make, issue, fund or maintain the
Commitments of such Lender or the Loans or Letters of Credit of such Lender or
Issuing Lender through another lending or letter of credit office of such Lender
or Issuing Lender, if (i) as a result thereof the circumstances which would
cause such Lender to be an Affected Lender would cease to exist or the
additional amounts which would otherwise be required to be paid to such Lender
or Issuing Lender pursuant to subsection 2.7 would be materially reduced and
(ii) as determined by such Lender or Issuing Lender in its sole discretion, such
action would not otherwise be disadvantageous to such Lender or Issuing Lender;
provided that such Lender or Issuing Lender will not be obligated to utilize
such other lending or letter of credit office pursuant to this subsection 2.8C
unless Company agrees to pay all incremental expenses incurred by such Lender or
Issuing Lender as a result of utilizing such other lending or letter of credit
office as described above.

 

  2.9 Replacement of a Lender.

If Company receives a statement of amounts due pursuant to subsection 2.8A from
a Lender, a Lender becomes a Defaulting Lender, a Lender (a “Non-Consenting
Lender”) refuses to consent to an amendment, modification or waiver of this
Agreement that, pursuant to subsection 10.6, requires consent of 100% of Lenders
or 100% of Lenders with Obligations directly affected and such amendment,
modification or waiver has been approved by Requisite Lenders or a Lender
becomes an Affected Lender (any such Lender, a “Subject Lender”), so long as
(i) Company has obtained a commitment from another Lender or an Eligible
Assignee to purchase at par the Subject Lender’s Loans and assume the Subject
Lender’s Commitments and all other obligations of the Subject Lender hereunder,
(ii) such Lender is not an Issuing Lender with respect to any Letters of Credit
outstanding (unless all such Letters of Credit are terminated or arrangements
reasonably acceptable to such Issuing Lender (such as a “back-to-back” letter of
credit) are made) and (iii) if applicable, the Subject Lender is unwilling to
withdraw the notice

 

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delivered to Company pursuant to subsection 2.8A and/or remains a Defaulting
Lender, Company may require the Subject Lender to assign all of its Loans and
Commitments to such other Lender, Lenders, Eligible Assignee or Eligible
Assignees pursuant to the provisions of subsection 10.1B; provided that, prior
to or concurrently with such replacement, (1) the Subject Lender shall have
received payment in full of all principal, accrued interest, accrued fees and
other amounts (including all amounts under subsections 2.6D, 2.7 and/or 2.8C (if
applicable)) through such date of replacement and a release from its obligations
under the Loan Documents in respect of the interest so assigned, (2) the
processing fee, if any, required to be paid by subsection 10.1B(i) shall have
been paid to Administrative Agent, (3) all of the requirements for such
assignment contained in subsection 10.1B, including, without limitation, the
consent of Administrative Agent (if required) and the receipt by Administrative
Agent of an executed Assignment Agreement executed by the assignee
(Administrative Agent being hereby authorized to execute any Assignment
Agreement on behalf of a Subject Lender relating to the assignment of Loans
and/or Commitments of such subject Lender) and other supporting documents, have
been fulfilled, and (4) in the event such Subject Lender is a Non-Consenting
Lender, each assignee shall consent, at the time of such assignment, to each
matter in respect of which such Subject Lender was a Non-Consenting Lender. For
the avoidance of doubt, if a Lender is a Non-Consenting Lender solely because it
refused to consent to an amendment, modification or waiver that required the
consent of 100% of Lenders with Obligations directly affected thereby (which
amendment, modification or waiver did not accordingly require the consent of
100% of all Lenders), the Loans and Commitments of such Non-Consenting Lender
that are subject to the assignments required by this subsection 2.9 shall
include only those Loans and Commitments that constitute the Obligations
directly affected by the amendment, modification or waiver to which such
Non-Consenting Lender refused to provide its consent.

Section 3. LETTERS OF CREDIT

 

  3.1 Issuance of Letters of Credit and Lenders’ Purchase of Participations
Therein.

A. Letters of Credit. Company may request, in accordance with the provisions of
this subsection 3.1, from time to time during the period from the Effective Date
to but excluding the fifth Business Day prior to the Revolving Loan Commitment
Termination Date, that one or more Revolving Lenders issue Letters of Credit
payable on a sight basis for the account of Company for the general corporate
purposes of Company or a Subsidiary of Company. Subject to the terms and
conditions of this Agreement and in reliance upon the representations and
warranties of Company herein set forth, any one or more Revolving Lenders may,
but (except as provided in subsection 3.1B(ii)) shall not be obligated to, issue
such Letters of Credit in accordance with the provisions of this subsection 3.1;
provided that Company shall not request that any Revolving Lender issue (and no
Revolving Lender shall issue):

(i) any Letter of Credit if, after giving effect to such issuance, the Total
Utilization of Revolving Loan Commitments would exceed the Revolving Loan
Commitment Amount then in effect;

(ii) any Letter of Credit if, after giving effect to such issuance, the Letter
of Credit Usage would exceed $50,000,000;

 

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(iii) any Standby Letter of Credit having an expiration date later than the
earlier of (a) five Business Days prior to the Revolving Loan Commitment
Termination Date and (b) the date which is one year from the date of issuance of
such Standby Letter of Credit; provided that the immediately preceding clause
(b) shall not prevent any Issuing Lender from agreeing that a Standby Letter of
Credit will automatically be extended for one or more successive periods not to
exceed one year each unless such Issuing Lender elects not to extend for any
such additional period; and provided, further that such Issuing Lender shall
elect not to extend such Standby Letter of Credit if it has knowledge that an
Event of Default has occurred and is continuing (and has not been waived in
accordance with subsection 10.6) at the time such Issuing Lender must elect
whether or not to allow such extension;

(iv) any Standby Letter of Credit issued for the purpose of supporting (a) trade
payables or (b) any Indebtedness constituting “antecedent debt” (as that term is
used in Section 547 of the Bankruptcy Code);

(v) any Commercial Letter of Credit having an expiration date (a) later than the
earlier of (1) the date which is five Business Days prior to the Revolving Loan
Commitment Termination Date and (2) the date which is 180 days from the date of
issuance of such Commercial Letter of Credit or (b) that is otherwise
unacceptable to the applicable Issuing Lender in its reasonable discretion; or

(vi) any Letter of Credit denominated in a currency other than Dollars.

B. Mechanics of Issuance.

(i) Request for Issuance. Whenever Company desires the issuance of a Letter of
Credit, it shall deliver to Administrative Agent a Request for Issuance no later
than 1:00 P.M. (New York City time) at least three Business Days (in the case of
Standby Letters of Credit) or five Business Days (in the case of Commercial
Letters of Credit), or in each case such shorter period as may be agreed to by
the Issuing Lender in any particular instance, in advance of the proposed date
of issuance. The Issuing Lender, in its reasonable discretion, may require
changes in the text of the proposed Letter of Credit or any documents described
in or attached to the Request for Issuance. In furtherance of the provisions of
subsection 10.8, and not in limitation thereof, Company may submit Requests for
Issuance by telefacsimile or electronic transmission and Administrative Agent
and Issuing Lenders may rely and act upon any such Request for Issuance without
receiving an original signed copy thereof. No Letter of Credit shall require
payment against a conforming demand for payment to be made thereunder on the
same business day (under the laws of the jurisdiction in which the office of the
Issuing Lender to which such demand for payment is required to be presented is
located) on which such demand for payment is presented if such presentation is
made after 10:00 A.M. (in the time zone of such office of the Issuing Lender) on
such business day.

Company shall notify the applicable Issuing Lender (and Administrative Agent, if
Administrative Agent is not such Issuing Lender) prior to the issuance of any
Letter of Credit in the event that any of the matters to which Company is
required to certify in the

 

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applicable Request for Issuance is no longer true and correct as of the proposed
date of issuance of such Letter of Credit, and upon the issuance of any Letter
of Credit Company shall be deemed to have re-certified, as of the date of such
issuance, as to the matters to which Company is required to certify in the
applicable Request for Issuance.

(ii) Determination of Issuing Lender. Upon receipt by Administrative Agent of a
Request for Issuance pursuant to subsection 3.1B(i) requesting the issuance of a
Letter of Credit, in the event Administrative Agent elects to issue such Letter
of Credit, Administrative Agent shall promptly so notify Company, and
Administrative Agent shall be the Issuing Lender with respect thereto. In the
event that Administrative Agent, in its sole discretion, elects not to issue
such Letter of Credit, Administrative Agent shall promptly so notify Company,
whereupon Company may request any other Revolving Lender to issue such Letter of
Credit by delivering to such Revolving Lender a copy of the applicable Request
for Issuance. Any Revolving Lender so requested to issue such Letter of Credit
shall promptly notify Company and Administrative Agent whether or not, in its
sole discretion, it has elected to issue such Letter of Credit, and any such
Revolving Lender that so elects to issue such Letter of Credit shall be the
Issuing Lender with respect thereto. In the event that all other Revolving
Lenders shall have declined to issue such Letter of Credit, notwithstanding the
prior election of Administrative Agent not to issue such Letter of Credit,
Administrative Agent shall be obligated to issue such Letter of Credit and shall
be the Issuing Lender with respect thereto, provided that Administrative Agent
shall in no circumstances be obligated to issue, or be Issuing Lender with
respect to, any Commercial Letter of Credit. The Issuing Lender with respect to
each Letter of Credit shall be required to issue such Letter of Credit
notwithstanding the fact that the Letter of Credit Usage with respect to such
Letter of Credit and with respect to all other Letters of Credit issued by such
Issuing Lender, when aggregated with such Issuing Lender’s outstanding Revolving
Loans, may exceed the amount of such Issuing Lender’s Revolving Loan Commitment
then in effect. Notwithstanding anything to the contrary contained in this
subsection or elsewhere in this Agreement, in the event that a Defaulting Lender
with a Revolving Loan Commitment exists, Administrative Agent shall not be
required to issue any Letter of Credit unless Administrative Agent has entered
into arrangements reasonably satisfactory to it and Company to eliminate
Administrative Agent’s risk with respect to the participation in Letters of
Credit by all such Defaulting Lenders, including by Cash collateralizing each
such Defaulting Lender’s Pro Rata Share of each Letter of Credit.

(iii) Issuance of Letter of Credit. Upon satisfaction or waiver (in accordance
with subsection 10.6) of the conditions set forth in subsection 4.3, the Issuing
Lender shall issue the requested Letter of Credit in accordance with the Issuing
Lender’s standard operating procedures.

(iv) Notification to Revolving Lenders. Upon the issuance of or amendment to any
Standby Letter of Credit the applicable Issuing Lender shall promptly notify
Administrative Agent and Company of such issuance or amendment in writing. Upon
receipt of such notice (or, if Administrative Agent is the Issuing Lender,
together with such notice), Administrative Agent shall notify each Revolving
Lender in writing of such issuance or amendment and the amount of such Revolving
Lender’s respective

 

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participation in such Standby Letter of Credit or amendment, and, if so
requested by a Revolving Lender, Administrative Agent shall provide such Lender
with a copy of such Letter of Credit or amendment. In the case of Commercial
Letters of Credit, in the event that Issuing Lender is other than Administrative
Agent, such Issuing Lender will send by facsimile or electronic transmission to
Administrative Agent, promptly upon the first Business Day of each week, a
report of its daily aggregate maximum amount available for drawing under
Commercial Letters of Credit for the previous week. Administrative Agent shall
notify each Revolving Lender in writing on a quarterly basis of the contents
thereof.

C. Revolving Lenders’ Purchase of Participations in Letters of Credit.
Immediately upon the issuance of each Letter of Credit, each Revolving Lender
shall be deemed to, and hereby agrees to, have irrevocably purchased from the
Issuing Lender a participation in such Letter of Credit and any drawings honored
thereunder in an amount equal to such Revolving Lender’s Pro Rata Share of the
maximum amount that is or at any time may become available to be drawn
thereunder. On the Effective Date, each Revolving Lender shall be deemed to and
hereby agrees to have irrevocably purchased from the Issuing Lender a
participation in all Letters of Credit outstanding on the Effective Date and any
drawings honored thereunder in an amount equal to such Revolving Lender’s Pro
Rata Share of the maximum amount that is or at any time may become available to
be drawn thereunder.

 

  3.2 Letter of Credit Fees.

Company agrees to pay the following amounts with respect to Letters of Credit
issued hereunder:

(i) with respect to each Standby Letter of Credit, (a) a fronting fee, payable
directly to the applicable Issuing Lender for its own account, equal to a
percentage per annum to be agreed upon by the Issuing Lender and Company of the
daily amount available to be drawn under such Standby Letter of Credit (but not
to exceed 0.25% per annum) and (b) a letter of credit fee, payable to
Administrative Agent for the account of Revolving Lenders, equal to the
Applicable Margin for Revolving Loans that are Eurodollar Rate Loans plus, upon
the application of increased rates of interest pursuant to subsection 2.2E,
2% per annum, multiplied by the daily amount available to be drawn under such
Standby Letter of Credit, each such fronting fee or letter of credit fee to be
payable in arrears on and to (but excluding) the last Business Day of each of
March, June, September and December of each year and on the date of termination
of the Revolving Loan Commitments hereunder and computed on the basis of a
360-day year for the actual number of days elapsed;

(ii) with respect to each Commercial Letter of Credit, (a) a fronting fee,
payable directly to the applicable Issuing Lender for its own account, equal to
a percentage per annum to be agreed upon by the Issuing Lender and Company of
the daily amount available to be drawn under such Commercial Letter of Credit
and (b) a letter of credit fee, payable to Administrative Agent for the account
of Revolving Lenders, equal to the Applicable Margin for Revolving Loans that
are Eurodollar Rate Loans plus, upon the application of increased rates of
interest pursuant to subsection 2.2E, 2% per annum,

 

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multiplied by the daily amount available to be drawn under such Commercial
Letter of Credit, each such fronting fee or letter of credit fee to be payable
in arrears on and to (but excluding) the last Business Day of each of March,
June, September and December of each year and on the date of the termination of
the Revolving Loan Commitments hereunder and computed on the basis of a 360-day
year for the actual number of days elapsed; and

(iii) with respect to the issuance, amendment or transfer of each Letter of
Credit and each payment of a drawing made thereunder (without duplication of the
fees payable under clauses (i) and (ii) above), documentary and processing
charges payable directly to the applicable Issuing Lender for its own account in
accordance with such Issuing Lender’s standard schedule for such charges in
effect at the time of such issuance, amendment, transfer or payment, as the case
may be.

For purposes of calculating any fees payable under clauses (i) and (ii) of this
subsection 3.2, (1) the daily amount available to be drawn under any Letter of
Credit shall be determined as of the close of business on any date of
determination. Promptly upon receipt by Administrative Agent of any amount
described in clause (i)(b) or clause (ii)(b) of this subsection 3.2,
Administrative Agent shall distribute to each Revolving Lender its Pro Rata
Share of such amount. Notwithstanding the foregoing, if Company has entered into
an arrangement with Administrative Agent pursuant to subsection 3.1B(ii) above
with respect to any Letter of Credit, then the Defaulting Lender with respect to
which Company was required to enter into such arrangements shall not be entitled
to any fees under this subsection 3.2 with respect to such Letter of Credit.

 

  3.3 Drawings and Reimbursement of Amounts Paid Under Letters of Credit.

A. Responsibility of Issuing Lender With Respect to Drawings. In determining
whether to honor any drawing under any Letter of Credit by the beneficiary
thereof, the Issuing Lender shall be responsible only to examine the documents
delivered under such Letter of Credit with reasonable care so as to ascertain
whether they appear on their face to be in accordance with the terms and
conditions of such Letter of Credit.

B. Reimbursement by Company of Amounts Paid Under Letters of Credit. In the
event an Issuing Lender has determined to honor a drawing under a Letter of
Credit issued by it, such Issuing Lender shall immediately notify Company and
Administrative Agent (each such notice, a “Drawing Notice”) of the Business Day
on which such drawing is to be or was honored (the “Drawing Date”), and Company
shall reimburse such Issuing Lender on the date (the “Reimbursement Date”)
determined as follows: (a) the Drawing Date, if the applicable Drawing Notice is
received on or prior to 12:00 Noon (New York City time) on the Drawing Date or
(b) on the first Business Day following the date of delivery of the Drawing
Notice, if the applicable Drawing Notice is received after 12:00 Noon (New York
City time) on the Drawing Date, in each case, in an amount in Dollars and in
same day funds equal to the amount of such payment; provided that, anything
contained in this Agreement to the contrary notwithstanding, unless Company
shall have notified Administrative Agent and such Issuing Lender prior to 1:00
P.M. (New York City time) on the Reimbursement Date that Company intends to
reimburse such Issuing Lender for the amount of such payment with funds other
than the proceeds of Revolving

 

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Loans, Administrative Agent shall notify each Revolving Lender of such drawing
and the amount thereof, and on the Reimbursement Date, the Revolving Lenders
shall make Revolving Loans that are Base Rate Loans in the amount of such
payment, the proceeds of which shall be applied directly by Administrative Agent
to reimburse such Issuing Lender for the amount of such payment; and provided,
further that if for any reason proceeds of Revolving Loans are not received by
such Issuing Lender on the Reimbursement Date in an amount equal to the amount
of such payment, Company shall reimburse such Issuing Lender, on demand, in an
amount in same day funds equal to the excess of the amount of such payment over
the aggregate amount of such Revolving Loans, if any, which are so received.
Nothing in this subsection 3.3B shall be deemed to relieve any Revolving Lender
from its obligation to make Revolving Loans on the terms and conditions set
forth in this Agreement, and Company shall retain any and all rights it may have
against any Revolving Lender resulting from the failure of such Revolving Lender
to make such Revolving Loans under this subsection 3.3B.

C. Payment by Lenders of Unreimbursed Amounts Paid Under Letters of Credit.

(i) Payment by Revolving Lenders. In the event that any Issuing Lender shall not
have been reimbursed on the Reimbursement Date as provided in subsection 3.3B in
an amount equal to the amount of any payment by such Issuing Lender under a
Letter of Credit issued by it, such Issuing Lender shall promptly notify
Administrative Agent, who shall notify each other Revolving Lender of the
unreimbursed amount of such honored drawing and of such other Revolving Lender’s
respective participation therein based on such Revolving Lender’s Pro Rata
Share. Each Revolving Lender (other than such Issuing Lender) shall make
available to Administrative Agent an amount equal to its respective
participation, in Dollars and in same day funds, at the Funding and Payment
Account, not later than 12:00 Noon (New York City time) on the first Business
Day after the date notified by Administrative Agent and Administrative Agent
shall make available to such Issuing Lender in Dollars in same day funds, at the
office of such Issuing Lender on such Business Day, the aggregate amount of the
participation payments so received by Administrative Agent. In the event that
any Revolving Lender fails to make available to Administrative Agent on such
Business Day the amount of such Revolving Lender’s participation in such Letter
of Credit as provided in this subsection 3.3C, such Issuing Lender shall be
entitled to recover such amount on demand from such Revolving Lender together
with interest thereon at the Federal Funds Effective Rate. Nothing in this
subsection 3.3C shall be deemed to prejudice the right of Administrative Agent
or Company to recover, for the benefit of Revolving Lenders, from any Issuing
Lender any amounts made available to such Issuing Lender pursuant to this
subsection 3.3C in the event that it is determined by the final judgment of a
court of competent jurisdiction that the payment with respect to a Letter of
Credit by such Issuing Lender in respect of which such participation payments
were made by Revolving Lenders constituted gross negligence or willful
misconduct on the part of such Issuing Lender.

(ii) Distribution to Lenders of Reimbursements Received From Company. In the
event any Issuing Lender shall have been reimbursed by other Revolving Lenders
pursuant to subsection 3.3C(i) for all or any portion of any payment by such
Issuing Lender under a Letter of Credit issued by it, and Administrative Agent
or such Issuing

 

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Lender thereafter receives any payments from Company in reimbursement of such
payment under the Letter of Credit, to the extent any such payment is received
by such Issuing Lender, it shall distribute such payment to Administrative
Agent, and Administrative Agent shall distribute to each other Revolving Lender
that has paid all amounts payable by it under subsection 3.3C(i) with respect to
such payment such Revolving Lender’s Pro Rata Share of all payments subsequently
received by Administrative Agent or by such Issuing Lender from Company. Any
such distribution shall be made to a Revolving Lender at the account specified
in subsection 2.4C(iii).

D. Interest on Amounts Paid Under Letters of Credit.

(i) Payment of Interest by Company. Company agrees to pay to Administrative
Agent, with respect to payments under any Letters of Credit issued by any
Issuing Lender, interest on the amount paid by such Issuing Lender in respect of
each such payment from the Drawing Date thereof to but excluding the date such
amount is reimbursed by Company (including any such reimbursement out of the
proceeds of Revolving Loans pursuant to subsection 3.3B) at a rate equal to
(a) for the period from the Drawing Date with respect to such payment to but
excluding the Reimbursement Date, the rate then in effect under this Agreement
with respect to Revolving Loans that are Base Rate Loans and (b) thereafter, a
rate which is 2% per annum in excess of the rate of interest otherwise payable
under this Agreement with respect to Revolving Loans that are Base Rate Loans.
Interest payable pursuant to this subsection 3.3D(i) shall be computed on the
basis of a 365 or 366-day year, as the case may be, for the actual number of
days elapsed in the period during which it accrues and shall be payable on the
Reimbursement Date and, if not so paid, shall be payable in accordance with
subsection 2.2E.

(ii) Distribution of Interest Payments by Administrative Agent. Promptly upon
receipt by Administrative Agent of any payment of interest pursuant to
subsection 3.3D(i) with respect to a payment under a Letter of Credit,
(a) Administrative Agent shall distribute to (x) each Revolving Lender
(including the Revolving Lender that paid such drawing), out of the interest
received by Administrative Agent in respect of the period from the date such
drawing is honored to but excluding the date on which the applicable Issuing
Lender is reimbursed for the amount of such payment (including any such
reimbursement out of the proceeds of Revolving Loans pursuant to subsection
3.3B), the amount that such Revolving Lender would have been entitled to receive
in respect of the letter of credit fee that would have been payable in respect
of such Letter of Credit for such period pursuant to subsection 3.2 if no
drawing had been honored under such Letter of Credit and (y) such Issuing Lender
the amount, if any, remaining after payment of the amounts applied pursuant to
the immediately preceding clause (x), and (b) in the event such Issuing Lender
shall have been reimbursed by other Revolving Lenders pursuant to subsection
3.3C(i) for all or any portion of such payment, Administrative Agent shall
distribute to each Revolving Lender (including such Issuing Lender) that has
paid all amounts payable by it under subsection 3.3C(i) with respect to such
payment such Revolving Lender’s Pro Rata Share of any interest received by
Administrative Agent in respect of that portion of such payment so made by
Revolving Lenders for the period from the date on which such Issuing Lender was
so reimbursed to but excluding the date

 

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on which such portion of such payment is reimbursed by Company. Any such
distribution shall be made to a Revolving Lender at the account specified in
subsection 2.4C(iii).

 

  3.4 Obligations Absolute.

The obligation of Company to reimburse each Issuing Lender for payments under
the Letters of Credit issued by it and to repay any Revolving Loans made by
Revolving Lenders pursuant to subsection 3.3B and the obligations of Revolving
Lenders under subsection 3.3C(i) shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances including any of the following circumstances:

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

(ii) the existence of any claim, set-off, defense or other right which Company
or any Lender may have at any time against a beneficiary or any transferee of
any Letter of Credit (or any Persons for whom any such transferee may be
acting), any Issuing Lender or other Revolving Lender or any other Person or, in
the case of a Revolving Lender, against Company, whether in connection with this
Agreement, the transactions contemplated herein or any unrelated transaction
(including any underlying transaction between Company or one of its Subsidiaries
and the beneficiary for which any Letter of Credit was procured);

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

(iv) payment by the applicable Issuing Lender to the beneficiary under any
Letter of Credit against presentation of a draft or other document which does
not substantially comply with the terms of such Letter of Credit;

(v) any adverse change in the business, operations, properties, assets,
condition (financial or otherwise) or prospects of Company or any of its
Subsidiaries;

(vi) any breach of this Agreement or any other Loan Document by any party
thereto;

(vii) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing; or

(viii) the fact that an Event of Default or a Potential Event of Default shall
have occurred and be continuing;

provided, in each case, that payment by the applicable Issuing Lender under the
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).

 

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  3.5 Nature of Issuing Lenders’ Duties.

As between Company and any Issuing Lender, Company assumes all risks of the acts
and omissions of, or misuse of the Letters of Credit issued by such Issuing
Lender by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, such Issuing Lender shall
not be responsible for: (i) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in connection
with the application for and issuance of any such Letter of Credit, even if it
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
such Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; (iii) failure of the beneficiary of any such Letter of Credit to comply
fully with any conditions required in order to draw upon such Letter of Credit;
(iv) errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex, electronic transmission or
otherwise, whether or not they be in cipher; (v) errors in interpretation of
technical terms; (vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any such Letter of Credit or
of the proceeds thereof; (vii) the misapplication by the beneficiary of any such
Letter of Credit of the proceeds of any drawing under such Letter of Credit; or
(viii) any consequences arising from causes beyond the control of such Issuing
Lender, including any act or omission by a Government Authority, and none of the
above shall affect or impair, or prevent the vesting of, any of such Issuing
Lender’s rights or powers hereunder.

In furtherance and extension and not in limitation of the specific provisions
set forth in the first paragraph of this subsection 3.5, any action taken or
omitted by any Issuing Lender under or in connection with the Letters of Credit
issued by it or any documents and certificates delivered thereunder, if taken or
omitted in good faith, shall not put such Issuing Lender under any resulting
liability to Company.

Notwithstanding anything to the contrary contained in this subsection 3.5,
Company shall retain any and all rights it may have against any Issuing Lender
for any liability arising solely out of the gross negligence or willful
misconduct of such Issuing Lender, as determined by a final judgment of a court
of competent jurisdiction.

Section 4. CONDITIONS TO EFFECTIVENESS AND REVOLVING LOANS AND LETTERS OF CREDIT

 

  4.1 Conditions to Effectiveness.

This Agreement shall become effective only upon the satisfaction of all of the
following conditions precedent (the date of satisfaction of such conditions
being referred to herein as the “Effective Date”):

A. Loan Party Documents. On or before the Effective Date, Company shall, and
shall cause each other Loan Party to, deliver to Administrative Agent the
following with respect to Company or such Loan Party, as the case may be, each,
unless otherwise noted, dated the Effective Date:

(i) Copies of the Organizational Documents of such Person, certified by the
Secretary of State of its jurisdiction of organization or, if such document is
of a type that may not be so certified, certified by the secretary or similar
officer of the applicable Loan Party, together with a good standing certificate
from the Secretary of State of its jurisdiction of organization and each other
state in which such Person is qualified to do business and, to the extent
generally available, a certificate or other evidence of good standing as to
payment of any applicable franchise or similar Taxes from the appropriate taxing
authority of each of such jurisdictions, each dated a recent date prior to the
Effective Date;

 

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(ii) Resolutions of the Governing Body of such Person approving and authorizing
the execution, delivery and performance of the Loan Documents to which it is a
party, certified as of the Effective Date by the secretary or similar officer of
such Person as being in full force and effect without modification or amendment;

(iii) Signature and incumbency certificates of the officers of such Person
executing the Loan Documents to which it is a party;

(iv) Executed originals of the Amendment and Restatement Agreement and any other
document to be executed by a Loan Party hereunder; and

(v) Such other documents as Administrative Agent may reasonably request.

B. Fees. Company shall have paid to Administrative Agent, for distribution (as
appropriate) to Administrative Agent and Lenders, the fees payable on the
Effective Date referred to in subsection 2.3, and other amounts due and payable
on or prior to the Effective Date, including, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be reimbursed
by Company hereunder or under any Loan Document.

C. Representations and Warranties; Performance of Agreements. Company shall have
delivered to Administrative Agent an Officer’s Certificate, in form and
substance reasonably satisfactory to Administrative Agent, to the effect that
the representations and warranties in Section 5 and in the other Loan Documents
are true, correct and complete in all material respects on and as of the
Effective Date to the same extent as though made on and as of that date (or, to
the extent such representations and warranties specifically relate to an earlier
date, that such representations and warranties were true, correct and complete
in all material respects on and as of such earlier date) and that Company shall
have performed in all material respects all agreements and satisfied all
conditions which this Agreement provides shall be performed or satisfied by it
on or before the Effective Date except as otherwise disclosed to and agreed to
in writing by Administrative Agent; provided that, if a representation and
warranty, covenant or condition is qualified as to materiality, the applicable
materiality qualifier set forth in this subsection 4.1C shall be disregarded
with respect to such representation and warranty, covenant or condition for
purposes of this condition.

D. Financial Statements; Pro Forma Financial Statements; Financial Plans.

(i) Financial Statements; Pro Forma Financial Statements. On or before the
Effective Date, Administrative Agent shall have received from Company for
distribution

 

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to Lenders (a) audited financial statements of Company and its Subsidiaries for
Fiscal Years 2007, 2008 and 2009, consisting of the consolidated balance sheet
and the related consolidated statements of income and cash flows for such Fiscal
Years and (b) unaudited financial statements of Company and its Subsidiaries for
each Fiscal Quarter ending after December 31, 2009 but before 45 days prior to
the Effective Date, and, consisting of the consolidated balance sheet and the
related consolidated statements of income and cash flows for the applicable
period ending the last day of such Fiscal Quarter, in each case in reasonable
detail and certified by the chief financial officer of Company that they fairly
present the financial condition of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for the
periods indicated, subject to changes resulting from audit and normal year-end
adjustments.

(ii) Financial Plans. On or before the Effective Date, Administrative Agent
shall have received for distribution to Lenders, a consolidated plan and
financial forecast for Fiscal Years 2010 through 2015 and summary information
for each Fiscal Quarter beginning with the Fiscal Quarter ending June 30, 2010
and through the Fiscal Quarter ending March 31, 2012, including (a) forecasted
consolidated balance sheet and forecasted consolidated statements of income and
cash flows of Company and its Subsidiaries for each such Fiscal Year, together
with an explanation of the assumptions on which such forecasts are based and
(b) such other information and projections as any Lender may reasonably request.

E. Opinions of Counsel to Loan Parties. Administrative Agent shall have
received, on behalf of itself, Collateral Agent and Lenders, one or more
favorable written opinions of (i) Latham & Watkins LLP, counsel for Loan
Parties, and (ii) as may be requested by Administrative Agent in its sole
discretion, such other local counsel from among those listed on Schedule 4.1E,
in each case in form and substance reasonably satisfactory to Administrative
Agent and its counsel, dated as of the Effective Date and setting forth
substantially the matters in the opinions designated in Exhibit VIII annexed
hereto and as to such other matters as Administrative Agent acting on behalf of
Lenders may reasonably request (this Agreement constituting a written request by
Company to such counsel to deliver such opinions).

F. Solvency Assurances. On the Effective Date, Administrative Agent shall have
received an Officer’s Certificate signed by the chief financial officer of
Company dated the Effective Date, substantially in the form of Exhibit X annexed
hereto and with appropriate attachments, in each case demonstrating that, after
giving effect to the consummation of the transactions contemplated by the Loan
Documents, Company and Subsidiary Guarantors on a consolidated basis will be
Solvent.

G. Evidence of Insurance. Administrative Agent shall have received a certificate
from Company’s insurance broker or other evidence reasonably satisfactory to it
that all insurance required to be maintained pursuant to subsection 6.4 is in
full force and effect and that Collateral Agent on behalf of Lenders has been
named as additional insured and/or loss payee thereunder to the extent required
under subsection 6.4.

 

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H. Necessary Governmental Authorizations and Consents; Expiration of Waiting
Periods, Etc. Company shall have obtained all Governmental Authorizations,
Healthcare Authorizations and all consents of other Persons, in each case that
are necessary or advisable in connection with the Transactions and the other
transactions contemplated by the Loan Documents and the continued operation of
the business conducted by Company and its Subsidiaries in substantially the same
manner as conducted prior to the Effective Date. Each such Governmental
Authorization, Healthcare Authorization and consent shall be in full force and
effect, except in a case where the failure to obtain or maintain a Governmental
Authorization, Healthcare Authorization or consent, either individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

I. Security Interests in Personal and Mixed Property. Administrative Agent shall
have received evidence reasonably satisfactory to it that Company and Subsidiary
Guarantors shall have taken or caused to be taken all such actions, executed and
delivered or caused to be executed and delivered all such agreements, documents
and instruments, and made or caused to be made all such filings and recordings
that may be necessary or, in the opinion of Administrative Agent, desirable in
order to create in favor of Collateral Agent, for the benefit of Beneficiaries,
a valid and (upon such filing and recording) perfected First Priority security
interest in the entire personal and mixed property Collateral. Such actions
shall include the following:

(i) Stock Certificates and Instruments. To the extent not previously delivered
to Collateral Agent, delivery to Collateral Agent of (a) certificates (which
certificates shall be accompanied by irrevocable undated stock powers, duly
endorsed in blank and otherwise reasonably satisfactory in form and substance to
Collateral Agent) representing all certificated Equity Interests pledged
pursuant to the Security Agreement and any Foreign Pledge Agreement
(Administrative Agent and Lenders acknowledge that such pledge will not cover
any Equity Interests in Fountain View Reinsurance, Inc.) and (b) all promissory
notes or other instruments (duly endorsed, where appropriate, in a manner
satisfactory to Collateral Agent) evidencing any Collateral; and

(ii) UCC Financing Statements and Fixture Filings. To the extent not previously
delivered to Collateral Agent, delivery to Collateral Agent of duly completed
UCC financing statements and/or amendments thereto and, where appropriate,
fixture filings, with respect to all personal and mixed property Collateral of
such Loan Party, for filing in all jurisdictions as may be necessary or, in the
opinion of Administrative Agent or Collateral Agent, desirable to perfect or
continue the perfection of the security interests created in such Collateral
pursuant to the Collateral Documents.

J. Perfection Certificate. Collateral Agent shall have received a Perfection
Certificate with respect to Loan Parties dated the Effective Date and duly
executed by an Officer of Company.

K. Patriot Act Compliance. At least five Business Days prior to the Effective
Date, Administrative Agent shall have received all documentation and other
information required by bank regulatory authorities under the applicable “know
your customer” and anti-money laundering rules and regulations, including
without limitation the Patriot Act and requested by Administrative Agent or any
Lender.

 

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L. Material Adverse Effect. No event, change or condition shall have occurred
since December 31, 2009 that, individually or in the aggregate, has had, or
could reasonably be expected to have, a material adverse effect on the assets,
properties, financial condition, business or results of operations of Company
and its Subsidiaries, taken as a whole.

M. Security Agreement. The Collateral Documents shall have been duly executed by
each Loan Party that is to be a party thereto and shall be in full force and
effect. Collateral Agent, on behalf of Beneficiaries shall have a security
interest in the Collateral of the type and priority described in each Collateral
Documents.

N. Ratings. On or before the Effective Date, (i) the credit facilities
contemplated hereby shall have received public ratings from both S&P and
Moody’s, (ii) Company shall have obtained or confirmed a public corporate rating
from S&P and a public corporate family rating from Moody’s.

O. Completion of Proceedings. All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and all documents
incidental thereto not previously found acceptable by Administrative Agent,
acting on behalf of Lenders, and its counsel shall be reasonably satisfactory in
form and substance to Administrative Agent and such counsel, and Administrative
Agent and such counsel shall have received all such counterpart originals or
certified copies of such documents as Administrative Agent may reasonably
request.

P. Repayment. All principal, interest, fees and other amounts due or outstanding
to Previous Lenders in connection with the Existing Credit Agreement (other than
Unasserted Obligations) shall have been paid in full substantially
simultaneously with the Effective Date, and immediately after giving effect to
the Transactions, Company and the Subsidiary shall have outstanding no
Indebtedness other than Indebtedness permitted pursuant to Section 7.1.

Q. Consolidated Leverage Ratio and Consolidated Fixed Charge Coverage Ratio.
Administrative Agent shall have received a certificate from the chief financial
officer of Company demonstrating in reasonable detail the calculation of the
Consolidated Leverage Ratio and Consolidated Fixed Charge Coverage Ratio as of
such date.

R. No Default. As of the Effective Date, no Potential Event of Default or Event
of Default shall have occurred and be continuing or result from the consummation
of the Transactions. Administrative Agent shall have received an Officer’s
Certificate as to the foregoing.

 

  4.2 Conditions to All Loans.

The obligation of each Lender to make its Loans on each Funding Date are subject
to the following conditions precedent:

A. Administrative Agent shall have received before that Funding Date, in
accordance with the provisions of subsection 2.1B, a duly executed Notice of
Borrowing, in each case signed by a duly authorized Officer of Company.

 

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B. As of that Funding Date:

(i) The representations and warranties contained herein and in the other Loan
Documents shall be true, correct and complete in all material respects on and as
of that Funding Date to the same extent as though made on and as of that date,
except to the extent such representations and warranties specifically relate to
an earlier date, in which case such representations and warranties shall have
been true, correct and complete in all material respects on and as of such
earlier date; provided, that, if a representation and warranty is qualified as
to materiality, the materiality qualifier set forth in this subsection 4.2B(i)
shall be disregarded with respect to such representation and warranty, for
purposes of this condition;

(ii) No event shall have occurred and be continuing or would result from the
consummation of the borrowing contemplated by such Notice of Borrowing that
would constitute an Event of Default or a Potential Event of Default;

(iii) No order, judgment or decree of any arbitrator or Government Authority
shall purport to enjoin or restrain such Lender from making the Loans to be made
by it on that Funding Date;

(iv) Company shall have delivered such other certificates or documents that
Administrative Agent shall reasonably request, in form and substance reasonably
satisfactory to Administrative Agent; and

(v) Unless and until the Senior Subordinated Note Indenture shall have been
satisfied and discharged, if after giving effect to the making of the Loans and
the use of proceeds thereof, the aggregate amount of Obligations would exceed
the maximum amount of “Senior Credit Facilities” Indebtedness permitted to be
incurred pursuant to Section 4.03(b)(1) of the Senior Subordinated Note
Indenture, Company shall have delivered a certificate, signed by an Officer of
Company, with calculations in reasonable detail demonstrating (if such
demonstration is requested by Administrative Agent) that the incurrence of the
Loans by Company would then be permitted by the Senior Subordinated Notes
Indenture.

 

  4.3 Conditions to Letters of Credit.

The issuance of any Letter of Credit hereunder (whether or not the applicable
Issuing Lender is obligated to issue such Letter of Credit) is subject to the
following conditions precedent:

A. On or before the date of issuance of such Letter of Credit, Administrative
Agent shall have received, in accordance with the provisions of subsection
3.1B(i), an originally executed Request for Issuance (or a facsimile copy
thereof) in each case signed by a duly authorized Officer of Company, together
with all other information specified in subsection 3.1B(i) and such other
documents or information as the applicable Issuing Lender may reasonably require
in connection with the issuance of such Letter of Credit.

 

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B. On the date of issuance of such Letter of Credit, all conditions precedent
described in subsection 4.2B shall be satisfied to the same extent as if the
issuance of such Letter of Credit were the making of a Loan and the date of
issuance of such Letter of Credit were a Funding Date.

Section 5. COMPANY’S REPRESENTATIONS AND WARRANTIES

In order to induce Lenders to enter into this Agreement and to purchase and to
make the Loans, to induce Issuing Lenders to issue Letters of Credit and to
induce Revolving Lenders to purchase participations therein, Company represents
and warrants to each Lender:

 

  5.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries.

A. Organization and Powers. Company is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization
as specified in Schedule 5.1 annexed hereto. Company has all requisite power and
authority to own and operate its properties, to carry on its business as now
conducted and as proposed to be conducted, to enter into the Loan Documents to
which it is a party and to carry out the transactions contemplated thereby.

B. Qualification and Good Standing. Company is qualified to do business and in
good standing in every jurisdiction where its assets are located and wherever
necessary to carry out its business and operations, except in jurisdictions
where the failure to be so qualified or in good standing has not had and could
not reasonably be expected to result in a Material Adverse Effect.

C. Conduct of Business. Company and its Subsidiaries are engaged only in the
businesses permitted to be engaged in pursuant to subsection 7.10.

D. Subsidiaries. All of the Subsidiaries of Company as of the Effective Date and
their jurisdictions of organization are identified in Schedule 5.1 annexed
hereto, as said Schedule 5.1 may be supplemented from time to time pursuant to
the provisions of subsection 6.1(xiii). The Equity Interests of each of the
Subsidiaries of Company identified in Schedule 5.1 annexed hereto (as so
supplemented) is duly authorized, validly issued, fully paid and nonassessable
and none of such Equity Interests constitutes Margin Stock. Each of the
Subsidiaries of Company identified in Schedule 5.1 annexed hereto (as so
supplemented) is a corporation, partnership, trust or limited liability company
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of organization set forth therein, has all requisite
power and authority to own and operate its properties and to carry on its
business as now conducted and as proposed to be conducted, and is qualified to
do business and in good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its business and operations, in each
case except where failure to be so qualified or in good standing or a lack of
such power and authority has not had and could not reasonably be expected to
result in a Material Adverse Effect. Schedule 5.1 annexed hereto (as so
supplemented) correctly sets forth the ownership interest of Company and each of
its Subsidiaries in each of the Subsidiaries of Company identified therein.

 

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  5.2 Authorization of Borrowing, etc.

A. Authorization of Borrowing. The execution, delivery and performance of the
Loan Documents have been duly authorized by all necessary action on the part of
each Loan Party that is a party thereto.

B. No Conflict. The execution, delivery and performance by Loan Parties of the
Loan Documents to which they are parties and the consummation of the
transactions contemplated by the Loan Documents do not and will not (i) violate
any provision of any law or any governmental rule or regulation applicable to
Company or any of its Subsidiaries, the Organizational Documents of Company or
any of its Subsidiaries or any order, judgment or decree of any court or other
Government Authority binding on Company or any of its Subsidiaries,
(ii) conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any Contractual Obligation of Company or
any of its Subsidiaries, (iii) result in or require the creation or imposition
of any Lien upon any of the properties or assets of Company or any of its
Subsidiaries (other than any Liens created under any of the Loan Documents in
favor of Collateral Agent on behalf of Lenders), or (iv) require any approval of
stockholders or any approval or consent of any Person under any Contractual
Obligation of Company or any of its Subsidiaries, except for such approvals or
consents which will be obtained on or before the Effective Date and except, in
each case, to the extent such violation, conflict, Lien or failure to obtain
such approval or consent could not reasonably be expected either individually or
in the aggregate to result in a Material Adverse Effect.

C. Governmental Consents. The execution, delivery and performance by Loan
Parties of the Loan Documents to which they are parties and the consummation of
the transactions contemplated by the Loan Documents do not and will not require
any Governmental Authorizations or notice to, or other action to, with or by,
any Government Authority or registration, consent or approval or other action
under any Healthcare Regulations, except for such Governmental Authorizations,
registrations, consents, approvals or notices which will be obtained or taken on
or before the Effective Date or the failure to obtain which could not reasonably
be expected either individually or in the aggregate to result in a Material
Adverse Effect.

D. Binding Obligation. Each of the Loan Documents has been duly executed and
delivered by each Loan Party that is a party thereto and is the legally valid
and binding obligation of such Loan Party, enforceable against such Loan Party
in accordance with its respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors’ rights generally or by equitable principles relating to
enforceability.

E. Healthcare Authorizations. Except in each case as is not reasonably likely to
have, either individually or in the aggregate, a Material Adverse Effect, all
Healthcare Authorizations have been duly obtained and are in full force and
effect without any known conflict with the rights of others and free from any
restrictions. Except in each case as is not

 

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reasonably likely to have, either individually or in the aggregate, a Material
Adverse Effect, none of Company or any of its Subsidiaries has received any
written notice or other written communications from any Government Authority
regarding (i) any revocation, withdrawal, suspension, termination or
modification of, or the imposition of any material conditions with respect to,
any Healthcare Authorizations, (ii) any violation by Company or any of its
Subsidiaries of any applicable Law (including any Environmental Law or
Healthcare Regulation) or (iii) any other limitations on the conduct of business
by Company or any of its Subsidiaries.

 

  5.3 Financial Condition.

All financial statements delivered pursuant to subsection 4.1D(i) were prepared
in conformity with GAAP and fairly present, in all material respects, the
financial position (on a consolidated basis) of the entities described in such
financial statements as at the respective dates thereof and the results of
operations and cash flows (on a consolidated basis) of the entities described
therein for each of the periods then ended, subject, in the case of any such
unaudited financial statements, to changes resulting from audit and normal
year-end adjustments. Neither Company nor any of its Subsidiaries has any
Contingent Obligation, contingent liability or liability for Taxes, long-term
lease or unusual forward or long-term commitment that, as of the Effective Date,
is not reflected in the foregoing financial statements or the notes thereto and,
as of any Funding Date subsequent to the Effective Date, is not reflected in the
most recent financial statements delivered to Lenders pursuant to subsection 6.1
or the notes thereto and that, in any such case, is material in relation to the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Company or any of its Subsidiaries.

 

  5.4 No Material Adverse Effect; No Restricted Junior Payments.

Since December 31, 2009, no event or change has occurred that has resulted in or
evidences, either in any case or in the aggregate, a Material Adverse Effect.
Neither Company nor any of its Subsidiaries has directly or indirectly declared,
ordered, paid or made, or set apart any sum or property for, any Restricted
Junior Payment or agreed to do so except as permitted by subsection 7.5.

 

  5.5 Title to Properties; Liens; Real Property; Intellectual Property.

A. Title to Properties; Liens. Company and its Subsidiaries have (i) good,
sufficient and legal title to (in the case of fee interests in real property),
(ii) valid leasehold interests in (in the case of leasehold interests in real or
personal property), or (iii) good title to (in the case of all other personal
property), all of their respective properties and assets reflected in the
financial statements referred to in subsection 5.3 or in the most recent
financial statements delivered pursuant to subsection 6.1, in each case except
for assets disposed of since the date of such financial statements in the
ordinary course of business or as otherwise permitted under subsection 7.7.
Except as permitted by this Agreement, all such properties and assets are free
and clear of Liens.

B. Real Property. As of the Effective Date, Schedule 5.5B annexed hereto
contains a true, accurate and complete list of (i) all fee interests in any Real
Property Assets and (ii) all leases, subleases or assignments of leases
(together with all amendments, modifications,

 

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supplements, renewals or extensions of any thereof) affecting each Real Property
Asset, regardless of whether a Loan Party is the landlord or tenant (whether
directly or as an assignee or successor in interest) under such lease, sublease
or assignment. Except as specified in Schedule 5.5B annexed hereto, each
agreement listed in clause (ii) of the immediately preceding sentence is in full
force and effect and Company does not have knowledge of any material default
that has occurred and is continuing thereunder, and each such agreement
constitutes the legally valid and binding obligation of each applicable Loan
Party, enforceable against such Loan Party in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors’ rights generally
or by equitable principles.

C. Intellectual Property. As of the Effective Date, Company and its Subsidiaries
own or have the right to use, all Intellectual Property used in the conduct of
their business, except where the failure to own or have such right to use in the
aggregate could not reasonably be expected to result in a Material Adverse
Effect. No claim has been asserted and is pending by any Person challenging or
questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does Company know of any
valid basis for any such claim, except for such claims that in the aggregate
could not reasonably be expected to result in a Material Adverse Effect. The use
of such Intellectual Property by Company and its Subsidiaries does not infringe
on the rights of any Person, except for such claims and infringements that, in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect. All federal, state and foreign registrations of and applications for
Intellectual Property, and all unregistered Intellectual Property, that are
owned or licensed by Company or any of its Subsidiaries on the Effective Date
are described on Schedule 5.5C annexed hereto.

 

  5.6 Litigation; Adverse Facts.

Except as set forth in Schedule 5.6 annexed hereto, there are no Proceedings
(whether or not purportedly on behalf of Company or any of its Subsidiaries) at
law or in equity, before or by any court or other Government Authority
(including any Environmental Claims) that are pending or, to the knowledge of
Company, threatened against or affecting Company or any of its Subsidiaries or
any property of Company or any of its Subsidiaries that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
Neither Company nor any of its Subsidiaries (i) is in violation of any
Healthcare Authorizations or any applicable Laws (including Environmental Laws
and Healthcare Regulations) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect, or (ii) is
subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court or other Government
Authority, that, individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect.

 

  5.7 Payment of Taxes.

A. Except to the extent permitted by subsection 6.3, all material Tax returns
and reports of Company and its Subsidiaries required to be filed by any of them
have been timely filed, and all Taxes due and payable and all assessments, fees
and other governmental charges upon Company and its Subsidiaries and upon their
respective properties, assets, income, businesses and franchises that are due
and payable have been paid when due and payable (taking

 

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into account any extensions). Company knows of no proposed tax assessment
against Company or any of its Subsidiaries that could reasonably be expected to
result in a Material Adverse Effect and is not being actively contested by
Company or such Subsidiary in good faith and by appropriate proceedings;
provided that such reserves or other appropriate provisions, if any, as shall be
required in conformity with GAAP shall have been made or provided therefor.

B. As of the Effective Date, (i) Company intends that no Senior Subordinated
Notes will remain outstanding on October 14, 2013, and (ii) based on Company’s
understanding of the facts and circumstances, Company expects with a high degree
of likelihood to be able to issue additional Indebtedness or Equity Interests
and use the proceeds thereof to retire the Senior Subordinated Notes such that
no Senior Subordinated Notes will remain outstanding on October 14, 2013.

 

  5.8 Performance of Agreements.

Neither Company nor any of its Subsidiaries is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any of its Contractual Obligations, and no condition exists that,
with the giving of notice or the lapse of time or both, would constitute such a
default, except where the consequences, direct or indirect, of such default or
defaults, if any, could not reasonably be expected to result in a Material
Adverse Effect.

 

  5.9 Governmental Regulation.

Neither Company nor any of its Subsidiaries is subject to regulation under the
Federal Power Act, the Interstate Commerce Act or the Investment Company Act of
1940 or under any other federal or state statute or regulation which may limit
its ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable.

 

  5.10 Securities Activities.

A. Neither Company nor any of its Subsidiaries is engaged principally, or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying any Margin Stock.

B. Following application of the proceeds of each Loan, not more than 25% of the
value of the assets (either of Company only or of Company and its Subsidiaries
on a consolidated basis) subject to the provisions of subsection 7.2 or 7.7 or
subject to any restriction contained in any agreement or instrument, between
Company and any Lender or any Affiliate of any Lender, relating to Indebtedness
and within the scope of subsection 8.2, will be Margin Stock.

 

  5.11 Employee Benefit Plans.

A. Company and each of its Subsidiaries are in compliance in all material
respects with all applicable provisions and requirements of ERISA and the
regulations thereunder with respect to each Employee Benefit Plan (other than a
Multiemployer Plan), and have performed all their obligations in all material
respects under each Employee Benefit Plan. Each Employee Benefit Plan (other
than a Multiemployer Plan) that is intended to qualify under Section 401(a) of
the Internal Revenue Code is so qualified.

 

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B. No ERISA Event has occurred or is reasonably expected to occur.

C. Except to the extent required under Section 4980B of the Internal Revenue
Code or other applicable Law, or except as set forth in Schedule 5.11 annexed
hereto, no Employee Benefit Plan provides health or welfare benefits (through
the purchase of insurance or otherwise) for any retired or former employee of
Company or any of its Subsidiaries.

D. As of the date of the most recent actuarial valuation for any Pension Plan,
the amount equal to the accrued liability, less the actuarial value of assets,
of such Pension Plan (in each case, as determined under such actuarial valuation
for funding purposes), individually or in the aggregate for all Pension Plans
(excluding for purposes of such computation any Pension Plans with respect to
which the actuarial value of assets exceeds the accrued liability, as so
determined), does not exceed $12,500,000.

E. As of the date of the most recent actuarial valuation for each Multiemployer
Plan for which the actuarial report is available, the potential withdrawal
liability of Company, its Subsidiaries and their respective ERISA Affiliates for
a complete withdrawal from such Multiemployer Plan (within the meaning of
Section 4203 of ERISA), when aggregated with such potential withdrawal liability
for a complete withdrawal from all Multiemployer Plans, based on information
available pursuant to Section 4221(e) of ERISA, does not exceed $12,500,000.

 

  5.12 Certain Fees.

Except for fees referred to in subsection 2.3B and amounts owed to Lead
Arrangers in connection with this Agreement, no broker’s or finder’s fee or
commission will be payable with respect to this Agreement or any of the
transactions contemplated hereby, and Company hereby indemnifies Lenders
against, and agrees that it will hold Lenders harmless from, any claim, demand
or liability for any such broker’s or finder’s fees alleged to have been
incurred in connection herewith or therewith and any expenses (including
reasonable fees, expenses and disbursements of counsel) arising in connection
with any such claim, demand or liability.

 

  5.13 Environmental Protection.

Except as set forth in Schedule 5.13 annexed hereto:

(i) neither Company nor any of its Subsidiaries nor any of their respective
Facilities or operations are subject to any Environmental Claim that could
reasonably be expected to result in a Material Adverse Effect;

(ii) there are and, to Company’s knowledge, have been no conditions,
occurrences, or Hazardous Materials Activities that could reasonably be expected
to form the basis of an Environmental Claim against Company or any of its
Subsidiaries that could reasonably be expected to result in a Material Adverse
Effect;

 

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(iii) neither Company nor any of its Subsidiaries nor, to Company’s knowledge,
any predecessor of Company or any of its Subsidiaries has filed any notice under
any Environmental Law indicating past or present treatment, disposal or Release
of Hazardous Materials at any Facility, and none of Company’s or any of its
Subsidiaries’ operations involves the generation, transportation, treatment,
storage or disposal of Hazardous Materials except in the ordinary course of
business and in compliance with applicable law;

(iv) compliance with all current or reasonably foreseeable future requirements
pursuant to or under Environmental Laws would not, individually or in the
aggregate, be reasonably expected to result in a Material Adverse Effect.

 

  5.14 Employee Matters.

There is no strike or work stoppage in existence or threatened involving Company
or any of its Subsidiaries that could reasonably be expected to result in a
Material Adverse Effect.

 

  5.15 Solvency.

Each Loan Party is and, upon the incurrence of any Obligations by such Loan
Party on any date on which this representation is made, will be, Solvent.

 

  5.16 Matters Relating to Collateral.

A. Creation, Perfection and Priority of Liens. The execution and delivery of the
Collateral Documents by Loan Parties, together with (i) the actions taken to
date pursuant to the Existing Credit Agreement and subsections 4.1I, 6.8 and 6.9
hereof and (ii) the delivery to Collateral Agent of any Pledged Collateral not
delivered to Collateral Agent at the time of execution and delivery of the
applicable Collateral Document (all of which Pledged Collateral has been so
delivered) are effective to create or to continue in favor of Collateral Agent
for the benefit of Beneficiaries, as security for the respective Secured
Obligations, a valid First Priority Lien on all of the Collateral (except as
indicated in the applicable Collateral Document), and all filings and other
actions necessary or desirable to perfect and maintain the perfection and First
Priority status of such Liens have been duly made or taken and remain in full
force and effect, other than the filing of any UCC financing statements and PTO
filings delivered to Collateral Agent on the Effective Date for filing (but not
yet filed), the periodic filing of UCC continuation statements in respect of UCC
financing statements filed by or on behalf of Collateral Agent and the
amendments or modifications to the Mortgages described in subsection 6.9(D) or
permitted alternatives thereto.

B. Governmental Authorizations. No authorization, approval or other action by,
and no notice to or filing with, any Government Authority is required for either
(i) the pledge or grant by any Loan Party of the Liens purported to be created
in favor of Collateral Agent pursuant to any of the Collateral Documents or
(ii) the exercise by Administrative Agent or Collateral Agent of any rights or
remedies in respect of any Collateral (whether specifically granted or created
pursuant to any of the Collateral Documents or created or provided for by
applicable law), except for filings or recordings contemplated by the Collateral
Documents and except as may be required, in connection with the disposition of
any Pledged Collateral, by laws generally affecting the offering and sale of
securities.

 

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C. Absence of Third-Party Filings. Except such as may have been filed in favor
of Collateral Agent as contemplated by the Collateral Documents and to evidence
permitted lease obligations and other Liens permitted pursuant to subsection
7.2, (i) no effective UCC financing statement, fixture filing or other
instrument similar in effect covering all or any part of the Collateral is on
file in any filing or recording office and (ii) no effective filing covering all
or any part of the IP Collateral is on file in any IP Filing Office.

D. Margin Regulations. The pledge of the Pledged Collateral pursuant to the
Collateral Documents does not violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System.

E. Information Regarding Collateral. All information supplied to Administrative
Agent or Collateral Agent by or on behalf of any Loan Party with respect to any
of the Collateral (in each case taken as a whole with respect to any particular
Collateral) is accurate and complete in all material respects.

F. Accounts. The Accounts of Company and its Subsidiaries represent sales
actually made in the ordinary course of business, and are, in all material
respects, current and fully collectible net of reserves shown on the financial
statements delivered to Administrative Agent pursuant to subsection 4.1D (which
reserves are adequate and were calculated on a basis consistent with GAAP and
past practices). The Accounts have, in all material respects, been appropriately
adjusted to reflect current reimbursement policies of Government Reimbursement
Programs and Nongovernmental Payors. The Accounts, adjusted as set forth above,
relating to third party payors, do not exceed in any material respects amounts
Company reasonably believes it or a Subsidiary is entitled to receive, under any
capitalization arrangement, fee schedule, discount formula, cost based
reimbursement or other adjustment or limitation to the usual charges of Company
and its Subsidiaries.

 

  5.17 Disclosure.

No representation or warranty of Company or any of its Subsidiaries contained in
the Confidential Information Memorandum, in any Loan Document or in any other
document, certificate or written statement furnished to Lenders by or on behalf
of Company or any of its Subsidiaries for use in connection with the
transactions contemplated by this Agreement contains any untrue statement of a
material fact or omits to state a material fact (known to Company, in the case
of any document or information not furnished by it) necessary in order to make
the statements contained herein or therein not materially misleading in light of
the circumstances in which the same were made. Any projections and pro forma
financial information contained in such materials are based upon good faith
estimates and assumptions believed by Company to be reasonable at the time made,
it being recognized by Lenders that such projections as to future events are not
to be viewed as facts and that actual results during the period or periods
covered by any such projections may differ from the projected results.

 

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  5.18 Subordinated Indebtedness.

The Obligations constitute senior indebtedness that is entitled to the benefits
of the subordination provisions, if any, of all Subordinated Indebtedness.

 

  5.19 Reporting to IRS.

Company does not intend to treat the Loans and related transactions as being a
“reportable transaction” (within the meaning of Treasury Regulation
Section 1.6011-4). In the event Company determines to take any action
inconsistent with such intention, it will promptly notify Administrative Agent
thereof.

Company acknowledges that one or more Lenders may treat their Loans as part of a
transaction that is subject to Treasury Regulation Section 1.6011-4 or
Section 301.6112-1, and Administrative Agent and such Lender or Lenders, as
applicable, may file such IRS forms or maintain such lists and other records as
they may determine is required by such Treasury Regulations.

 

  5.20 Healthcare Matters.

Company and each of its Subsidiaries has developed and implemented a Compliance
Program. Neither Company nor any of its Subsidiaries (i) is a party to a
corporate integrity agreement, (ii) has reporting obligations pursuant to a
settlement agreement entered into with a Governmental Authority, (iii) to
Company’s best knowledge, has been the subject of any investigation conducted by
any federal or state enforcement agency, (iv) to Company’s best knowledge, has
been a defendant in any qui tam/false claims act litigation and (v) has been
served with or received any written search warrant, subpoena, civil
investigative demand or contact letter from any federal or state enforcement
agency, except in each case where such event or circumstance could not
reasonably be expected to have Material Adverse Effect.

 

  5.21 Reimbursement; Nongovernmental Payors.

A. The healthcare Facilities operated by Company and its Subsidiaries and the
services provided at such Facilities are qualified for participation in the
Government Reimbursement Programs, and Company and its Subsidiaries are entitled
to reimbursement under the Government Reimbursement Programs for services
rendered to qualified beneficiaries, and Company and its Subsidiaries and the
healthcare Facilities operated by Company and its Subsidiaries comply in all
material respects with the conditions of participation in all Government
Reimbursement Programs and related contracts. Company and its Subsidiaries are
in compliance in all material respects with contracts with Nongovernmental
Payors and are entitled to reimbursement under such contracts.

B. With respect to Government Reimbursement Programs and contracts with
Nongovernmental Payors, (i) no notice of any offsets against future
reimbursement has been received by Company or any of its Subsidiaries, nor to
the knowledge of Company, is there any reasonable basis therefor, except with
respect to offsets in the ordinary course of business that could not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect, (ii) there are no pending appeals, adjustments, challenges,
audits, litigation,

 

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notices of intent to reopen or open completed payments and/or cost reports,
except such adjustments made in the ordinary course of business that could not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect, and (iii) neither Company nor any of its Subsidiaries has
received notice of pending, threatened or possible suspension, exclusion,
decertification or other loss of participation which could, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

  5.22 Foreign Assets Control Regulations, etc.

Neither the making of the Loans to, or issuance of a Letter of Credit on behalf
of, Company nor its use of the proceeds thereof will violate in any material
respect the Trading with the Enemy Act, as amended, or any of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) or any enabling legislation or executive order
relating thereto. Without limiting the foregoing, neither Company nor any of its
Subsidiaries or Affiliates (a) is or will become a Person whose property or
interests in property are blocked pursuant to Section 1 of Executive Order 13224
of September 23, 2001 Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079
(2001)) or (b) to its knowledge engages or will engage in any dealings or
transactions, or be otherwise associated, with any such Person. Company and its
Subsidiaries and Affiliates are in compliance, in all material respects, with
the Uniting And Strengthening America By Providing Appropriate Tools Required To
Intercept And Obstruct Terrorism (USA Patriot Act of 2001).

Section 6. COMPANY’S AFFIRMATIVE COVENANTS

Company covenants and agrees that, so long as any of the Commitments hereunder
shall remain in effect and until payment in full of all of the Loans and other
Obligations (other than Unasserted Obligations) and the cancellation or
expiration of all Letters of Credit, unless Requisite Lenders shall otherwise
give prior written consent, Company shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Section 6.

 

  6.1 Financial Statements and Other Reports.

Company will maintain, and cause each of its Subsidiaries to maintain, a system
of accounting established and administered in accordance with sound business
practices to permit preparation of financial statements in conformity with GAAP.
Company will deliver to Administrative Agent for distribution to Lenders:

(i) Events of Default, etc.: promptly upon any officer of Company obtaining
knowledge (a) of any condition or event that constitutes an Event of Default or
Potential Event of Default, (b) that any Person has given any notice to Company
or any of its Subsidiaries or taken any other action with respect to a claimed
default or event or condition of the type referred to in subsection 8.2, or
(c) of the occurrence of any event or change that has caused or evidences,
either in any case or in the aggregate, a Material Adverse Effect, an Officer’s
Certificate specifying the nature and period of existence of such condition,
event or change, or specifying the notice given or action taken by any such
Person and the nature of such claimed Event of Default, Potential Event of
Default, default, event or condition, and what action Company has taken, is
taking and proposes to take with respect thereto;

 

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(ii) Quarterly Financials: on or before the date on which such financial
statements are required or permitted to be filed with the Securities and
Exchange Commission with respect to each of the first three Fiscal Quarters of
each Fiscal Year of Company (or, if such financial statements are not required
to be filed with the Securities and Exchange Commission, on or before the date
that is 45 days after the end of each such Fiscal Quarter), (a) the consolidated
balance sheet of Company and its Subsidiaries as at the end of such Fiscal
Quarter and the related consolidated statements of income and cash flows of
Company and its Subsidiaries for such Fiscal Quarter and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal Quarter,
setting forth in each case in comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year and the corresponding figures
from the Financial Plan for the current Fiscal Year, to the extent prepared for
such Fiscal Quarter, all in reasonable detail and certified by the chief
financial officer, controller or treasurer of Company that they fairly present,
in all material respects, the financial condition of Company and its
Subsidiaries as at the dates indicated and the results of their operations and
their cash flows for the periods indicated, subject to changes resulting from
audit and normal year-end adjustments, and (b) a narrative report describing the
operations of Company and its Subsidiaries in the form prepared for presentation
to senior management for such Fiscal Quarter and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal Quarter;
provided, however, that so long as Company is required to file reports under
Section 13 of the Exchange Act, the requirements of this paragraph shall be
deemed satisfied by the delivery of the quarterly financial statements of
Company on Form 10-Q for the relevant Fiscal Quarter, signed by the duly
authorized Officer or Officers of Company;

(iii) Year-End Financials: on or before the date on which such financial
statements are required or permitted to be filed with the Securities and
Exchange Commission (or, if such financial statements are not required to be so
filed, on or before the date that is 90 days after the end of each such Fiscal
Year of Company), (a) the consolidated balance sheet of Company and its
Subsidiaries as at the end of such Fiscal Year and the related consolidated
statements of income, stockholders’ equity and cash flows of Company and its
Subsidiaries for such Fiscal Year, setting forth in each case in comparative
form the corresponding figures for the previous Fiscal Year and the
corresponding figures from the Financial Plan for the Fiscal Year covered by
such financial statements, all in reasonable detail and certified by the chief
financial officer, controller or treasurer of Company that they fairly present,
in all material respects, the financial condition of Company and its
Subsidiaries as at the dates indicated and the results of their operations and
their cash flows for the periods indicated, (b) a narrative report describing
the operations of Company and its Subsidiaries in the form prepared for
presentation to senior management for such Fiscal Year, and (c) in the case of
such consolidated financial statements, a report thereon of Ernst & Young LLP or
other independent certified public accountants of recognized national standing
selected by Company and reasonably satisfactory to Administrative Agent, which
report shall be unqualified as to scope and, shall express no doubts,
assumptions or qualifications

 

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concerning the ability of Company and its Subsidiaries to continue as a going
concern, and shall state that such consolidated financial statements fairly
present, in all material respects, the consolidated financial position of
Company and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in conformity with
GAAP applied on a basis consistent with prior years (except as otherwise
disclosed in such financial statements) and that the examination by such
accountants in connection with such consolidated financial statements has been
made in accordance with generally accepted auditing standards; provided,
however, that so long as Company is required to file reports under Section 13 of
the Exchange Act, the requirements of clauses (a) and (b) of this paragraph
shall be deemed satisfied by the delivery of the annual financial statements of
Company on Form 10-K for the relevant Fiscal Year, signed by the duly authorized
Officer or Officers of Company;

(iv) Pricing and Compliance Certificates: together with each delivery of
financial statements pursuant to subdivisions (ii) and (iii) above, (a) an
Officer’s Certificate of Company stating that the signers have reviewed the
terms of this Agreement and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and condition of
Company and its Subsidiaries during the accounting period covered by such
financial statements and that such review has not disclosed the existence during
or at the end of such accounting period, and that the signers do not have
knowledge of the existence as at the date of such Officer’s Certificate, of any
condition or event that constitutes an Event of Default or Potential Event of
Default, or, if any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action Company has taken, is
taking and proposes to take with respect thereto; (b) a Compliance Certificate
demonstrating in reasonable detail compliance during and at the end of the
applicable accounting periods with the restrictions contained in Section 7, in
each case to the extent compliance with such restrictions is required to be
tested at the end of the applicable accounting period; and (c) a Pricing
Certificate demonstrating in reasonable detail the calculation of the
Consolidated Leverage Ratio as of the end of the four Fiscal Quarter period then
ended;

(v) Reconciliation Statements: if, as a result of any change in accounting
principles and policies from those used in the preparation of the audited
financial statements referred to in subsection 5.3, the consolidated financial
statements of Company and its Subsidiaries delivered pursuant to subdivisions
(ii), (iii) or (xi) of this subsection 6.1 will differ in any material respect
from the consolidated financial statements that would have been delivered
pursuant to such subdivisions had no such change in accounting principles and
policies been made, then, if requested by Administrative Agent (a) together with
the first delivery of financial statements pursuant to subdivision (ii),
(iii) or (xi) of this subsection 6.1 following such change, consolidated
financial statements of Company and its Subsidiaries for (y) the current Fiscal
Year to the effective date of such change and (z) the Fiscal Year immediately
preceding the Fiscal Year in which such change is made, in each case prepared on
a pro forma basis as if such change had been in effect during such periods, and
(b) together with each delivery of financial statements pursuant to subdivision
(ii), (iii) or (xi) of this subsection 6.1 following such change, if required
pursuant to subsection 1.2, a written statement of the chief accounting officer,
chief financial officer, controller or treasurer of Company

 

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setting forth the differences (including any differences that would affect any
calculations relating to the financial covenants set forth in subsection 7.6)
which would have resulted if such financial statements had been prepared without
giving effect to such change;

(vi) Accountants’ Certification: together with each delivery of consolidated
financial statements pursuant to subdivision (iii) above, a written statement by
the independent certified public accountants giving the report thereon
(a) stating whether, in connection with their audit examination, any condition
or event that constitutes an Event of Default or Potential Event of Default has
come to their attention and, if such a condition or event has come to their
attention, specifying the nature and period of existence thereof; provided that
such accountants shall not be liable by reason of any failure to obtain
knowledge of any such Event of Default or Potential Event of Default that would
not be disclosed in the course of their audit examination, and (b) stating that
based on their audit examination nothing has come to their attention that causes
them to believe either or both that the information contained in the
certificates delivered therewith pursuant to subdivision (iv) above is not
correct or that the matters set forth in the Compliance Certificates delivered
therewith pursuant to clause (b) of subdivision (v) above for the applicable
Fiscal Year are not stated in accordance with the terms of this Agreement;

(vii) Accountants’ Reports: promptly upon receipt thereof (unless restricted by
applicable professional standards), copies of all reports submitted to Company
by independent certified public accountants in connection with each annual,
interim or special audit of the financial statements of Company and its
Subsidiaries made by such accountants, including any comment letter submitted by
such accountants to management in connection with their annual audit;

(viii) Litigation or Other Proceedings: promptly upon any Officer of Company
obtaining knowledge of (a) the institution of, or non-frivolous threat of, any
Proceeding against or affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries not previously disclosed in
writing by Company to Lenders, or (b) any development in any Proceeding that:

(1) with respect to (A) Company’s or any of its Subsidiaries’ qualification or
right to participate in any Government Reimbursement Program, (B) the compliance
or non-compliance by Company or any of its Subsidiaries with the terms or
provisions of any Government Reimbursement Program or any contract with a
Nongovernmental Payor or (C) the right of Company or any of its Subsidiaries to
receive or retain amounts received or due or to become due from any Government
Reimbursement Programs or any Nongovernmental Payor, together with all other
such Proceedings, has a reasonable possibility of giving rise to a Material
Adverse Effect; or

(2) with respect to any other matter which has a reasonable possibility after
giving effect to the coverage and policy limits of insurance policies issued to
Company and its Subsidiaries of giving rise to a Material Adverse Effect; or

 

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(3) seeks to enjoin or otherwise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the transactions contemplated hereby;

written notice thereof together with such other information as may be reasonably
available to Company to enable Lenders and their counsel to evaluate such
matters;

(ix) ERISA Events: promptly upon becoming aware of the occurrence of or
forthcoming occurrence of any ERISA Event, a written notice specifying the
nature thereof, what action Company, any of its Subsidiaries or any of their
respective ERISA Affiliates has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or threatened by the Internal
Revenue Service, the Department of Labor or the PBGC with respect thereto;

(x) ERISA Notices: with reasonable promptness, copies of (a) all notices
received by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and
(b) copies of such other documents or governmental reports or filings relating
to any Employee Benefit Plan as Administrative Agent shall reasonably request;

(xi) Financial Plans: as soon as practicable and in any event no later than 90
days after the beginning of each Fiscal Year, a consolidated plan and financial
forecast for such Fiscal Year (the “Financial Plan” for such Fiscal Year),
including (a) a forecasted consolidated balance sheet and forecasted
consolidated statements of income and cash flows of Company and its Subsidiaries
for each such Fiscal Year, together with a pro forma Compliance Certificate for
each such Fiscal Year and an explanation of the assumptions on which such
forecasts are based, (b) forecasted consolidated statements of income and cash
flows of Company and its Subsidiaries for each month of each such Fiscal Year,
together with an explanation of the assumptions on which such forecasts are
based, and (c) such other information and projections as Administrative Agent
may reasonably request;

(xii) Insurance: as soon as practicable after any material change in insurance
coverage maintained by Company and its Subsidiaries notice thereof to
Administrative Agent specifying the changes and reasons therefor;

(xiii) New Subsidiaries: promptly upon any Person becoming a Subsidiary of
Company, a written notice setting forth with respect to such Person (a) the date
on which such Person became a Subsidiary of Company and (b) all of the data
required to be set forth in Schedule 5.1 annexed hereto with respect to all
Subsidiaries of Company (it being understood that such written notice shall be
deemed to supplement Schedule 5.1 annexed hereto for all purposes of this
Agreement);

(xiv) Healthcare Compliance: Promptly upon any Officer of Company obtaining
knowledge of (a) any material claim, audit or complaint received by Company

 

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or any of its Subsidiaries (excluding malpractice claims, routine or random
audits and routine license and certification surveys, unless such surveys
include a recommendation that the Government Reimbursement Program certification
or license of a Facility should be terminated, revoked or suspended) by or on
behalf of a Government Reimbursement Program, other Government Authority or a
Nongovernmental Payor relating to the delivery of medical services and payment
therefor or billing procedures, or (b) the suspension, termination, revocation,
decertification or restriction or proposed suspension, termination, revocation,
decertification or restriction of any Healthcare Authorization by any Government
Authority which could reasonably be expected to result in a Material Adverse
Effect;

(xv) Patriot Act, etc.: with reasonable promptness, information to confirm
compliance with the representations contained in subsection 5.22 reasonably
requested by any Lender through Administrative Agent; and

(xvi) Other Information: with reasonable promptness, such other information and
data with respect to Company or any of its Subsidiaries as from time to time may
be reasonably requested by any Lender.

Information required to be delivered pursuant to subdivisions (ii)(a), (iii)(a)
and (iii)(c) of this subsection 6.1 shall be deemed to have been delivered on
the date on which Company provides notice to Lenders that such information has
been posted on Company’s Internet website at the website address listed on the
signature page hereof or at another website identified in such notice and
accessible to Lenders without charge; provided that Company shall deliver paper
copies of such information to any Lender that requests such delivery.

 

  6.2 Existence, Healthcare Authorizations, etc.

Except as permitted under subsection 7.7, Company will, and will cause each of
its Subsidiaries to, at all times (i) preserve and keep in full force and effect
its existence in the jurisdiction of organization specified on Schedule 5.1 and
all rights and franchises material to its business and (ii) maintain and keep in
full force and effect its Healthcare Authorizations material to its business;
provided, however that neither Company nor any of its Subsidiaries shall be
required to preserve or maintain any such right, franchise or Healthcare
Authorization if the Governing Body of Company or such Subsidiary shall
determine that the preservation or maintenance thereof is no longer desirable in
the conduct of the business of Company or such Subsidiary, as the case may be,
and that the loss thereof is not disadvantageous in any material respect to
Company, such Subsidiary or Lenders.

 

  6.3 Payment of Taxes and Claims; Tax.

Company will, and will cause each of its Subsidiaries to, pay all material
Taxes, assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all material claims
(including material claims for labor, services, materials and supplies) for sums
that have become due and payable and that by law have or may become a Lien upon
any of its properties or assets, prior to the time when any penalty or fine
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thereto; provided that no such Tax, assessment, charge or claim need be paid if
it is being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, so long as (i) such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor and (ii) in the case of a Tax, assessment, charge
or claim which has or may become a Lien against any of the Collateral, such
proceedings conclusively operate to stay the sale of any portion of the
Collateral to satisfy such charge or claim.

 

  6.4 Maintenance of Properties; Insurance; Application of Net Insurance/
Condemnation Proceeds.

A. Maintenance of Properties. Company will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained in good repair, working
order and condition, ordinary wear and tear excepted, all material properties
used or useful in the business of Company and its Subsidiaries (including all
Intellectual Property) and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof.

B. Insurance. Company will maintain or cause to be maintained, with financially
sound and reputable insurers, such public liability insurance, third party
property damage insurance, business interruption insurance and casualty
insurance with respect to liabilities, losses or damage in respect of the
assets, properties and businesses of Company and its Subsidiaries as may
customarily be carried or maintained under similar circumstances by corporations
of established reputation engaged in similar businesses, in each case in such
amounts (giving effect to self-insurance), with such deductibles, covering such
risks and otherwise on such terms and conditions as shall be customary for
business entities similarly situated in the industry. Without limiting the
generality of the foregoing, Company will maintain or cause to be maintained
(i) flood insurance with respect to each Flood Hazard Property that is located
in a community that participates in the National Flood Insurance Program, in
each case in compliance with any applicable regulations of the Board of
Governors of the Federal Reserve System, and (ii) replacement value casualty
insurance on the Collateral under such policies of insurance, with such
insurance companies, in such amounts, with such deductibles, and covering such
risks as are at all times satisfactory to Administrative Agent in its
commercially reasonable judgment. Each such policy of insurance shall (a) name
Collateral Agent for the benefit of Beneficiaries as an additional insured
thereunder as its interests may appear and (b) in the case of each business
interruption and casualty insurance policy, contain a loss payable clause or
endorsement, reasonably satisfactory in form and substance to Administrative
Agent, that names Collateral Agent for the benefit of Beneficiaries as the loss
payee thereunder for any covered loss in excess of $1,000,000 and (c) provide
for at least 30 days prior written notice to Administrative Agent of any
modification or cancellation of such policy.

C. Application of Net Insurance/Condemnation Proceeds.

(i) Business Interruption Insurance. Upon receipt by Company or any of its
Subsidiaries of any business interruption insurance proceeds, Company or such
Subsidiary may retain and apply such business interruption proceeds for general
corporate purposes. Upon receipt by Administrative Agent of any business
interruption insurance proceeds, so long as no Event of Default or Potential
Event of Default shall have occurred and be continuing, Administrative Agent
shall turn over such proceeds to Company to use for general corporate purposes.

 

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(ii) Other Net Insurance/Condemnation Proceeds. Upon receipt by Company or any
of its Subsidiaries or by Administrative Agent as loss payee of any Net
Insurance/Condemnation Proceeds other than from business interruption insurance:

(a) so long as no Event of Default or Potential Event of Default shall have
occurred and be continuing, Administrative Agent, if it received such Net
Insurance/Condemnation Proceeds, shall deliver them to Company, and Company
shall, or shall cause one or more of its Subsidiaries to, promptly and
diligently apply any such Net Insurance/Condemnation Proceeds to pay or
reimburse the costs of repairing, restoring or replacing (including replacing
such assets by investing in a different geographical area) the assets in respect
of which such Net Insurance/Condemnation Proceeds were received or, to the
extent not so applied, to prepay the Loans as provided in subsection 2.4B; and

(b) if at any time (1) an Event of Default or Potential Event of Default shall
have occurred and be continuing or (2) Administrative Agent reasonably
determines (A) that Company or such Subsidiary is not proceeding diligently with
such repair, restoration or replacement, (B) that such repair, restoration or
replacement cannot be completed with the Net Insurance/Condemnation Proceeds,
together with funds otherwise available to Company for such purpose, or (C) that
such repair, restoration or replacement cannot be completed within 270 days
after the receipt by Company and/or Administrative Agent of such Net
Insurance/Condemnation Proceeds, Administrative Agent, if it holds such Net
Insurance/Condemnation Proceeds, is hereby authorized by Company to, and
Company, if it or one of its Subsidiaries holds such Net Insurance/Condemnation
Proceeds, shall, apply such Net Insurance/Condemnation Proceeds to prepay the
Loans as provided in subsection 2.4B and subsection 2.4D.

 

  6.5 Inspection Rights; Lender Meeting.

A. Inspection Rights. Company shall, and shall cause each of its Subsidiaries
to, permit any authorized representatives designated by any Lender, at the
expense of such Lender, to visit and inspect any of the properties of Company or
of any of its Subsidiaries, to inspect, copy and take extracts from its and
their financial and accounting records, and to discuss its and their affairs,
finances and accounts with its and their officers and independent public
accountants (provided that Company may, if it so chooses, be present at or
participate in any such discussion), all upon reasonable notice and at such
reasonable times during normal business hours and as often as may reasonably be
requested or at any time or from time to time following the occurrence and
during the continuation of an Event of Default.

B. Lender Meeting. Company will, upon the request of Administrative Agent or
Requisite Lenders, participate in a meeting of Administrative Agent and Lenders
once during each Fiscal Year to be held at Company’s principal offices (or at
such other location as may be agreed to by Company and Administrative Agent) at
such time as may be agreed to by Company and Administrative Agent.

 

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  6.6 Compliance with Laws, etc.

Company shall comply, and shall cause each of its Subsidiaries and all other
Persons on or occupying any Facilities to comply, with the requirements of all
applicable Laws (including all Environmental Laws and Healthcare Regulations),
noncompliance with which could reasonably be expected to result in, individually
or in the aggregate, a Material Adverse Effect.

 

  6.7 Environmental Matters.

A. Environmental Disclosure. Company will deliver to Administrative Agent:

(i) Environmental Audits and Reports. As soon as practicable following receipt
thereof by Company or any of its Subsidiaries, copies of all environmental
audits, investigations, analyses and reports, whether prepared by personnel of
Company or any of its Subsidiaries or by independent consultants, Governmental
Authorities or any other Persons, with respect to environmental matters at or
involving any Facility that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect or with respect to any
Environmental Claims that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.

(ii) Notice of Certain Releases, Remedial Actions, Etc. Promptly upon the
occurrence thereof, written notice describing in reasonable detail (a) any
Release required to be reported to any federal, state or local governmental or
regulatory agency under any applicable Environmental Laws and (b) any remedial
action taken by Company or any other Person in response to (1) any Hazardous
Materials Activities the existence of which could reasonably be expected to
result in one or more Environmental Claims having, individually or in the
aggregate, a Material Adverse Effect, or (2) any Environmental Claims that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.

(iii) Written Communications Regarding Environmental Claims, Releases, Etc. As
soon as practicable following the sending or receipt thereof by Company or any
of its Subsidiaries, a copy of any and all written communications with respect
to (a) any Environmental Claims that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect, (b) any Release
required to be reported to any Governmental Authority and (c) any request for
information from any Governmental Authority concerning any investigation as to
whether Company or any of its Subsidiaries may be responsible for any Hazardous
Materials Activity.

(iv) Notice of Certain Proposed Actions Having Environmental Impact. Prompt
written notice describing in reasonable detail (a) any proposed acquisition of
stock, assets, or property by Company or any of its Subsidiaries that could
reasonably be expected to (1) expose Company or any of its Subsidiaries to, or
result in, Environmental Claims that could reasonably be expected to result in,
individually or in the aggregate, a

 

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Material Adverse Effect or (2) affect the ability of Company or any of its
Subsidiaries to maintain in full force and effect all material Governmental
Authorizations required under any Environmental Laws for their respective
operations and (b) any proposed action to be taken by Company or any of its
Subsidiaries to modify current operations in a manner that could reasonably be
expected to subject Company or any of its Subsidiaries to any additional
obligations or requirements under any Environmental Laws that could reasonably
be expected to result in, individually or in the aggregate, a Material Adverse
Effect.

B. Company’s Actions Regarding Hazardous Materials Activities, Environmental
Claims and Violations of Environmental Laws.

(i) Remedial Actions Relating to Hazardous Materials Activities. Company shall,
in compliance with all applicable Environmental Laws, undertake, and shall cause
each of its Subsidiaries promptly to undertake, any and all investigations,
studies, sampling, testing, permitting, abatement, cleanup, removal, remediation
or other response actions necessary to remove, remediate, clean up or abate any
Hazardous Materials Activity on, under or about any Facility that is in
violation of any Environmental Laws or that presents a material risk of giving
rise to an Environmental Claim.

(ii) Actions with Respect to Environmental Claims and Violations of
Environmental Laws. Company shall promptly take, and shall cause each of its
Subsidiaries promptly to take, any and all actions necessary to (i) cure any
violation of applicable Environmental Laws by Company or its Subsidiaries that
could reasonably be expected to result in, individually or in the aggregate, a
Material Adverse Effect and (ii) make an appropriate response to any
Environmental Claim against Company or any of its Subsidiaries where failure to
do so could reasonably be expected to result in, individually or in the
aggregate, a Material Adverse Effect.

C. Phase I Environmental Reports on Leasehold Properties. Upon the occurrence
and during the continuation of any Event of Default and upon the request of
Administrative Agent, Company shall promptly deliver to Administrative Agent a
Phase I environmental assessment for any Leasehold Property which is occupied by
Company or any of its Subsidiaries and which is subject to a Mortgage, which
assessment (a) conforms to the ASTM Standard Practice for Environmental Site
Assessments: Phase I Environmental Site Assessment Process, E 1527-05, (b) was
conducted by one or more environmental consulting firms reasonably satisfactory
to Administrative Agent and (c) is accompanied by an estimate of the reasonable
worst-case cost of investigating and remediating any recognized environmental
condition.

 

  6.8 Execution of Subsidiary Guaranty and Personal Property Collateral
Documents After the Effective Date.

A. Execution of Subsidiary Guaranty and Personal Property Collateral Documents.
In the event that any Person becomes a Domestic Subsidiary after the date
hereof, Company will promptly notify Administrative Agent and Collateral Agent
of that fact and (except in the case of a Joint Venture permitted pursuant to
subsection 7.3(xi)) cause such

 

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Domestic Subsidiary to execute and deliver to Administrative Agent a counterpart
of the Subsidiary Guaranty and Security Agreement and to take all such further
actions and execute all such further documents and instruments (including
actions, documents and instruments comparable to those described in subsection
4.1I as well as lien searches, lien terminations, documents filed with any IP
Filing Office, and, if requested by Administrative Agent, opinions of local
counsel with respect to the creation and perfection of any security interests
granted in favor of Collateral Agent and such other matters governed by the laws
of the applicable jurisdiction regarding such security interests as
Administrative Agent or Collateral Agent may reasonably request, in form and
substance reasonably satisfactory to Administrative Agent and Collateral Agent)
as may be necessary or, in the reasonable opinion of Administrative Agent or
Collateral Agent, desirable to create in favor of Collateral Agent, for the
benefit of Beneficiaries, a valid and perfected First Priority Lien on all of
the personal and mixed property assets of such Domestic Subsidiary described in
the applicable forms of Collateral Documents. In addition, as provided in the
Security Agreement, Company shall, or shall cause the Subsidiary that owns the
Equity Interests of such Person to, execute and deliver to Collateral Agent a
supplement to the Security Agreement and to deliver to Collateral Agent all
certificates representing such Equity Interests of such Person (accompanied by
irrevocable undated stock powers, duly endorsed in blank).

B. Foreign Subsidiaries. In the event that any Person becomes a Foreign
Subsidiary of Company after the date hereof, Company will promptly notify
Administrative Agent of that fact and, if such Subsidiary is directly owned by
Company or a Domestic Subsidiary, cause such Subsidiary to execute and deliver
to Administrative Agent such documents and instruments and take such further
actions (including actions, documents and instruments comparable to those
described in subsection 4.1I as well as lien searches, lien terminations, pledge
agreements enforceable under local law, and, if requested by Administrative
Agent, opinions of local counsel with respect to the creation and perfection of
any security interests granted in favor of Collateral Agent and such other
matters governed by the laws of the applicable jurisdiction regarding such
security interests as Administrative Agent or Collateral Agent may reasonably
request, in form and substance reasonably satisfactory to Administrative Agent
and Collateral Agent) as may be necessary, or in the reasonable opinion of
Administrative Agent or Collateral Agent, desirable to create in favor of
Collateral Agent, for the benefit of Beneficiaries, a valid and perfected First
Priority Lien on 65% of the voting Equity Interests of such Foreign Subsidiary.
To the extent no adverse tax consequences to Company would result therefrom,
Company shall comply with subsection 6.8A with respect to any Person which
becomes a Foreign Subsidiary of Company after the date hereof as if it were a
Domestic Subsidiary.

C. Subsidiary Organizational Documents, Legal Opinions, Etc. Company shall
deliver to Administrative Agent, together with such Loan Documents,
(i) certified copies of such Subsidiary’s Organizational Documents, together
with, if such Subsidiary is a Domestic Subsidiary, a good standing certificate
from the Secretary of State of the jurisdiction of its organization and each
other state in which such Person is qualified to do business and, to the extent
generally available, a certificate or other evidence of good standing as to
payment of any applicable franchise or similar Taxes from the appropriate taxing
authority of each of such jurisdiction, each to be dated a recent date prior to
their delivery to Administrative Agent, (ii) a certificate executed by the
secretary or similar officer of such Subsidiary as to (a) the fact that

 

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the attached resolutions of the Governing Body of such Subsidiary approving and
authorizing the execution, delivery and performance of such Loan Documents are
in full force and effect and have not been modified or amended and (b) the
incumbency and signatures of the officers of such Subsidiary executing such Loan
Documents, and (iii) to the extent requested by Administrative Agent, a
favorable opinion of counsel to such Subsidiary, in form and substance
reasonably satisfactory to Administrative Agent and Collateral Agent and their
counsel.

D. Timing. Notwithstanding anything to the contrary in the foregoing, Company
and its Subsidiaries shall be deemed to be in compliance with this subsection
6.8 with respect to any new Subsidiary if they perform the obligations under
this subsection 6.8 on or prior to the next succeeding date on which financial
statements are required to be delivered by Company to Administrative Agent
pursuant to clause (ii) or (iii) of subsection 6.1, so long as the aggregate
value of the assets of all Subsidiaries for which performance under subsection
6.8 has not been made, when added to the aggregate fair market value of all real
property for which performance has not been made under subsection 6.9A, does not
exceed $10,000,000 in the aggregate at any time.

 

  6.9 Matters Relating to Real Property Collateral.

A. Additional Mortgages, Etc. From and after the Effective Date, in the event
that (i) Company or any Subsidiary Guarantor acquires any fee interest in real
property with a value of more than $1,500,000 or any Material Leasehold Property
or (ii) at the time any Person becomes a Subsidiary Guarantor, such Person owns
or holds any fee interest in real property or any Material Leasehold Property,
in the case of clause (ii) above excluding any such Real Property Asset the
encumbrancing of which requires the consent of any applicable lessor (including
any third party master lessor) or then-existing senior lienholder, where Company
and its Subsidiaries have attempted in good faith, but are unable, to obtain
such lessor’s or senior lienholder’s consent (any such non-excluded Real
Property Asset described in the foregoing clause (i) or (ii) being an
“Additional Mortgaged Property”), Company or such Subsidiary Guarantor shall
deliver to Administrative Agent, as soon as practicable after such Person
acquires such Additional Mortgaged Property or becomes a Subsidiary Guarantor,
as the case may be, a fully executed and notarized Mortgage (an “Additional
Mortgage,” and together with all such Mortgages, the “Additional Mortgages”), in
proper form for recording in all appropriate places in all applicable
jurisdictions, encumbering the interest of such Loan Party in such Additional
Mortgaged Property, and such opinions, appraisal, documents, title insurance,
environmental reports that would have been delivered on the Effective Date or
prior thereto under the Existing Credit Agreement if such Additional Mortgaged
Property were an Existing Mortgaged Property or that may be reasonably required
by Administrative Agent or Collateral Agent; provided, however, that
notwithstanding anything to the contrary in the foregoing, Company and its
Subsidiaries shall be deemed to be in compliance with this subsection 6.9A if
they perform the obligations under this subsection 6.9A on or prior to the next
succeeding date on which financial statements are required to be delivered by
Company to Administrative Agent pursuant to clause (ii) or (iii) of subsection
6.1, so long as the fair market value of all real property for which performance
under subsection 6.9A has not been made, when added to the aggregate value of
the assets of all Subsidiaries for which performance under subsection 6.8 has
not been made, does not exceed $10,000,000 in the aggregate at any time.

 

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B. Real Estate Appraisals. Company shall, and shall cause each of its
Subsidiaries to, permit an independent real estate appraiser reasonably
satisfactory to Administrative Agent, upon reasonable notice, to visit and
inspect any Additional Mortgaged Property for the purpose of preparing an
appraisal of such Additional Mortgaged Property satisfying the requirements of
any applicable laws and regulations (in each case to the extent required under
such laws and regulations as determined by Administrative Agent in its
discretion).

C. Conforming Leasehold Interests. If Company or any of its Subsidiaries
acquires any Leasehold Property, Company shall, or shall cause such Subsidiary
to, use its commercially reasonable efforts (without requiring Company or such
Subsidiary to relinquish any material rights or incur any material obligations
or to expend more than a nominal amount of money over and above the
reimbursement, if required, of the landlord’s out-of-pocket costs, including
attorneys fees) to cause such Leasehold Property to be a Conforming Leasehold
Interest.

D. Mortgage Modifications. Within 60 days following the Effective Date, or at
such later date as determined in the sole discretion of Collateral Agent,
Company shall deliver or cause to be delivered the following:

(i) amendments to or modifications of each of the Existing Mortgages in form and
substance reasonably satisfactory to Collateral Agent;

(ii) with respect to each amended or modified Mortgage, a date-down and
modification endorsement to the policy or policies of title insurance insuring
the Lien of such Mortgage, issued by a nationally recognized title insurance
company insuring the Lien of each amended or modified Mortgage as a valid Lien
on the Mortgaged Property described therein, free of any Liens other than Liens
permitted pursuant to subsection 7.2, together with such endorsements,
coinsurance and reinsurance as Collateral Agent may reasonably request having
the effect of a valid, issued and binding title insurance policy, provided that
no date-down or modification endorsement shall be required with respect to any
amended or modified Mortgage covering any Mortgaged Property in the State of
Texas or the State of New Mexico; and

(iii) with respect to each amended or modified Mortgage, a favorable written
opinion (a) rendered by the relevant local counsel listed on Schedule 4.1E,
(b) furnished to Administrative Agent, Collateral Agent and Lenders and (c) in
form and substance reasonably acceptable to Collateral Agent.

Notwithstanding anything herein to the contrary, Collateral Agent may, in its
sole discretion, permit Company at its option to satisfy its obligations
pursuant to this subsection 6.9D as to any Existing Mortgage by delivering or
causing to be delivered to Collateral Agent a new fully executed and notarized
Mortgage, in proper form for recording in all appropriate places in all
applicable jurisdictions and encumbering the Existing Mortgaged Property
previously encumbered by such Existing Mortgage to secure the Obligations with
priority as to any other Lien on such Existing Mortgaged Property equal to or
better than the priority of such Existing Mortgage as to such other Lien,
together with such opinions, documents and title insurance as Collateral Agent
may reasonably request.

 

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  6.10 Interest Rate Protection.

No later than the 90th day after the Effective Date, to the extent necessary to
result in at least 40% of the aggregate principal amount of the funded long-term
Indebtedness of Company and its Subsidiaries being effectively subject to a
fixed or a maximum interest rate for a term of at least three years, Company
shall enter into one or more Interest Rate Agreements, each such Interest Rate
Agreement to be in form and substance reasonably satisfactory to Administrative
Agent.

 

  6.11 Deposit Accounts, Securities Accounts and Cash Management Systems;
Government Reimbursement Deposit Accounts.

A. Deposit Accounts and Cash Management Systems. Company shall, and shall cause
each of its Domestic Subsidiaries to, use and maintain its Deposit Accounts,
Securities Accounts and cash management systems in a manner reasonably
satisfactory to Administrative Agent. Beginning with the date 60 days after the
Effective Date (or at such later date as determined in the sole discretion of
Collateral Agent), Company shall not permit any of such Deposit Accounts (other
than Government Reimbursement Deposit Accounts) and Securities Accounts at any
time to have a principal balance in excess of $100,000 unless Company or such
Domestic Subsidiary, as the case may be, has (i) executed and delivered to
Administrative Agent a Control Agreement, and (ii) taken all other steps
necessary or, in the reasonable opinion of Administrative Agent or Collateral
Agent, desirable to ensure that Collateral Agent has a perfected security
interest in such Deposit Account; provided that, if Company or such Domestic
Subsidiary is unable to obtain a Control Agreement from the financial
institution at which the Deposit Account or Securities Account is maintained,
Company shall, or shall cause such Domestic Subsidiary to, within 60 days after
receiving a written request by Administrative Agent to do so, transfer all
amounts in the applicable Deposit Account or Securities Account to a Deposit
Account or Securities Account, as applicable, maintained at a financial
institution from which Company or such Domestic Subsidiary has obtained a
Control Agreement. Beginning with the date 60 days after the Effective Date (or
at such later date as determined in the sole discretion of Collateral Agent),
Company shall not permit the aggregate amount on deposit in all Deposit Accounts
of Company and of its Domestic Subsidiaries (other than Deposit Accounts
maintained with Administrative Agent and Deposit Accounts with respect to which
the depository institution has executed a Control Agreement) at any time to
exceed $1,000,000.

B. Government Reimbursement Deposit Accounts. With respect to each Government
Reimbursement Deposit Account, Company shall, and shall cause each of its
Domestic Subsidiaries to, (i) execute and deliver to Administrative Agent a
Deposit Account Instruction Agreement and (ii) deposit therein only proceeds of
receivables of Government Reimbursement Programs; provided that, if Company or
such Domestic Subsidiary is unable to obtain a Deposit Account Instruction
Agreement from the financial institution at which the Government Reimbursement
Deposit Account is maintained, Company shall, or shall cause such Domestic
Subsidiary to, within 30 days after receiving a written request by
Administrative Agent to do so, transfer all amounts in the applicable Government
Reimbursement Deposit Account to a Government Reimbursement Deposit Account
maintained at a financial institution from which Company or such Domestic
Subsidiary has obtained a Deposit Account Instruction Agreement.

 

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  6.12 Ratings.

Company shall maintain continually in effect the ratings described in
subsection 4.1N.

Section 7. NEGATIVE COVENANTS

Company covenants and agrees that, so long as any of the Commitments hereunder
shall remain in effect and until payment in full of all of the Loans and other
Obligations (other than Unasserted Obligations) and the cancellation or
expiration of all Letters of Credit, unless Requisite Lenders shall otherwise
give prior written consent, Company shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Section 7.

 

  7.1 Indebtedness.

Company shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, create, incur, assume or guaranty, or otherwise become or remain
directly or indirectly liable with respect to, any Indebtedness, except:

(i) Company may become and remain liable with respect to the Obligations;

(ii) Company and its Domestic Subsidiaries may become and remain liable with
respect to Contingent Obligations permitted by subsection 7.4 and, upon any
matured obligations actually arising pursuant thereto, the Indebtedness
corresponding to the Contingent Obligations so extinguished;

(iii) Company and its Domestic Subsidiaries may become and remain liable with
respect to Indebtedness in respect of Capital Leases incurred at the time of, or
within ninety days after, the acquisition of the related property (it being
understood that the completion of the construction or development of express
recovery or similar units, additional beds at existing Facilities or new
Facilities shall constitute the acquisition of property) aggregating not in
excess of $25,000,000 at any one time; provided that the aggregate amount of
Indebtedness represented by (x) Converted Capital Leases or (y) other Capital
Leases that are assumed in connection with Permitted Acquisitions, shall not be
included in calculating the aggregate amount of Indebtedness outstanding in
respect of Capital Leases for the purposes of this subsection 7.1(iii) if, after
giving effect to such conversion or assumption, Company is in Pro Forma
Compliance with the maximum Consolidated Leverage Ratio permitted by subsection
7.6B less 0.25x;

(iv) Company may become and remain liable with respect to Indebtedness to any
Subsidiary, and any Subsidiary Guarantor may become and remain liable with
respect to Indebtedness to Company or any Subsidiary Guarantor; provided that
(a) a security interest in all such intercompany Indebtedness shall have been
granted to Collateral Agent for the benefit of Beneficiaries and (b) if such
intercompany Indebtedness is evidenced by a promissory note or other instrument,
such promissory note or instrument shall have been pledged to Administrative
Agent pursuant to the Security Agreement;

 

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(v) Company and its Subsidiaries, as applicable, may remain liable with respect
to Indebtedness described in Schedule 7.1 annexed hereto;

(vi) Company may become and remain liable with respect to (x) the Senior
Subordinated Notes and any Permitted Refinancing Indebtedness; and (y) unsecured
Subordinated Indebtedness on terms and conditions substantially the same as the
Senior Subordinated Notes or otherwise reasonably satisfactory to Administrative
Agent the proceeds of which shall be used solely to (1) refinance Indebtedness
previously incurred under this subsection 7.1(vi)(y), (2) refinance Indebtedness
outstanding under this Agreement or (3) finance Permitted Acquisitions (which
financing may occur as a repayment of a Revolving Loan, the purpose of which
Revolving Loan was to finance a Permitted Acquisition, or which financing may be
used to finance Permitted Acquisitions occurring within 180 days after the
incurrence of such Indebtedness if the Net Indebtedness Proceeds thereof are
deposited in a separate Deposit Account or Securities Account (the “Designated
Account”) subject to a Control Agreement until such time as they are used for
such Permitted Acquisition (the Net Indebtedness Proceeds so deposited being
referred to herein as “Designated Restricted Cash”); provided that (A) the
maximum principal amount of Indebtedness permitted pursuant to this subsection
7.1(vi)(y) at any time shall not exceed $300,000,000 and (B) any Designated
Restricted Cash that remains in the Designated Account on the date 180 days
after of the incurrence of the related Indebtedness shall be used to prepay
Indebtedness outstanding under this Agreement;

(vii) Company or a Subsidiary of Company may become and remain liable with
respect to Indebtedness of any Person assumed in connection with a Permitted
Acquisition and a Person that becomes a direct or indirect wholly-owned
Subsidiary of Company as a result of a Permitted Acquisition may remain liable
with respect to Indebtedness existing on the date of such acquisition; provided
that such Indebtedness is not created in anticipation of such acquisition and
the aggregate principal amount of such Indebtedness does not exceed $65,000,000,
and an additional $30,000,000 of such Indebtedness, if after giving effect to
the assumption of any such Indebtedness, the Consolidated Leverage Ratio,
calculated on a Pro Forma Basis, is equal to or less than 3.00:1.00;

(viii) Indebtedness of Company or any of its Subsidiaries in respect of
insurance premiums payable to Fountain View Reinsurance, Inc. in an aggregate
amount not to exceed $35,000,000;

(ix) Indebtedness of Company to directors, employees and officers of any Loan
Party for the purpose of purchasing from such directors, employees and officers
Equity Interests of Company; provided that the amount of the annual principal
payments with respect to such Indebtedness, together with all Restricted Junior
Payments made pursuant to subsection 7.5(ii)(d), shall not at any time exceed
the amounts of Restricted Junior Payments permitted pursuant to subsection
7.5(ii)(d);

(x) Indebtedness of Company or any of its Subsidiaries to sellers in connection
with an exercise of a purchase option under a lease with respect to any

 

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existing Facility or a Permitted Acquisition in an amount not to exceed 60% of
the purchase price or total consideration paid with respect to such purchase
option or Permitted Acquisition; provided that, except to the extent permitted
by subsection 7.2A(v), such Indebtedness shall be unsecured and subordinated in
right of payment to the Obligations (including any guaranty thereof) on terms
and conditions reasonably satisfactory to Administrative Agent; and

(xi) Company and its Domestic Subsidiaries may become and remain liable with
respect to other Indebtedness in an aggregate principal amount not to exceed
$25,000,000 at any time outstanding.

 

  7.2 Liens and Related Matters.

A. Prohibition on Liens. Company shall not and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the UCC or under any similar recording or notice statute, except:

(i) Permitted Encumbrances;

(ii) Liens securing Capital Leases permitted pursuant to subsection 7.1;
provided, however, that the Lien shall apply only to the asset so acquired and
proceeds thereof;

(iii) Liens assumed in connection with a Permitted Acquisition and Liens on
assets of a Person that becomes a direct or indirect Subsidiary of Company after
the date of this Agreement in a Permitted Acquisition, provided, however, that
such Liens exist at the time such Person becomes a Subsidiary, apply only to the
assets so acquired and the proceeds thereof and are not created in anticipation
of such acquisition and, in any event, only secure Indebtedness incurred
pursuant to subsection 7.1(vii);

(iv) Liens described in Schedule 7.2 annexed hereto;

(v) Liens securing Indebtedness permitted to be incurred pursuant to subsection
7.1(x) on the assets so acquired and the proceeds thereof; provided that the
aggregate original principal amount of the Indebtedness so secured does not
exceed $50,000,000; and

(vi) Other Liens securing Indebtedness in an aggregate amount not to exceed
$10,000,000 at any time outstanding.

Notwithstanding the foregoing, Company and its Domestic Subsidiaries shall not
enter into, or suffer to exist, any control agreements (as such term is defined
in the UCC), other than Control Agreements entered into pursuant to subsection
6.11 or the Security Agreement.

 

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B. Equitable Lien in Favor of Lenders. If Company or any of its Subsidiaries
shall create or assume any Lien upon any of its properties or assets, whether
now owned or hereafter acquired, other than Liens excepted by the provisions of
subsection 7.2A, it shall make or cause to be made effective provision whereby
the Secured Obligations will be secured by such Lien equally and ratably with
any and all other Indebtedness secured thereby as long as any such Indebtedness
shall be so secured; provided that, notwithstanding the foregoing, this covenant
shall not be construed as a consent by Requisite Lenders to the creation or
assumption of any such Lien not permitted by the provisions of subsection 7.2A.

C. No Further Negative Pledges. Neither Company nor any of its Subsidiaries
shall enter into any agreement (other than the Senior Subordinated Note
Indenture or an agreement prohibiting only the creation of Liens securing
Subordinated Indebtedness) prohibiting the creation or assumption of any Lien
upon any of its properties or assets, whether now owned or hereafter acquired,
except with respect to (i) specific property encumbered to secure payment of
particular Indebtedness or to be sold pursuant to an executed agreement with
respect to an Asset Sale; or (ii) customary restrictions or conditions contained
in any agreement, indenture or other instrument governing any Indebtedness
permitted hereunder.

D. No Restrictions on Subsidiary Distributions to Company or Other Subsidiaries.
Company shall not, and shall not permit any of its Subsidiaries to, create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any such Subsidiary to
(i) pay dividends or make any other distributions on any of such Subsidiary’s
Equity Interests owned by Company or any other Subsidiary of Company, (ii) repay
or prepay any Indebtedness owed by such Subsidiary to Company or any other
Subsidiary of Company, (iii) make loans or advances to Company or any other
Subsidiary of Company, or (iv) transfer any of its property or assets to Company
or any other Subsidiary of Company, except (a) as provided in this Agreement,
(b) customary restrictions or conditions contained in any agreement, indenture
or other instrument governing any Indebtedness permitted hereunder and (c) as
may be provided in an agreement with respect to an Asset Sale.

 

  7.3 Investments; Acquisitions.

Company shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, make or own any Investment in any Person, including any Joint
Venture, or acquire, by purchase or otherwise, all or substantially all the
business, property or fixed assets of, or Equity Interests of any Person, or any
division or line of business of any Person except:

(i) Company and its Subsidiaries may make and own Investments in Cash and Cash
Equivalents;

(ii) Company and its wholly-owned Domestic Subsidiaries may make and own equity
Investments in their respective wholly-owned Domestic Subsidiaries;

(iii) Company and its Subsidiaries may make intercompany loans to the extent
permitted under subsection 7.1(iv);

 

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(iv) Company and its Subsidiaries may (x) make Consolidated Capital
Expenditures, (y) enter into any Converted Capital Lease otherwise permitted
pursuant to this Agreement and (z) exercise a purchase option under any lease
with respect to any existing Facility, to the extent otherwise permitted under
this Agreement;

(v) Company and its Subsidiaries may continue to own the Investments owned by
them and described in Schedule 7.3 annexed hereto;

(vi) Company and its Domestic Subsidiaries may (x) acquire assets (including
Equity Interests and including Equity Interests of Subsidiaries formed in
connection with any such acquisition), (y) incur construction and development
costs and expenses in connection with the construction and development of
express recovery or similar units or (z) incur construction and development
costs and expenses in connection with the construction and development of
additional beds at existing Facilities or the construction and development of
new Facilities for a total consideration (including any Indebtedness that is
assumed or repaid by Company or any of its Subsidiaries in connection with such
acquisition); provided that (i) no Potential Event of Default or Event of
Default shall have occurred and be continuing at the time such acquisition,
development or construction occurs or after giving effect thereto, (ii) Company
shall, and shall cause its Domestic Subsidiaries to, comply with the
requirements of subsections 6.8 and 6.9 with respect to each such acquisition,
development or construction, (iii) at the time of and after giving effect to
such acquisition, development or construction, Company is in Pro Forma
Compliance with (a) the financial covenants contained in subsection 7.6 and
(b) the maximum Consolidated Leverage Ratio permitted by subsection 7.6B less
0.25x, (iv) for any acquisition, development or construction with a value in
excess of $7,500,000, prior to the consummation of such acquisition, development
or construction, Company shall have delivered written notice thereof to
Administrative Agent (which notice shall include a reasonably detailed
description of such proposed acquisition, development or construction), together
with the most recent audited financial statements, if available, of the seller
or entity to be acquired and (v) for any acquisition, development or
construction with a value in excess of $5,000,000, Company shall have delivered
projections updating the Financial Plans delivered pursuant to subsection
6.1(xi), which projections shall reflect Pro Forma Compliance by Company with
the financial covenants contained in subsection 7.6 as of the last day of each
of the four Fiscal Quarters ending immediately after such acquisition,
development or construction;

(vii) Company and its Domestic Subsidiaries may make and own other Investments
in an aggregate amount not to exceed at any time $25,000,000;

(viii) Company may acquire and hold obligations of one or more officers or other
employees of Company or its Subsidiaries in connection with such officers’ or
employees’ acquisition of shares of Company’s Equity Interests, so long as no
cash is actually advanced by Company or any of its Subsidiaries to such officers
or employees in connection with the acquisition of any such obligations;

 

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(ix) Company and its Subsidiaries may receive and hold promissory notes and
other non-cash consideration received in connection with any Asset Sale
permitted by subsection 7.7;

(x) Company and its Subsidiaries may acquire Securities in connection with the
satisfaction or enforcement of Indebtedness or claims due or owing to Company or
any of its Subsidiaries or as security for any such Indebtedness or claim; and

(xi) Company and its Subsidiaries may make and own equity and debt Investments
in domestic Joint Ventures in an aggregate amount at any time outstanding not to
exceed $30,000,000 (it being agreed the amount of any investment “outstanding”
shall not be reduced by any amount received in respect of such investment that
is included in Consolidated EBITDA for any period); and

(xii) In connection with the consummation of a HUD Financing, Company may from
time to time designate by written notice to Administrative Agent one or more
Domestic Subsidiaries as HUD Subsidiaries, so long as (A) the fair market value
of all Facilities on an enterprise basis (as evidenced by the written appraisals
obtained in connection with the related HUD Financings) so designated does not
exceed $50,000,000 in the aggregate in any Fiscal Year (such amount for each
Fiscal Year commencing on or after January 1, 2011, to be increased by the
amount, if positive, by which the amount permitted to be designated under this
subsection (xii) in the immediately preceding Fiscal Year exceeds the fair
market value on an enterprise basis of the Facilities so designated in the
immediately preceding Fiscal Year) and (B) on a Pro Forma Basis, the ratio of
(1) HUD Asset Pool Value to the aggregate principal amount of such HUD Financing
is no greater than (2) Remaining Asset Pool Value to Total Credit Agreement
Indebtedness, as certified by an Officer of Company at the time of such
designation with calculations of such ratios in reasonable detail.

 

  7.4 Contingent Obligations.

Company shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, create or become or remain liable with respect to any Contingent
Obligation, except:

(i) Company may become and remain liable with respect to Contingent Obligations
in respect of Letters of Credit;

(ii) Company may become and remain liable with respect to Contingent Obligations
under Hedge Agreements required under subsection 6.10 and under other Hedge
Agreements with respect to permitted Indebtedness;

(iii) Company and its Subsidiaries may become and remain liable with respect to
Contingent Obligations in respect of customary indemnification and purchase
price adjustment obligations incurred in connection with Asset Sales or other
sales of assets;

(iv) Company and its Subsidiaries may become and remain liable with respect to
Contingent Obligations in respect of any Indebtedness of Company or any of its
Subsidiaries permitted by subsection 7.1; provided that any Contingent
Obligations with

 

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respect to Indebtedness permitted pursuant to subsections 7.1(vi) or 7.1(x)
shall be subordinated to the Obligations (including any guaranty thereof) to the
same extent as such Indebtedness is required to be so subordinated;

(v) Company or any Subsidiary Guarantor may become and remain liable with
respect to Contingent Obligations in respect of other obligations of Company,
any other Subsidiary Guarantor or Fountain View Reinsurance, Inc. not prohibited
by this Agreement;

(vi) Company and its Subsidiaries, as applicable, may remain liable with respect
to Contingent Obligations described in Schedule 7.4 annexed hereto; and

(vii) Company and its Subsidiaries may become and remain liable with respect to
other Contingent Obligations; provided that the maximum aggregate liability,
contingent or otherwise, of Company and its Subsidiaries in respect of all such
Contingent Obligations shall at no time exceed $3,000,000.

 

  7.5 Restricted Junior Payments.

Company shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, declare, order, pay, make or set apart any sum for any Restricted
Junior Payment; provided that Company may (i) make regularly scheduled payments
of interest in respect of any Subordinated Indebtedness in accordance with the
terms of, and only to the extent required by, and subject to the subordination
provisions contained in, the indenture or other agreement pursuant to which such
Subordinated Indebtedness was issued, as such indenture or other agreement may
be amended from time to time to the extent permitted under subsection 7.11A,
(ii) (a) so long as no Event of Default or Potential Event of Default shall have
occurred and be continuing or shall be caused thereby, excluding the repurchases
of Equity Interests described in clause (b) of this subsection 7.5, pay
dividends on, repurchase or redeem its Equity Interests in an amount not to
exceed the amount of Consolidated Excess Cash Flow for the immediately preceding
Fiscal Year not otherwise required to be applied as a mandatory prepayment
pursuant to subsection 2.4B(iii)(d); provided that the Consolidated Leverage
Ratio as of the last day of the Fiscal Quarter immediately preceding such
payment, repurchase or redemption is less than 3.25:1.00 and (b) so long as no
Event of Default or Potential Event of Default shall have occurred and be
continuing or would result therefrom, repurchase its Equity Interests owned by
directors, officers and employees of Company or its Subsidiaries or make
payments to directors, officers and employees of Company or its Subsidiaries
upon termination of employment in connection with the exercise of stock options,
stock appreciation rights or similar equity incentives or equity based
incentives pursuant to management or other incentive plans or in connection with
the death or disability of such directors, officers and employees in an
aggregate amount, together with principal payments on Indebtedness permitted
pursuant subsection 7.1(ix), not to exceed $1,000,000 in any Fiscal Year and
(iii) repay Subordinated Indebtedness (including the Senior Subordinated Notes)
with the proceeds of other Subordinated Indebtedness permitted to be incurred
pursuant to subsection 7.1(vi) or with the proceeds of Equity Interests of
Company.

 

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  7.6 Financial Covenants.

A. Minimum Fixed Charge Coverage Ratio. Company shall not permit the
Consolidated Fixed Charge Coverage Ratio, calculated on a Pro Forma Basis, for
any four-Fiscal Quarter period ending during any period set forth below to be
less than the correlative ratio indicated:

 

Period   

Minimum Fixed Charge

Coverage Ratio

Effective Date up to but not including December 31, 2011

   1.50 : 1.00

December 31, 2011 up to but not including December 31, 2012

   1.60 : 1.00

December 31, 2012 up to but not including December 31, 2013

   1.75 : 1.00

December 31, 2013 and thereafter

   2.00 : 1.00

B. Maximum Leverage Ratio. Company shall not permit the Consolidated Leverage
Ratio, calculated on a Pro Forma Basis, as of the last day of each Fiscal
Quarter ending during the periods set forth below to exceed the correlative
ratio indicated:

 

Period   

Maximum Leverage Ratio

Effective Date up to but not including Dec 31, 2010

   5.50 : 1.00

December 31, 2010 up to but not including June 30, 2011

   5.40 : 1.00

June 30, 2011 up to but not including December 31, 2011

   5.25 : 1.00

December 31, 2011 up to but not including December 31, 2012

   5.00 : 1.00

December 31, 2012 up to but not including December 31, 2013

   4.75 : 1.00

December 31, 2013 up to but not including December 31, 2014

   4.50 : 1.00

December 31, 2014 up to but not including December 31, 2015

   4.25 : 1.00

December 31, 2015 and thereafter

   4.00 : 1.00

 

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  7.7 Restriction on Fundamental Changes; Asset Sales.

Company shall not, and shall not permit any of its Subsidiaries to, alter the
corporate, capital or legal structure of Company or any of its Subsidiaries, or
enter into any transaction of merger or consolidation, or liquidate, wind-up or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease or sub-lease (as lessor or sublessor), transfer or otherwise dispose of,
in one transaction or a series of transactions, all or any part of its business,
property or assets (including its notes or receivables and Equity Interests of a
Subsidiary, whether newly issued or outstanding), whether now owned or hereafter
acquired, except:

(i) any Subsidiary of Company may be merged or consolidated with or into Company
or any wholly-owned Subsidiary Guarantor, or be liquidated, wound up or
dissolved, or all or any part of its business, property or assets may be
conveyed, sold, sub-leased, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to Company or any wholly-owned
Subsidiary Guarantor; provided that, in the case of such a merger, Company or
such wholly-owned Subsidiary Guarantor shall be the continuing or surviving
Person;

(ii) Company and its Subsidiaries may convey, sell, transfer or otherwise
dispose of assets in transactions that do not constitute Asset Sales; provided
that the consideration received for such assets shall be in an amount at least
equal to the fair market value thereof;

(iii) Company and its Subsidiaries may dispose of obsolete, worn out or surplus
property in the ordinary course of business;

(iv) Company and its Subsidiaries may make Asset Sales of assets having a fair
market value not in excess of $35,000,000, in the case of Asset Sales of the
Facilities set forth on Schedule 7.7, and $15,000,000, in the case of all other
Asset Sales, in each case in any Fiscal Year; provided that (a) the
consideration received for such assets shall be in an amount at least equal to
the fair market value thereof; (b) not less than 75% of the consideration
received shall be Cash or Cash Equivalents, provided, however, that in the case
of any Asset Sale to a domestic Joint Venture permitted pursuant to subsection
7.3(xi), the amount of the Investment therein received or retained by Company
and its Subsidiaries in consideration of such Asset Sale shall be treated as
Cash solely for purposes of satisfying this requirement; (c) no Potential Event
of Default or Event of Default shall have occurred or be continuing after giving
effect thereto; and (d) the proceeds of such Asset Sales shall be applied as
required by subsection 2.4B(iii)(a) or subsection 2.4D;

 

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(v) in order to resolve disputes that occur in the ordinary course of business,
Company and its Subsidiaries may discount or otherwise compromise for less than
the face value thereof, notes or accounts receivable;

(vi) Company or a Subsidiary may sell or dispose of shares of Equity Interests
of any of its Subsidiaries in order to qualify members of the Governing Body of
the Subsidiary if required by applicable law;

(vii) any Person may be merged with or into Company or any Subsidiary if the
acquisition of the Equity Interests of such Person by Company or such Subsidiary
would have been permitted pursuant to subsection 7.3; provided that (a) in the
case of Company, Company shall be the continuing or surviving Person, (b) if a
Subsidiary is not the surviving or continuing Person, the surviving Person
becomes a Subsidiary and complies with the provisions of subsection 6.8 and
(c) no Potential Event of Default or Event of Default shall have occurred or be
continuing after giving effect thereto; and

(viii) Company or any Subsidiary may sell or dispose of all or any portion of
the assets, or the Equity Interests of the Subsidiaries that own the assets,
related to the pharmacy or therapy business of Company and its Subsidiaries;
provided that the proceeds of such asset sales are applied as required pursuant
to subsection 2.4B(iii).

 

  7.8 Transactions with Shareholders and Affiliates.

Company shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, enter into or permit to exist any transaction (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder of 5% or more of any class of equity Securities of
Company or with any Affiliate of Company or of any such holder, on terms that
are less favorable to Company or that Subsidiary, as the case may be, than those
that might be obtained at the time from Persons who are not such a holder or
Affiliate; provided that the foregoing restriction shall not apply to (i) any
transaction between Company and any of its wholly-owned Subsidiaries or between
any of its wholly-owned Subsidiaries, (ii) reasonable and customary fees paid to
members of the Governing Bodies of Company and its Subsidiaries, or
(iii) payments of consulting fees to Onex or any Affiliate of Onex in an amount
not to exceed $500,000 per Fiscal Year, provided that if an Event of Default
shall occur, then no payment of such fees shall be permitted for so long as such
Event of Default shall be continuing, it being agreed that any amount of such
fees which accrues while such Event of Default exists may be paid to Onex and/or
its Affiliates, as applicable, when such Event of Default is fully cured (and no
other Event of Default then exists).

 

  7.9 Sales and Lease-Backs.

Company shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, become or remain liable as lessee or as a guarantor or other surety
with respect to any lease, whether an Operating Lease or a Capital Lease, of any
property (whether real, personal or mixed), whether now owned or hereafter
acquired, (i) that Company or any of its Subsidiaries has sold or transferred or
is to sell or transfer to any other Person (other than Company or any of its
Subsidiaries) or (ii) that Company or any of its Subsidiaries intends to use for
substantially the

 

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same purpose as any other property that has been or is to be sold or transferred
by Company or any of its Subsidiaries to any Person (other than Company or any
of its Subsidiaries) in connection with such lease; provided that Company and
its Subsidiaries may become and remain liable as lessee, guarantor or other
surety with respect to any such lease if and to the extent that Company or any
of its Subsidiaries would be permitted to enter into, and remain liable under,
such lease to the extent that the transaction would be permitted under
subsection 7.1, assuming the sale and lease back transaction constituted
Indebtedness in a principal amount equal to the gross proceeds of the sale.

 

  7.10 Conduct of Business.

From and after the Effective Date, Company shall not permit any of its
Subsidiaries to engage in any business other than (i) the businesses engaged in
by such Subsidiaries on the Effective Date and similar or related businesses and
(ii) such other lines of business as may be consented to by Requisite Lenders.

 

  7.11 Amendments of Documents Relating to Subordinated Indebtedness; Amendments
or Waivers of Related Agreements; Designation of Designated Senior Indebtedness.

A. Amendments of Documents Relating to Subordinated Indebtedness. Company shall
not, and shall not permit any of its Subsidiaries to, amend or otherwise change
the terms of any Subordinated Indebtedness, or make any payment consistent with
an amendment thereof or change thereto, if the effect of such amendment or
change is to increase the interest rate on such Subordinated Indebtedness,
change (to earlier dates) any dates upon which payments of principal or interest
are due thereon, change any event of default or condition to an event of default
with respect thereto (other than to eliminate any such event of default or
increase any grace period related thereto), change the redemption, prepayment or
defeasance provisions thereof, change the subordination provisions thereof (or
of any guaranty thereof), or change any collateral therefor (other than to
release such collateral), or if the effect of such amendment or change, together
with all other amendments or changes made, is to increase materially the
obligations of the obligor thereunder or to confer any additional rights on the
holders of such Subordinated Indebtedness (or a trustee or other representative
on their behalf) which would be materially adverse to Company or Lenders.

B. Designation of “Designated Senior Indebtedness.” Company shall not designate
any Indebtedness as “Designated Senior Indebtedness” (as defined in the Senior
Subordinated Note Indenture) for purposes of the Senior Subordinated Note
Indenture without the prior written consent of Requisite Lenders.

 

  7.12 Fiscal Year.

Company shall not change its Fiscal Year-end from December 31.

 

  7.13 Government Reimbursement Deposit Accounts.

Company shall not, and shall not permit any of or any of its Subsidiaries, to
(i) make any withdrawal from a Deposit Account for which a Deposit Account
Instruction

 

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Agreement has been entered into, or (ii) change the payment instructions in a
Deposit Account Instruction Agreement or (iii) terminate a Deposit Account
Instruction Agreement, in each case, without the written consent of
Administrative Agent; provided that each such action shall be permitted in
connection with the transfer of the cash management operations of Company to a
new financial institution that, prior to such action, enters into Deposit
Account Instruction Agreements reasonably satisfactory to Administrative Agent
and Collateral Agent.

Section 8. EVENTS OF DEFAULT

If any of the following conditions or events (“Events of Default”) shall occur:

 

  8.1 Failure to Make Payments When Due.

Failure by Company to pay any installment of principal of any Loan when due,
whether at stated maturity, by acceleration, by notice of voluntary prepayment,
by mandatory prepayment or otherwise; failure by Company to pay when due any
amount payable to an Issuing Lender in reimbursement of any drawing under a
Letter of Credit; or failure by Company to pay any interest on any Loan or any
fee or any other amount due under this Agreement within five days after the date
due; or

 

  8.2 Default in Other Agreements.

(i) Failure of Company or any of its Subsidiaries to pay when due any principal
of or interest on or any other amount payable in respect of one or more items of
Indebtedness (other than Indebtedness referred to in subsection 8.1) or
Contingent Obligations in an individual principal amount of $15,000,000 or more
or with an aggregate principal amount of $15,000,000 or more, in each case
beyond the end of any grace period provided therefor; or

(ii) breach or default by Company or any of its Subsidiaries with respect to any
other material term of (a) one or more items of Indebtedness or Contingent
Obligations in the individual or aggregate principal amounts referred to in
clause (i) above or (b) any loan agreement, mortgage, indenture or other
agreement relating to such item(s) of Indebtedness or Contingent Obligation(s),
if the effect of such breach or default is to cause, or to permit the holder or
holders of that Indebtedness or Contingent Obligation(s) (or a trustee on behalf
of such holder or holders) to cause, that Indebtedness or Contingent
Obligation(s) to become or be declared due and payable prior to its stated
maturity or the stated maturity of any underlying obligation, as the case may be
(upon the giving or receiving of notice, lapse of time, both, or otherwise); or

 

  8.3 Breach of Certain Covenants.

Failure of Company to perform or comply with any term or condition contained in
subsection 2.5 or 6.2 or Section 7 of this Agreement; or

 

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  8.4 Breach of Warranty.

Any representation, warranty, certification or other statement made by Company
or any of its Subsidiaries in any Loan Document or in any statement or
certificate at any time given by Company or any of its Subsidiaries in writing
pursuant hereto or thereto or in connection herewith or therewith shall be false
in any material respect on the date as of which made; or

 

  8.5 Other Defaults Under Loan Documents.

Any Loan Party shall default in the performance of or compliance with any term
contained in this Agreement or any of the other Loan Documents, other than any
such term referred to in any other subsection of this Section 8, and such
default shall not have been remedied or waived within 45 days (except for
defaults with respect to the terms contained in subsections 6.1(ii), (iii) and
(xi), for which such period shall be 30 days) after the earlier of (i) an
Officer of Company or such Loan Party becoming aware of such default or
(ii) receipt by Company and such Loan Party of notice from Administrative Agent
or any Lender of such default; or

 

  8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.

(i) A court having jurisdiction in the premises shall enter a decree or order
for relief in respect of Company or any of its Material Subsidiaries in an
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or

(ii) an involuntary case shall be commenced against Company or any of its
Material Subsidiaries under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect; or a decree or
order of a court having jurisdiction in the premises for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian or other officer having
similar powers over Company or any of its Material Subsidiaries, or over all or
a substantial part of its property, shall have been entered; or there shall have
occurred the involuntary appointment of an interim receiver, trustee or other
custodian of Company or any of its Material Subsidiaries for all or a
substantial part of its property; or a warrant of attachment, execution or
similar process shall have been issued against any substantial part of the
property of Company or any of its Material Subsidiaries, and any such event
described in this clause (ii) shall continue for 60 days unless dismissed,
bonded or discharged; or

 

  8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.

(i) Company or any of its Material Subsidiaries shall have an order for relief
entered with respect to it or commence a voluntary case under the Bankruptcy
Code or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a voluntary
case, under any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a substantial
part of its property; or Company or any of its Material Subsidiaries shall make
any assignment for the benefit of creditors; or

 

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(ii) Company or any of its Material Subsidiaries shall be unable, or shall fail
generally, or shall admit in writing its inability, to pay its debts as such
debts become due; or the Governing Body of Company or any of its Material
Subsidiaries (or any committee thereof) shall adopt any resolution or otherwise
authorize any action to approve any of the actions referred to in clause
(i) above or this clause (ii); or

 

  8.8 Judgments and Attachments.

Any money judgment, writ or warrant of attachment or similar process involving
(i) in any individual case an amount in excess of $15,000,000 or (ii) in the
aggregate at any time an amount in excess of $15,000,000, in either case to the
extent not adequately covered by insurance as to which a solvent and
unaffiliated insurance company has acknowledged coverage, shall be entered or
filed against Company or any of its Subsidiaries or any of their respective
assets and shall remain undischarged, unvacated, unbonded or unstayed for a
period of 60 days (or in any event later than five days prior to the date of any
proposed sale thereunder); or

 

  8.9 Dissolution.

Any order, judgment or decree shall be entered against Company or any of its
Material Subsidiaries decreeing the dissolution or split up of Company or that
Material Subsidiary and such order shall remain undischarged or unstayed for a
period in excess of 30 days; or

 

  8.10 Employee Benefit Plans.

There shall occur one or more ERISA Events that, individually or in the
aggregate, result in or would reasonably be expected to result in liability of
Company, any of its Subsidiaries or any of their respective ERISA Affiliates in
excess of $15,000,000 during the term of this Agreement; or, as of the date of
the most recent actuarial valuation of any Pension Plan, there shall exist an
amount equal to the accrued liability, less the actuarial value of assets, of
such Pension Plan (in each case, determined under such actuarial valuation for
funding purposes), individually or in the aggregate for all Pension Plans
(excluding for purposes of such computation any Pension Plans with respect to
which the actuarial value of assets exceeds the accrued liability, as so
determined), which exceeds $15,000,000; or

 

  8.11 Change in Control.

A Change in Control shall have occurred; or

 

  8.12 Invalidity of Loan Documents; Failure of Security; Repudiation of
Obligations.

At any time after the execution and delivery thereof, (i) any Loan Document or
any provision thereof, for any reason other than the satisfaction in full of all
Obligations, shall cease to be in full force and effect (other than in
accordance with its terms) or shall be declared

 

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to be null and void, (ii) Administrative Agent shall not have or shall cease to
have a valid and perfected First Priority Lien in any Collateral purported to be
covered by the Collateral Documents, in each case for any reason other than the
failure of Administrative Agent or any Lender to take any action within its
control or (iii) any Loan Party shall contest the validity or enforceability of
any Loan Document or any provision thereof in writing or deny in writing that it
has any further liability, including with respect to future advances by Lenders,
under any Loan Document or any provision thereof to which it is a party; or

 

  8.13 Failure to Maintain Healthcare Authorizations.

Any Government Authority shall finally revoke or fail to renew any Healthcare
Authorization of Company or one of its Subsidiaries or Company or one of its
Subsidiaries shall for any reason lose any Healthcare Authorization or suffer
the imposition of any restraining order, escrow, suspension or impound of funds
in connection with any proceeding (judicial or administrative) with respect to
any license, permit or franchise which event, either individually or in the
aggregate for all such events, could reasonably be expected to have a Material
Adverse Effect:

THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans, (b) an amount equal to 105% of the maximum amount that may at any time be
drawn under all Letters of Credit then outstanding (whether or not any
beneficiary under any such Letter of Credit shall have presented, or shall be
entitled at such time to present, the drafts or other documents or certificates
required to draw under such Letter of Credit), and (c) all other Obligations
shall automatically become immediately due and payable, without presentment,
demand, protest or other requirements of any kind, all of which are hereby
expressly waived by Company, and the obligation of each Lender to make any Loan,
the obligation of Administrative Agent to issue any Letter of Credit and the
right of any Lender to issue any Letter of Credit hereunder shall thereupon
terminate, (ii) upon the occurrence and during the continuation of any Event of
Default, Administrative Agent may (and at the written request of Requisite Class
Lenders for Lenders having Revolving Loan Exposure shall), without notice,
suspend all Revolving Loan borrowings with respect to additional Revolving Loans
and/or the incurrence of additional Letters of Credit, whereupon any additional
Revolving Loans and/or additional Letters of Credit shall be made or incurred in
Administrative Agent’s sole discretion (or in the sole discretion of Requisite
Class Lenders for Lenders having Revolving Loan Exposure, if such suspension
occurred at their direction), and (iii) upon the occurrence and during the
continuation of any other Event of Default, Administrative Agent shall, upon the
written request or with the written consent of Requisite Lenders, by written
notice to Company, declare all or any portion of the amounts described in
clauses (a) through (c) above to be, and the same shall forthwith become,
immediately due and payable without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by Company,
and the obligation of each Lender to make any Loan, the obligation of
Administrative Agent to issue any Letter of Credit and the right of any Lender
to issue any Letter of Credit hereunder shall thereupon terminate; provided that
the foregoing shall not affect in any way the obligations of Revolving Lenders
under subsection 3.3C(i).

 

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Any amounts described in clause (b) above, when received by Administrative
Agent, shall be held by Administrative Agent pursuant to the terms of the
Security Agreement and shall be applied as therein provided.

Company hereby further expressly waives (a) all rights to notice and a hearing
prior to Administrative Agent’s or Collateral Agent’s taking possession or
control of, or to Administrative Agent’s or Collateral Agent’s replevy,
attachment or levy upon, the Collateral or any bond or security that might be
required by any court prior to allowing Administrative Agent or Collateral Agent
to exercise any of their remedies, and (b) the benefit of all valuation,
appraisal, marshaling and exemption laws.

8.14 Right to cure. Notwithstanding anything to the contrary contained in this
Section 8, in the event that Company and its Subsidiaries fail to comply with
the requirements of subsection 7.6 as of the last day of any Fiscal Quarter or
Fiscal Year, as applicable, at any time on or after such last day of such Fiscal
Quarter or Fiscal Year, as applicable, until the expiration of the 10th day
subsequent to the earlier of (i) the date on which a Compliance Certificate with
respect to such Fiscal Quarter or Fiscal Year, as applicable, is delivered in
accordance with subsection 6.1(iv) and (ii) the date on which the financial
statements with respect to such Fiscal Quarter or Fiscal Year, as applicable,
are required to be delivered pursuant to subsection 6.1(ii) or 6.1(iii), as
applicable, Company shall have the right to issue to Onex or any Affiliate of
Onex common stock (or other Securities on terms and conditions reasonable
satisfactory to Administrative Agent) for Cash or otherwise receive Cash
contributions to the capital of Company from Onex and/or any Affiliate of Onex
(collectively, the “Cure Right”), and upon the receipt by Company of the net
Cash proceeds of such issuance or contribution, excluding a portion of such net
Cash proceeds equal to the aggregate amount (if any) of all Restricted Junior
Payments made to Onex and/or any Affiliate of Onex pursuant to
subsection 7.5(ii)(a) during the 90 day period immediately preceding Company’s
receipt (the amount of such net Cash proceeds collectively, the “Cure Amount”)
pursuant to the exercise by Company of such Cure Right, subsection 7.6 shall be
recalculated giving effect to the following pro forma adjustment:

A. Consolidated EBITDA shall be increased with respect to such applicable Fiscal
Quarter and any four Fiscal Quarter period that contains such Fiscal Quarter,
solely for the purpose of calculating amounts under subsection 7.6 and not for
any other purpose under this Agreement, by an amount equal to the Cure Amount;
and

B. If, after giving effect to the foregoing pro forma adjustment, Company and
its Subsidiaries shall then be in compliance with the requirements of subsection
7.6, Company and its Subsidiaries shall be deemed to have satisfied the
requirements of subsection 7.6 as of the relevant date of determination with the
same effect as though there had been no failure to comply therewith at such
date, and the applicable breach or default of the provisions of subsection 7.6
that had occurred shall be deemed cured for the purposes of this Agreement.

Notwithstanding anything herein to the contrary, (i) in each four consecutive
Fiscal Quarter period of Company there shall be no more than one Fiscal Quarter
with respect to which the Cure Right is exercised, (ii) the Cure Right may not
be exercised more than three times, and (iii) for purposes of this subsection
8.14, the Cure Amount shall be no greater than the amount required for purposes
of complying with each financial covenant contained in subsection 7.6. The Cure
Amount received pursuant to any exercise of the Cure Right shall be disregarded
for purposes of determining any available basket under Section 7 of this
Agreement.

 

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Section 9. ADMINISTRATIVE AGENT AND COLLATERAL AGENT

 

  9.1 Appointment.

A. Appointment of Administrative Agent and Collateral Agent. CS is hereby
appointed Administrative Agent and Collateral Agent hereunder and under the
other Loan Documents, as applicable. Each Lender (including any Lender in its
capacity as a Swap Counterparty) hereby authorizes Administrative Agent and
Collateral Agent to act as its agent in accordance with the terms of this
Agreement and the other Loan Documents. Administrative Agent and Collateral
Agent agree to act upon the express conditions contained in this Agreement and
the other Loan Documents, as applicable. Except as expressly provided in this
Section 9, the provisions of this Section 9 are solely for the benefit of
Administrative Agent, Collateral Agent and Lenders and no Loan Party shall have
rights as a third party beneficiary of any of the provisions thereof. In
performing its functions and duties under this Agreement, Administrative Agent
(other than as provided in subsection 2.1D) shall act solely as an agent of
Lenders and does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for Company or any
other Loan Party.

B. Appointment of Supplemental Collateral Agents. It is the purpose of this
Agreement and the other Loan Documents that there shall be no violation of any
law of any jurisdiction denying or restricting the right of banking corporations
or associations to transact business as agent or trustee in such jurisdiction.
It is recognized that in case of litigation under this Agreement or any of the
other Loan Documents, and in particular in case of the enforcement of any of the
Loan Documents, or in case Administrative Agent deems that by reason of any
present or future law of any jurisdiction it or Collateral Agent may not
exercise any of the rights, powers or remedies granted herein or in any of the
other Loan Documents or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that Administrative Agent
appoint an additional individual or institution as a separate trustee,
co-trustee, collateral agent or collateral co-agent (any such additional
individual or institution being referred to herein individually as a
“Supplemental Collateral Agent” and collectively as “Supplemental Collateral
Agents”).

In the event that Administrative Agent appoints a Supplemental Collateral Agent
with respect to any Collateral, (i) each and every right, power, privilege or
duty expressed or intended by this Agreement or any of the other Loan Documents
to be exercised by or vested in or conveyed to Administrative Agent or
Collateral Agent with respect to such Collateral shall be exercisable by and
vest in such Supplemental Collateral Agent to the extent, and only to the
extent, necessary to enable such Supplemental Collateral Agent to exercise such
rights, powers and privileges with respect to such Collateral and to perform
such duties with respect to such Collateral, and every covenant and obligation
contained in the Loan Documents and necessary to the exercise or performance
thereof by such Supplemental Collateral Agent shall run to and be enforceable by
Administrative Agent, Collateral Agent or such Supplemental Collateral Agent,
and (ii) the provisions of this Section 9 and of subsections 10.2 and 10.3 that
refer to Administrative Agent or Collateral Agent shall inure to the benefit of
such Supplemental

 

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Collateral Agent and all references therein to Administrative Agent or
Collateral Agent shall be deemed to be references to Administrative Agent,
Collateral Agent and/or such Supplemental Collateral Agent, as the context may
require.

Should any instrument in writing from Company or any other Loan Party be
required by any Supplemental Collateral Agent so appointed by Administrative
Agent for more fully and certainly vesting in and confirming to him or it such
rights, powers, privileges and duties, Company shall, or shall cause such Loan
Party to, execute, acknowledge and deliver any and all such instruments promptly
upon request by Administrative Agent. In case any Supplemental Collateral Agent,
or a successor thereto, shall die, become incapable of acting, resign or be
removed, all the rights, powers, privileges and duties of such Supplemental
Collateral Agent, to the extent permitted by law, shall vest in and be exercised
by Administrative Agent until the appointment of a new Supplemental Collateral
Agent.

C. Control. Each Lender, Administrative Agent and Collateral Agent hereby
appoint each other Lender as agent for the purpose of perfecting Collateral
Agent’s security interest in assets that, in accordance with the UCC, can be
perfected by possession or control.

 

  9.2 Powers and Duties; General Immunity.

A. Powers; Duties Specified. Each Lender irrevocably authorizes Administrative
Agent and Collateral Agent to take such action on such Lender’s behalf and to
exercise such powers, rights and remedies hereunder and under the other Loan
Documents as are specifically delegated or granted to Administrative Agent
and/or Collateral Agent by the terms hereof and thereof, together with such
powers, rights and remedies as are reasonably incidental thereto. Administrative
Agent and Collateral Agent shall have only those duties and responsibilities
that are expressly specified in this Agreement and the other Loan Documents.
Administrative Agent and Collateral Agent may exercise such powers, rights and
remedies and perform such duties by or through its agents or employees.
Administrative Agent and Collateral Agent shall not have, by reason of this
Agreement or any of the other Loan Documents, a fiduciary relationship in
respect of any Lender or Company; and nothing in this Agreement or any of the
other Loan Documents, expressed or implied, is intended to or shall be so
construed as to impose upon Administrative Agent or Collateral Agent any
obligations in respect of this Agreement or any of the other Loan Documents
except as expressly set forth herein or therein.

B. No Responsibility for Certain Matters. No Agent shall be responsible to any
Lender for the execution, effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Agreement or any other Loan Document or
for any representations, warranties, recitals or statements made herein or
therein or made in any written or oral statements or in any financial or other
statements, instruments, reports or certificates or any other documents
furnished or made by such Agent to Lenders or by or on behalf of Company to such
Agent or any Lender in connection with the Loan Documents and the transactions
contemplated thereby or for the financial condition or business affairs of
Company or any other Person liable for the payment of any Obligations, nor shall
such Agent be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or agreements
contained in any of the Loan Documents or as to the use of the proceeds of the
Loans or the use of the Letters of Credit or as to the existence or possible
existence of any Event of

 

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Default or Potential Event of Default. Anything contained in this Agreement to
the contrary notwithstanding, Administrative Agent shall not have any liability
arising from confirmations of the amount of outstanding Loans or the Letter of
Credit Usage or the component amounts thereof.

C. Exculpatory Provisions. No Agent or any of its officers, directors, employees
or agents shall be liable to Lenders for any action taken or omitted by such
Agent under or in connection with any of the Loan Documents except to the extent
caused by such Agent’s gross negligence or willful misconduct. An Agent shall be
entitled to refrain from any act or the taking of any action (including the
failure to take an action) in connection with this Agreement or any of the other
Loan Documents or from the exercise of any power, discretion or authority vested
in it hereunder or thereunder unless and until such Agent shall have received
instructions in respect thereof from Requisite Lenders (or such other Lenders as
may be required to give such instructions under subsection 10.6) and, upon
receipt of such instructions from Requisite Lenders (or such other Lenders, as
the case may be), such Agent shall be entitled to act or (where so instructed)
refrain from acting, or to exercise such power, discretion or authority, in
accordance with such instructions; provided that no Agent shall be required to
take any action that, in its opinion or the opinion of its counsel, may expose
such Agent to liability or that is contrary to any Loan Document or applicable
law. Without prejudice to the generality of the foregoing, (i) each Agent shall
be entitled to rely, and shall be fully protected in relying, upon any
communication (including any electronic message, Internet or intranet website
posting or other distribution), instrument or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons, and shall be entitled to rely and shall be protected in relying on
opinions and judgments of attorneys (who may be attorneys for Company and its
Subsidiaries), accountants, experts and other professional advisors selected by
it; and (ii) no Lender shall have any right of action whatsoever against an
Agent as a result of such Agent acting or (where so instructed) refraining from
acting under this Agreement or any of the other Loan Documents in accordance
with the instructions of Requisite Lenders (or such other Lenders as may be
required to give such instructions under subsection 10.6).

D. Agents Entitled to Act as Lender. The agency hereby created shall in no way
impair or affect any of the rights and powers of, or impose any duties or
obligations upon, an Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans and the Letters of Credit, an
Agent shall have the same rights and powers hereunder as any other Lender and
may exercise the same as though it were not performing the duties and functions
delegated to it hereunder, and the term “Lender” or “Lenders” or any similar
term shall, unless the context clearly otherwise indicates, include each Agent
in its individual capacity. An Agent and its Affiliates may accept deposits
from, lend money to, acquire equity interests in and generally engage in any
kind of commercial banking, investment banking, trust, financial advisory or
other business with Company or any of its Affiliates as if it were not
performing the duties specified herein, and may accept fees and other
consideration from Company for services in connection with this Agreement and
otherwise without having to account for the same to Lenders.

 

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  9.3 Independent Investigation by Lenders; No Responsibility For Appraisal of
Creditworthiness.

Each Lender agrees that it has made its own independent investigation of the
financial condition and affairs of Company and its Subsidiaries in connection
with the making of the Loans and the issuance of Letters of Credit hereunder and
that it has made and shall continue to make its own appraisal of the
creditworthiness of Company and its Subsidiaries. No Agent shall have any duty
or responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Lenders or to provide any
Lender with any credit or other information with respect thereto, whether coming
into its possession before the making of the Loans or at any time or times
thereafter, and no Agent shall have any responsibility with respect to the
accuracy of or the completeness of any information provided to Lenders.

 

  9.4 Right to Indemnity.

Each Lender, in proportion to its Pro Rata Share, severally agrees to indemnify
Administrative Agent, Collateral Agent and Issuing Lender and each of their
officers, directors, employees, agents, attorneys, professional advisors and
Affiliates to the extent that any such Person shall not have been reimbursed by
Company, for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including counsel fees
and disbursements and fees and disbursements of any financial advisor engaged by
Administrative Agent, Collateral Agent or Issuing Lender) or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by or asserted
against Administrative Agent, Collateral Agent or Issuing Lender, in their
capacities as such, or such other Person in exercising their powers, rights and
remedies hereunder or performing their duties hereunder or under the other Loan
Documents or otherwise in their capacities as Administrative Agent, Collateral
Agent or Issuing Lender, as applicable, in any way relating to or arising out of
this Agreement or the other Loan Documents; provided that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of
Administrative Agent, Collateral Agent or Issuing Lender resulting solely from
such Person’s gross negligence or willful misconduct as determined by a final
judgment of a court of competent jurisdiction. If any indemnity furnished to
Administrative Agent, Collateral Agent or Issuing Lender or any other such
Person for any purpose shall, in the opinion of Administrative Agent, Collateral
Agent or Issuing Lender, as applicable, be insufficient or become impaired,
Administrative Agent, Collateral Agent or Issuing Lender, as the case may be,
may call for additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished.

 

  9.5 Resignation of Agents; Successor Administrative Agent and Collateral
Agent.

Any Agent may resign at any time by giving 30 days’ prior written notice thereof
to Lenders and Company. Upon any such notice of resignation by Administrative
Agent or Collateral Agent, Requisite Lenders shall have the right to appoint a
successor Administrative Agent or Collateral Agent, as applicable, reasonably
acceptable to Company. If no such successor shall have been so appointed by
Requisite Lenders and consented to by Company and shall have accepted such
appointment within 30 days after the retiring Administrative Agent or

 

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Collateral Agent, as applicable, gives notice of its resignation, the retiring
Administrative Agent or Collateral Agent, as applicable, may, on behalf of
Lenders, appoint a successor Administrative Agent or Collateral Agent,
respectively, without the further consent of Requisite Lenders or Company. If
Administrative Agent or Collateral Agent shall notify Lenders and Company that
no Person has accepted such appointment as successor Administrative Agent or
Collateral Agent, as the case may be, such resignation shall nonetheless become
effective in accordance with Administrative Agent’s or Collateral Agent’s notice
and (i) the retiring Administrative Agent or Collateral Agent shall be
discharged from its duties and obligations under the Loan Documents, except that
any Collateral held by Collateral Agent will continue to be held by it until a
Person shall have accepted the appointment of successor Collateral Agent, and
(ii) all payments, communications and determinations provided to be made by, to
or through Administrative Agent or Collateral Agent, as applicable, shall
instead be made by, to or through each Lender directly, until such time as
Requisite Lenders appoint a successor Administrative Agent or Collateral Agent
and Company shall consent to such appointment in accordance with this subsection
9.5. Upon the acceptance of any appointment as Administrative Agent or
Collateral Agent hereunder by a successor Administrative Agent or Collateral
Agent, that successor Administrative Agent or Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent or Collateral Agent, as applicable, and the
retiring Administrative Agent or Collateral Agent shall be discharged from its
duties and obligations under this Agreement (if not already discharged as set
forth above). After any retiring Agent’s resignation hereunder, the provisions
of this Section 9 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was an Agent under this Agreement.

 

  9.6 Collateral Documents and Subsidiary Guaranty.

Each Lender (including each Lender in its capacity as a Swap Counterparty)
hereby further authorizes Collateral Agent, on behalf of and for the benefit of
Beneficiaries, to enter into each Collateral Document as secured party and to be
the agent for and representative of Lenders under the Subsidiary Guaranty, and
each Lender agrees to be bound by the terms of each Collateral Document and the
Subsidiary Guaranty; provided that Collateral Agent shall not (i) enter into or
consent to any material amendment, modification, termination or waiver of any
provision contained in any Collateral Document or the Subsidiary Guaranty or
(ii) release or subordinate any Collateral (except as otherwise expressly
permitted or required pursuant to the terms of this Agreement or the applicable
Collateral Document), in each case without the prior consent of Requisite
Lenders (or, if required pursuant to subsection 10.6, all Lenders); provided
further, however, that, without further written consent or authorization from
Lenders, Collateral Agent may execute any documents or instruments necessary to
(a) release any Lien encumbering any item of Collateral that is the subject of a
sale or other disposition of assets permitted by this Agreement or to which
Requisite Lenders have otherwise consented, (b) release any Subsidiary Guarantor
from the Subsidiary Guaranty if all of the Equity Interests of such Subsidiary
Guarantor are sold to any Person (other than an Affiliate of Company) pursuant
to a sale or other disposition permitted hereunder or to which Requisite Lenders
have otherwise consented or (c) subordinate the Liens of Collateral Agent, on
behalf of Beneficiaries, to any Liens permitted by subsection 7.2A (excluding
Liens described in clause (vi) thereof); provided that, in the case of a sale of
such item of Collateral or stock referred to in subdivision (a) or (b), the
requirements of subsection 10.14 are satisfied. Anything contained in any of the
Loan Documents to the contrary notwithstanding, Company, Administrative Agent,
Collateral Agent and each Lender

 

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hereby agree that (1) no Lender shall have any right individually to realize
upon any of the Collateral under any Collateral Document or to enforce the
Subsidiary Guaranty, it being understood and agreed that all powers, rights and
remedies under the Collateral Documents and the Subsidiary Guaranty may be
exercised solely by Collateral Agent for the benefit of Beneficiaries in
accordance with the terms thereof, and (2) in the event of a foreclosure by
Collateral Agent on any of the Collateral pursuant to a public or private sale,
Collateral Agent or any Lender may be the purchaser of any or all of such
Collateral at any such sale and Collateral Agent, as agent for and
representative of Lenders (but not any Lender or Lenders in its or their
respective individual capacities unless Requisite Lenders shall otherwise agree
in writing), shall be entitled, for the purpose of bidding and making settlement
or payment of the purchase price for all or any portion of the Collateral sold
at any such public sale, to use and apply any of the Obligations as a credit on
account of the purchase price for any Collateral payable by Collateral Agent at
such sale.

Without derogating from any other authority granted to Administrative Agent or
Collateral Agent herein or in the Collateral Documents or any other document
relating thereto, each Lender hereby specifically (i) authorizes Collateral
Agent to enter into pledge agreements pursuant to this subsection 9.6 with
respect to the Equity Interests of all existing and future first-tier Foreign
Subsidiaries, which pledge agreements may be governed by the laws of each of the
jurisdictions of formation of such Foreign Subsidiaries, as agent on behalf of
each of Lenders, with the effect that Lenders each become a secured party
thereunder or, where relevant in a jurisdiction, as agent and trustee, with the
effect that Lenders each become a beneficiary of a trust and Collateral Agent
has all the rights, powers, discretions, protections and exemptions from
liability set out in the pledge agreements and (ii) appoints Collateral Agent as
its attorney-in-fact granting it the powers to execute each such pledge
agreement and any registrations of the security interest thereby created, in
each case in its name and on its behalf, with the effect that each Lender
becomes a secured party thereunder. With respect to each such pledge agreement,
Collateral Agent has the power to sub-delegate to third parties its powers as
attorney-in-fact of each Lender.

 

  9.7 Duties of Other Agents.

To the extent that any Lender is identified in this Agreement as a co-agent,
Lead Arranger, documentation agent or syndication agent, such Lender shall not
have any right, power, obligation, liability, responsibility or duty under this
Agreement other than those applicable to all Lenders as such. Without limiting
the foregoing, none of such Lenders shall have or be deemed to have a fiduciary
relationship with any Lender.

 

  9.8 Administrative Agent May File Proofs of Claim.

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

(i) to file and prove a claim for the whole amount of principal and interest
owing and unpaid in respect of the Loans and any other Obligations that are
owing and unpaid and to file such other papers or documents as may be necessary
or advisable in order to have the claims of Lenders and Agents (including any
claim for the reasonable compensation, expenses, disbursements and advances of
Lenders and Agents and their agents and counsel and all other amounts due
Lenders and Agents under subsections 2.3 and 10.2) allowed in such judicial
proceeding, and

 

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

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to Administrative Agent and, in the event that
Administrative Agent shall consent to the making of such payments directly to
Lenders, to pay to Administrative Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of Agents and their agents
and counsel, and any other amounts due Agents under subsections 2.3 and 10.2.

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

Section 10. MISCELLANEOUS

 

  10.1 Successors and Assigns; Assignments and Participations in Loans and
Letters of Credit.

A. General. This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders’ rights of assignment are subject to the further provisions of this
subsection 10.1). Neither Company’s rights or obligations hereunder nor any
interest therein may be assigned or delegated by Company without the prior
written consent of all Lenders (and any attempted assignment or transfer by
Company without such consent shall be null and void). No sale, assignment or
transfer or participation of any Letter of Credit or any participation therein
may be made separately from a sale, assignment, transfer or participation of a
corresponding interest in the Revolving Loan Commitment and the Revolving Loans
of the Revolving Lender effecting such sale, assignment, transfer or
participation. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Affiliates of each of Administrative Agent, Collateral
Agent and Lenders and Indemnitees) any legal or equitable right, remedy or claim
under or by reason of this Agreement.

 

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B. Assignments.

(i) Amounts and Terms of Assignments. Any Lender may assign to one or more
Eligible Assignees all or any portion of its rights and obligations under this
Agreement; provided that (a) except (1) in the case of an assignment of the
entire remaining amount of the assigning Lender’s rights and obligations under
this Agreement or (2) in the case of an assignment to a Lender or an Affiliate
of a Lender or an Approved Fund of a Lender, the aggregate amount of the
Revolving Loan Exposure or Term Loan Exposure, as the case may be, of the
assigning Lender and the assignee subject to each such assignment shall not be
less than $2,500,000, in the case of any assignment of a Revolving Loan, or
$1,000,000, in the case of any assignment of a Term Loan, unless each of
Administrative Agent and, so long as no Event of Default has occurred and is
continuing, Company otherwise consent (each such consent not to be unreasonably
withheld or delayed), (b) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender’s rights and obligations
under this Agreement with respect to the Loans or Commitments assigned and any
assignment of all or any portion of a Revolving Loan Commitment, Revolving Loans
or Letter of Credit participations shall be made only as an assignment of the
same proportionate part of the assigning Lender’s Revolving Loan Commitment,
Revolving Loans and Letter of Credit participations, (c) the parties to each
assignment shall (A) electronically execute and deliver to Administrative Agent
an Assignment Agreement via an electronic settlement system acceptable to
Administrative Agent or (B) manually execute and deliver to Administrative Agent
an Assignment Agreement, together with a processing and recordation fee of
$3,500, and the Eligible Assignee, if it shall not already be a party to this
Agreement, shall deliver to Administrative Agent information reasonably
requested by Administrative Agent, including an administrative questionnaire and
such forms, certificates or other evidence, if any, with respect to United
States federal income tax withholding matters as the assignee under such
Assignment Agreement may be required to deliver to Administrative Agent pursuant
to subsection 2.7B(v) and with respect to information requested under the
Patriot Act, and (d) Administrative Agent, and if no Event of Default has
occurred and is continuing, Company, and, in the case of the assignment of
Revolving Loans or Revolving Loan Commitments, each Issuing Lender, shall have
consented thereto (which consents shall not be unreasonably withheld or
delayed); provided that, (I) with respect to the Term Loans, in the case of an
assignment to an Eligible Assignee, no consent of Company shall be required,
(II) with respect to the Revolving Loans and Revolving Loan Commitments, no
consent of Company shall be required in the case of any assignment to a Lender,
any Affiliate of a Lender or any Approved Fund of a Lender and (III) no consent
of Company shall be required in connection with any assignment relating to the
primary allocation or syndication of the Loans and Commitments by CS to Eligible
Assignees that are either organized under the laws of the United States or are
qualified to do business in one or more states of the United States.

Upon acceptance and recording by Administrative Agent pursuant to clause
(ii) below, from and after the effective date specified in such Assignment
Agreement, (y) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment

 

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Agreement, shall have the rights and obligations of a Lender hereunder and shall
be deemed to have made all of the agreements of a Lender contained in the Loan
Documents arising out of or otherwise related to such rights and obligations and
(z) the assigning Lender thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish its rights (other than any rights which survive the
termination of this Agreement under subsection 10.9B) and be released from its
obligations under this Agreement (and, in the case of an Assignment Agreement
covering all or the remaining portion of an assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto;
provided that, anything contained in any of the Loan Documents to the contrary
notwithstanding, if such Lender is an Issuing Lender such Lender shall continue
to have all rights and obligations of an Issuing Lender until the cancellation
or expiration of any Letters of Credit issued by it and the reimbursement of any
amounts drawn thereunder). The assigning Lender shall, upon the effectiveness of
such assignment or as promptly thereafter as practicable, surrender its Notes,
if any, to Administrative Agent for cancellation, and thereupon new Notes shall,
if so requested by the assignee and/or the assigning Lender in accordance with
subsection 2.1E, be issued to the assignee and/or to the assigning Lender,
substantially in the form of Exhibit IV or Exhibit V annexed hereto, as the case
may be, with appropriate insertions, to reflect the amounts of the new
Commitments and/or outstanding Revolving Loans and/or outstanding Term Loans, as
the case may be, of the assignee and/or the assigning Lender. Other than as
provided in subsection 2.1A(iii) and subsection 10.5, any assignment or transfer
by a Lender of rights or obligations under this Agreement that does not comply
with this subsection 10.1B shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in
accordance with subsection 10.1C.

(ii) Acceptance by Administrative Agent; Recordation in Register. Upon its
receipt of an Assignment Agreement executed by an assigning Lender and an
assignee representing that it is an Eligible Assignee, together with the
processing and recordation fee referred to in subsection 10.1B(i) and any forms,
certificates or other evidence with respect to United States federal income tax
withholding matters that such assignee may be required to deliver to
Administrative Agent pursuant to subsection 2.7B(v), Administrative Agent shall,
if Administrative Agent and Company have consented to the assignment evidenced
thereby (in each case to the extent such consent is required pursuant to
subsection 10.1B(i)), (a) accept such Assignment Agreement by executing a
counterpart thereof as provided therein (which acceptance shall evidence any
required consent of Administrative Agent to such assignment) and (b) record the
information contained therein in the Register. Administrative Agent shall
maintain a copy of each Assignment Agreement delivered to and accepted by it as
provided in this subsection 10.1B(ii). No assignment shall be effective for
purposes of this Agreement unless it has been recorded in the Register as
provided in this clause (ii).

(iii) Deemed Consent by Company. If the consent of Company to an assignment or
to an Eligible Assignee is required hereunder (including a consent to an
assignment which does not meet the minimum assignment thresholds specified in
subsection 10.1B(i)), Company shall be deemed to have given its consent five
Business Days after the date written notice thereof has been delivered by the
assigning Lender

 

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(through Administrative Agent or the electronic settlement system used in
connection with any such assignment) unless such consent is expressly refused by
Company prior to such fifth Business Day.

(iv) Special Purpose Funding Vehicles. Notwithstanding anything to the contrary
contained herein, any Lender (a “Granting Lender”) may grant to a special
purpose funding vehicle (an “SPC”), identified as such in writing from time to
time by the Granting Lender to Administrative Agent and Company, the option to
provide to Company all or any part of any Loan that such Granting Lender would
otherwise be obligated to make to Company pursuant to this Agreement; provided
that (i) nothing herein shall constitute a commitment by any SPC to make any
Loan, and (ii) if an SPC elects not to exercise such option or otherwise fails
to provide all or any part of such Loan, the Granting Lender shall be obligated
to make such Loan pursuant to the terms hereof. The making of a Loan by an SPC
hereunder shall utilize the Commitment of the Granting Lender to the same
extent, and as if, such Loan were made by such Granting Lender. Each party
hereto hereby agrees that no SPC shall be liable for any indemnity or similar
payment obligation under this Agreement (all liability for which shall remain
with the Granting Lender). In furtherance of the foregoing, each party hereto
hereby agrees (which agreement shall survive the termination of this Agreement)
that, prior to the date that is one year and one day after the payment in full
of all outstanding commercial paper or other senior indebtedness of any SPC, it
will not institute against, or join any other person in instituting against,
such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under the laws of the United States or any state thereof. In
addition, notwithstanding anything to the contrary contained in this subsection
10.1B(iv), any SPC may (i) with notice to, but without the prior written consent
of, Company and Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to the Granting
Lender or to any financial institutions (consented to by Company and
Administrative Agent) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Loans and
(ii) disclose on a confidential basis any non-public information relating to its
Loans to any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit or liquidity enhancement to such SPC. This subsection
10.1B(iv) may not be amended without the written consent of the SPC.

C. Participations. Any Lender may, without the consent of, or notice to, Company
or Administrative Agent, sell participations to one or more Persons (other than
a natural Person or Company or any of its Affiliates) in all or a portion of
such Lender’s rights and/or obligations under this Agreement; provided that
(i) such Lender’s obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations and (iii) Company, Administrative Agent,
Collateral Agent and Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender’s rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver directly affecting (i) the extension of
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the principal amount of or interest on any Loan allocated to such participation,
(ii) a reduction of the principal amount of, or the rate of interest payable on,
or any fees with respect to, any Loan allocated to such participation, (iii) the
release of all or substantially all of the Subsidiary Guarantors from their
obligations under the Subsidiary Guaranty or the release of any Lien granted in
favor of Collateral Agent with respect to all or substantially all of the
Collateral, or (iv) the increase in the commitment allocated to any such
Participant. Subject to the further provisions of this subsection 10.1C, Company
agrees that each Participant shall be entitled to the benefits of subsections
2.6D and 2.7 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to subsection 10.1B. To the extent permitted by
law, each Participant also shall be entitled to the benefits of subsection 10.4
as though it were a Lender, provided such Participant agrees to be subject to
subsection 10.5 as though it were a Lender. A Participant shall not be entitled
to receive any greater payment under subsections 2.6D and 2.7 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant unless the sale of the participation to
such Participant is made with Company’s prior written consent. A Participant
that would be a Non-US Lender if it were a Lender shall not be entitled to the
benefits of subsection 2.7 unless Company is notified of the participation sold
to such Participant and such Participant agrees, for the benefit of Company, to
comply with subsection 2.7B(v) as though it were a Lender.

D. Pledges and Assignments. Any Lender may at any time (1) pledge or assign a
security interest in all or any portion of its Loans, and the other Obligations
owed to such Lender, to secure obligations of such Lender, including without
limitation any pledge or assignment to secure obligations to any Federal Reserve
Bank and (2) transfer its rights to receive payments hereunder to one or more of
its Affiliates; provided that (i) no Lender shall be relieved of any of its
obligations hereunder as a result of any such assignment, pledge or transfer and
(ii) in no event shall any assignee, pledgee or transferee be considered to be a
“Lender” or be entitled to require the assigning Lender to take or omit to take
any action hereunder.

E. Information. Each Lender may furnish any information concerning Company and
its Subsidiaries in the possession of that Lender from time to time to assignees
and participants (including prospective assignees and participants), subject to
subsection 10.19.

F. Agreements of Lenders. Each Lender listed on the signature pages hereof
hereby agrees, and each Lender that becomes a party hereto pursuant to an
Assignment Agreement shall be deemed to agree, (i) that it is an Eligible
Assignee described in clause (ii) of the definition thereof; (ii) that it has
experience and expertise in the making of or purchasing loans such as the Loans;
and (iii) that it will make or purchase its Loans for its own account in the
ordinary course of its business and without a view to distribution of such Loans
within the meaning of the Securities Act or the Exchange Act or other federal
securities laws (it being understood that, subject to the provisions of this
subsection 10.1, the disposition of such Loans or any interests therein shall at
all times remain within its exclusive control). Each Lender that becomes a party
hereto pursuant to an Assignment Agreement shall also be deemed to represent
that such Assignment Agreement constitutes a legal, valid and binding obligation
of such Lender, enforceable against such Lender in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors’ rights
generally and by general principles of equity.

 

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  10.2 Expenses.

Whether or not the transactions contemplated hereby shall be consummated,
Company agrees to pay promptly (i) all reasonable costs and expenses of
Administrative Agent in the negotiation, preparation and execution of the Loan
Documents and any consents, amendments, waivers or other modifications thereto;
(ii) all reasonable costs and expenses of furnishing all opinions by counsel for
Company (including any opinions requested by Agents or Lenders as to any legal
matters arising hereunder) and of Company’s performance of and compliance with
all agreements and conditions on its part to be performed or complied with under
this Agreement and the other Loan Documents including with respect to confirming
compliance with environmental, insurance and solvency requirements; (iii) all
reasonable fees, expenses and disbursements of counsel to Agents (including
reasonable allocated costs of internal counsel) in connection with the
negotiation, preparation, execution and administration of the Loan Documents and
any consents, amendments, waivers or other modifications thereto and any other
documents or matters requested by Company; (iv) all costs and expenses of
creating and perfecting Liens in favor of Collateral Agent on behalf of Lenders
pursuant to any Collateral Document, including filing and recording fees,
expenses and taxes, stamp or documentary taxes, search fees, title insurance
premiums, and reasonable fees, expenses and disbursements of counsel to
Administrative Agent, Collateral Agent and of counsel providing any opinions
that Administrative Agent, Collateral Agent or Requisite Lenders may reasonably
request in respect of the Collateral Documents or the Liens created pursuant
thereto; (v) all reasonable costs and expenses (including the reasonable fees,
expenses and disbursements of any auditors, accountants or appraisers and any
environmental or other consultants, advisors and agents employed or retained by
Administrative Agent or its counsel) of obtaining and reviewing any appraisals
provided for under subsection 6.9B and any environmental audits or reports
provided for under subsection 6.9A; (vi) all reasonable costs and expenses
incurred by Collateral Agent in connection with the custody or preservation of
any of the Collateral; (vii) all other reasonable costs and expenses incurred by
Administrative Agent and Lead Arrangers in connection with the syndication of
the Commitments; (viii) all reasonable costs and expenses, including reasonable
attorneys’ fees (including allocated costs of internal counsel) and fees, costs
and expenses of accountants, advisors and consultants, incurred by
Administrative Agent or Collateral Agent and its counsel relating to efforts to
(a) evaluate or assess any Loan Party, its business or financial condition and
(b) protect, evaluate, assess or dispose of any of the Collateral; and (ix) all
reasonable costs and expenses, including reasonable attorneys’ fees (including
allocated costs of internal counsel), fees, costs and expenses of accountants,
advisors and consultants and costs of settlement, incurred by Agents and Lenders
in enforcing any Obligations of or in collecting any payments due from any Loan
Party hereunder or under the other Loan Documents (including in connection with
the sale of, collection from, or other realization upon any of the Collateral or
the enforcement of the Loan Documents) or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a “work-out” or pursuant to any insolvency or bankruptcy proceedings.

 

  10.3 Indemnity.

In addition to the payment of expenses pursuant to subsection 10.2, whether or
not the transactions contemplated hereby shall be consummated, Company agrees to
defend (subject to Indemnitees’ selection of counsel), indemnify, pay and hold
harmless Agents and

 

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Lenders (including Issuing Lenders), and the officers, directors, trustees,
employees, agents, advisors, successors and assigns, controlling persons,
members, Affiliates and other representatives of Agents and Lenders
(collectively called the “Indemnitees”), from and against any and all
Indemnified Liabilities (as hereinafter defined); provided that Company shall
not have any obligation to any Indemnitee hereunder with respect to any
Indemnified Liabilities to the extent such Indemnified Liabilities arise solely
from the gross negligence or willful misconduct of that Indemnitee as determined
by a final nonappealable judgment of a court of competent jurisdiction. In the
case of an investigation, litigation or proceeding to which the indemnity in
this subsection 10.3 applies, such indemnity shall be effective whether or not
such investigation, litigation or proceeding is brought by Company, any equity
holders or creditors of Company, or an Indemnitee, whether or not an Indemnitee
is otherwise a party thereto and whether or not any aspect of the Transactions
are consummated.

As used herein, “Indemnified Liabilities” means, collectively, any and all
liabilities, obligations, losses, damages (including natural resource damages),
penalties, actions, judgments, suits, claims (including Environmental Claims),
reasonable costs (including the reasonable costs of any investigation, study,
sampling, testing, abatement, cleanup, removal, remediation or other response
action necessary to remove, remediate, clean up or abate any Hazardous Materials
Activity), reasonable expenses and disbursements of any kind or nature
whatsoever (including the reasonable fees and disbursements of counsel for
Indemnitees (including reasonable allocated costs of internal counsel) in
connection with any investigative, administrative or judicial proceeding
commenced or threatened by any Person, whether or not any such Indemnitee shall
be designated as a party or a potential party thereto, and any fees or expenses
incurred by Indemnitees in enforcing this indemnity), whether direct, indirect
or consequential and whether based on any federal, state or foreign laws,
statutes, rules or regulations (including securities and commercial laws,
statutes, rules or regulations, foreign assets control executive orders and
regulations of the Treasury Department, and Environmental Laws), on common law
or equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
arising out of (i) this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby (including Lenders’ agreement to
make the Loans hereunder or the use or intended use of the proceeds thereof or
the issuance of Letters of Credit hereunder or the use or intended use of any
thereof, the failure of an Issuing Lender to honor a drawing under a Letter of
Credit as a result of any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto Government Authority, or any enforcement
of any of the Loan Documents (including any sale of, collection from, or other
realization upon any of the Collateral or the enforcement of the Subsidiary
Guaranty)) or (ii) any Environmental Claim or any Hazardous Materials Activity
relating to or arising from, directly or indirectly, any past or present
activity, operation, land ownership, or practice of Company or any of its
Subsidiaries.

To the extent that the undertakings to defend, indemnify, pay and hold harmless
set forth in this subsection 10.3 may be unenforceable in whole or in part
because they are violative of any law or public policy, Company shall contribute
the maximum portion that it is permitted to pay and satisfy under applicable law
to the payment and satisfaction of all Indemnified Liabilities incurred by
Indemnitees or any of them.

 

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Company hereby agrees that no Indemnitee shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to Company or any of its
Subsidiaries or Affiliates or to equity holders or creditors of Company arising
out of, related to or in connection with any aspect of the Transactions, except
only for direct (as opposed to special, indirect, consequential or punitive)
damages determined in a final nonappealable judgment by a court of competent
jurisdiction to have resulted primarily from such Indemnitee’s gross negligence
or willful misconduct.

 

  10.4 Set-Off.

In addition to any rights now or hereafter granted under applicable law and not
by way of limitation of any such rights, upon the occurrence and during the
continuation of any Event of Default each of Lenders and their Affiliates is
hereby authorized by Company at any time or from time to time, without notice to
Company or to any other Person, any such notice being hereby expressly waived,
to set off and to appropriate and to apply any and all deposits (general or
special, time or demand, provisional or final, including Indebtedness evidenced
by certificates of deposit, whether matured or unmatured, but not including
trust accounts) and any other Indebtedness at any time held or owing by that
Lender or any Affiliate of that Lender to or for the credit or the account of
Company and each other Loan Party against and on account of the Obligations of
Company or any other Loan Party then due and owing to that Lender (or any
Affiliate of that Lender) or to any other Lender (or any Affiliate of any other
Lender) under this Agreement, the Letters of Credit and participations therein
and the other Loan Documents, including all claims of any nature or description
arising out of or connected with this Agreement, the Letters of Credit and
participations therein or any other Loan Document, irrespective of whether or
not that Lender shall have made any demand hereunder and although said
obligations and liabilities, or any of them, may be contingent or unmatured.

 

  10.5 Ratable Sharing.

Lenders hereby agree among themselves that if any of them shall, whether by
voluntary or mandatory payment (other than a payment or prepayment of Loans made
and applied in accordance with the terms of this Agreement), by realization upon
security, through the exercise of any right of set-off or banker’s lien, by
counterclaim or cross action or by the enforcement of any right under the Loan
Documents or otherwise, or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, amounts payable in
respect of Letters of Credit, fees and other amounts then due and owing to that
Lender hereunder or under the other Loan Documents (collectively, the “Aggregate
Amounts Due” to such Lender) that is greater than the proportion received by any
other Lender in respect of the Aggregate Amounts Due to such other Lender, then
the Lender receiving such proportionately greater payment shall, unless such
proportionately greater payment is required by the terms of this Agreement,
(i) notify Administrative Agent and each other Lender of the receipt of such
payment and (ii) apply a portion of such payment to purchase assignments (which
it shall be deemed to have purchased from each seller of an assignment
simultaneously upon the receipt by such seller of its portion of such payment)
of the Aggregate Amounts Due to the other Lenders so that all such recoveries of
Aggregate Amounts Due shall be shared by all Lenders in proportion to the
Aggregate Amounts Due to them; provided that (A) if all or part of such
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such purchasing Lender is thereafter recovered from such Lender upon the
bankruptcy or reorganization of Company or otherwise, those purchases shall be
rescinded and the purchase prices paid for such assignments shall be returned to
such purchasing Lender ratably to the extent of such recovery, but without
interest and (B) the foregoing provisions shall not apply to (1) any payment
made by Company pursuant to and in accordance with the express terms of this
Agreement or (2) any payment obtained by a Lender as consideration for the
assignment (other than an assignment pursuant to this subsection 10.5) of or the
sale of a participation in any of its Obligations to any Eligible Assignee or
Participant pursuant to subsection 10.1B. Company expressly consents to the
foregoing arrangement and agrees that any purchaser of an assignment so
purchased may exercise any and all rights of a Lender as to such assignment as
fully as if that Lender had complied with the provisions of subsection 10.1B
with respect to such assignment. In order to further evidence such assignment
(and without prejudice to the effectiveness of the assignment provisions set
forth above), each purchasing Lender and each selling Lender agree to enter into
an Assignment Agreement at the request of a selling Lender or a purchasing
Lender, as the case may be, in form and substance reasonably satisfactory to
each such Lender.

 

  10.6 Amendments and Waivers.

No amendment, modification, termination or waiver of any provision of this
Agreement or of the Notes, and no consent to any departure by Company therefrom,
shall in any event be effective without the written concurrence of Requisite
Lenders; provided that no such amendment, modification, termination, waiver or
consent shall, without the consent of:

(a) each Lender with Obligations directly affected (whose consent shall be
sufficient for any such amendment, modification, termination or waiver without
the consent of Requisite Lenders) (1) reduce the principal amount of any Loan,
(2) postpone the scheduled final maturity date of any Loan or postpone the date
or reduce the amount of any scheduled payment (but not prepayment) of principal
of any Loan, (3) postpone the date on which any interest or any fees are
payable, (4) decrease the interest rate borne by any Loan (other than any waiver
of any increase in the interest rate applicable to any of the Loans pursuant to
subsection 2.2E) or the amount of any fees payable hereunder (other than any
waiver of any increase in the fees applicable to Letters of Credit pursuant to
subsection 3.2 following an Event of Default) excluding any change in the manner
in which any financial ratio used in determining any interest rate or fee is
calculated that would result in a reduction of any such rate or fee, (5) reduce
the amount or postpone the due date of any amount payable in respect of any
Letter of Credit, (6) extend the expiration date of any Letter of Credit beyond
the Revolving Loan Commitment Termination Date, (7) extend the Revolving
Commitment Termination Date or (8) change in any manner the obligations of
Revolving Lenders relating to the purchase of participations in Letters of
Credit;

(b) each Lender, (1) change in any manner the definition of “Requisite Class
Lenders” or the definition of “Requisite Lenders” (except for any changes
resulting solely from an increase in the aggregate amount of the Commitments
approved by Requisite Lenders), (2) change in any manner any provision of this
Agreement that, by its terms, expressly requires the approval or concurrence of
all

 

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Lenders, (3) increase the maximum duration of Interest Periods permitted
hereunder, (4) release any Lien granted in favor of Collateral Agent with
respect to all or substantially all of the Collateral or release all or
substantially all of the Subsidiary Guarantors from their obligations under the
Subsidiary Guaranty, in each case other than in accordance with the terms of the
Loan Documents, or (5) change in any manner or waive the provisions contained in
subsection 8.1 or this subsection 10.6.

In addition, no amendment, modification, termination or waiver of any provision
(i) of Section 3 shall be effective without the written concurrence of
Administrative Agent and, with respect to the purchase of participations in
Letters of Credit, without the written concurrence of each Issuing Lender that
has issued an outstanding Letter of Credit or has not been reimbursed for a
payment under a Letter of Credit, (ii) of Section 9 or of any other provision of
this Agreement which, by its terms, expressly requires the approval or
concurrence of Administrative Agent or Collateral Agent, as applicable, shall be
effective without the written concurrence of Administrative Agent or Collateral
Agent, as applicable, (iii) of subsection 2.4 that has the effect of changing
any voluntary or mandatory prepayments, or Commitment reductions applicable to a
Class in a manner that disproportionately disadvantages such Class relative to
any other Class shall be effective without the written concurrence of Requisite
Class Lenders of such affected Class (it being understood and agreed that any
amendment, modification, termination or waiver of any such provision which only
postpones or reduces any interim scheduled payment, voluntary or mandatory
prepayment, or Commitment reduction from those set forth in subsection 2.4 with
respect to one Class but not any other Class shall be deemed to
disproportionately disadvantage such one Class but not to disproportionately
disadvantage any such other Class for purposes of this clause (iii)); (iv) of
Section 8 that has the effect of obligating Revolving Lenders to make Revolving
Loans during the occurrence and continuation of an Event of Default shall be
effective without the written concurrence of Requisite Class Lenders having
Revolving Loan Exposure; (v) that increases the amount of a Commitment of a
Lender shall be effective without the consent of such Lender; and (vi) that
increases the maximum amount of Letters of Credit shall be effective without the
consent of Revolving Lenders constituting Requisite Class Lenders.

Administrative Agent may, but shall have no obligation to, with the concurrence
of any Lender, execute amendments, modifications, waivers or consents on behalf
of that Lender. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on Company in any case shall entitle Company to any other or further
notice or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this subsection 10.6
shall be binding upon each Lender at the time outstanding, each future Lender
and, if signed by Company, on Company.

 

  10.7 Independence of Covenants.

All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.

 

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  10.8 Notices; Effectiveness of Signatures.

Unless otherwise specifically provided herein, any notice or other communication
herein required or permitted to be given shall be in writing and may be
personally served, or sent by telefacsimile or United States mail or courier
service and shall be deemed to have been given when delivered in person or by
courier service, upon receipt of telefacsimile in complete and legible form, or
three Business Days after depositing it in the United States mail with postage
prepaid and properly addressed; provided that notices to Administrative Agent
and any Issuing Lender shall not be effective until received. For the purposes
hereof, the address of each party hereto shall be as set forth under such
party’s name on the signature pages hereof or (i) as to Company and
Administrative Agent, such other address as shall be designated by such Person
in a written notice delivered to the other parties hereto and (ii) as to each
other party, such other address as shall be designated by such party in a
written notice delivered to Administrative Agent. Electronic mail and Internet
and intranet websites may be used to distribute routine communications, such as
financial statements and other information as provided in subsection 6.1.
Administrative Agent or Company may, in its discretion, agree to accept notices
and other communications to it hereunder by electronic communications pursuant
to procedures approved by it, provided that approval of such procedures may be
limited to particular notices or communications.

Loan Documents and notices under the Loan Documents may be transmitted and/or
signed by telefacsimile and by signatures delivered in ‘PDF’ format by
electronic mail. The effectiveness of any such documents and signatures shall,
subject to applicable law, have the same force and effect as an original copy
with manual signatures and shall be binding on all Loan Parties, Agents and
Lenders. Administrative Agent may also require that any such documents and
signature be confirmed by a manually-signed copy thereof; provided, however,
that the failure to request or deliver any such manually-signed copy shall not
affect the effectiveness of any facsimile document or signature.

 

  10.9 Survival of Representations, Warranties and Agreements.

A. All representations, warranties and agreements made herein shall survive the
execution and delivery of this Agreement and the making of the Loans and the
issuance of the Letters of Credit hereunder.

B. Notwithstanding anything in this Agreement or implied by law to the contrary,
the agreements of Company set forth in subsections 2.6D, 2.7, 10.2, 10.3, 10.4,
10.17 and 10.18 and the agreements of Lenders set forth in subsections 9.2C,
9.4, 10.5 and 10.18 shall survive the payment of the Loans, the cancellation or
expiration of the Letters of Credit and the reimbursement of any amounts drawn
thereunder, and the termination of this Agreement.

 

  10.10  Failure or Indulgence Not Waiver; Remedies Cumulative.

No failure or delay on the part of an Agent or any Lender in the exercise of any
power, right or privilege hereunder or under any other Loan Document shall
impair such power,

 

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right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement and
the other Loan Documents are cumulative to, and not exclusive of, any rights or
remedies otherwise available.

 

  10.11  Marshalling; Payments Set Aside.

Neither any Agent nor any Lender shall be under any obligation to marshal any
assets in favor of Company or any other party or against or in payment of any or
all of the Obligations. To the extent that Company makes a payment or payments
to Administrative Agent or Lenders (or to Administrative Agent for the benefit
of Lenders), or Agents or Lenders enforce any security interests or exercise
their rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, any other state
or federal law, common law or any equitable cause, then, to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied,
and all Liens, rights and remedies therefor or related thereto, shall be revived
and continued in full force and effect as if such payment or payments had not
been made or such enforcement or setoff had not occurred.

 

  10.12  Severability.

In case any provision in or obligation under this Agreement or the Notes shall
be invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

 

  10.13  Obligations Several; Independent Nature of Lenders’ Rights; Damage
Waiver.

The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders, or
Lenders and Company, as a partnership, an association, a Joint Venture or any
other kind of entity. The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and, subject to subsection 9.6, each
Lender shall be entitled to protect and enforce its rights arising out of this
Agreement and it shall not be necessary for any other Lender to be joined as an
additional party in any proceeding for such purpose.

To the extent permitted by law, Company shall not assert, and hereby waives, any
claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with or as a result of this Agreement (including,
without limitation, subsection 2.1C hereof), any other Loan Document, any
transaction contemplated by the Loan Documents, any Loan or the use of proceeds
thereof. No Indemnitee shall be liable for any damages arising from the use by

 

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unintended recipients of any information or other materials distributed by it
through telecommunications, electronic or other information transmission systems
in connection with the Loan Documents or the transactions contemplated thereby.

 

  10.14  Release of Security Interest or Guaranty.

Upon (a) the proposed sale or other disposition of any Collateral to any Person
(other than an Affiliate of Company) that is permitted by this Agreement or to
which Requisite Lenders have otherwise consented, (b) the sale or other
disposition of all of the Equity Interests of a Subsidiary Guarantor to any
Person (other than an Affiliate of Company) that is permitted by this Agreement
or to which Requisite Lenders have otherwise consented or (c) the permitted
designation of a HUD Subsidiary under subsection 7.3(xii), for which a Loan
Party desires to obtain a security interest release or a release of the
Subsidiary Guaranty from Collateral Agent, such Loan Party shall deliver an
Officer’s Certificate (i) stating that the Collateral or the Equity Interests
subject to such disposition or such designation, as the case may be, is being
sold or otherwise disposed of or designated in compliance with the terms hereof
and (ii) specifying the Collateral or Equity Interests being sold or otherwise
disposed of or the identity of the Subsidiary so designated in the proposed
transaction. Upon the receipt of such Officer’s Certificate, Collateral Agent
shall, at such Loan Party’s expense, so long as Collateral Agent (a) has no
reason to believe that the facts stated in such Officer’s Certificate are not
true and correct and (b) (x) if the sale or other disposition of such item of
Collateral or Equity Interests constitutes an Asset Sale, shall have received
evidence reasonably satisfactory to it that arrangements reasonably satisfactory
to it have been made for delivery of the Net Asset Sale Proceeds if and as
required by subsection 2.4 and (y) in the case of a designation of a HUD
Subsidiary, shall have received evidence reasonably satisfactory to it that
arrangements reasonably satisfactory to it have been made for delivery of the
Net Indebtedness Proceeds required by subsection 2.4, execute and deliver such
releases of its security interest in such Collateral or such Subsidiary
Guaranty, as may be reasonably requested by such Loan Party (it being understood
that, in the case of the designation of a HUD Subsidiary, Collateral Agent shall
not be required to release the Lien in the Equity Interests of such HUD
Subsidiary).

 

  10.15  Applicable Law.

THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT AS OTHERWISE EXPRESSLY SET
FORTH IN ANY SUCH LOAN DOCUMENT), AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE
APPLICATION OF ANOTHER LAW.

 

  10.16  Construction of Agreement; Nature of Relationship.

Each of the parties hereto acknowledges that (i) it has been represented by
counsel in the negotiation and documentation of the terms of this Agreement,
(ii) it has had full and fair opportunity to review and revise the terms of this
Agreement, (iii) this Agreement has

 

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been drafted jointly by all of the parties hereto, and (iv) neither
Administrative Agent nor any Lender or other Agent has any fiduciary
relationship with or duty to Company arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between
Administrative Agent, the other Agents and Lenders, on one hand, and Company, on
the other hand, in connection herewith or therewith is solely that of debtor and
creditor. Accordingly, each of the parties hereto acknowledges and agrees that
the terms of this Agreement shall not be construed against or in favor of
another party.

 

  10.17  Consent to Jurisdiction and Service of Process.

ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY HERETO ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
HEREUNDER AND THEREUNDER, SHALL BE BROUGHT EXCLUSIVELY IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY
EXECUTING AND DELIVERING THIS AGREEMENT, COMPANY, FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, IRREVOCABLY

(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE
OF SUCH COURTS;

(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;

(III) AGREES THAT SERVICE OF ALL PROCESS TO IT IN ANY SUCH PROCEEDING IN ANY
SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION
10.8;

(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO
CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH PROCEEDING IN ANY SUCH
COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;

(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST COMPANY IN THE COURTS OF ANY
OTHER JURISDICTION; AND

(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT
PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.

NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT ADMINISTRATIVE AGENT,
COLLATERAL AGENT, ANY ISSUING LENDER

 

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OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING AGAINST
COMPANY, ITS SUBSIDIARIES OR THEIR RESPECTIVE PROPERTIES IN THE COURTS OF ANY
JURISDICTION FOR THE PURPOSE OF THE RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT
OR IN ORDER TO PROCEED AGAINST OR EXERCISE ANY RIGHTS OR REMEDIES WITH RESPECT
TO COLLATERAL.

 

  10.18  Waiver of Jury Trial.

EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER
IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN
ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED
ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO
RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL
AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION 10.18 AND EXECUTED BY EACH OF
THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

  10.19  Confidentiality.

Each Lender shall hold all non-public information obtained pursuant to the
requirements of this Agreement in accordance with such Lender’s customary
procedures for handling confidential information of this nature, it being
understood and agreed by Company that in any event a Lender may make disclosures
(a) to its and its Affiliates’ directors, officers, employees and agents,
including accountants, legal counsel and other advisors (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such information and instructed to keep such information
confidential),

 

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(b) to the extent requested by any Government Authority having jurisdiction over
such Lender, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder, (f) subject to an agreement containing provisions substantially the
same as those of this subsection 10.19, to (i) any Eligible Assignee of or
Participant in, or any prospective Eligible Assignee of or Participant in, any
of its rights or obligations under this Agreement or (ii) any direct or indirect
contractual counterparty or prospective counterparty (or such contractual
counterparty’s or prospective counterparty’s professional advisor) to any credit
derivative transaction relating to obligations of Company, (g) with the consent
of Company, (h) to the extent such information (i) becomes publicly available
other than as a result of a breach of this subsection 10.19 or (ii) becomes
available to Administrative Agent or any Lender on a nonconfidential basis from
a source other than Company or (i) to the National Association of Insurance
Commissioners or any other similar organization or any nationally recognized
rating agency that requires access to information about a Lender’s or its
Affiliates’ investment portfolio in connection with ratings issued with respect
to such Lender or its Affiliates; provided that, unless specifically prohibited
by applicable law or court order, each Lender shall notify Company of any
request by any Government Authority or representative thereof (other than any
such request in connection with any examination of the financial condition of
such Lender by such Government Authority) for disclosure of any such non-public
information prior to disclosure of such information; and provided, further that
in no event shall any Lender be obligated or required to return any materials
furnished by Company or any of its Subsidiaries. In addition, Administrative
Agent and Lenders may disclose the existence of this Agreement and information
about this Agreement to market data collectors, similar service providers to the
lending industry, and service providers to Administrative Agent and Lenders, and
Agents or any of their Affiliates may place customary “tombstone” advertisements
relating hereto in publications (including publications circulated in electronic
form) of its choice at its own expense.

Notwithstanding anything herein to the contrary, information required to be
treated as confidential by reason of the foregoing shall not include, and
Administrative Agent and each Lender may disclose to any and all Persons,
without limitation of any kind, any information with respect to United States
federal income tax treatment and United States federal income tax structure of
the transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to Administrative Agent or
such Lender relating to such tax treatment and tax structure.

 

  10.20  Counterparts; Effectiveness.

This Agreement and any amendments, waivers, consents or supplements hereto or in
connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto.

 

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THIRD AMENDED AND RESTATED

CREDIT AGREEMENT

DATED AS OF APRIL 9, 2010

AMONG

SKILLED HEALTHCARE GROUP, INC.,

THE LENDERS LISTED HEREIN,

as Lenders,

CREDIT SUISSE AG,

as Administrative Agent and as Collateral Agent,

and

CREDIT SUISSE SECURITIES (USA) LLC,

BANC OF AMERICA SECURITIES LLC,

BARCLAYS CAPITAL

and

J.P. MORGAN SECURITIES INC.,

as Joint Lead Arrangers and Joint Bookrunners

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TABLE OF CONTENTS

 

          Page

Section 1.

   DEFINITIONS    2

1.1

   Certain Defined Terms.    2

1.2

   Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
Agreement.    35

1.3

   Other Definitional Provisions and Rules of Construction.    36

Section 2.

   AMOUNTS AND TERMS OF COMMITMENTS AND LOANS    36

2.1

   Commitments; Making of Loans; the Register; Optional Notes.    36

2.2

   Interest on the Loans.    43

2.3

   Fees.    46

2.4

   Repayments, Prepayments and Reductions of Revolving Loan Commitment Amount;
General Provisions Regarding Payments; Application of Proceeds of Collateral and
Payments Under Subsidiary Guaranty.    47

2.5

   Use of Proceeds.    55

2.6

   Special Provisions Governing Eurodollar Rate Loans.    55

2.7

   Increased Costs; Taxes; Capital Adequacy.    57

2.8

   Statement of Lenders; Obligation of Lenders and Issuing Lenders to Mitigate.
   63

2.9

   Replacement of a Lender.    63

Section 3.

   LETTERS OF CREDIT    64

3.1

   Issuance of Letters of Credit and Lenders’ Purchase of Participations
Therein.    64

3.2

   Letter of Credit Fees.    67

3.3

   Drawings and Reimbursement of Amounts Paid Under Letters of Credit.    68

3.4

   Obligations Absolute.    71

3.5

   Nature of Issuing Lenders’ Duties.    72

Section 4.

   CONDITIONS TO EFFECTIVENESS AND REVOLVING LOANS AND LETTERS OF CREDIT    72

4.1

   Conditions to Effectiveness.    72

4.2

   Conditions to All Loans.    76

4.3

   Conditions to Letters of Credit.    77

Section 5.

   COMPANY’S REPRESENTATIONS AND WARRANTIES    78

 

-i-

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TABLE OF CONTENTS

(continued)

 

          Page 5.1    Organization, Powers, Qualification, Good Standing,
Business and Subsidiaries.    78 5.2    Authorization of Borrowing, etc.    79
5.3    Financial Condition.    80 5.4    No Material Adverse Effect; No
Restricted Junior Payments.    80 5.5    Title to Properties; Liens; Real
Property; Intellectual Property.    80 5.6    Litigation; Adverse Facts.    81
5.7    Payment of Taxes.    81 5.8    Performance of Agreements.    82 5.9   
Governmental Regulation.    82 5.10    Securities Activities.    82 5.11   
Employee Benefit Plans.    82 5.12    Certain Fees.    83 5.13    Environmental
Protection.    83 5.14    Employee Matters.    84 5.15    Solvency.    84 5.16
   Matters Relating to Collateral.    84 5.17    Disclosure.    85 5.18   
Subordinated Indebtedness.    86 5.19    Reporting to IRS.    86 5.20   
Healthcare Matters.    86 5.21    Reimbursement; Nongovernmental Payors.    86
5.22    Foreign Assets Control Regulations, etc.    87

Section 6.

   COMPANY’S AFFIRMATIVE COVENANTS    87

6.1

   Financial Statements and Other Reports.    87

6.2

   Existence, Healthcare Authorizations, etc.    92

6.3

   Payment of Taxes and Claims; Tax.    92

6.4

   Maintenance of Properties; Insurance; Application of Net Insurance/
Condemnation Proceeds.    93

6.5

   Inspection Rights; Lender Meeting.    94

6.6

   Compliance with Laws, etc.    95

 

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6.7

   Environmental Matters.    95

6.8

   Execution of Subsidiary Guaranty and Personal Property Collateral Documents
After the Effective Date.    96

6.9

   Matters Relating to Real Property Collateral.    98

6.10

   Interest Rate Protection.    100

6.11

   Deposit Accounts, Securities Accounts and Cash Management Systems; Government
Reimbursement Deposit Accounts.    100

6.12

   Ratings.    101

Section 7.

   NEGATIVE COVENANTS    101

7.1

   Indebtedness.    101

7.2

   Liens and Related Matters.    103

7.3

   Investments; Acquisitions.    104

7.4

   Contingent Obligations.    106

7.5

   Restricted Junior Payments.    107

7.6

   Financial Covenants.    108

7.7

   Restriction on Fundamental Changes; Asset Sales.    109

7.8

   Transactions with Shareholders and Affiliates.    110

7.9

   Sales and Lease-Backs.    110

7.10

   Conduct of Business.    111

7.11

   Amendments of Documents Relating to Subordinated Indebtedness; Amendments or
Waivers of Related Agreements; Designation of Designated Senior Indebtedness.   
111

7.12

   Fiscal Year.    111

7.13

   Government Reimbursement Deposit Accounts.    111

Section 8.

   EVENTS OF DEFAULT    112

8.1

   Failure to Make Payments When Due.    112

8.2

   Default in Other Agreements.    112

8.3

   Breach of Certain Covenants.    112

8.4

   Breach of Warranty.    113

8.5

   Other Defaults Under Loan Documents.    113

8.6

   Involuntary Bankruptcy; Appointment of Receiver, etc.    113

8.7

   Voluntary Bankruptcy; Appointment of Receiver, etc.    113

 

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8.8

   Judgments and Attachments.    114

8.9

   Dissolution.    114

8.10

   Employee Benefit Plans.    114

8.11

   Change in Control.    114

8.12

   Invalidity of Loan Documents; Failure of Security; Repudiation of
Obligations.    114

8.13

   Failure to Maintain Healthcare Authorizations.    115

8.14

   Right to cure    116

Section 9.

   ADMINISTRATIVE AGENT AND COLLATERAL AGENT    117

9.1

   Appointment.    117

9.2

   Powers and Duties; General Immunity.    118

9.3

   Independent Investigation by Lenders; No Responsibility For Appraisal of
Creditworthiness.    120

9.4

   Right to Indemnity.    120

9.5

   Resignation of Agents; Successor Administrative Agent and Collateral Agent.
   120

9.6

   Collateral Documents and Subsidiary Guaranty.    121

9.7

   Duties of Other Agents.    122

9.8

   Administrative Agent May File Proofs of Claim.    122

Section 10.

   MISCELLANEOUS    123

10.1

   Successors and Assigns; Assignments and Participations in Loans and Letters
of Credit.    123

10.2

   Expenses.    128

10.3

   Indemnity.    128

10.4

   Set-Off.    130

10.5

   Ratable Sharing.    130

10.6

   Amendments and Waivers.    131

10.7

   Independence of Covenants.    132

10.8

   Notices; Effectiveness of Signatures.    133

10.9

   Survival of Representations, Warranties and Agreements.    133

10.10

   Failure or Indulgence Not Waiver; Remedies Cumulative.    133

10.11

   Marshalling; Payments Set Aside.    134

 

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10.12

   Severability.    134

10.13

   Obligations Several; Independent Nature of Lenders’ Rights; Damage Waiver.   
134

10.14

   Release of Security Interest or Guaranty.    135

10.15

   Applicable Law.    135

10.16

   Construction of Agreement; Nature of Relationship.    135

10.17

   Consent to Jurisdiction and Service of Process.    136

10.18

   Waiver of Jury Trial.    137

10.19

   Confidentiality.    137

10.20

   Counterparts; Effectiveness.    138

Signature Pages

   S-1

 

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EXHIBITS

 

I    FORM OF NOTICE OF BORROWING II    FORM OF NOTICE OF CONVERSION/CONTINUATION
III    FORM OF REQUEST FOR ISSUANCE IV    FORM OF TERM NOTE V    FORM OF
REVOLVING NOTE VI    FORM OF NOTICE OF PREPAYMENT VII    FORM OF COMPLIANCE
CERTIFICATE VIII    OPINIONS OF COMPANY COUNSEL IX    FORM OF ASSIGNMENT
AGREEMENT X    FORM OF SOLVENCY CERTIFICATE XI    FORM OF MORTGAGE XII   
PERFECTION CERTIFICATE

 

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SCHEDULES

 

1.1    EXISTING MORTGAGED PROPERTIES 2.1    LENDERS’ COMMITMENTS 4.1E    CERTAIN
LOCAL COUNSEL 5.1    JURISDICTIONS OF ORGANIZATION; SUBSIDIARIES OF COMPANY 5.5B
   REAL PROPERTY 5.5C    INTELLECTUAL PROPERTY 5.6    LITIGATION 5.11    CERTAIN
EMPLOYEE BENEFIT PLANS 5.13    ENVIRONMENTAL MATTERS 7.1    CERTAIN EXISTING
INDEBTEDNESS 7.2    CERTAIN EXISTING LIENS 7.3    CERTAIN EXISTING INVESTMENTS
7.4    CERTAIN EXISTING CONTINGENT OBLIGATIONS 7.7    CERTAIN FACILITIES

 

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