AMENDED AND RESTATED TERM LOAN AND SECURITY AGREEMENT
dated as of April 30, 2013
by and among
DIVERSICARE AFTON OAKS, LLC, DIVERSICARE BRIARCLIFF, LLC, DIVERSICARE CHISOLM,
LLC, DIVERSICARE HARTFORD, LLC, DIVERSICARE OF CHANUTE, LLC, DIVERSICARE OF
COUNCIL GROVE, LLC, DIVERSICARE OF HAYSVILLE, LLC, DIVERSICARE OF SEDGWICK, LLC,
DIVERSICARE OF LARNED, LLC, DIVERSICARE WINDSOR HOUSE, LLC, DIVERSICARE
HILLCREST, LLC, DIVERSICARE LAMPASAS, LLC, DIVERSICARE HOLDING COMPANY, LLC,
DIVERSICARE KANSAS, LLC, and DIVERSICARE YORKTOWN, LLC,
collectively, Borrower
and
THE PRIVATEBANK AND TRUST COMPANY,
as Administrative Agent for the Lenders
and
The Financial Institutions Parties Hereto as the Lenders

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AMENDED AND RESTATED TERM LOAN AND SECURITY AGREEMENT
This AMENDED AND RESTATED TERM LOAN AND SECURITY AGREEMENT (this “Agreement”),
dated as of April 30, 2013, is by and among DIVERSICARE AFTON OAKS, LLC,
DIVERSICARE BRIARCLIFF, LLC, DIVERSICARE CHISOLM, LLC, DIVERSICARE HARTFORD,
LLC, DIVERSICARE OF CHANUTE, LLC, DIVERSICARE OF COUNCIL GROVE, LLC, DIVERSICARE
OF HAYSVILLE, LLC, DIVERSICARE OF SEDGWICK, LLC, DIVERSICARE OF LARNED, LLC,
DIVERSICARE WINDSOR HOUSE, LLC, DIVERSICARE HILLCREST, LLC, DIVERSICARE
LAMPASAS, LLC, DIVERSICARE HOLDING COMPANY, LLC, DIVERSICARE KANSAS, LLC, and
DIVERSICARE YORKTOWN, LLC, each a Delaware limited liability company
(individually and collectively, the “Borrower”), THE PRIVATEBANK AND TRUST
COMPANY, an Illinois banking corporation in its individual capacity
(“PrivateBank”), and the other financial institutions parties hereto (together
with PrivateBank, the “Lenders”), and THE PRIVATEBANK AND TRUST COMPANY, an
Illinois banking corporation in its capacity as administrative agent for the
Lenders (together with its successors and assigns, the “Administrative Agent”).
RECITALS
WHEREAS, certain of the Borrowers, certain of the Lenders, and the
Administrative Agent are parties to that certain Term Loan and Security
Agreement dated as of February 28, 2011 (as amended, the “Original Term Loan
Agreement”);
WHEREAS, certain of the Borrowers and their Affiliates are parties to that
certain Amended and Restated Revolving Loan and Security Agreement dated as of
February 28, 2011 by and among Borrowers and such Affiliates, certain of the
Lenders, and Administrative Agent (as amended, the “Original Revolving Loan
Agreement”), which is being amended and restated in connection herewith pursuant
to the Revolving Loan Agreement (as defined below); and
WHEREAS, the parties hereto desire to amend and restate the Original Term Loan
Agreement (and the Borrowers have agreed to continue to secure all of their
Liabilities under the Original Term Loan Agreement and the “Financing
Agreements” entered into in connection therewith by continuing their grant of a
security interest in and lien upon the Collateral described herein), upon the
terms and provisions and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements contained herein, and
of the term loan to be made to or for the benefit of the Borrower by the
Lenders, and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereto (intending to be legally
bound) hereby agree as follows:
1.DEFINITIONS.
1.1    General Terms. When used herein, the following terms shall have the
following meanings:

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“ACH Transactions” means any cash management or related services (including the
Automated Clearing House processing of electronic fund transfers through the
direct Federal Reserve Fedline system) provided by any Lender for the account of
Borrower or its Subsidiaries.
“Acquisition” means, individually or collectively as the context requires, any
transaction or series of related transactions for the purpose of or resulting,
directly or indirectly, in (a) the acquisition of all or substantially all of
the assets of a Person, or of all or substantially all of any business or
division of a Person, (b) the acquisition of in excess of fifty percent (50%) of
the Stock of any Person, or otherwise causing any Person to become a Subsidiary,
(c) a merger or consolidation or any other combination with another Person
(other than a Person that is already a Subsidiary), or (d) the acquisition of
any parcel of real estate, including, without limitation, the Kansas
Acquisition.
“Acquisition Agreement” means, individually and collectively as the context
requires, each purchase agreement entered into by one or more Borrowers in
connection with any Acquisition (whether an asset purchase agreement, stock
purchase agreement, contribution agreement, merger agreement, real estate
purchase agreement or otherwise), including, without limitation, the Kansas
Acquisition Agreement.
“Acquisition Documents” means, collectively, each Acquisition Agreement, bill of
sale, assignment and assumption agreement, real estate contract, special
warranty deed, assignment of intellectual property, consulting agreement,
management agreement, employment agreement, noncompete agreement, transition
services agreement, and any and all of the other documents, instruments and
agreements executed or delivered in connection therewith or otherwise in
connection with any Acquisition, including, without limitation, the Kansas
Acquisition Documents, in each case as the same may be amended or modified in
conformity with Section 9.16 of this Agreement.
“Administrative Agent” means The PrivateBank and Trust Company, an Illinois
banking corporation, in its capacity as administrative agent for the Lenders
hereunder and any successor thereto in such capacity.
“Advocat Finance” means Advocat Finance, Inc., a Delaware corporation.
“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling (including, without limitation, all shareholders,
members, directors, partners, managers, and officers of such Person), controlled
by, or under direct or indirect common control with, such Person. A Person shall
be deemed to control another Person if such first Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such other Person, whether through ownership of voting securities,
by contract or otherwise; provided, however, neither Administrative Agent nor
any Lender shall be deemed an Affiliate of any Credit Party.
“Affiliated Revolving Borrowers” means each of the entities identified on
Schedule 1 attached hereto.

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“Affiliate Revolving Loan Financing Agreement” means each “Financing Agreement”
as defined in the Revolving Loan Agreement, as any of the same may be restated,
modified, supplemented or amended from time to time.
“Affiliate Revolving Loan Liabilities” means the “Liabilities” as defined in the
Revolving Loan Agreement.
“Agreement” means this Term Loan and Security Agreement as the same may be
restated, modified, supplemented or amended from time to time.
“Allocable Amount” shall have the meaning ascribed to such term in Section
12.21(g) hereof.
“Applicable Libor Margin” means, with respect to Libor Loans, an amount equal to
four hundred fifty (450) basis points.
“Appraisal” means a complete, self-contained appraisal of the Property performed
in accordance with FIRREA and the Administrative Agent’s appraisal requirements
by an independent appraiser MAI licensed in the state in which the Property is
located and selected and retained by the Administrative Agent.
“Asset Disposition” means the sale, lease, assignment or other transfer for
value of greater than Fifty Thousand Dollars ($50,000) by Borrower to any Person
of any personal property of Borrower, other than (a) the sale of any personal
property asset which is to be replaced, and is in fact replaced, within sixty
(60) days thereof with another of equal or substantially similar value and used
in the ordinary course of business of Borrower, (b) the sale or lease of
Inventory in the ordinary course of business, (c) sales in the ordinary course
of business of personal property that is obsolete, unmerchantable or otherwise
unsalable, unusable or unnecessary to Borrower’s business, (d) sales, leases or
assignments of personal property between one Borrower to another Borrower, and
(e) in connection with a Permitted Disposition in accordance with Section 9.6.
“Assignment Agreement” shall have the meaning ascribed to such term in Section
12.15 hereof.
“Assignment of Rents and Leases” means each of those certain Amended and
Restated Assignment of Rents and Leases or Assignment of Rents and Leases each
dated of even date herewith made by Borrower, respectively, in favor of the
Administrative Agent, with respect to each parcel of Property, respectively, in
form and substance reasonably satisfactory to the Administrative Agent, as the
same may be amended, supplemented, and modified from time to time.
“Bank Product” means any service provided to, facility extended to, or
transaction entered into with, any Credit Party by any Lender or its Affiliates
consisting of, (a) deposit accounts, (b) cash and treasury management services,
including, controlled disbursement, lockbox, electronic funds transfers
(including, book transfers, fedwire transfers, ACH transfers), online reporting
and other services relating to accounts maintained with any Lender or its
Affiliates, (c) debit cards, purchase cards, and credit cards, (d) Hedging
Agreements, or (e) so long as prior written notice thereof is provided by Lender
(or its Affiliate) providing such service, facility or transaction and

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Administrative Agent consents in writing to its inclusion as a Bank Product, any
other service provided to, facility extended to, or transaction entered into
with, any Credit Party by a Lender or its Affiliates; provided that consistent
with Section 8.9 hereof the Deposit Accounts specified therein shall be
maintained with PrivateBank and not any other Lender.
“Bank Product Agreements” means those agreements entered into from time to time
between any Credit Party and a Lender or its Affiliates in connection with the
obtaining of any of the Bank Products, including, without limitation, Hedging
Agreements.
“Bank Product Obligations” means all obligations, liabilities, reimbursement
obligations, contingent reimbursement obligations, fees, or expenses owing by
any Credit Party to any Lender or its Affiliates pursuant to or evidenced by a
Bank Product Agreement and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all such amounts that a Credit
Party is obligated to reimburse to Administrative Agent or any Lender as a
result of Administrative Agent or such Lender purchasing participations or
executing indemnities or reimbursement obligations with respect to the Bank
Products provided to the Credit Parties pursuant to the Bank Product Agreements.
“Base Rate” means, solely with respect to Sections 2.7(b), 3.2, 3.6 and 3.7
hereof, the sum of (a) the corporate base rate of interest per annum identified
from time to time by the Administrative Agent, as its base or prime rate, which
rate shall not necessarily be the lowest rate of interest which the
Administrative Agent charges its customers, and (b) two percent (2.0%) per
annum; provided, however, at no time shall the Base Rate hereunder be less than
five and one-quarter percent (5.25%) per annum. Any change in the Base Rate
shall be effective as of the effective date of such change.
“Base Rate Loan” means a Loan that bears interest at an interest rate based upon
the Base Rate, solely with respect to Sections 2.7(b), 3.2, 3.6 and 3.7 hereof.
“Blocked Persons List” shall have the meaning ascribed to such term in Section
7.29 hereof.
“Borrower Agent” means Diversicare Management Services Co., a Tennessee
corporation.
“Borrower Cash Management Program” means the business practice of Guarantor and
Borrowers whereby cash receipts for Guarantor, Borrowers and the Affiliated
Revolving Borrowers are transferred/swept into a central concentration account
and all cash disbursements are funded by transfers from such central
concentration account.
“Business Day” means (a) with respect to any borrowing, payment or rate
selection of Libor Loans, a day other than Saturday or Sunday on which banks are
open for business in Chicago, Illinois and on which dealings in United States
dollars are carried on in the London interbank market, and (b) for all other
purposes, a day other than Saturday or Sunday on which banks are open for
business in Chicago, Illinois.
“Capital Expenditures” means, as to any Person, any and all expenditures of such
Person for fixed or capital assets, including, without limitation, the
incurrence of Capitalized Lease Obligations, all as determined in accordance
with GAAP, except that Capital Expenditures shall

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not include (i) expenditures for fixed or capital assets to the extent such
expenditures are paid for or reimbursed from the proceeds of insurance,
condemnation awards and other settlements in respect of lost, destroyed,
damaged, condemned or stolen assets, (ii) expenditures for assets purchased
substantially concurrently with the trade-in of existing assets to the extent of
the trade-in credit thereof; and (iii) any incurrence of Indebtedness comprising
the purchase price for the acquisition, whether by purchase, merger,
consolidation or otherwise, by Borrower of the assets of, or the equity interest
in, a Person or a division, line of business or other business unit of a Person
engaged in a business of the type conducted by Borrower as of the date hereof or
in a business reasonably related thereto.
“Capitalized Lease Obligations” means any amount payable with respect to any
lease of any tangible or intangible property (whether real, personal or mixed),
however denoted, which either (a) is required by GAAP to be reflected as a
liability on the face of the balance sheet of the lessee thereunder, or (b)
based on actual circumstances existing and ascertainable, either at the
commencement of the term of such lease or at any subsequent time at which any
property becomes subject thereto, can reasonably be anticipated to impose on
such lessee substantially the same economic risks and burdens, having regard to
such lessee’s obligations and the lessor’s rights thereunder both during and at
the termination of such lease, as would be imposed on such lessee by any lease
which is required to be so reflected or by the ownership of the leased property.
For avoidance of doubt, prepaid leases shall not be deemed “Capital Lease
Obligations” except to the extent required under GAAP.
“Cash Cost of Self-Insured Professional and General Liability” means the total
cash expenditures associated with professional and general liability related
settlements, legal fees and administration costs for all facilities owned or
leased by the Borrower. For purposes of measuring the Cash Cost of Self-Insured
Professional and General Liability for individual facilities or groups of
facilities, these amounts shall be allocated on the basis of licensed beds of
the facility or group of facilities in relation to the total number of licensed
beds for all facilities owned or leased by the Borrower.
“CERCLA” means the Comprehensive Environmental Release Compensation and
Liability Act, 42 U.S.C. § 9601 et seq., as amended.
“Certificates” shall have the meaning ascribed to such term in Section 5.1(e)(7)
hereof.
“CHAMPUS” means the Civilian Health and Medical Program of the Uniformed
Service, a part of TRICARE, a medical benefits program supervised by the U.S.
Department of Defense.
“Change of Control” means the occurrence of any one or more of the following
events or conditions, except as the result of a merger or consolidation with, or
merger into, a Borrower (and such Borrower is the surviving entity) or the
dissolution of an inactive subsidiary as permitted in accordance with Section
9.3: (a) Guarantor shall at any time after the Closing Date have control and
voting power over less than all of the issued and outstanding Stock of
Diversicare Management Services Co., (b) Diversicare Management Services Co.
shall at any time after the Closing Date have control and voting power over less
than all of the issued and outstanding Stock of Advocat Finance, (c) Advocat
Finance shall at any time after the Closing Date have control and voting power

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over less than all of the issued and outstanding Stock of Diversicare Leasing
and Diversicare Holding, (d) Diversicare Holding shall at any time after the
Closing Date have control and voting power over less than all of the issued and
outstanding Stock of Diversicare Kansas, (e) Diversicare Kansas shall at any
time after the Closing Date have control and voting power over less than all of
the issued and outstanding Stock of the Kansas Borrowers, (f) Diversicare
Leasing shall at any time after the Closing Date have control and voting power,
directly or indirectly, over less than all of the issued and outstanding Stock
of any other Borrower (other than Diversicare Holding, Diversicare Kansas and
the Kansas Borrowers), or (g) Guarantor shall cease to directly or indirectly
possess the right to elect (through contract, ownership of voting securities or
otherwise) at all times a majority of the board of directors or managers (or
similar governing body) of each Borrower and Pledgor and to direct the
management policies and decisions of each Borrower and Pledgor.
“Closing Date” means April 30, 2013.
“Closing Fee” shall have the meaning ascribed to such term in Section 2.16
hereof.
“CMS” means the Centers for Medicare and Medicaid Services of HHS and any Person
succeeding to the functions thereof.
“Collateral” shall have the meaning ascribed to such term in Section 6.1 hereof.
“Commercial Leases” means the collective reference to all Leases other than
admission agreements or residency agreements.
“Commitment” means the Term Loan Commitment.
“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et
seq.), as amended from time to time, and any successor statute.
“Compliance Certificate” shall have the meaning ascribed to such term in Section
8.1(c) hereof.
“CON” shall have the meaning ascribed to such term in Section 10.2 hereof.
“Credit Party” means each Borrower, the Guarantor, and each other Person that is
or becomes primarily or secondarily liable for the Liabilities, whether as a
principal, surety, guarantor, endorser or otherwise.
“Credit Termination Date” means the earlier of (i) the Stated Maturity Date,
(ii) such other date on which the Commitments shall terminate pursuant to
Section 11.2 hereof, or (iii) such other date as is mutually agreed in writing
between the Borrower and the Administrative Agent (with the consent of the
Required Lenders).
“Default” means an event, circumstance or condition which through the passage of
time or the service of notice or both would (assuming no action is taken to cure
the same) mature into an Event of Default.

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“Default Rate” shall have the meaning ascribed to such term in Section 2.7(a)
hereof.
“Defaulting Lender” means any Lender that (a) has failed to fund its portion of
the Loan required to be funded by it hereunder at Closing, (b) has otherwise
failed to pay over to the Administrative Agent or any other Lender any other
amount required to be paid by it hereunder within one Business Day of the date
when due, unless the subject of a good faith dispute or unless such failure has
been cured, or (c) has been deemed insolvent or become the subject of a
bankruptcy or insolvency proceeding.
“Deposit Accounts” means any deposit, securities, operating, lockbox, blocked or
cash collateral account (including, without limitation, the Restricted Balance
Account), together with any funds, instruments or other items credited to any
such account from time to time, and all interest earned thereon.
“Diversicare Holding” means Diversicare Holding Company, a limited liability
company.
“Diversicare Kansas” means Diversicare Kansas, LLC, a Delaware limited liability
company.
“Diversicare Leasing” means Diversicare Leasing Corp., a Tennessee corporation.
“Duly Authorized Officer” means the Chief Executive Officer, the President, the
Chief Operating Officer, the Chief Financial Officer and the Assistant Secretary
of the Borrower.
“EBITDA” means with respect to the Borrower, for any period of determination,
the net earnings of the Borrower before nonrecurring items (in accordance with
GAAP and as reasonably agreed to by the Administrative Agent), interest, taxes,
depreciation, and amortization (including amortized transaction expense), all as
determined in accordance with GAAP, consistently applied.
“EBITDAR” means with respect to the Borrower, for any period of determination,
the sum of the net earnings of the consolidated Borrower before nonrecurring
items (in accordance with GAAP and as reasonably agreed to by the Administrative
Agent), interest, taxes, depreciation, amortization and rent, all as determined
in accordance with GAAP, consistently applied.
“Environmental Indemnity Agreement” means that certain Environmental Indemnity
Agreement of even date herewith made by the Borrower in favor of the
Administrative Agent, in form and substance acceptable to the Administrative
Agent, as the same may be amended or modified from time to time.
“Environmental Laws” means all federal, state, local, and foreign statutes,
regulations, ordinances, and similar provisions having the force or effect of
law, all judicial and administrative orders and determinations, and all common
law concerning public health and safety, worker health and safety, pollution, or
protection of the environment, including all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances,
or wastes, chemical substances, or mixtures, pesticides, pollutants,

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contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise, or radiation, including, without limitation,
the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., as
amended; CERCLA; the Toxic Substance Act, 15 U.S.C. § 2601 et seq., as amended;
the Clean Water Act, 33 U.S.C. § 466 et seq., as amended; the Clean Air Act, 42
U.S.C. § 7401 et seq., as amended; state and federal superlien and environmental
cleanup programs; and U.S. Department of Transportation regulations.
“Environmental Notice” means any summons, citation, directive, information
request, notice of potential responsibility, notice of violation or deficiency,
order, claim, complaint, investigation, proceeding, judgment, letters or other
communication, written or oral to the Borrower or any officer thereof, actual or
threatened, from the United States Environmental Protection Agency or other
federal, state or local agency or authority, or any other entity or individual,
public or private, concerning any intentional or unintentional act or omission
which involves Management of Hazardous Substances on or off the property of the
Borrower which could result in the Borrower incurring a material liability or
which could have a Material Adverse Effect, or the imposition of any Lien on
property, or any alleged violation of or responsibility under Environmental Laws
which could result in the Borrower incurring a material liability or which could
have a Material Adverse Effect, and, after due inquiry and investigation, any
knowledge of any facts which could give rise to any of the foregoing.
“Equipment” means “equipment” as defined in the Code, including, without
limitation, any and all of the Borrower’s machinery, equipment, vehicles,
fixtures, furniture, computers, appliances, tools, and other tangible personal
property (other than Inventory), whether located on the Borrower’s premises or
located elsewhere, together with any and all accessions, parts and appurtenances
thereto, whether presently owned or hereafter acquired by the Borrower.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
together with the regulations thereunder.
“ERISA Affiliate” means any corporation, trade or business, which together with
the Borrower would be treated as a single employer under Section 4001 of ERISA.
“Event of Default” shall have the meaning ascribed to such term in Section 11.1
hereof.
“Excluded Swap Obligation” means any Swap Obligation that arises from any
guaranty or collateral pledge with respect to the Liabilities that becomes
impermissible under the Commodity Exchange Act or any rule, regulation or order
of the Commodity Futures Trading Commission (or the application or official
interpretation of any thereof) by virtue of any guarantor’s or pledgor’s failure
for any reason not to constitute an “eligible contract participant” as defined
in the Commodity Exchange Act at the time any applicable guaranty or pledge
agreement or similar collateral document becomes effective with respect to such
related Swap Obligation, but such exclusion shall only be effective for so long
as it would otherwise be so impermissible.
“Facility” or “Facilities” shall mean any one or more of the skilled nursing
homes or facilities located on the Property as further identified on Schedule
1.1(a).

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“FATCA” means Sections 1471 - 1474 of the Tax Code, as enacted as of the date
hereof (or any amendment or successor to any such Section so long as such
amendment or successor is substantially similar to the purpose and obligations
of and not more onerous to comply with than such Sections as such Sections were
in effect as of the date of this Agreement) and any Treasury Regulation
promulgated thereunder implementing such Sections.
“Federal Funds Rate” shall have the meaning ascribed to such term in Section
13.13 hereof.
“Fee Letter” means that certain letter agreement dated as of even date herewith
by and between PrivateBank and Borrower, pursuant to which, among other things,
the arrangement relating to compensation for certain services rendered by the
Administrative Agent is set forth (together with any similar letter from
Administrative Agent to the Lenders regarding their respective share of any
particular fee payable by Borrower).
“Financing Agreements” means any and all agreements, instruments, certificates
and documents, including, without limitation, security agreements, loan
agreements, notes, guarantees, keep well agreements, landlord waivers,
mortgages, deeds of trust, subordination agreements, intercreditor agreements,
pledges, powers of attorney, consents, assignments, collateral assignments,
perfection certificates, interest rate protection agreements, reimbursement
agreements, contracts, notices, leases, subordination and attornment agreement,
collateral assignments of key man life insurance policies, financing statements
and all other written matter (including, without limitation, this Agreement, the
Term Loan Notes, the Mortgages, the Assignment of Rents and Leases, the
Environmental Indemnity Agreement, the Subordination of Management Agreements,
the Guaranty, the Pledge Agreement, the Certificates, the Fee Letter, each
Hedging Agreement and any other Bank Product Agreement), in each case
evidencing, securing or relating to the Loan and the Liabilities, whether
heretofore, now, or hereafter executed by or on behalf of the Borrower, any
Affiliate, or any other Person, and delivered to or in favor of the
Administrative Agent or any Lender, together with all agreements and documents
referred to therein or contemplated thereby, as each may be amended, modified or
supplemented from time to time.
“FIRREA” means the Financial Institutions Reform, Recovery And Enforcement Act
of 1989, as amended from time to time.
“Fiscal Quarter” means the three (3) month period ending on March 31, June 30,
September 30 and December 31 of each calendar year.
“Fiscal Year” means the twelve (12) month period commencing on January 1 and
ending on December 31 of each calendar year.
“GAAP” means generally accepted accounting principles set forth in the 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 any successor authority) that are
applicable to the circumstances as of the date of determination.
“General Intangibles” means “general intangibles” as defined in the Code,
including, without limitation, any and all general intangibles, choses in
action, causes of action, rights to the payment

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of money (other than Accounts), and all other intangible personal property of
the Borrower of every kind and nature wherever located and whether currently
owned or hereafter acquired by the Borrower (other than Accounts), including,
without limitation, corporate or other business records, inventions, designs,
patents, patent applications, service marks, service mark applications,
trademark applications, brand names, trade names, trademarks and all goodwill
symbolized thereby and relating thereto, trade styles, trade secrets,
registrations, domain names, websites, computer software, advertising materials,
distributions on certificated and uncertificated securities, investment
property, securities entitlements, goodwill, operational manuals, product
formulas for industrial processes, blueprints, drawings, copyrights, copyright
applications, rights and benefits under contracts, licenses, license agreements,
permits, approvals, authorizations which are associated with the operation of
the Borrower’s business and granted by any Person, franchises, customer lists,
deposit accounts, tax refunds, tax refund claims, and any letters of credit,
guarantee claims, security interests or other security held by or granted to the
Borrower to secure payment by an Account Debtor of any of Borrower’s Accounts,
and, to the maximum extent permitted by applicable Law, any recoveries or
amounts received in connection with any litigation or settlement of any
litigation.
“Governing Documents” shall have the meaning ascribed to such term in Section
9.14 hereof.
“Governmental Approvals” means, collectively, all consents, licenses, and
permits and all other authorizations or approvals required from any Governmental
Authority to operate the Locations.
“Governmental Authority” means and includes any federal, state, District of
Columbia, county, municipal, or other government and any political subdivision,
department, commission, board, bureau, agency or instrumentality thereof,
whether domestic or foreign.
“Guarantor” means Diversicare Healthcare Services, Inc. (f/k/a Advocat Inc.), a
Delaware corporation in its capacity as the guarantor pursuant to the Guaranty
or as otherwise provided in this Agreement.
“Guaranty” means that certain Amended and Restated Guaranty of even date
herewith by Guarantor in favor of the Administrative Agent, in form and
substance reasonable satisfactory to the Administrative Agent, as the same may
be amended, restated, reaffirmed, modified or supplemented from time to time.
“Hazardous Substances” means hazardous substances, materials, wastes, and waste
constituents and reaction by-products, pesticides, oil and other petroleum
products, and toxic substances, including, without limitation, asbestos and
PCBs, as those terms are defined pursuant to Environmental Laws.
“Healthcare Laws” means all applicable Laws relating to the possession, control,
warehousing, marketing, sale and distribution of pharmaceuticals, the operation
of medical or senior housing facilities (such as, but not limited to, nursing
homes, skilled nursing facilities, rehabilitation hospitals, intermediate care
facilities, assisted living and adult care facilities), patient healthcare,
patient healthcare information, patient abuse, the quality and adequacy of
medical care, rate setting,

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equipment, personnel, operating policies, fee splitting, including, without
limitation, (a) all federal and state fraud and abuse laws, including, but not
limited to the federal Anti-Kickback Statute (42 U.S.C. §1320a-7b(6)), the Stark
Law (42 U.S.C. §1395nn), the civil False Claims Act (31 U.S.C. §3729 et seq.);
(b) TRICARE; (c) CHAMPUS, (d) Medicare; (e) Medicaid; (f) HIPAA; (g) quality,
safety and accreditation standards and requirements of all applicable state laws
or regulatory bodies; (h) all laws, policies, procedures, permits, requirements,
certifications, and regulations pursuant to which licenses, approvals and
accreditation certificates are issued in order to operate medical, senior
housing facilities, assisted living facilities, or skilled nursing facilities;
and (i) any and all other applicable health care laws, regulations, manual
provisions, policies and administrative guidance, each of (a) through (i) as may
be amended from time to time.
“Hedging Agreement” means any interest rate, currency or commodity swap
agreement, cap agreement or collar agreement, and any other agreement or
arrangement designed to protect a Person against fluctuations in interest rates,
currency exchange rates or commodity prices, in each case in form and substance
satisfactory to the Administrative Agent, as the same may be amended or modified
from time to time; provided, Borrower will only enter into any such Hedging
Agreement with PrivateBank or another Lender reasonably approved by
Administrative Agent.
“HHS” means the United States Department of Health and Human Services and any
Person succeeding to the functions thereof.
“HIPAA” means the Health Insurance Portability and Accountability Act of 1996,
as the same may be amended, modified or supplemented from time to time, and any
successor statute thereto, and any and all rules or regulations promulgated from
time to time thereunder.
“HUD” means the United States Department of Housing and Urban Development and
any successor thereto.
“HUD Financing” means an Indebtedness of a Borrower or Borrowers that is insured
by HUD under one of its programs for HUD insured loans for long term care
facilities, including a HUD insured loan under Section 223(f) for senior housing
facilities and Section 232 for nursing home and assisted living facilities of
the National Housing Act, and any refinancing, refunding, extension or renewal
thereof, and which Indebtedness is to be secured by the assets and properties
owned or held by such Borrower or Borrowers, including the Facility or
Facilities owned and operated by such Borrower or Borrowers.
“Indebtedness” with respect to any Person means, as of the date of determination
thereof, (a) all of such Person’s indebtedness for borrowed money, (b) all
indebtedness of such Person or any other Person secured by any Lien with respect
to any property or asset owned or held by such Person, regardless whether the
indebtedness secured thereby shall have been assumed by such Person or such
Person has become liable for the payment thereof, (c) all Capitalized Lease
Obligations of such Person and obligations or liabilities created or arising
under conditional sale or other title retention agreement with respect to
property used and/or acquired by Borrower even though the rights and remedies of
the lessor, seller and/or lender thereunder are limited to repossession of such
property, (d) all unfunded pension fund obligations and liabilities, (e) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (f) all

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obligations in respect of letters of credit, whether or not drawn, and bankers’
acceptances issued for the account of such Person, (g) deferred and/or accrued
taxes and all unfunded pension fund obligations and liabilities, (h) all
guarantees by such Person, or any undertaking by such Person to be liable for,
the debts or obligations of any other Person, described in clauses (a) through
(h), (i) any Stock of such Person, whether or not mandatorily redeemable, that
under GAAP is characterized as debt, whether pursuant to Financial Accounting
Standards Board Issuance No. 150 or otherwise, and (j) all Bank Product
Obligations of such Person.
“Indemnified Liabilities” shall have the meaning ascribed to such term in
Section 12.16 hereof.
“Indemnified Parties” shall have the meaning ascribed to such term in Section
12.16 hereof.
“Intellectual Property” means all of the following in any jurisdiction
throughout the world: (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade
names, corporate names, Internet domain names, and rights in telephone numbers,
together with all translations, adaptations, derivations, and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including source code, executable code, data,
databases, and related documentation), (g) all material advertising and
promotional materials, (h) all other proprietary rights, and (i) all copies and
tangible embodiments thereof (in whatever form or medium).
“Inventory” means “inventory” as defined in the Code, including, without
limitation, any and all inventory and goods of the Borrower, wheresoever
located, whether now owned or hereafter acquired by the Borrower, which are held
for sale or lease, furnished under any contract of service or held as raw
materials, work-in-process or supplies, and all materials used or consumed in
the Borrower’s business, and shall include such property the sale or other
disposition of which has given rise to Accounts and which has been returned to
or repossessed or stopped in transit by the Borrower.
“Joint Liability Payment” shall have the meaning ascribed to such term in
Section 12.21(g) hereof.
“Kansas Acquisition” means the sale/purchase transaction intended to be
consummated on the Closing Date pursuant to and in accordance with the Kansas
Acquisition Documents.

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“Kansas Acquisition Agreement” means that certain Asset Purchase Agreement dated
as of March 6, 2013 by and among the Seller and Kansas Borrowers.
“Kansas Acquisition Documents” means, collectively, the Kansas Acquisition
Agreement, the Operations Transfer Agreement dated as of March 6, 2013, and any
and all of the other material documents, instruments and agreements executed or
delivered in connection therewith, in each case as the same may be amended or
modified in conformity with Section 9.16 of this Agreement.
“Kansas Borrowers” means Diversicare of Chanute, LLC, Diversicare of Council
Grove, LLC, Diversicare of Haysville, LLC, Diversicare of Sedgwick, LLC, and
Diversicare of Larned, LLC, each a Kansas limited liability company.
“Laws” means, collectively, all federal, state and local laws, statutes, codes,
ordinances, orders, rules and regulations, including judicial opinions or
presidential authority in the applicable jurisdiction and Healthcare Laws and
Environmental Laws, now or hereafter in effect, and in each case as amended or
supplemented from time to time.
“Leases” means all leases, subleases, licenses, concessions and other agreements
(written or oral), including all amendments, extensions, renewals, guaranties,
and other agreements with respect thereto, pursuant to which the Borrower holds
any leased real property (including, without limitation, the Commercial Leases
and Operating Leases).
“Lender Parties” shall have the meaning ascribed to such term in Section 12.24
hereof.
“Liabilities” means any and all of each of the Borrower’s liabilities,
obligations and Indebtedness to the Lenders and the Administrative Agent of any
and every kind and nature, whether heretofore, now or hereafter owing, arising,
due or payable and howsoever evidenced, created, incurred, acquired, or owing,
whether primary, secondary, direct, indirect, contingent, absolute, fixed or
otherwise (including, without limitation, payments of or for principal,
interest, default interest, reimbursement obligations, interest rate hedging
obligations, fees, costs, expenses, and/or indemnification, and obligations of
performance, and the Closing Fee, any other fee due or payable to Administrative
Agent or Lenders in connection with any Financing Agreement, the Prepayment
Premium, and all Bank Product Obligations, and any interest that accrues after
commencement of any insolvency or bankruptcy proceeding regardless of whether
allowed or allowable in whole or in part as a claim in any such insolvency or
bankruptcy proceeding) and whether arising or existing under written agreement,
oral agreement, or by operation of law, including, without limitation, all of
each Borrower’s Indebtedness, liabilities and obligations to the Lenders and the
Administrative Agent under this Agreement (whether relating to the Loan or
otherwise and including, without limitation, all of each Borrower’s Bank Product
Obligations) or each Hedging Agreement (but excluding any Excluded Swap
Obligation) and any and all other Financing Agreements to which Borrower is a
party, and any refinancings, substitutions, extensions, renewals, replacements
and modifications for or of any or all of the foregoing.
“Libor Base Rate” means a rate of interest equal to (a) the per annum rate of
interest at which United States dollar deposits in an amount comparable to the
amount of the relevant Libor Loan and for a period equal to the Libor Interest
Period are offered in the London Interbank Eurodollar

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market at 11:00 A.M. (London time) two (2) Business Days prior to the
commencement of such Libor Interest Period (or three (3) Business Days prior to
the commencement of such Libor Interest Period if banks in London, England were
not open and dealing in offshore United States dollars on such second preceding
Business Day), as displayed in the Bloomberg Financial Markets system (or other
authoritative source selected by the Administrative Agent in its sole
discretion) or, if the Bloomberg Financial Markets system or another
authoritative source is not available, as the Libor Base Rate is otherwise
determined by the Administrative Agent in its sole and absolute discretion,
divided by (b) a number determined by subtracting from 1.00 the then stated
maximum reserve percentage for determining reserves to be maintained by member
banks of the Federal Reserve System for Eurocurrency funding or liabilities as
defined in Regulation D (or any successor category of liabilities under
Regulation D), such rate to remain fixed for such Libor Interest Period. The
Administrative Agent’s determination of the Libor Base Rate shall be conclusive,
absent manifest error.
“Libor Interest Period” means, with respect to any Libor Loan, successive one
(1) month periods, provided, however, that: (a) each Libor Interest Period
occurring after the initial Libor Interest Period of any Libor Loan shall
commence on the day on which the preceding Libor Interest Period for such Libor
Loan expires, with interest for such day to be calculated at the Libor Rate in
effect for the new Libor Interest Period; (b) whenever the last day of any Libor
Interest Period would otherwise occur on a day other than a Business Day, the
last day of such Libor Interest Period shall be extended to occur on the next
succeeding Business Day; (c) whenever the first day of any Libor Interest Period
occurs on a date for which there is no numerically corresponding date in the
month in which such Libor Interest Period terminates, such Libor Interest Period
shall end on the last day of such month, unless such day is not a Business Day,
in which case the Libor Interest Period shall terminate on the first Business
Day of the following month, provided, further, that so long as the Libor
Rollover remains in effect, all subsequent Libor Interest Periods shall
terminate on the date of the month numerically corresponding to the date on
which the initial Libor Interest Period commenced; and (d) if at any time the
Libor Interest Period for a Libor Loan expires less than one month before the
Stated Maturity Date, such Libor Loan shall automatically renew at the then
current Libor Rate for a Libor Interest Period terminating on the Stated
Maturity Date.
“Libor Loan” means a Loan which bears interest at a Libor Rate.
“Libor Rate” means, with respect to a Libor Loan for the relevant Libor Interest
Period, the sum of the Libor Base Rate applicable to that Libor Interest Period,
plus the Applicable Libor Margin.
“Libor Rollover” means that each Libor Loan shall automatically renew for the
Libor Interest Period specified in this Agreement at the then current Libor
Rate, except that a Libor Interest Period for a Libor Loan shall not
automatically renew with respect to any principal amount which is scheduled to
be repaid before the last day of the applicable Libor Interest Period, and any
such amounts shall bear interest at the Base Rate, until repaid.
“Licenses” shall have the meaning ascribed to such term in Section 10.2 hereof

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“Lien” means any lien, security interest, mortgage, pledge, hypothecation,
collateral assignment, or other charge, encumbrance or preferential arrangement,
including, without limitation, the retained security title of a conditional
vendor or lessor.
“Loan Account” shall have the meaning ascribed to such term in Section 2.5
hereof.
“Loan” means the Term Loan, and, if applicable, any and all other advances made
by the Lenders (or, if applicable, the Administrative Agent) to the Borrower
pursuant to the terms of this Agreement or any other Financing Agreement.
“Location” or “Locations” mean one or more of the healthcare or other facilities
owned by the Borrower on the Property as identified on Schedule 1.1(a) hereto.
“Manage” or “Management” means to generate, handle, manufacture, process, treat,
store, use, re-use, refine, recycle, reclaim, blend or burn for energy recovery,
incinerate, accumulate speculatively, transport, transfer, dispose of, release,
threaten to release or abandon Hazardous Substances.
“Management Agreements” means, collectively, those certain Management Agreements
between (i) Manager and each Borrower for the operation and management of the
Facilities and (ii) Manager and Diversicare Therapy Services, LLC, for
bookkeeping, accounting, payroll, billing and management of its contract therapy
services.
“Manager” means Diversicare Management Services Co.
“Material Adverse Change” or “Material Adverse Effect” means, with respect to
any event, act, condition or occurrence of whatever nature (including any
adverse determination in any litigation, arbitration, or governmental
investigation or proceeding), whether singly or in conjunction with any other
event or events, act or acts, condition or conditions, occurrence or
occurrences, whether or not related, any of the following: (a) a material
adverse change in, or a material adverse effect upon, the financial condition,
operations, business or properties of the Credit Parties, taken as a whole, (b)
a material adverse change in, or a material adverse effect upon, the rights and
remedies of the Administrative Agent or the Lenders under any Financing
Agreement or the ability of the Credit Parties, taken as a whole, to perform
their payment or other obligations under any Financing Agreement to which they
are parties, (c) a material adverse change in, or a material adverse effect
upon, the legality, validity or enforceability of any Financing Agreement, (d) a
material adverse change in, or a material adverse effect upon, the existence,
perfection or priority of any security interest granted in any Financing
Agreement or the value of any material Collateral not resulting from any action
or inaction by the Administrative Agent, or (e) any liability of the Credit
Parties, or any one or more of them, in excess of Five Hundred Thousand and
No/100 Dollars ($500,000.00) in the aggregate as a result the final adjudication
of one or more violations of any Healthcare Law which remains unpaid for a
period of thirty (30) days, unless such liability is being contested or appealed
by appropriate proceedings and Borrower has established appropriate reserves
adequate for payment in the event such appeal or contest is ultimately
unsuccessful, provided further that in the event such contest or appeal is
ultimately unsuccessful, the Borrower shall pay the assessment no later than the
deadline set forth by the applicable agency.

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“Maximum Term Facility” means an amount equal to Forty-Five Million and No/100
Dollars ($45,000,000.00).
“Medicaid” mean collectively all federal statutes (whether set forth in Title
XIX of the Social Security Act or elsewhere) affecting the health insurance
program established by Title XIX of the Social Security Act (42 U.S.C. §§ 1396,
et seq.), together with all applicable provisions of all rules, regulations,
manuals, final orders and administrative, reimbursement and other applicable
guidelines of all governmental authorities, including HHS, CMS or the Office of
the Inspector General of HHS, or any Person succeeding to the functions of any
of the foregoing (whether or not having the force of law).
“Medicare” mean collectively all federal statutes (whether set forth in Title
XVIII of the Social Security Act or elsewhere) affecting the health insurance
program for the aged and disabled established by Title XVIII of the Social
Security Act (42 U.S.C. § 1395, et seq.), together with all applicable
provisions of all rules, regulations, manuals, final orders and administrative,
reimbursement and other applicable guidelines of all governmental authorities,
including HHS, CMS or the Office of the Inspector General of HHS, or any Person
succeeding to the functions of any of the foregoing (whether or not having the
force of law).
“Mortgages” means, collectively, each of those certain Amended and Restated Deed
of Trust, Financing Statement and Fixture Filing, Amended and Restated Deed of
Trust, Amended and Restated Mortgage, or other Mortgage, Deed of Trust, Security
Agreement, Assignment of Leases and Rents and Fixture Filing each dated of even
date herewith made by the Borrower, respectively, granting and conveying to the
Administrative Agent for the ratable benefit of the Lenders a first mortgage
Lien on that certain Property as identified on Schedule 1.1(b), as the same may
be amended, restated, supplemented or modified from time to time
“Multiemployer Plan” shall have the meaning ascribed to such term in Section
7.19 hereof.
“Non-U.S. Participant” shall have the meaning ascribed to such term in Section
3.3 hereof.
“OFAC Lists” means, collectively, the Specially Designated Nationals and Blocked
Persons List maintained by the Office of Foreign Asset Control, the Department
of the Treasury pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079
(Sept. 25, 2001) and/or any other list of terrorists or terrorist organizations
maintained pursuant to any of the rules and regulations of or by the Office of
Foreign Asset Control, the Department of the Treasury or pursuant to any other
applicable Executive Orders, as such lists may be amended or supplemented from
time to time.
“Operating Lease” means the collective reference to any Commercial Leases
between the Borrower and any Operators, respectively, pursuant to which such
Operators lease and operate each Location.
“Operators” or “Operator” means the respective operators of the Locations, all
of which are licensed under all applicable Healthcare Laws.
“Participant” shall have the meaning ascribed to such term in Section 12.15(d)
hereof.

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“Patriot Act” shall have the meaning ascribed to such term in Section 8.16
hereof.
“Payment In Full” means (a) the indefeasible payment in full in cash of all
Loans and other Liabilities (and all of the Affiliate Revolving Loan
Liabilities), other than contingent indemnification obligations for which no
claims have been asserted, and (b) the termination of the Term Loan Commitment
in accordance with the terms and conditions hereof (and the termination of the
Revolving Loan Commitment in accordance with the terms and conditions of the
Revolving Loan Agreement).
“PBGC” shall have the meaning ascribed to such term in Section 7.19 hereof.
“Permitted Acquisition” means an Acquisition by a Borrower (or by an applicable
Affiliate of Borrower to acquire Rose Terrace under its option in the Rose
Terrace Lease) that (i) fully complies with the terms and conditions set forth
in Exhibit C attached hereto and made a part of this Agreement by this reference
thereto, and (ii) without limiting the conditions identified on Exhibit C
hereto, is otherwise approved in advance in writing by the Administrative Agent,
which approval will not be unreasonably withheld, conditioned or delayed.
“Permitted Liens” shall have the meaning ascribed to such term in Section 9.1
hereof.
“Person” means any individual, sole proprietorship, partnership, joint venture,
trust, limited liability company, unincorporated organization, association,
corporation, institution, entity, party, or government (whether national,
federal, state, provincial, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).
“Plan” shall have the meaning ascribed to such term in Section 7.19 hereof.
“Pledge Agreement” means that certain Amended and Restated Pledge Agreement of
even date herewith made by Diversicare Leasing in favor of the Administrative
Agent, each of those certain Pledge Agreements of even date herewith made by
Diversicare Management Services Co., Diversicare Holding and Diversicare Kansas,
respectively, in favor of the Administrative Agent, and any other similar pledge
agreement required by Administrative Agent in connection with the terms and
conditions of this Agreement, each in form and substance reasonable satisfactory
to the Administrative Agent, as the same may be modified, restated, supplemented
or amended from time to time in accordance with the terms thereof.
“Pledgor” means, individually and collectively as applicable, Diversicare
Leasing Corp., Diversicare Management Services Co., Diversicare Holding, and/or
Diversicare Kansas.
“Prepayment Premium” means, with respect to prepayment of the Loan, three
percent (3%) of the amount of the outstanding principal balance of the Loan
prepaid if such prepayment occurs on or prior to the first (1st) year
anniversary of the Closing Date; two percent (2%) of the amount of the
outstanding principal balance of the Loan prepaid if such prepayment occurs
after the first anniversary hereof and on or prior to the second (2nd) year
anniversary of the Closing Date; and one percent (1%) of the amount of the
outstanding principal balance of the Loan prepaid if such prepayment occurs at
any time after the second anniversary hereof.

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“Pro Rata Share” means , with respect to a Lender’s obligation to make a Term
Loan and receive payments of principal, interest, fees, costs, and expenses with
respect thereto, (a) prior to the making of the Term Loan, the percentage
obtained by dividing (i) such Lender’s Term Loan Commitment, by (ii) the
aggregate amount of all Lenders’ Term Loan Commitments, and (b) from and after
the making of the Term Loan, the percentage obtained by dividing (i) the
principal amount of such Lender’s Term Loan by (ii) the principal amount of all
Term Loans of all Lenders.
“Prohibited Transaction” shall have the meaning ascribed to such term in ERISA.
“Property” means any and all real property owned, leased, sub-leased or used at
any time by Borrower, including the real estate identified on Schedule 1.1(b).
“Register” shall have the meaning ascribed to such term in Section 12.15(d)
hereof.
“Release” means any actual or threatened spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing of Hazardous Substances into the environment, as “environment” is
defined in CERCLA.
“Released Parties” shall have the meaning ascribed to such term in Section 12.24
hereof.
“Releasing Parties” shall have the meaning ascribed to such term in Section
12.24 hereof.
“Required Lenders” means, as of any date of determination, (a) if there are two
(2) or fewer Lenders, Lenders holding one hundred percent (100%) of the sum of
the outstanding principal balance of the Loan (and the unused Term Loan
Commitment) at such time, or (b) if there are more than two (2) Lenders, Lenders
holding sixty-six and two-thirds percent (66‑2/3%) or more of the sum of the
outstanding principal balance of the Loan (and the unused Term Loan Commitment)
at such time, provided, that the commitments of, and the portion of the
Liabilities held or deemed held by, any Defaulting Lender shall be excluded for
purposes of making a determination of Required Lenders, and any Lender and its
Affiliates shall be counted as a single Lender for purposes of making a
determination of Required Lenders.
“Required Repairs” shall have the meaning ascribed to such term in Section 2.19
hereof.
“Respond” or “Response” means any action taken pursuant to Environmental Laws to
correct, remove, remediate, cleanup, prevent, mitigate, monitor, evaluate,
investigate or assess the Release of a Hazardous Substance.
“Restricted Agreements” means, collectively, each Management Agreement, each
Commercial Lease, each agreement, document or instrument entered into in
connection with (directly or indirectly) the Borrower Cash Management Program,
the Kansas Acquisition Documents, and, if applicable at any time, any material
agreement entered into by a Borrower in connection with a Permitted Acquisition,
and any other agreement, document or instrument between or among the Credit
Parties and any agreement, document or instrument pertaining to (directly or
indirectly) any of the foregoing.

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“Restricted Balance Account” shall have the meaning ascribed to such term in
Section 2.19 hereof.
“Restrictions” shall have the meaning ascribed to such term in Section 10.3
hereof.
“Revolving Loan Agreement” means that certain Amended and Restated Revolving
Loan and Security Agreement dated of even date herewith by and among the
Affiliated Revolving Borrowers, the Lenders and the Administrative Agent, as the
same may be restated, modified, supplemented or amended from time to time.
“Seller” means, collectively, Cumberland & Ohio Co. of Texas, a Tennessee
corporation, as Receiver of SeniorTrust of Florida, Inc., a Tennessee non-profit
corporation, which is the sole member of SeniorTrust of Chanute, LLC,
SeniorTrust of Council Grove, LLC, SeniorTrust of Haysville, LLC, SeniorTrust of
Larned, LLC, and SeniorTrust of Sedgwick, LLC.
“Service Fee” shall have the meaning ascribed to such term in Section 8.9
hereof.
“Solvent” means, with respect to any Person on a particular date, that on such
date (a) the fair value of the property of such Person is greater than the total
amount of liabilities, including contingent liabilities, of such Person; (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured; (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay as such debts and liabilities mature; and (d) such
Person is not engaged in a business or transaction, and is not about to engage
in a business or transaction, for which such Person’s property would constitute
an unreasonably small capital. The amount of contingent liabilities (such as
litigation, guaranties and pension plan liabilities) at any time shall be
computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can be reasonably be expected
to become an actual or matured liability, but shall not include incurred but not
reported professional liability claims.
“Stated Maturity Date” means April 30, 2018.
“Stock” shall mean all certificated and uncertificated shares, stock, options,
warrants, general or limited partnership interests, membership interests or
units, limited liability company interests, participation or other equivalents
(regardless of how designated) of or in a corporation, partnership, limited
liability company or equivalent entity whether voting or nonvoting, including
common stock, preferred stock, or any other “equity security” (as such term is
defined in Rule 3a11‑1 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934).
“Subordinated Debt” means any and all Indebtedness owing by the Borrower to a
third party that has been subordinated to the Liabilities in writing on terms
and conditions satisfactory to the Administrative Agent in its sole and absolute
discretion.
“Subordination Agreement” means, collectively, any subordination agreements
entered into from time to time by holders of Subordinated Debt and the
Administrative Agent, each in form and

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substance satisfactory to the Administrative Agent in its sole and absolute
discretion, each as the same may be modified, supplemented, amended or restated
from time to time.
“Subordination of Management Agreements” means that certain Amended and Restated
Subordination of Management Agreements of even date herewith made by the Manager
in favor of the Administrative Agent, in form and substance reasonable
satisfactory to the Administrative Agent, as the same may be modified, restated,
supplemented or amended from time to time in accordance with the terms thereof.
“Subsidiary” means, with respect to any Person, (i) any corporation of which an
aggregate of more than fifty percent (50%) of the outstanding Stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, Stock of any other class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of fifty percent (50%) or more of such Stock whether by
proxy, agreement, operation of law or otherwise, and (ii) any partnership or
limited liability company in which such Person or one or more Subsidiaries of
such Person has an equity interest (whether in the form of voting or
participation in profits or capital contribution) of more than fifty percent
(50%) or of which any such Person is a general partner, managing member or
manager or may exercise the powers of a general partner, managing member or
manager.
“Swap Obligation” means any Hedging Agreement or related obligation that
constitutes a “swap” within the meaning of section 1a(47) of the Commodity
Exchange Act.
“Tax Code” shall have the meaning ascribed to such term in Section 7.19 hereof.
“Taxes” shall have the meaning ascribed to such term in Section 3.3 hereof.
“Tenant” means any tenant, resident or occupant under any Lease.
“Term Loan” shall have the meaning ascribed to such term in Section 2.1 hereof.
“Term Note(s)” shall have the meaning ascribed to such term in Section 2.1
hereof.
“Term Loan Commitment” means, as to any Lender, such Lender’s commitment to make
the Term Loan under this Agreement. The initial amount of each Lender’s Term
Loan Commitment is set forth on Annex A attached hereto and made a part hereof.
“TRICARE” means the medical program for active duty members, qualified family
members, CHAMPUS eligible retirees and their family members and survivors, of
all uniformed services.
“Uniform Commercial Code” or “UCC” or “Code” means the Uniform Commercial Code
as the same may, from to time, be in effect in the State of Illinois; provided,
however, that if, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of, or remedies with respect to,
Administrative Agent’s Lien on the Collateral is governed by the Uniform

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Commercial Code as in effect in a jurisdiction other than the State of Illinois,
the term “Uniform Commercial Code” or “UCC” or “Code” shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions of this Agreement or the other Financing Agreements relating to such
attachment, perfection, priority or remedies and for purposes of definitions
related to such provisions; provided further that, to the extent that the
Uniform Commercial Code of a particular jurisdiction is used to define a term
herein or in any Financing Agreement and such term is defined differently in
different Articles or Divisions of such Uniform Commercial Code, then the
definition of such term contained in Article or Division 9 of such Uniform
Commercial Code shall control.
“Withholding Certificate” shall have the meaning ascribed to such term in
Section 3.3 hereof.
1.2    Interpretation.
(a)    All accounting terms used in this Agreement or the other Financing
Agreements shall have, unless otherwise specifically provided herein or therein,
the meaning customarily given such term in accordance with GAAP, and all
financial computations thereunder shall be computed, unless otherwise
specifically provided therein, in accordance with GAAP consistently applied;
provided, however, that all financial covenants and calculations in the
Financing Agreements shall be made in accordance with GAAP as in effect on the
Closing Date unless Borrower, Administrative Agent and Required Lenders shall
otherwise specifically agree in writing. That certain items or computations are
explicitly modified by the phrase “in accordance with GAAP” shall in no way be
construed to limit the foregoing. Unless otherwise specified, references in this
Agreement or any of the attachments hereto or appendices hereof to a Section,
subsection or clause refer to such Section, subsection or clause as contained in
this Agreement. The words “herein,” “hereof” and “hereunder” and other words of
similar import refer to this Agreement as a whole, including all annexes,
exhibits and schedules attached hereto, as the same may from time to time be
amended, restated, modified or supplemented, and not to any particular section,
subsection or clause contained in this Agreement or any such annex, exhibit or
schedule.
(b)    Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words “including”, “includes” and
“include” shall be deemed to be followed by the words “without limitation”; the
word “or” is not exclusive; references to Persons include their respective
successors and assigns (to the extent and only to the extent permitted by the
Financing Agreements) or, in the case of governmental Persons, Persons
succeeding to the relevant functions of such Persons; and all references to
statutes and related regulations shall include any amendments of the same and
any successor statutes and regulations. Whenever any provision in any Financing
Agreement refers to the knowledge (or an analogous phrase) of Borrower, except
as otherwise expressly provided for herein, such words are intended to signify
that a Duly Authorized Officer of Borrower has actual knowledge or awareness of
a particular fact or circumstance or that a prudent individual in the position
of such Duly Authorized Officer of Borrower, would reasonably be expected to
have known or been aware of such fact or circumstance in the course of
performing his or her duties.
2.    COMMITMENT; INTEREST; FEES.

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2.1    Term Loan. On the terms and subject to the conditions set forth in this
Agreement, and provided there does not then exist a Default or an Event of
Default, each Lender, severally and for itself alone, agrees to make in U.S.
Dollars such Lender’s Pro Rata Share of a term loan (the “Term Loan”) in one
advance to the Borrower on the Closing Date in the aggregate amount of the
Maximum Term Facility. As of the date hereof (immediately prior to giving effect
to such advance) the outstanding principal amount of the Term Loan is equal to
Twenty Two Million One Hundred Seventy Four Thousand One Hundred Fifty Eight and
No/100 Dollars ($22,174,158.00) and, immediately after giving effect to such
advance, is equal to the Maximum Term Facility. Any amounts paid or applied to
the principal balance of the Term Loan (whether by mandatory prepayment or
otherwise) may not be reborrowed hereunder. The payment obligations of the
Borrower to the Lenders hereunder are and shall be joint and several as provided
in Section 12.21 hereof. Each Lender’s obligation to fund the Term Loan shall be
limited to such Lender’s Pro Rata Share.
(c)    The advance to the Borrower under this Section 2.1 shall be deposited, in
immediately available funds, in the Borrower’s demand deposit account with the
Administrative Agent, or in such other account as the Borrower Agent designates
in writing with the Administrative Agent’s approval.
(d)    The principal balance of the Term Loan shall be amortized over
twenty-five (25) years and shall be jointly and severally repaid by Borrower in
consecutive equal monthly installments as follows (subject to Section 2.10):
Year 1:
$970,000 ($80,833.34/month)
Year 2:
$1,010,000 ($84,166.67/month)
Year 3:
$1,060,000 ($88,333.34/month)
Year 4:
$1,110,000 ($92,500.00/month)
Year 5:
$1,170,000 ($97,500.00/month)

, together with interest accrued thereon, each payable on the first day of each
calendar month, commencing on June 1, 2013, and otherwise in accordance with
Section 2.7 hereof, with a final installment of the aggregate unpaid principal
balance of the Term Loan, together with interest accrued thereon, payable on the
Credit Termination Date.
(e)    The Term Loan shall be evidenced by a separate amended and restated
promissory note or promissory note (hereinafter, as the same may be amended,
restated, modified or supplemented from time to time, and together with any
renewals or extensions thereof or exchanges or substitutions therefor, called
the “Term Loan Note(s)”), duly executed and delivered by the Borrower,
substantially in the form set forth in Exhibit A attached hereto, with
appropriate insertions, dated the Closing Date, jointly and severally payable to
the order of each Lender, respectively, in the principal amount equal to such
Lender’s Pro Rata Share of the Maximum Term Facility. THE PROVISIONS OF THE TERM
LOAN NOTES NOTWITHSTANDING, THE TERM LOAN THEN OUTSTANDING SHALL BECOME
IMMEDIATELY DUE AND PAYABLE ON A JOINT AND SEVERAL BASIS UPON THE EARLIEST TO
OCCUR OF (X) STATED MATURITY DATE; (Y) THE ACCELERATION OF THE LIABILITIES
PURSUANT

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TO SECTION 11.2 HEREOF; AND (Z) TERMINATION OF THIS AGREEMENT (WHETHER BY
PREPAYMENT OR OTHERWISE) IN ACCORDANCE WITH ITS TERMS.
(f)    Accrued interest on the Term Loan shall be due and payable and shall be
made by the Borrower to the Administrative Agent in accordance with Section 2.7
hereof. Monthly interest payments on the Term Loan shall be computed using the
interest rate then in effect and based on the outstanding principal balance of
the Term Loan. Upon maturity, the outstanding principal balance of the Term Loan
shall be immediately due and payable, together with any remaining accrued
interest thereon.
2.2    [Intentionally Omitted.].
2.3    [Intentionally Omitted.].
2.4    [Intentionally Omitted.].
2.5    The Borrower’s Loan Account. The Administrative Agent, on behalf of each
Lender, shall maintain a loan account (the “Loan Account”) on its books for the
Borrower in which shall be recorded (a) the Loan made by the Lenders (including
Administrative Agent) to the Borrower pursuant to this Agreement, (b) all
payments made by the Borrower on the Loan, and (c) all other appropriate debits
and credits as provided in this Agreement, including, without limitation, all
fees, charges, expenses and interest. All entries in the Loan Account shall be
made in accordance with the Administrative Agent’s customary accounting
practices as in effect from time to time. The Borrower promises to pay the
amount reflected as owing by Borrower under its Loan Account and all of its
other obligations hereunder as such amounts become due or are declared due
pursuant to the terms of this Agreement. Notwithstanding the foregoing, the
failure so to record any such amount or any error in so recording any such
amount shall not limit or otherwise affect the Borrower’s obligations under this
Agreement or under the Term Loan Note to repay the outstanding principal amount
of the Loan together with all interest accruing thereon.
2.6    Statements. The Loan to the Borrower, and all other debits and credits
provided for in this Agreement, shall be evidenced by entries made by the
Administrative Agent in its internal data control systems showing the date,
amount and reason for each such debit or credit. Until such time as the
Administrative Agent shall have rendered to the Borrower Agent written
statements of account as provided herein, the balance in the Loan Account, as
set forth on the Administrative Agent’s most recent computer printout, shall be
rebuttably presumptive evidence of the amounts due and owing the Lenders by the
Borrower. From time to time the Administrative Agent shall render to the
Borrower Agent a statement setting forth the balance of the Loan Account,
including principal, interest, expenses and fees. Each such statement shall be
subject to subsequent adjustment by the Administrative Agent but shall, absent
manifest errors or omissions, be presumed correct and binding upon the Borrower.
2.7    Interest. (a) The Borrower agrees to jointly and severally pay to the
Administrative Agent on behalf of the Lenders interest on the daily outstanding
principal balance of the Term Loan at the Libor Rate; provided, however, that
notwithstanding any other term or provision of this Agreement to the contrary,
(x) immediately following the occurrence and during the continuance

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of an Event of Default relating to Sections 11.1(a), (h), (i) or (j) hereof, and
(y) unless the Required Lenders otherwise direct in writing, upon Administrative
Agent’s demand following the occurrence and during the continuance of any other
Event of Default, in each case, Borrower agrees to and shall pay to
Administrative Agent on behalf of Lenders interest on the outstanding principal
balance of the Loan at the per annum rate of two percent (2.0%) plus the rate
otherwise payable hereunder with respect to such Loan (the “Default Rate”).
(b)    Accrued interest on each Libor Loan shall be payable on the last day of
the Libor Interest Period relating to such Libor Loan and at maturity,
commencing with the first such last day of the initial Libor Interest Period. If
at any time applicable in accordance with Sections 3.2, 3.6 or 3.7 hereof,
accrued interest on each Base Rate Loan shall be payable on the first calendar
day of each month and at maturity. Notwithstanding the foregoing in this Section
2.7(b), the first interest payment hereunder shall be due and payable on June 1,
2013. Monthly interest payments on the Loan shall be computed using the interest
rate then in effect and based on the outstanding principal balance of the Loan.
Upon maturity, the outstanding principal balance of the Loan shall be
immediately due and payable, together with any remaining accrued interest
thereon. Interest shall be computed on the basis of a year of three hundred
sixty (360) days for the actual number of days elapsed (which results in more
interest being paid than if computed on the basis of a 365-day year). If any
payment of principal of, or interest on, the Term Loan Note falls due on a day
that is not a Business Day, then such due date shall be extended to the next
following Business Day, and additional interest shall accrue and be payable for
the period of such extension.
2.8    Method for Making Payments. All payments of principal, interest, fees and
costs and expenses (including, without limitation, pursuant to Section 12.2)
hereunder shall be paid by automatic debit from Borrower’s concentration
account, wire transfer, check or in coin or currency which, at the time or times
of payment, is the legal tender for public and private debts in the United
States of America and shall be made at such place as Administrative Agent may
from time to time appoint or direct in the payment invoice or otherwise in
writing, and in the absence of such appointment or direction, then, not later
than 1:00 p.m. (Chicago time) on the date of payment, at the offices of
Administrative Agent at 120 South LaSalle Street, Chicago, Illinois 60603, Attn:
Commercial Loan Department. Payment made by check shall be deemed paid on the
date two Business Days after Administrative Agent receives such check; provided,
however, that if such check is subsequently returned to Administrative Agent
unpaid due to insufficient funds or otherwise, the payment shall not be deemed
to have been made and shall continue to bear interest until collected. If at any
time requested by Borrower (including via electronic transmission), principal,
interest, fees and costs and expenses (including, without limitation, pursuant
to Section 12.2) hereunder owed to Administrative Agent or Lenders from time to
time will be deducted by Administrative Agent automatically on the due date or
date declared due from Borrower’s concentration account with Administrative
Agent. Borrower shall maintain sufficient funds in the account on the dates
Administrative Agent enters debits authorized hereby. If there are insufficient
funds in the concentration account on the date Administrative Agent enters any
debit authorized hereby, the debit will be reversed. Borrower may terminate this
direct debit arrangement at any time by sending written notice to Administrative
Agent at the address specified above. Notwithstanding the foregoing in this
Section, Borrower hereby irrevocably authorizes and instructs Administrative
Agent after the occurrence and during the continuance of any Default or Event of

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Default to direct debit any of Borrower’s operating accounts with Administrative
Agent and PrivateBank for all principal, interest, costs, and any and all fees,
costs and expenses due hereunder or pursuant hereto with respect to the Loan and
the Liabilities (including, without limitation, reasonable attorneys’ fees).
Payments made after 1:00 p.m. (Chicago time) shall be deemed to have been made
on the next succeeding Business Day. Administrative Agent shall promptly (but in
no event longer than within three (3) Business Days thereof) remit to each
Lender its Pro Rata Share of all such payments received in collected funds by
Administrative Agent for the account of such Lender; provided, however, all
payments due by Borrower under Section 3 hereof, as applicable, shall be made by
Borrower directly to Administrative Agent and Lenders entitled thereto without
setoff, counterclaim or other defense.
2.9    Term of this Agreement. The Borrower shall have the right to terminate
this Agreement (subject to survival of Sections 12.9 and 12.16 and any other
term hereof surviving by its terms hereof) following prepayment of all of the
Liabilities as provided under Section 2.10 hereof; provided, however, that (a)
all of the Administrative Agent’s and each Lender’s rights and remedies under
this Agreement, and (b) the Liens created under Section 6.1 hereof and under any
of the other Financing Agreements, shall survive such termination until Payment
in Full. In addition, the Liabilities may be accelerated as set forth in Section
11.2 hereof. Upon the effective date of termination, all of the Liabilities
shall become immediately due and payable on a joint and several basis without
notice or demand. Notwithstanding any termination, until Payment in Full, the
Administrative Agent shall be entitled to retain its Liens (for the ratable
benefit of the Lenders and the Administrative Agent) in and to all existing and
future Collateral.
2.10    Optional Prepayment of Loan. The Borrower may, at its option,
permanently prepay, at any time during the term of this Agreement the Loan or
any portion thereof but in minimum amounts of no less than Five Hundred Thousand
Dollars ($500,000), subject to the following conditions: (i) not less than ten
(10) days prior to the date upon which the Borrower desires to make any such
prepayment, Borrower shall deliver to the Administrative Agent a written notice
of its intention to prepay all or such portion of the Loan, which notice shall
be revocable (provided, that any and all costs or expenses incurred or suffered
by the Administrative Agent and the Lenders as a result of the revocation of
notice by the Borrower shall be borne solely by the Borrower) and state the
amount of the prepayment and the prepayment date, (ii) the Borrower shall pay
(A) in the case of a prepayment of the entire Loan with the proceeds received
from a Change in Control or a refinancing from a Person not an Affiliate of the
Borrower or any of its Affiliates, the Prepayment Premium (in view of the
impracticality and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of each Lender’s
lost profits as a result of such prepayment), (B) any amount due pursuant to
Section 3.4 hereof, (C) any amounts due in connection with such prepayment under
any Hedging Agreement, and (D) all liabilities, including any applicable swap or
hedging breakage or termination fee, if any, in connection with any Hedging
Agreement; provided, however, no Prepayment Premium shall be required or due in
the event of a prepayment of the Loan or any portion thereof (x) with the
proceeds received by Borrower from a HUD Financing, or (y) by Borrower outside
the amortization schedule in Section 2.1(a). Any such Prepayment Premium shall
constitute a part of the Liabilities and be secured by the Collateral.
Prepayments of the Loan shall be applied against installments payable under the
Term Loan Notes in the inverse order of maturity. The parties agree that the
Prepayment Premium

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is not a penalty. BORROWER HEREBY EXPRESSLY ACKNOWLEDGES THAT SUCH PREPAYMENT
PREMIUM IS REASONABLE AND WILL FAIRLY COMPENSATE THE LENDERS FOR ANY COSTS AND
CHARGES INCURRED BY LENDERS AS A RESULT OF THE PREPAYMENT OF ALL OR ANY PORTION
OF THE LOAN. BORROWER ACKNOWLEDGES THAT THE INCLUSION OF THIS AGREEMENT TO PAY
THE PREPAYMENT PREMIUM FOR THE RIGHT TO PREPAY ALL OR ANY PORTION OF THE LOAN
WAS SEPARATELY NEGOTIATED WITH ADMINISTRATIVE AGENT AND LENDERS, THAT THE
ECONOMIC VALUE OF THE VARIOUS ELEMENTS OF THIS AGREEMENT WERE DISCUSSED, THAT
THE CONSIDERATION GIVEN BY BORROWER FOR THE LOAN WAS ADJUSTED TO REFLECT THE
SPECIFIC AGREEMENT NEGOTIATED AMONG BORROWER, ADMINISTRATIVE AGENT AND LENDERS
AND CONTAINED IN THIS SECTION.
2.11    Limitation on Charges. It being the intent of the parties that the rate
of interest and all other charges to the Borrower be lawful, if for any reason
the payment of a portion of the interest or other charges otherwise required to
be paid under this Agreement would exceed the limit which the Lenders may
lawfully charge the Borrower, then the obligation to pay interest or other
charges shall automatically be reduced to such limit and, if any amounts in
excess of such limit shall have been paid, then such amounts shall at the sole
option of the Administrative Agent (or otherwise at the direction of the
Required Lenders in writing) either be refunded to the Borrowers or credited to
the principal amount of the Liabilities (or any combination of the foregoing) so
that under no circumstances shall the interest or other charges required to be
paid by the Borrowers hereunder exceed the maximum rate allowed by applicable
Laws, and Borrowers shall not have any action against any Lender or the
Administrative Agent for any damages arising out of the payment or collection of
any such excess interest.
2.12    [Intentionally Omitted.].
2.13    Setoff. (a) Borrower agrees that the Administrative Agent and each
Lender has all rights of setoff and banker’s liens provided by applicable law.
The Borrower agrees that, if at any time (i) any amount owing by it under this
Agreement or any Financing Agreement is then due and payable to the
Administrative Agent or Lenders, or (ii) or an Event of Default shall have
occurred and be continuing, then the Administrative Agent or Lenders, in their
sole discretion, may set off against and apply to the payment of any and all
Liabilities, any and all balances, credits, deposits, accounts or moneys of the
Borrower then or thereafter with the Administrative Agent or such Lender.
(b)    Without limitation of Section 2.13(a) hereof, the Borrower agrees that,
upon and after the occurrence of any Event of Default, the Administrative Agent
and each Lender is hereby authorized, at any time and from time to time, without
prior notice to the Borrower (provided, however, prior to an Event of Default
the Administrative Agent and such Lender shall use reasonable efforts to provide
notice of any such action within a reasonable time thereafter but the
Administrative Agent and such Lender shall not be liable for any failure to
provide such notice), (i) to set off against and to appropriate and apply to the
payment of any and all Liabilities any and all amounts which the Administrative
Agent or Lender is obligated to pay over to the Borrower (whether matured or
unmatured, and, in the case of deposits, whether general or special, time or
demand and however

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evidenced), and (ii) pending any such action, to the extent necessary, to
deposit such amounts with the Administrative Agent as Collateral to secure such
Liabilities and to dishonor any and all checks and other items drawn against any
deposits so held as the Administrative Agent in its sole discretion may elect.
(c)    The rights of the Administrative Agent and Lenders under this Section
2.13 are in addition to all other rights and remedies which the Administrative
Agent and Lenders may otherwise have in equity or at law.
(d)    If any Lender shall obtain any payment or other recovery (whether
voluntary, involuntary, by application of offset or otherwise), on account of
(a) principal of or interest on the Term Loan, but excluding (i) any payment
pursuant to Section 3.8 or Section 12.15 and (ii) payments of interest on any
Base Rate Loan that but for Sections 3.2, 3.6 and 3.7 would be a Libor Loan, or
(b) other recoveries obtained by all Lenders on account of principal of and
interest on the Loan (or such participation) then held by them, then such Lender
shall purchase from the other Lenders such participations in the Loan held by
them as shall be necessary to cause such purchasing Lender to share the excess
payment or other recovery ratably with each of them; provided that if all or any
portion of the excess payment or other recovery is thereafter recovered from
such purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery.
2.14    Termination of Commitment. On the date on which the Commitment
terminates pursuant to Section 11.2 hereof, the Loan and other Liabilities shall
become immediately due and payable, without presentment, demand or notice of any
kind.
2.15    [Intentionally Omitted.].
2.16    Closing Fee. On the Closing Date, the Borrower shall pay to the
Administrative Agent a one-time closing fee pursuant to the Fee Letter in
immediately available funds, which fee shall be nonrefundable and deemed fully
earned as of such date (“Closing Fee”).
2.17    Late Charge. If any installment of principal or interest due hereunder
shall become overdue for five (5) days after the date when due, the Borrower
shall pay to the Administrative Agent (for the ratable benefit of the Lenders)
on demand a “late charge” of five cents ($.05) for each dollar so overdue in
order to defray part of the increased cost of collection occasioned by any such
late payment, as liquidated damages and not as a penalty.
2.18    Mandatory Prepayments. Upon receipt by Borrower of the proceeds of any
(a) Asset Disposition, or (b) sale or issuance of any Stock of Borrower
(excluding (i) any issuance to another Borrower or Guarantor, (ii) any issuance
of Stock pursuant to any employee, officer or director option program or
agreement, benefit plan or compensation program or agreement, or (iii) any
issuance of Stock pursuant to the exercise of options or warrants, or (iv) any
issuance in connection with any dividend reinvestment plan or direct stock
purchase plan, if applicable), in each case, Borrower shall prepay the
outstanding principal amount of the Liabilities in an amount equal to one
hundred percent (100%) of the cash proceeds of such transaction net of (A) the
direct reasonably and actually incurred costs relating thereto, such as sales
commissions and legal, accounting and investment banking fees and out-of-pocket
costs, and (B) taxes paid or reasonably estimated by

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Borrower to be payable as a result thereof. Nothing contained in this Section
2.18 shall be construed to permit Borrower to consummate any transaction in
violation of any other provision contained in this Agreement, including, without
limitation, Section 9.6 hereof. No Prepayment Premium shall be required or due
in respect of any mandatory prepayment made by Borrower pursuant to this Section
2.18 (except as identified in Section 2.10(ii)(A) hereof).
2.19    Restricted Balance Account. Simultaneous with the advance of the Term
Loan hereunder, Borrower shall direct Administrative Agent to deposit: (i) Five
Million Eight Hundred Forty-Four Thousand Three Hundred Three and 50/100 Dollars
($5,844,303.50) of such Term Loan proceeds and (ii) the balance remaining of
approximately Eight Hundred Seventy-Six Thousand Two Hundred Twenty-Seven
Dollars ($876,227) from that certain restricted balance account in the name of
Borrower maintained with PrivateBank for Capital Expenditures to be made with
the proceeds from the Original Term Loan Agreement (the “Prior Capital
Expenditures Amounts”), into a single, interest bearing account established at
PrivateBank under the name of Borrower (“Restricted Balance Account”). The
Restricted Balance Account shall be pledged as additional collateral to
Administrative Agent for the payment of the Liabilities. Provided that no
Default or Event of Default exists and is continuing at the time, Borrower or
Guarantor may withdraw and use the funds in the Restricted Balance Account only
for the following purposes: (i) to make one or more Permitted Acquisitions, or
(ii) for Capital Expenditures or other repairs to be made in the ordinary course
of business at a Facility owned by a Borrower and the Facilities for which the
Prior Capital Expenditures Amounts are designated; provided, that if Capital
Expenditures are required to cure a Default hereunder, Borrower may withdraw
funds from the Restricted Balance Accounts for the purpose of timely curing such
Default; provided, however, no less than Two Million One Hundred Thousand
Dollars ($2,100,000) in the aggregate of the funds in the Restricted Balance
Account as of the Closing Date must be used by Borrower to make each of the
repairs identified in Exhibit E attached hereto and made a part hereof within
two hundred seventy (270) days of the Closing Date (the “Required Repairs”). If
the Required Repairs are completed at a cost of less than Two Million One
Hundred Thousand Dollars ($2,100,000), then the balance remaining following such
completion shall remain in the Restricted Balance Account and be made available
for other Capital Expenditures or Permitted Acquisitions in the manner provided
by this Section 2.19. Each request for withdrawal and disbursement of funds from
the Restricted Balance Account shall specify the date, amount and purpose of the
withdrawal, contain the certification of Borrower that no Default or Event of
Default exists and is continuing at the time (or will occur immediately after
such contemplated withdrawal), and authorization and direction to disburse the
requested funds in accordance with instructions set forth therein. All interest
which shall accrue from time to time upon the amount in the Restricted Balance
Account shall be disbursed to Borrower quarterly, provided that there is no
outstanding Default or Event of Default at the time. Borrower must promptly
provide to Administrative Agent true and correct copies of all applicable
invoices, delivery receipts and other documents relating to any machinery and
equipment acquired or to be acquired by Borrower with funds in or from the
Restricted Balance Account in connection with this Section, all in form and
substance reasonably satisfactory to Administrative Agent. Administrative Agent
must receive and have a first priority Lien (for the benefit of Lenders and
Administrative Agent) on each item of machinery and equipment financed with
funds from the Restricted Balance Account.

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3.    CHANGE IN CIRCUMSTANCES.
3.1    Yield Protection. If, after the date of this Agreement (for purposes of
this Agreement, the Dodd-Frank Wall Street Reform and Consumer Protection Act
and all guidelines and regulations adopted in connection therewith are deemed to
have been adopted after the date hereof), the adoption of any law or any
governmental or quasi-governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law), or any change therein, or
any change in the interpretation or administration thereof, or the compliance of
any Lender therewith, or Regulation D of the Board of Governors of the Federal
Reserve System,
(a)    subjects any Lender to any tax, duty, charge or withholding on or from
payments due from the Borrower (excluding taxation of the overall net income or
receipts of such Lender or any branch profits taxes), or changes the basis of
taxation of payments to such Lender in respect of its portion of the Loan or
other amounts due it hereunder, or
(b)    imposes, modifies, or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, any
Lender (other than reserves and assessments taken into account in determining
the interest rate applicable to Libor Loans), or
(c)    imposes any other condition the result of which is to increase the cost
to any Lender of making, funding or maintaining advances or reduces any amount
receivable by such Lender in connection with advances, or requires any Lender to
make any payment calculated by reference to the amount of advances held or
interest received by it, by an amount deemed material by such Lender, or
(d)    affects the amount of capital required or expected to be maintained by
any Lender or any corporation controlling such Lender and such Lender determines
the amount of capital required is increased by or based upon the existence of
this Agreement or its obligation to make the Loan hereunder or of commitments of
this type, then, within three (3) Business Days of demand by such Lender, the
Borrower agrees to pay such Lender that portion of such increased expense
incurred (including, in the case of clause (d), any reduction in the rate of
return on capital to an amount below that which it could have achieved but for
such law, rule, regulation, policy, guideline or directive and after taking into
account such Lender’s policies as to capital adequacy) or reduction in an amount
received which such Lender determines is attributable to making, funding and
maintaining the Loan.
3.2    Availability of Rate Options. If Administrative Agent determines (or
Required Lenders advise Administrative Agent in writing) that maintenance of any
Libor Loans would violate any applicable law, rule, regulation or directive of
any government or any division, agency, body or department thereof, whether or
not having the force of law, the Lenders shall suspend the availability of the
Libor Rate option and the Administrative Agent shall require any Libor Loans
outstanding to be promptly converted to a Base Rate Loan subject to the
Borrower’s compliance with Section 3.4 hereof; or if Administrative Agent
determines (or Required Lenders advise Administrative Agent in writing) that (i)
deposits of a type or maturity appropriate to match fund Libor Loans are not
available, the Lenders shall suspend the availability of the Libor Rate after
the

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date of any such determination, or (ii) the Libor Rate does not accurately
reflect the cost of making a Libor Loan, then, if for any reason whatsoever the
provisions of Section 3.1 hereof are inapplicable, the Lenders shall, at their
option, suspend the availability of the Libor Rate after the date of any such
determination or permit (solely in the case of clause (ii)) the Borrower to pay
the Lenders for any increased cost the Lenders may incur.
3.3    Taxes. All payments by the Borrower under this Agreement shall be made
free and clear of, and without deduction for, any present or future income,
excise, stamp or other taxes, fees, levies, duties, withholdings or other
charges of any nature whatsoever, now or hereafter imposed by any taxing
authority, other than franchise taxes and taxes imposed on or measured by any
Lender’s net income or receipts or branch profits taxes (such non-excluded items
being called “Taxes”). If any withholding or deduction from any payment to be
made by the Borrower hereunder is required in respect of any Taxes pursuant to
any applicable law, rule or regulation, then the Borrower shall:
(a)    pay directly to the relevant authority the full amount required to be so
withheld or deducted;
(b)    promptly forward to the Administrative Agent an official receipt or other
documentation satisfactory to the Administrative Agent evidencing such payment
to such authority; and
(c)    pay to the Lenders such additional amount or amounts as is necessary to
ensure that the net amount actually received by the Lenders will equal the full
amount the Lenders would have received had no such withholding or deduction been
required.
Moreover, if any Taxes are directly asserted against any Lender with respect to
any payment received by such Lender hereunder, such Lender may pay such Taxes
and the Borrower agrees to promptly pay such additional amounts (including,
without limitation, any penalties, interest or expenses) as is necessary in
order that the net amount received by the Lenders after the payment of such
Taxes (including, without limitation, any Taxes on such additional amount) shall
equal the amount the Lenders would have received had not such Taxes been
asserted.
The provisions of and undertakings of the Borrower set out in this Section 3.3
shall survive the satisfaction and payment of the Liabilities of Borrower and
the termination of this Agreement.
To the extent permitted by applicable law, each Lender that is not a United
States person within the meaning of Code Section 7701(a)(30) (a “Non-U.S.
Participant”) shall deliver to Borrower and Administrative Agent on or prior to
the Closing Date (or in the case of a Lender that is an Assignee, on the date of
such assignment to such Lender) two accurate and complete original signed copies
of IRS Form W-8BEN, W-8ECI, or W-8IMY (or any successor or other applicable form
prescribed by the IRS) certifying to such Lender’s entitlement to a complete
exemption from, or a reduction in the rate of, United States withholding tax on
interest payments to be made hereunder or on the Loan. If a Lender that is a
Non-U.S. Participant is claiming a complete exemption from withholding on
interest pursuant to Code Sections 871(h) or 881(c), such Lender shall deliver
(along with two accurate and complete original signed copies of IRS Form W-8BEN)
a certificate in form and substance reasonably acceptable to Administrative
Agent (any such certificate, a “Withholding

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Certificate”). In addition, each Lender that is a Non-U.S. Participant agrees
that from time to time after the Closing Date (or in the case of a Lender that
is an Assignee, after the date of the assignment to such Lender), when a lapse
in time (or change in circumstances occurs) renders the prior certificates
hereunder obsolete or inaccurate in any material respect, such Lender shall, to
the extent permitted under applicable law, deliver to Borrower and
Administrative Agent two new and accurate and complete original signed copies of
an IRS Form W-8BEN, W-8ECI, or W-8IMY (or any successor or other applicable
forms prescribed by the IRS), and if applicable, a new Withholding Certificate,
to confirm or establish the entitlement of such Lender or Administrative Agent
to an exemption from, or a reduction in the rate of, from United States
withholding tax on interest payments to be made hereunder or on the Loan.
Each Lender that is not a Non-U.S. Participant (other than any such Lender which
is taxed as a corporation for U.S. federal income tax purposes) shall provide
two properly completed and duly executed copies of IRS Form W-9 (or any
successor or other applicable form) to Borrower and Administrative Agent
certifying that such Lender is exempt from, or entitled to a reduction in the
rate of, United States backup withholding tax. To the extent that a form
provided pursuant to this Section is rendered obsolete or inaccurate in any
material respects as result of change in circumstances with respect to the
status of a Lender, such Lender shall, to the extent permitted by applicable
law, deliver to Borrower and Administrative Agent revised forms necessary to
confirm or establish the entitlement to such Lender’s or Administrative Agent’s
exemption from United States backup withholding tax. Borrower shall not be
required to pay additional amounts to a Lender, or indemnify any Lender, under
this Section to the extent that such obligations would not have arisen but for
the failure of such Lender to comply with this Section.
Each Lender agrees to and shall indemnify Administrative Agent and hold
Administrative Agent harmless for the full amount of any and all present or
future Taxes and related liabilities (including penalties, interest, additions
to tax and expenses, and any Taxes imposed by any jurisdiction on amounts
payable to Administrative Agent under this Section 3.3) which are imposed on or
with respect to principal, interest or fees payable to such Lender hereunder as
a result of the failure by such Lender to deliver, or as a result of the
inaccuracy, inadequacy or deficiency of, any documentation required to be
delivered by such Lender to the Administrative Agent as set forth above. Such
indemnification shall be made within thirty (30) days from the date
Administrative Agent makes written demand therefor.
If a payment made to a Non-U.S. Participant under any Financing Agreement would
be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were
to fail to comply with the applicable reporting requirements of FATCA (including
those contained in Section 1471(b) or 1472(b) of the Tax Code, as applicable),
such Lender shall deliver to the Administrative Agent and Borrower at the time
or times prescribed by FATCA and at such time or times reasonably requested by
the Administrative Agent or Borrower such documentation prescribed by FATCA as
may be necessary for the Administrative Agent and Borrower to comply with their
respective obligations under FATCA and to determine the amount (if any) required
to be deducted and withheld under FATCA from such payment and (ii) any U.S.
federal withholding taxes imposed by FATCA as a result of such Lender’s failure
to comply shall be excluded from the gross-up and indemnification obligations
under this section with respect to taxes.

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3.4    Funding Indemnification. If any payment of a Libor Loan occurs on a date
that is not the last day of the applicable Libor Interest Period, whether
because of acceleration, prepayment, or otherwise, or a Libor Loan is not made
on the date specified by the Borrower, the Borrower shall indemnify the Lender
for any loss or cost incurred by it resulting therefrom, including, without
limitation, any loss or cost in liquidating or employing deposits acquired to
fund or maintain the Libor Loan.
3.5    Lender Statements. Each affected Lender shall deliver a written statement
to the Borrower and Administrative Agent as to the amount due, if any, under
Sections 3.1, 3.3 or 3.4 hereof. Such written statement shall set forth in
reasonable detail the calculations upon which such Lender determined such amount
and shall be final, conclusive and binding on the Borrower in the absence of
demonstrable error. Unless otherwise provided herein, the amount specified in
the written statement shall be payable on demand after receipt by the Borrower
of the written statement.
3.6    Basis for Determining Interest Rate Inadequate or Unfair. If with respect
to any Libor Interest Period: (a) Administrative Agent reasonably determines (or
Required Lenders advise Administrative Agent in writing), which determination
shall be binding and conclusive on the Borrower, that by reason of circumstances
affecting the interlender Libor Base market adequate and reasonable means do not
exist for ascertaining the applicable Libor Base Rate; or (b) Administrative
Agent reasonably determines (or Required Lenders advise Administrative Agent in
writing) that the Libor Base Rate will not adequately and fairly reflect the
cost to Lenders of maintaining or funding the Loan or any portion thereof for
such Libor Interest Period, or that the making or funding of Libor Loans has
become impracticable as a result of an event occurring after the date of this
Agreement which in the opinion of Administrative Agent (or Required Lenders)
adversely affects such Loan, then, in either case, so long as such circumstances
shall continue: (i) Lenders shall not be under any obligation to make, maintain,
convert into or continue Libor Loans and (ii) on the last day of the then
current Libor Interest Period for each Libor Loan, each such Loan shall, unless
then repaid in full, automatically convert to a Base Rate Loan. Each affected
Lender shall promptly give the Borrower written notice of any determination made
by it under this Section accompanied by a statement setting forth in reasonable
detail the basis of such determination.
3.7    Illegality. If any applicable law or regulation, or any interpretation
thereof by any court or any governmental or other regulatory body charged with
the administration thereof, should make it unlawful for any Lender or its
lending office to make, maintain or fund any Libor Loan, then the obligation of
such Lender to make, convert into or continue such Libor Loan shall, upon the
effectiveness of such event, be suspended for the duration of such unlawfulness,
and on the last day of the current Libor Interest Period for such Libor Loan
(or, in any event, if Administrative Agent or Required Lenders so request, on
such earlier date as may be required by the relevant law, regulation or
interpretation), the Libor Loans shall, unless then repaid in full,
automatically convert to Base Rate Loans.
3.8    Right of Lenders to Fund through Other Offices. Each Lender may, if it so
elects, fulfill its commitment as to any Libor Loan by causing a foreign branch
or Affiliate of such Lender to make such Loan; provided that such election shall
not increase the costs to Borrower hereunder and that in such event for the
purposes of this Agreement such Loan shall be deemed to have been

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made by such Lender and the obligation of Borrower to repay such Loan shall
nevertheless be to such Lender and shall be deemed held by it, to the extent of
such Loan, for the account of such branch or Affiliate.
3.9    Discretion of Lenders as to Manner of Funding; No Match Funding.
Notwithstanding any provision of this Agreement to the contrary, each Lender
shall be entitled to fund and maintain its funding of its portion of the Loan in
any manner it sees fit, it being understood, however, that for the purposes of
this Agreement all determinations hereunder shall be made as if such Lender had
actually funded and maintained each Libor Loan during each Libor Interest Period
for such Loan through the purchase of deposits having a maturity corresponding
to such Libor Interest Period and bearing an interest rate equal to the Libor
Rate for such Libor Interest Period.
3.10    Further Documentation; Loss of Notes. If any further documentation or
information is (a) required by Administrative Agent or any Lender or any
prospective transferee in connection with selling, transferring, delivering,
assigning, or granting a participation in the Loan (or transferring the
servicing of the Loan), or (b) deemed necessary or appropriate by Administrative
Agent to correct patent mistakes in the Financing Agreements, Borrower shall
provide, or cause to be provided to Administrative Agent and Lenders, and, in
the case of (b), unless such patent mistake is due to the gross negligence,
willful misconduct or illegal activity of Administrative Agent and Lenders at
Borrower’s cost and expense, such documentation or information as Administrative
Agent and any Lender or any prospective transferee may reasonably request. Upon
notice from Administrative Agent of the loss, theft, or destruction of any of
the Term Loan Notes and upon receipt of indemnity reasonably satisfactory to
Borrower from the applicable Lender, or in the case of mutilation of any of the
Term Loan Notes, upon surrender of the mutilated Term Loan Note, Borrower shall
promptly make and deliver a new promissory note of like tenor in lieu of the
then to be superseded Term Loan Note.
4.    ATTORNEY-IN-FACT.
4.1    Appointment of the Administrative Agent as the Borrower’s
Attorney-in-Fact. The Borrower hereby irrevocably designates, makes, constitutes
and appoints the Administrative Agent (and all Persons designated by the
Administrative Agent in writing to the Borrower) as the Borrower’s true and
lawful attorney-in-fact, and authorizes the Administrative Agent, in the
Borrower’s or the Administrative Agent’s name, after an Event of Default has
occurred and is continuing to do the following: (a) at any time, (i) endorse the
Borrower’s name upon any items of payment or proceeds thereof and deposit the
same in the Administrative Agent’s account on account of the Borrower’s
Liabilities, and (ii) do all other acts and things which are necessary, in the
Administrative Agent’s reasonable discretion, to fulfill the Borrower’s
obligations under this Agreement. The Borrower hereby ratifies and approves all
acts under such power of attorney and neither Administrative Agent nor any other
Person acting as Borrower’s attorney hereunder will be liable for any acts or
omissions or for any error of judgment or mistake of fact or law made in good
faith except as result of its gross negligence, willful misconduct or illegal
activity as finally determined in a non-appealable judicial proceeding. The
appointment of Administrative Agent (and any of the Administrative Agent’s
officers, employees or agents designated by the Administrative Agent) as
Borrower’s attorney, and each and every one of Administrative Agent’s rights and
powers,

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being coupled with an interest, are irrevocable until all of the Liabilities
have been fully repaid and this Agreement shall have expired or been terminated
in accordance with the terms hereunder. Without restricting the generality of
the foregoing, after an Event of Default has occurred and is continuing,
Borrower hereby appoints and constitutes the Administrative Agent its lawful
attorney-in-fact with full power of substitution in the Property to advance
funds in excess of the face amount of the Term Loan Note, to pay, settle or
compromise all existing bills and claims, which may be liens or security
interests, or to avoid such bills and claims becoming liens against the
Collateral; to execute all applications and certificates in the name of Borrower
prosecute and defend all actions or proceedings in connection with the
Collateral (including any Leases pertaining to Property); and to do any and
every act which the Borrower might do in its own behalf; it being understood and
agreed that this power of attorney shall be a power coupled with an interest and
cannot be revoked.
5.    CONDITIONS OF LOAN.
5.1    Conditions to Loan. Notwithstanding any other term or provision contained
in this Agreement, the Administrative Agent’s and Lenders’ obligation to make
the Term Loan hereunder is subject to the satisfaction of each of the following
conditions precedent:
(d)    The Borrower’s Request. The Administrative Agent shall have received a
borrowing notice from Borrower, signed by a Duly Authorized Officer of the
Borrower, irrevocably electing the Loan to be made on the Closing Date. If at
any time applicable, if at all, the Administrative Agent and Lenders shall have
no liability to the Borrower or any other Person as a result of acting on any
telephonic request that the Administrative Agent believes in good faith to have
been made by any Person authorized by Borrower to make a borrowing request on
behalf of Borrower. Promptly upon receipt of such borrowing request,
Administrative Agent will advise each Lender thereof. Not later than 1:00 p.m.
(Chicago time), on the date of the proposed borrowing of the Loan, each Lender
shall provide Administrative Agent at the office specified by Administrative
Agent with immediately available funds covering such Lender’s Pro Rata Share of
such borrowing and, so long as Administrative Agent has not received written
notice that the conditions precedent set forth in Section 5 with respect to such
borrowing have not been satisfied, Administrative Agent shall pay over the funds
received by Administrative Agent to Borrower on the requested borrowing date.
(e)    No Default. Neither a Default nor an Event of Default shall have occurred
or be in existence.
(f)    Representations and Warranties. All of the representations and warranties
contained in the Financing Agreements to which the Borrower is a party and in
this Agreement (including, without limitation, those set forth in Section 7
hereof), are true and correct.
(g)    Fees and Expenses. The Borrower shall have paid all fees owed to the
Administrative Agent and Lenders and reimbursed Administrative Agent and the
Lenders for all costs, disbursements, fees and expenses due and payable
hereunder on or before the Closing Date, including, without limitation, all fees
and costs identified in Section 12.2(a) hereof.

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(h)    Documents. The Administrative Agent shall have received all of the
following, each duly executed and delivered and dated the Closing Date, or such
earlier date as shall be satisfactory to the Administrative Agent, each in form
and substance reasonably satisfactory to the Administrative Agent in its sole
determination:
(1)    Financing Agreements. This Agreement, the Term Loan Notes, the Guaranty,
each Pledge Agreement, each Mortgage, each Assignment of Rents and Leases, the
Environmental Indemnity Agreement, the Subordination of Management Agreements,
and such other Financing Agreements as the Administrative Agent may require
(provided each Lender shall also receive a fully-executed original of this
Agreement and such Lender’s respective Term Loan Note).
(2)    Resolutions; Incumbency and Signatures. Copies of resolutions of the
Board of Directors or Board of Managers of the Borrower (as applicable), and, if
required, the shareholder or member(s) of the Borrower, authorizing or ratifying
the execution, delivery and performance by the Borrower of this Agreement, the
Financing Agreements to which the Borrower is a party and any other document
provided for herein or therein to be executed by Borrower, certified by a Duly
Authorized Officer. A certificate of a Duly Authorized Officer certifying the
names of the officers of the Borrower authorized to make a borrowing request and
sign this Agreement and the Financing Agreements to which the Borrower is a
party, together with a sample of the true signature of each such officer; the
Administrative Agent may conclusively rely on each such certificate until
formally advised by a like certificate of any changes therein. A copy of
resolutions of the Board of Directors of Guarantor and each Pledgor authorizing
or ratifying the execution, delivery and performance by Guarantor and each
Pledgor, respectively, of the Guaranty and its respective Pledge Agreement.
(3)    Consents. Certified copies of all documents evidencing any necessary
consents and governmental approvals, if any, with respect to this Agreement, the
Financing Agreements, and any other documents provided for herein or therein to
be executed by Borrower.
(4)    Opinions of Counsel. An opinion of Harwell Howard Hyne Gabbert & Manner,
the legal counsel to the Borrower, Guarantor and each Pledgor, and local counsel
opinions in the jurisdictions where the Facilities are located with respect to
the Mortgages, each in form and substance reasonably satisfactory to
Administrative Agent.
(5)    Certain Restricted Agreements. Correct and complete copies of the fully
executed Commercial Leases, Management Agreements, the Kansas Acquisition
Documents, the nursing home licenses of each Borrower, and any other Restricted
Agreement, together with all applicable amendments thereto.
(6)    Financial Condition Certificate. A Financial Condition Certificate, in
form and substance reasonably satisfactory to the Administrative Agent, signed
on behalf of the Borrower by a Duly Authorized Officer of the Borrower.
(7)    Governing Documents and Good Standings. Administrative Agent shall have
received (i) copies, certified as correct and complete by the applicable state
of organization

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of each Borrower, Pledgor and Guarantor, of the certificate of incorporation,
certificate of formation or certificate of limited liability partnership, as
applicable, of each Borrower, Pledgor and Guarantor, with any amendments to any
of the foregoing, (ii) copies, certified as correct and complete by an
authorized officer, member or partner of each Borrower, Pledgor and Guarantor,
of all other documents necessary for performance of the obligations of each
Borrower, Pledgor and Guarantor under this Agreement and the other Financing
Agreements, and (iii) certificates of good standing for each Borrower, Pledgor
and Guarantor issued by the state of organization of each Borrower, Pledgor and
Guarantor and by each state in which each Borrower and Guarantor is doing and
currently intends to do business for which qualification is required (such
certificates set forth in (i) through (iii), the “Certificates”).
(8)    Revolving Loan Agreement and Affiliate Revolving Loan Financing
Agreements. Fully-executed copies of the Revolving Loan Agreement and the
Affiliate Revolving Loan Financing Agreements.
(9)    UCC Financing Statements; Termination Statements; UCC Searches. UCC
Financing Statements or UCC Amendment Statements, as requested by the
Administrative Agent, naming the Borrower as debtor and the Administrative Agent
as secured party with respect to the Collateral, together with such UCC
termination statements necessary to release all Liens (other than Permitted
Liens) and other rights in favor of any Person in any of the Collateral except
the Administrative Agent (for the ratable benefit of the Lenders and the
Administrative Agent), and other documents as the Administrative Agent deems
necessary or appropriate, shall have been filed in all jurisdictions that the
Administrative Agent deems necessary or advisable. UCC Financing Statements or
UCC Amendment Statements, as requested by the Administrative Agent, naming each
Pledgor as debtor and the Administrative Agent as secured party with respect to
the Collateral (as respectively defined in the Pledge Agreement), and other
documents, if any, as the Administrative Agent deems necessary or appropriate,
shall have been filed in all jurisdictions that the Administrative Agent deems
necessary or advisable. UCC tax, lien, bankruptcy, pending suit and judgment
searches for each Borrower, Pledgor and the Guarantor (including, for each, any
assumed name or trade name) and each dated a date reasonably near to the Closing
Date in all jurisdictions deemed necessary by the Administrative Agent, the
results of which shall be satisfactory to the Administrative Agent in its sole
and absolute determination.
(10)    Insurance Certificates. Certificates from the Borrower’s insurance
carriers evidencing that all required insurance coverage is in effect, each
designating the Administrative Agent as an additional insured and “lender’s loss
payee” thereunder (and any reasonably required endorsements thereof).
(11)    Receivership Order. A certified copy of the applicable final court order
from the Chancery Court of Davidson County, Tennessee approving the receiver’s
sale of the Facilities that are the subject of the Kansas Acquisition to the
Kansas Borrowers, or other applicable written evidence, in each case reasonably
satisfactory to the Administrative Agent, including mortgage loan title
insurance policies as required under Section 5.1(b)(14) hereof insuring Lender’s
lien and security interest under the Mortgages in and to the Property that is
the subject of the Kansas Acquisition, providing for the termination and release
of any liens or security interests of any other

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Person in the Collateral of the Kansas Borrowers acquired by the Kansas
Borrowers pursuant to the Kansas Acquisition Documents.
(12)    Certificate of Occupancy. To the extent available, a true and complete
copy of each certificate of occupancy with respect to the Facilities,
respectively.
(13)    Environmental Assessments. A Phase I environmental report of the
Property addressed to Administrative Agent prepared by an environmental audit
firm reasonably acceptable to the Administrative Agent, the form and results of
which shall be satisfactory to the Administrative Agent in its sole and absolute
determination.
(14)    Title Insurance. A title insurance policy in the form of ALTA Form
Mortgagee Title Insurance Policy shall be issued by an insurer (reasonably
acceptable to the Administrative Agent) in favor of the Administrative Agent for
the Property. Each title insurance policy shall contain such endorsements as
deemed appropriate by the Administrative Agent that are available in the
applicable State. Copies of all documents of record concerning the Property as
identified on the commitment for the ALTA Policy referred to above.
(15)    Survey. An ALTA plat of survey shall be prepared on the Property
(certified to the 2011 ALTA standards).
(16)    Appraisal. An Appraisal prepared by an independent appraiser of the
Property engaged by Administrative Agent, which appraisal shall satisfy the
requirements of the FIRREA, if applicable, and shall evidence compliance with
the supervisory loan-to-value limits set forth in the Federal Deposit Insurance
Corporation Improvement Act of 1991 (including a combined loan-to-value ratio on
a “stabilized value” not to exceed 75%). Such appraisal (and the results
thereof) shall be satisfactory to the Administrative Agent in its sole and
absolute determination.
(17)    Flood Insurance. A flood insurance policy, if applicable, concerning the
Property, reasonably satisfactory to the Administrative Agent, if required by
the Flood Disaster Protection Act of 1973.
(18)    Property Condition Report. Property Condition Reports for each parcel of
Property, the form, substance and results of which shall be satisfactory to the
Administrative Agent in its sole and absolute determination.
(19)    Bylaws and Operating Agreements. Correct and complete certified copies
of the Bylaws and the duly executed Limited Liability Company Agreements (as
applicable) of each Borrower and Pledgor, as amended.
(20)    Other. The Administrative Agent shall have received, in form and
substance reasonably satisfactory to the Administrative Agent, all certificates,
orders, authorities, consents, affidavits, schedules, instruments, agreements,
financing statements, and other documents which are provided for hereunder or
under or in connection with any Financing Agreement, which

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the Administrative Agent may reasonably request on or prior to the Closing Date.
(i)    Field Examinations. At the Administrative Agent’s sole option, the
Administrative Agent shall have completed its field examinations of the
Borrower’s books and records, assets, and operations which examinations will be
satisfactory to the Administrative Agent in its sole and absolute discretion.
(j)    Certificate. The Administrative Agent shall have received a certificate
signed on behalf of the Borrower by a Duly Authorized Officer and dated the
Closing Date certifying satisfaction of the conditions specified in this Section
5.
(k)    Closing Fee. The Borrower shall have paid the Administrative Agent the
Closing Fee.
(l)    Proposal Letter. The Borrower shall have delivered, performed and
satisfied, in the sole discretion of the Administrative Agent, any other items
set forth in that certain proposal letter dated January 11, 2013, accepted by
Guarantor on behalf of Borrower and made in favor of the Administrative Agent.
(m)    Bank Meetings. Borrower’s senior management shall have made themselves
and Borrower’s facilities reasonably available (through scheduled bank meetings,
company visits, or other venues) to Administrative Agent and Lenders and their
representatives.
(n)    Revolving Loan Agreement. Satisfaction of each of the conditions
precedent contained in the Revolving Loan Agreement, as determined by the
Administrative Agent.
(o)    Acquisition Agreement. The closing of the transaction contemplated by the
Acquisition Agreement (including all material conditions precedent thereto,
including, without limitation, the obtaining of any and all consents and
approvals) shall occur in accordance with its terms concurrently with the
transactions contemplated by this Agreement.
(m)    Solvency. On the Closing Date, Borrower, as determined on a consolidated
basis, is Solvent.
(n)    No Material Adverse Change. No Material Adverse Change, as reasonably
determined by Administrative Agent and Lenders, in the business, assets,
liabilities, properties, condition (financial or otherwise), prospects or
results of operations of Borrower or Guarantor shall have occurred from December
31, 2012 through the Closing Date.
(o)    Litigation. There shall not have been instituted or threatened, from
December 31, 2012 through the Closing Date, as reasonably determined by
Administrative Agent, any litigation or proceeding in any court or
administrative forum to which Borrower is, or is threatened to be, a party which
has, or is reasonably likely to result in, a Material Adverse Change.

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(p)    Minimum Underwritten EBITDAR. There shall be minimum underwritten EBITDAR
for the Borrower of no less than Seven Million Six Hundred Thousand Dollars
($7,600,000).
6.    COLLATERAL.
6.1    Security Interest. As security for the prompt and complete payment and
performance of all of the Liabilities and the Affiliate Revolving Loan
Liabilities when due or declared due, each Borrower hereby grants, pledges,
conveys and transfers to the Administrative Agent (for the ratable benefit of
the Lenders and Administrative Agent) a continuing security interest in and to
all of such Borrower’s right, title and interest in and to the following
property and interests in property, whether now owned or existing or hereafter
owned, arising or acquired, and wheresoever located (collectively, the
“Collateral”): (a) all of Borrower’s accounts receivable, including, without
limitation, Accounts and Health-Care-Insurance Receivables (each as defined in
the Code), (b) all of the Borrower’s General Intangibles, including, without
limitation, General Intangibles related to accounts receivable and money; (c)
all of Borrower’s Deposit Accounts and other deposit accounts (general or
special) with, and credits and other claims against, the Administrative Agent or
any Lender, or any other financial institution with which the Borrower maintains
deposits; (d) all of the Borrower’s contracts, licenses, chattel paper,
instruments, notes, letters of credit, contract rights, bills of lading,
warehouse receipts, shipping documents, permits, tax refunds, documents and
documents of title, and all of the Borrower’s Tangible Chattel Paper, Documents,
Electronic Chattel Paper, Letter-of-Credit Rights, letters of credit, Software,
Supporting Obligations, Payment Intangibles, and Goods (each as defined in the
Code); (e) all of the Borrower’s Inventory and Equipment and motor vehicles and
trucks; (f) all of the Borrower’s monies, and any and all other property and
interests in property of the Borrower, including, without limitation, Investment
Property, Instruments, Security Entitlements, Uncertificated Securities,
Certificated Securities, Chattel Paper, and Financial Assets (each as defined in
the Code), now or hereafter coming into the actual possession, custody or
control of the Administrative Agent, any Lender or any agent or Affiliate
thereof in any way or for any purpose (whether for safekeeping, deposit,
custody, pledge, transmission, collection or otherwise), and, independent of and
in addition to the Administrative Agent’s and each Lender’s rights of setoff
(which the Borrower acknowledges), the balance of any account or any amount that
may be owing from time to time by Administrative Agent or any Lender to the
Borrower; (g) all insurance proceeds of or relating to any of the foregoing
property and interests in property, and any key man life insurance policy
covering the life of any officer or employee of Borrower; (h) all proceeds and
profits derived from the operation of the Borrower’s business; (i) all of the
Borrower’s books and records, computer printouts, manuals and correspondence
relating to any of the foregoing and to the Borrower’s business; and (j) all
accessions, improvements and additions to, substitutions for, and replacements,
products, profits and proceeds of any of the foregoing.
Administrative Agent acknowledges that it will not have control over or right of
setoff against the Government Blocked Account (as defined in the Revolving Loan
Agreement) solely to the extent such control or right of setoff is or would be
prohibited by applicable Healthcare Laws, provided, however, that as soon as any
such prohibition or restriction lapses or is legally removed Borrower shall
immediately take such all actions as are reasonably necessary to provide
Administrative Agent

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with control over and/or the right of setoff against such Government Blocked
Account (at Borrower’s cost).
6.2    Preservation of Collateral and Perfection of Security Interests Therein.
The Borrower agrees that it shall execute and deliver to Administrative Agent,
concurrently with the execution of this Agreement, and promptly at any time or
times hereafter at the reasonable request of Administrative Agent instruments
and documents as Administrative Agent may reasonably request, in a form and
substance satisfactory to Administrative Agent, to establish, create, perfect
and keep perfected the Liens in the Collateral or to otherwise protect and
preserve the Collateral and Administrative Agent’s Liens therein (including,
without limitation, if and as applicable, financing statements, and Borrower
shall pay the cost of filing or recording the same in all public offices deemed
necessary by Administrative Agent). If the Borrower fails to do so,
Administrative Agent is authorized to file such financing statements. The
Borrower further agrees that a carbon, photographic, photostatic or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement.
6.3    Loss of Value of Collateral. The Borrower agrees to immediately notify
the Administrative Agent of any material loss or depreciation in the value of
the Collateral or any portion thereof.
6.4    Right to File Financing Statements. Notwithstanding anything to the
contrary contained herein, the Administrative Agent may at any time and from
time to time file financing statements, continuation statements and amendments
thereto that describe the Collateral as “all assets” or in particular and which
contain any other information required by the Code for the sufficiency or filing
office acceptance of any financing statement, continuation statement or
amendment, including whether the Borrower is an organization, the type of
organization and any organization identification number issued to the Borrower.
The Borrower agrees to furnish any such information to the Administrative Agent
promptly upon request. Any such financing statements, continuation statements or
amendments may be signed (if at any time required) by the Administrative Agent
on behalf of the Borrower and may be filed at any time with or without signature
and in any jurisdiction as reasonably determined by the Administrative Agent.
The Administrative Agent agrees to use its reasonable efforts to notify the
Borrower of the Administrative Agent taking any such action provided in this
Section; provided, however, the Borrower agrees that the failure of the
Administrative Agent to so notify the Borrower for any reason shall not in any
way invalidate the actions taken by the Administrative Agent pursuant to this
Section.
6.5    Third Party Agreements. The Borrower shall at any time and from time to
time take such steps as the Administrative Agent may reasonably require for the
Administrative Agent: (i) to obtain an acknowledgment, in form and substance
reasonably satisfactory to the Administrative Agent, of any third party having
possession of any of the Collateral that the third party holds for the benefit
of the Administrative Agent, (ii) to obtain “control” (as defined in the Code)
of any Investment Property, Deposit Accounts, Letter of Credit Rights or
Electronic Chattel Paper (each as defined in the Code), with any agreements
establishing control to be in form and substance reasonably satisfactory to the
Administrative Agent, and (iii) otherwise to ensure the continued

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perfection and priority of the Administrative Agent’s security interest in any
of the Collateral and of the preservation of its rights therein.
6.6    All Loans One Obligation. All Liabilities of the Borrowers under this
Agreement and each of the Financing Agreements, and all of the Affiliate
Revolving Loan Liabilities under the Revolving Loan Agreement and each of the
Affiliate Revolving Loan Financing Agreements, are cross-collateralized and
cross-defaulted. Payment of all sums and indebtedness to be paid by Borrower to
Lenders and Administrative Agent under this Agreement shall be secured by, among
other things, the Financing Agreements. All loans or advances made to Borrower
under this Agreement shall constitute one Loan, and all of Borrower’s
Liabilities and other liabilities of Borrower to Lenders and Administrative
Agent shall constitute one general obligation secured by Administrative Agent’s
Lien on all of the Collateral of Borrower and by all other liens heretofore,
now, or at any time or times granted to Lender to secure the Loan and other
Liabilities (for the ratable benefit of the Lenders and the Administrative
Agent). Borrower agrees that all of the rights of Administrative Agent and
Lenders set forth in this Agreement shall apply to any amendment, restatement or
modification of, or supplement to, this Agreement, any supplements or exhibits
hereto and the Financing Agreements, unless otherwise agreed in writing by the
Administrative Agent or Required Lenders.
6.7    Commercial Tort Claim. If the Borrower shall at any time hereafter
acquire a Commercial Tort Claim (as defined in the Code), the Borrower shall
promptly notify the Administrative Agent of same in a writing signed by the
Borrower (describing such claim in reasonable detail) and grant to the
Administrative Agent (for the ratable benefit of the Lenders and the
Administrative Agent) in such writing (at the sole cost and expense of the
Borrower) a continuing, first-priority security interest therein and in the
proceeds thereof, with such writing to be in form and substance satisfactory to
the Administrative Agent in its sole and absolute determination.
6.8    HUD Financing; Prepayment and Release. Notwithstanding the provisions of
Section 6.6, upon any one or more of the Borrowers obtaining HUD Financing for
their respective Facility or Facilities, Administrative Agent will fully release
and discharge the lien and security interest granted to Administrative Agent to
secure the Loan (for the ratable benefit of the Lenders and the Administrative
Agent) under this Agreement and the Financing Agreements on the specific
Collateral of such Borrower or Borrowers (the “Released Collateral”), and will
fully release and discharge such Borrower or Borrowers (the “Released
Borrowers”) from their obligations under this Agreement and any Financing
Agreement, including the Term Loan Note (except for contingent indemnification
obligations that survive by their terms herein), provided that and conditioned
upon satisfaction of each of the foregoing, in the sole determination of the
Administrative Agent:
(1)    Administrative Agent shall receive written notice within thirty (30) days
of such Borrower or Borrowers decision to seek and obtain such HUD Financing;
(2)    Both before and after giving effect to the HUD Financing, no Default or
Event of Default shall have occurred and be continuing (including, without
limitation, any breach of any financial ratio covenant set forth in Section
9.12);
(3)    [Intentionally Omitted];

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(4)    The release documents are reasonably acceptable to Administrative Agent
and customary for recording the release of liens and security interests in the
applicable Collateral in the jurisdictions where the liens and security in the
Released Collateral are filed or recorded. Borrower shall be responsible for the
cost and expense of preparing and recording the applicable release documents;
(5)    All reasonably requested instruments, documents and agreements by the
Administrative Agent and Lenders in connection with such HUD Financing are duly
executed and delivered by Borrower and any Affiliate thereof (including
amendments to this Agreement and the other Financing Agreements); and
(6)    The Released Borrowers shall, substantially simultaneously with (and in
any event not later than the first (1st) Business Day following the receipt of
the net cash proceeds from the insurance or incurrence of the HUD Financing),
apply and pay in immediately available funds without setoff or deduction of any
kind an amount equal to one hundred percent (100%) of such net cash proceeds to
prepay the outstanding Term Loan amount in accordance with Section 2.10 and any
other related then due and owing Liabilities of the Released Borrowers. As used
in this Section, “Net cash proceeds” shall mean the cash proceeds of the HUD
Financing net of all taxes and customary and reasonable fees, commissions, costs
and other expenses actually incurred in connection therewith.
Notwithstanding the release and discharge of the Released Borrowers and the
Released Collateral as provided in this Section 6.8, this Agreement, the other
Financing Agreements and the Lien of the Administrative Agent on the Collateral
(and any other Lien provided by the other Financing Agreements, including
pursuant to the applicable Mortgages), shall remain and continue in full force
and effect as to the Borrowers other than the Released Borrowers and the
Collateral (and other assets and property subject to the other Financing
Agreements) other than the Released Collateral.
7.    REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants on a joint and several basis to
Administrative Agent and Lenders that as of the date of this Agreement, and
continuing as long as any Liabilities or Affiliate Revolving Loan Liabilities
remain outstanding, and (even if there shall be no such Liabilities or Affiliate
Revolving Loan Liabilities outstanding) as long as this Agreement remains in
effect:
7.1    Existence. The Borrower is a corporation or limited liability company
duly organized, validly existing and in good standing under the laws of the
state of its incorporation or formation. The Borrower is duly (a) qualified and
in good standing as a foreign corporation or foreign limited liability company
and (b) authorized to do business in each jurisdiction where such qualification
is required because of the nature of its activities or properties. The Borrower
has all requisite power to carry on its business as now being conducted and as
proposed to be conducted. The Pledgors legally and beneficially own and control
all of the issued and outstanding capital Stock of the Borrower.

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7.2    Corporate Authority. The execution and delivery by the Borrower of this
Agreement and all of the other Financing Agreements to which Borrower is a party
and the performance of its obligations hereunder and thereunder: (i) are within
its powers; (ii) are duly authorized by the board of directors, manger or
members of the Borrower, each as applicable, and, if applicable, Pledgor; and
(iii) are not in contravention of the terms of its operating agreement, bylaws,
or of an indenture, agreement or undertaking to which it is a party or by which
it or any of its property is bound. The execution and delivery by the Borrower
of this Agreement and all of the other Financing Agreements to which it is a
party and the performance of its obligations hereunder and thereunder: (i) do
not require any governmental consent, registration or approval; (ii) do not
contravene any contractual or governmental restriction binding upon it; and
(iii) will not, except in favor of Administrative Agent, result in the
imposition of any Lien upon any property of Borrower under any existing
indenture, mortgage, deed of trust, loan or credit agreement or other material
agreement or instrument to which it is a party or by which it or any of its
property may be bound or affected. Borrower is not bound by any contractual
obligation, or subject to any restriction in any organizational document, that
could reasonably be expected to have a Material Adverse Effect. This Agreement
and all of the other Financing Agreements to which Borrower is a party have been
duly executed.
7.3    Binding Effect. This Agreement and all of the other Financing Agreements
to which the Borrower is a party are the legal, valid and binding obligations of
the Borrower and are enforceable against the Borrower in accordance with their
respective terms, subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditor’s rights and
remedies generally.
7.4    Financial Data.
(a)    All income statements, balance sheets, cash flow statements, statements
of operations, and other financial data which have been or shall hereafter be
furnished to the Administrative Agent and Lenders for the purposes of or in
connection with this Agreement do and will present fairly in all material
respects in accordance with GAAP, consistently applied, the financial condition
of the Borrower as of the dates thereof and the results of its operations for
the period(s) covered thereby. The foregoing notwithstanding all unaudited
financial statements furnished or to be furnished to the Administrative Agent
and Lenders by or on behalf of Borrower are not and will not be prepared in
accordance with GAAP to the extent that such financial statements (a) are
subject to cost report and other year-end audit adjustments, (b) do not contain
footnotes, (c) were prepared without physical inventories, (d) are not restated
for subsequent events, (e) may not contain a statement of construction in
process, and (f) may not fully reflect the following liabilities: (i) vacation,
holiday and similar accruals, (ii) liabilities payable in connection with
workers’ compensation claims, (iii) liabilities payable to any employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA) maintained by
Borrower or its affiliates on account of Borrower’s employees, (iv) federal,
state and local income or franchise taxes and (v) bonuses payable to certain
employees (collectively, the “GAAP Exceptions”).
(b)    Since December 31, 2012, there has been no Material Adverse Change with
respect to Borrower.

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7.5    Collateral. Except for the Permitted Liens, all of the Borrower’s assets
and property (including, without limitation, the Collateral) is and will
continue to be owned by Borrower (except for items of Inventory disposed of in
the ordinary course of business and sales of Equipment being replaced in the
ordinary course of business, or as a result of casualty loss or condemnation,
with other Equipment with a value equal to or greater than the Equipment being
sold), has been fully paid for and is free and clear of all Liens. No financing
statement or other document similar in effect covering all or any part of the
Collateral is on file in any recording or filing office, other than those
identifying the Administrative Agent as the secured creditor or except for
Permitted Liens. The organizational number assigned by the Secretary of State of
the Borrower’s state of incorporation or formation, as applicable, is as
identified on the UCC Financing Statements filed in connection with this
Agreement and as set forth on Schedule 1 hereto.
7.6    Solvency. The Borrower, as determined on a consolidated basis, is
Solvent. The Borrower, as determined on a consolidated basis, will not be
rendered insolvent by the execution and delivery of this Agreement or any
Financing Agreement, or by completion of the transactions contemplated hereunder
or thereunder.
7.7    Principal Place of Business; State of Organization. Set forth on Schedule
1 hereto, is, as of the Closing Date, (a) the principal place of business and
chief executive office of Borrower and (b) the Borrower’s state of incorporation
or formation. The books and records of the Borrower are at the principal place
of business and chief executive office of the Borrower.
7.8    Other Names. As of the Closing Date the Borrower is not using, and shall
not thereafter use, any name (including, without limitation, any trade name,
trade style, assumed name, division name or any similar name), other than the
names set forth on Schedule 7.8 attached hereto.
7.9    Tax Liabilities. The Borrower has filed all material federal, state and
local tax reports and returns required by any law or regulation to be filed by
it, except for extensions duly obtained, and taxes that are being contested in
good faith by appropriate proceedings duly conducted, and has either duly paid
all taxes, duties and charges indicated due on the basis of such returns and
reports, or made adequate provision for the payment thereof, and the assessment
of any material amount of additional taxes in excess of those paid and reported
is not reasonably expected.
7.10    Loans. Except as otherwise permitted by Section 9.2 hereof, the Borrower
is not obligated on any loans or other Indebtedness.
7.11    Margin Securities. No part of the proceeds of the Loan will be used, and
whether immediately, incidentally or ultimately, for any purposes that violates
or results in directly or indirectly, a violation of Regulations U, T or X of
the Board of Governors of the Federal Reserve System (assuming, in the case of
Regulation T, that no broker-dealer or other “creditor” as defined in Regulation
T extends or maintains credit to Borrower under this Agreement). The Borrower
does not own any margin securities and the Loan advanced hereunder will not be
used for the purpose of purchasing or carrying any margin securities or for the
purpose of reducing or retiring any Indebtedness which was originally incurred
to purchase any margin securities or for any other purpose not permitted by
Regulation U of the Board of Governors of the Federal Reserve System..

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7.12    Organizational Chart. Set forth on Schedule 7.12 hereto is a true and
complete copy of an organizational chart setting forth the Borrower and each of
its Subsidiaries and Affiliates as of the Closing Date.
7.13    Litigation and Proceedings. As of the Closing Date, no judgments are
outstanding against the Borrower that could be an Event of Default under clause
(e) of Section 11.1, nor is there as of such date pending, or to the best of
Borrower’s knowledge, threatened, except, as of the Closing Date, as shown on
Schedule 7.13, any (i) litigation, suit, action or contested claim (other than a
personal injury tort claim), or federal, state or municipal governmental
proceeding, by or against the Borrower or any of its Property which if adversely
determined could have a Material Adverse Effect, or (ii) any tort claim for
personal injury, including death, against the Borrower as to which (a)
litigation has been instituted and is pending or (b) or a request for medical
records has been made upon Borrower by an attorney for the claimant on or after
January 1, 2011.
7.14    Other Agreements. The Borrower is not in default under or in breach of
any agreement, contract, lease, or commitment to which it is a party or by which
it is bound which could reasonably be expected to have a Material Adverse
Effect. The Borrower does not know of any dispute regarding any agreement,
contract, instrument, lease or commitment to which it is a party which could
reasonably be expected to have a Material Adverse Effect.
7.15    Compliance with Laws and Regulations. The execution and delivery by the
Borrower of this Agreement and all of the other Financing Agreements to which it
is a party and the performance of the Borrower’s obligations hereunder and
thereunder are not in contravention of any applicable law, rule or regulation.
The Borrower has obtained all licenses, authorizations, approvals, licenses and
permits necessary in connection with the operation of its business, except to
the extent the failure to obtain any of the foregoing could reasonably be
expected to not result in a Material Adverse Effect. The Borrower is in
compliance with all laws, orders, rules, regulations and ordinances of all
federal, foreign, state and local governmental authorities applicable to it and
its business, operations, property, and assets, except to the extent any such
non-compliance could reasonably be expected to not result in a Material Adverse
Effect.
7.16    Intellectual Property. As of the Closing Date, the Borrower does not own
or otherwise possess any material Intellectual Property. To the Borrower’s best
knowledge, none of its Intellectual Property infringes on the rights of any
other Person; provided that the name “Diversicare” is shared in Canada with
various Diversicare entities that were sold in 2004.
7.17    Environmental Matters. The Borrower has not Managed Hazardous Substances
on or off its Property other than in compliance with applicable Environmental
Laws, except to the extent any such non-compliance could reasonably be expected
to not result in a Material Adverse Effect. Except as set forth on Schedule 7.17
hereto, the Borrower has complied in all material respects with applicable
Environmental Laws regarding transfer, construction on and operation of its
business and Property, including, but not limited to, notifying authorities,
observing restrictions on use, transferring, modifying or obtaining permits,
licenses, approvals and registrations, making required notices, certifications
and submissions, complying with financial liability requirements, and, except
where not required to do so pursuant to any Commercial Lease, Managing Hazardous
Substances and Responding to the presence or Release of Hazardous Substances
connected with

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operation of its business or Property. The Borrower does not have any contingent
liability with respect to the Management of any Hazardous Substance that could
reasonably be expected to result in a Material Adverse Effect. As of the Closing
Date, the Borrower has not received any Environmental Notice that could
reasonably be expected to result in a Material Adverse Effect.
7.18    Disclosure. As of the Closing Date, none of the representations or
warranties made by the Borrower herein or in any Financing Agreement to which
the Borrower is a party and no other written information provided or statements
made by the Borrower or its representatives to the Administrative Agent or
Lenders contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of the Closing
Date, the Borrower has disclosed to the Administrative Agent and Lenders all
facts of which the Borrower has knowledge which might result in a Material
Adverse Effect either prior or subsequent to the consummation of the
transactions contemplated hereby or which, to Borrower’s knowledge, at any time
hereafter might reasonably be expected to result in a Material Adverse Effect.
7.19    Pension Related Matters. Each employee pension plan (other than a
multiemployer plan within the meaning of Section 3(37) of ERISA and to which the
Borrower or any ERISA Affiliate has or had any obligation to contribute (a
“Multiemployer Plan”)) maintained by the Borrower or any of its ERISA Affiliates
to which Title IV of ERISA applies and (a) which is maintained for employees of
the Borrower or any of its ERISA Affiliates or (b) to which the Borrower or any
of its ERISA Affiliates made, or was required to make, contributions at any time
within the preceding five (5) years (a “Plan”), complies, and is administered in
accordance, with its terms and all material applicable requirements of ERISA and
of the Internal Revenue Code of 1986, as amended, and any successor statute
thereto (the “Tax Code”), and with all material applicable rulings and
regulations issued under the provisions of ERISA and the Tax Code setting forth
those requirements. No “Reportable Event” or “Prohibited Transaction” (as each
is defined in ERISA) or withdrawal from a Multiemployer Plan caused by the
Borrower has occurred and no funding deficiency described in Section 302 of
ERISA caused by the Borrower exists with respect to any Plan or Multiemployer
Plan which could have a Material Adverse Effect. The Borrower and each ERISA
Affiliate has satisfied all of their respective funding standards applicable to
such Plans and Multiemployer Plans under Section 302 of ERISA and Section 412 of
the Tax Code and the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA (“PBGC”) has not
instituted any proceedings, and there exists no event or condition caused by the
Borrower which would reasonably be expected to constitute grounds for the
institution of proceedings by PBGC, to terminate any Plan or Multiemployer Plan
under Section 4042 of ERISA which could have a Material Adverse Effect.
7.20    Perfected Security Interests. The Lien in favor of the Administrative
Agent provided pursuant to Section 6.1 hereof is a valid and perfected first
priority security interest in the Collateral (subject only to the Permitted
Liens), and all filings and other actions necessary to perfect such Lien have
been or will be duly taken.

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7.21    [Intentionally Omitted.].
7.22    Broker’s Fees. The Borrower does not have any obligation to any Person
in respect of any finder’s, brokers or similar fee in connection with the Loan
or this Agreement.
7.23    Investment Company Act. The Borrower is not an “investment company” or a
company “controlled” by an “investment company”, within the meaning of the
Investment Company Act of 1940, as amended.
7.24    [Intentionally Omitted.].
7.25    [Intentionally Omitted.].
7.26    Offenses and Penalties Under the Medicare/Medicaid Programs. Except as
listed on Schedule 7.26 attached hereto, as of the Closing Date, neither the
Borrower nor any Affiliate and/or employee of the Borrower or any Affiliate is
currently, to the best knowledge of the Borrower, after due inquiry, under
investigation or prosecution for, nor has the Borrower or any Affiliate or, to
the best knowledge of Borrower, after due inquiry, any current employee of the
Borrower or any Affiliate been convicted of: (a) any offense related to the
delivery of an item or service under the Medicare or Medicaid programs; (b) a
criminal offense related to neglect or abuse of patients in connection with the
delivery of a health care item or service; (c) fraud, theft, embezzlement or
other financial misconduct; (d) the obstruction of an investigation of any crime
referred to in subsections (a) through (c) of this Section; or (e) unlawful
manufacture, distribution, prescription, or dispensing of a controlled
substance. Except as listed on Schedule 7.26, as of the Closing Date, neither
the Borrower nor any Affiliate and/or, to the best knowledge of Borrower, after
due inquiry, any current employee of the Borrower or any Affiliate has been
required to pay any civil money penalty under applicable laws regarding false,
fraudulent or impermissible claims or payments to induce a reduction or
limitation of health care services to beneficiaries of any state or federal
health care program, nor, to the best knowledge of the Borrower, after due
inquiry, is the Borrower nor any Affiliate and/or to the best knowledge of
Borrower, after due inquiry, any current employee of the Borrower or any
Affiliate currently the subject of any investigation or proceeding that may
result in such payment.
7.27    Medicaid/Medicare. Neither the Borrower nor any Affiliate of the
Borrower nor any current officer or director of the foregoing has engaged in any
of the following: (i) knowingly and willfully making or causing to be made a
false statement or representation of a material fact in any application for any
benefit or payment under Medicare or Medicaid; (ii) knowingly and willfully
making or causing to be made any false statement or representation of a material
fact for use in determining rights to any benefit or payment under Medicare or
Medicaid; (iii) failing to disclose knowledge by a claimant of the occurrence of
any event affecting the initial or continued right to any benefit or payment
under Medicare or Medicaid on its own behalf or on behalf of another, with
intent to secure such benefit or payment fraudulently; or (iv) knowingly and
willfully soliciting or receiving any remuneration (including any kickback,
bribe or rebate), directly or indirectly, overtly or covertly, in cash or in
kind or offering to pay such remuneration: (A) in return for referring any
individual to a Person for the furnishing or arranging for the furnishing of any
item or service for which payment may be made in whole or in part by Medicare or
Medicaid; or (B) in return for

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purchasing, leasing or ordering or arranging for or recommending the purchasing,
leasing or ordering of any good, facility, service or item for which payment may
be made in whole in part by Medicare or Medicaid.
7.28    Consideration. Borrower acknowledges that it desires to have this
Agreement and the Financing Agreements to which the Borrower is a party
cross-collateralized and cross-defaulted and have the Collateral serve as
collateral for all of the Liabilities and Affiliate Revolving Loan Liabilities.
The Affiliated Revolving Borrowers and the Borrowers are Affiliates of each
other. Each Borrower will derive substantial direct and indirect benefit
(financial and otherwise) from funds made available to the Affiliated Revolving
Borrowers pursuant to this Agreement, and it is and will be to each Borrower’s
and Affiliated Revolving Borrower’s advantage to assist each other in procuring
such funds from the Lenders.
7.29    USA Patriot Act. Neither the Borrower nor any of its Affiliates is
identified in any list of known or suspected terrorists published by any United
States government agency (collectively, as such lists may be amended or
supplemented from time to time, referred to as the “Blocked Persons Lists”)
including, without limitation, (a) the annex to Executive Order 13224 issued on
September 23, 2001, and (b) the Specially Designated Nationals List published by
the Office of Foreign Assets Control. No part of the proceeds of any Loan will
be used directly or indirectly for any payments to any government official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.
7.30    Absence of Foreign or Enemy Status. Neither the Borrower nor any
Affiliate of the Borrower is an “enemy” or an “ally of the enemy” within the
meaning of Section 2 of the Trading with the Enemy Act (50 U.S.C. App. §§ 1 et
seq.), as amended. Neither the Borrower nor any Affiliate of the Borrower is in
violation of, nor will the use of the Loan violate, the Trading with the Enemy
Act, as amended, or any executive orders, proclamations or regulations issued
pursuant thereto, including, without limitation, regulations administered by the
Office of Foreign Asset Control of the Department of the Treasury (31 C.F.R.
Subtitle B, Chapter V).
7.31    Acquisition. Borrower has delivered true, correct and complete copies of
the fully-signed Kansas Acquisition Documents to the Administrative Agent on or
prior to the Closing Date. On the Closing Date and concurrently with the making
of the Term Loan hereunder, the Kansas Acquisition will have been consummated in
accordance with the terms of the Kansas Acquisition Documents and in accordance
in all material respects with all applicable laws. As of the Closing Date, to
the Borrower’s knowledge, the Seller is not in default or breach of or under the
Kansas Acquisition Documents to which Seller is a party. All consents and
approvals of, and filings and registrations with, and all other actions by, any
Governmental Authority and (except where the failure to obtain or make the same
could not reasonably be expected to have an adverse effect on the Kansas
Acquisition or any portion thereof or a Material Adverse Effect) to the best of
Borrower’s knowledge each other Person required in order to make or consummate
the Kansas Acquisition have been obtained, given, filed or taken and are or will
be in full force and effect.

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7.32    Labor Matters. There are no strikes or other labor disputes or
grievances pending or, to the knowledge of Borrower, threatened against
Borrower. All payments due from the Borrower on account of wages and employee
and retiree health and welfare insurance and other benefits have been paid or
accrued as a liability on its books. The consummation of the transactions
contemplated by the Financing Agreements will not give rise to a right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which Borrower is a party or by which it is
bound.
7.33    Capitalization. The authorized Stock of each Borrower, as of the Closing
Date, is set forth on Schedule 7.33 hereto. Pledgor legally and beneficially
owns all of the issued and outstanding Stock of each Borrower. All issued and
outstanding Stock of the Borrower is duly authorized and validly issued, fully
paid, non-assessable, free and clear of all Liens or pledges other than
Permitted Liens, and such Stock was issued in compliance with all applicable
state, federal and foreign laws concerning the issuance of securities. No shares
of the Stock of Borrower, other than those owned by Pledgor are issued and
outstanding. There are no preemptive or other outstanding rights, options,
warrants, conversion rights or similar agreements or understandings for the
purchase or acquisition from Borrower of any equity securities of Borrower.
7.34    Government Contracts. The Borrower is not a party to any contract or
agreement (including, but not limited to, any Lease) that requires Borrower to
comply with the Federal Assignment of Claims Act, as amended (31 U.S.C. Section
3727) or, to the best of Borrower’s knowledge, any similar state or local law.
7.35    OFAC. Neither the Borrower, nor Guarantor, nor any beneficial owner of
the Borrower or Guarantor, is currently listed on the OFAC Lists. None of
Borrower and, to the best knowledge of Borrower, its Affiliates, are in
violation of (a) the Trading with the Enemy Act, and each of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle B
Chapter V, as amended) and any other enabling legislation or executive order
relating thereto, (b) the Patriot Act and (c) other federal or state laws
relating to “know your customer” and anti-money laundering rules and
regulations.
7.36    Commercial Leases. As of the Closing Date, there are no Commercial
Leases as to which a Borrower is the lessee and no Operating Leases between
Borrower and any Operators of the Facilities. As of the Closing Date, each
Borrower is the Operator of the Facility owned by such Borrower.
7.37.    Title to Property. Except as could not reasonably be expected to have a
Material Adverse Effect, Borrower owns good and, in the case of real property,
marketable title to all of its properties and assets, real and personal,
tangible and intangible, of any nature whatsoever, free and clear of all Liens
(except for Permitted Liens), and except for minor defects in title that do not
interfere with in any material respect with the ability of Borrower to conduct
its business as currently conducted or utilize such properties and assets for
their intended purposes.
7.38.    Management Fees. The management fees payable by Borrower to Manager
pursuant to the Management Agreements is entirely used to cover and pay for
actually incurred, ordinary course costs and does not include any amount of
profit.

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8.    AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees on a joint and several basis with
Administrative Agent and Lenders that, as long as any Liabilities or Affiliate
Revolving Loan Liabilities remain outstanding, and (even if there shall be no
such Liabilities or Affiliate Revolving Loan Liabilities outstanding) as long as
this Agreement remains in effect:
8.1    Reports, Certificates and Other Information. The Borrower Agent shall
deliver to the Administrative Agent and each Lender:
(c)    Financial Statements.
(1)    On or before the one hundred twentieth (120th) day after each of
Guarantor’s Fiscal Years, a copy of the annual financial statements on a
consolidated basis for Guarantor, duly certified and audited by independent
certified public accountants of nationally recognized standing selected by the
Borrower, together with the supporting consolidating statements for each
Borrower, consisting of, at least, balance sheets and statements of income and
cash flow for such period, prepared in conformity with GAAP. In lieu of its
obligations hereunder, Guarantor may submit to Administrative Agent and Lenders,
upon its filing thereof, a copy of its form 10-K as filed with the United States
Security and Exchange Commission.
(2)    On or before the forty-fifth (45th) day of the end of each of Guarantor’s
first, second and third Fiscal Quarters, a copy of internally prepared quarterly
financial statements for Borrower prepared in accordance with GAAP and in a
manner substantially consistent with the financial statements referred to in
Section 8.1(a)(1) hereof (subject, however, to the GAAP Exceptions), signed on
behalf of the Borrower by a Duly Authorized Officer and consisting of, at least,
an income statement, a balance sheet, and statement of cash flow as at the close
of such Fiscal Quarter and statements of earnings for such Fiscal Quarter and
for the period from the beginning of such Fiscal Year to the close of such
Fiscal Quarter.
(3)    On or before (i) the forty-fifth (45th) day after the end of each
calendar month ending the Borrower’s first, second and third Fiscal Quarters,
(ii) the seventy-fifth (75th) day after the end of the calendar month ending the
Borrower’s final Fiscal Quarter, and (iii) the thirtieth (30th) day after the
end of each calendar month, a copy of internally prepared financial statements
for Borrower prepared in accordance with GAAP and in a manner substantially
consistent with the financial statements referred to in Section 8.1(a)(1)
hereof, signed on behalf of the Borrower by a Duly Authorized Officer and
consisting of, at least, an income statement and a balance sheet, as at the
close of such calendar month and statements of earnings for such calendar month
and for the period from the beginning of such Fiscal Year to the close of such
calendar month, each of which must be in form, scope and substance reasonably
satisfactory to Administrative Agent and the Required Lenders.
(d)    [Intentionally Omitted.].
(e)    Compliance Certificates. Contemporaneously with the furnishing of each
quarterly financial statements, a duly completed compliance certificate with
appropriate insertions

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(a “Compliance Certificate”), dated the date of such annual financial statement
or such Fiscal Quarter and signed on behalf of the Borrower by a Duly Authorized
Officer, which Compliance Certificate shall state that no Default or Event of
Default has occurred and is continuing, or, if there is any such event,
describes it and the steps, if any, being taken to cure it. Each Compliance
Certificate shall contain a computation of, and show compliance with, each of
the financial ratios and restrictions set forth in Section 9.12 hereof (each
such computation and calculation to be in form and substance acceptable to the
Administrative Agent), and each Compliance Certificate must otherwise be in
form, scope and substance reasonably satisfactory to Administrative Agent and
the Required Lenders.
(f)    Real Estate Taxes. As paid, evidence of timely payment of real estate
taxes owed on the Property.
(g)    Notice of Default, Regulatory Matters, Litigation Matters or Adverse
Change in Business. Forthwith upon learning of the occurrence of any of the
following, written notice thereof which describes the same and the steps being
taken by the Borrower with respect thereto: (i) the occurrence of a Default or
an Event of Default; (ii) the institution or threatened institution of, or any
adverse determination in, any litigation (other than a personal injury tort
claim), arbitration proceeding or governmental proceeding in which any
injunctive relief or money damages is sought which if adversely determined could
have a Material Adverse Effect; (iii) the receipt of any notice from any
governmental agency concerning any violation or potential violation of any
regulations, rules or laws applicable to Borrower which could have a Material
Adverse Effect; or (iv) any Material Adverse Change. With regard to personal
injury tort claims, upon request by Administrative Agent, Borrower shall review
with Administrative Agent the occurrence of any personal injury or other action
which could reasonably give rise to a personal injury tort claim against the
Borrower as to which (i) litigation has been instituted and is pending or (ii) a
request for medical records has been made upon Borrower by an attorney for the
claimant on or after January 1, 2011.
(h)    Insurance Reports. (i) At any time after a Default and upon the request
of the Administrative Agent, a certificate signed by a Duly Authorized Officer
that summarizes the property, casualty, liability and malpractice insurance
policies carried by the Borrower, and (ii) written notification of any material
change in any such insurance by the Borrower within five (5) Business Days after
receipt of any notice (whether formal or informal) of such change by any of its
insurers.
(i)    Operating Budget. No later than thirty (30) days after the end of each
Fiscal Year, a copy of the Borrower’s and Guarantor’s Fiscal Year consolidated
operating budget.
(j)    Affiliate Transactions. Upon the Administrative Agent’s reasonable
request from time to time, a reasonably detailed description of each of the
material transactions between the Borrower and any of its Affiliates during the
time period reasonably requested by the Administrative Agent, which shall
include, without limitation, the amount of money either paid or received, as
applicable, by the Borrower in such transactions.

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(k)    [Intentionally Omitted.].
(l)    Interim Reports. Promptly upon receipt thereof, copies of any reports
submitted to Guarantor or Borrower by the independent accountants in connection
with any interim audit of the books of any such Person and copies of each
management control letter provided to Guarantor or Borrower by independent
accountants.
(m)    Reports to the SEC. Upon the Administrative Agent’s reasonable request
from time to time, copies of any and all regular, annual, periodic or special
reports of Guarantor, any Borrower or any Affiliate thereof filed with the
Securities and Exchange Commission (“SEC”); copies of any and all registration
statements of Guarantor, any Borrower or any Affiliate thereof filed with the
SEC; and copies of any and all proxy statements or other written communications
made to security holders generally.
(n)    Other Information. Such other information, certificates, schedules,
exhibits or documents (financial or otherwise) concerning the Borrower and its
operations, business, properties, condition or otherwise as the Administrative
Agent or any Lender may reasonably request from time to time.
8.2    Inspection; Audit Fees. Borrower shall keep proper books of record and
account in accordance with GAAP in which full, true and correct entries shall be
made of all dealings and transactions in relation to its business and
activities; and shall permit (at the expense of the Borrower provided the
Borrower shall be responsible for such reasonable expenses no more than one (1)
time per year unless an Event of Default has occurred and is continuing),
representatives of the Administrative Agent or any Person appointed by
Administrative Agent to visit and inspect any of their respective properties, to
examine and make abstracts or copies from any of their respective books and
records (in each case excluding patient medical records and other records to the
extent confidential or where such examination is prohibited under applicable
Laws, including without limitation HIPAA), to conduct a collateral audit and
analysis of their respective Inventory and Accounts and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants as often as may reasonably be
desired. In the absence of an Event of Default, the Administrative Agent shall
give the Borrower commercially reasonable prior written notice of such exercise;
provided, no notice shall be required during the existence and continuance of
any Event of Default. All such costs, expenses and fees incurred or charged by
Administrative Agent under this Section 8.2 shall bear interest at the Default
Rate and shall be additional Liabilities of Borrower to Administrative Agent,
secured by the Collateral, if not promptly paid upon the request of
Administrative Agent.
8.3    Conduct of Business. The Borrower shall maintain its corporate existence,
shall maintain in full force and effect all licenses, permits, authorizations,
bonds, franchises, leases, patents, trademarks and other Intellectual Property,
contracts and other rights necessary to the conduct of its business, shall
continue in, and limit its operations to, the same general line of business as
that currently conducted and shall comply with all applicable laws (including,
without limitation, Healthcare Laws and Environmental Laws), orders, regulations
and ordinances of all federal, foreign, state and local governmental
authorities, except to the extent any such non-compliance could reasonably be
expected to result in a Material Adverse Effect. The Borrower shall keep proper

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books of record and account in which full and true entries will be made of all
dealings or transactions of or in relation to the business and affairs of the
Borrower, in accordance with GAAP (subject, however, to the GAAP Exceptions),
consistently applied.
8.4    Claims and Taxes. The Borrower agrees to pay or cause to be paid all
license fees, bonding premiums and related taxes and charges and shall pay or
cause to be paid all of the Borrower’s real and personal property taxes,
assessments and charges and all of the Borrower’s franchise, income,
unemployment, payroll, use, excise, old age benefit, withholding, sales and
other taxes and other governmental charges assessed against the Borrower, or
payable by the Borrower, at such times and in such manner as to prevent any
penalty from accruing or any Lien from attaching to its property, provided that
the Borrower shall have the right to contest in good faith, by an appropriate
proceeding promptly initiated and diligently conducted, the validity, amount or
imposition of any such tax, assessment or charge, and upon such good faith
contest to delay or refuse payment thereof, if (a) the Borrower establishes
adequate reserves to cover such contested taxes, assessments or charges, and (b)
such contest does not have a Material Adverse Effect.
8.5    State of Incorporation or Formation. The Borrower’s state of
incorporation or formation, as applicable, set forth on Schedule 1 hereto shall
remain the Borrower’s state of incorporation or formation, as applicable,
unless: (a) the Borrower provides the Administrative Agent with at least thirty
(30) days prior written notice of any proposed change, (b) no Event of Default
then exists or will exist immediately after such proposed change, and (c) the
Borrower provides the Administrative Agent with, at Borrower’s sole cost and
expense, such financing statements, and such other agreements and documents as
the Administrative Agent shall reasonably request in connection therewith.
8.6    Liability Insurance. The Borrower shall maintain, at its expense, general
liability and environmental insurance through commercial insurance in such
amounts and with such deductibles consistent with its past practices, and shall
deliver to the Administrative Agent the original (or a certified) copy of each
policy of insurance and evidence of the payment of all premiums therefor. Such
policies of insurance shall contain an endorsement showing the Administrative
Agent as additional insured thereunder to the general liability coverage and,
where such an endorsement is available from Borrower’s carrier at commercially
affordable rates, to the professional liability coverage. Administrative Agent
acknowledges that general liability insurance coverage is currently unavailable
generally in the nursing home industry at commercially affordable rates.
Borrower has in place and will maintain either (i) so long it is available at
commercially affordable rates, for the States of Texas, Alabama, Florida, Kansas
and Ohio, indemnity insurance with coverage limits of One Million Dollars
($1,000,000.00) per medical incident, subject to a deductible of Four Hundred
Ninety-Five Thousand Dollars ($495,000.00) per claim, with a total annual
aggregate policy limit of Fifteen Million Dollars ($15,000,000.00) and a
sublimit per Facility of Three Million Dollars ($3,000,000.00) or (ii) general
liability and malpractice insurance with single limit coverage of Five Hundred
Thousand and No/100 Dollars ($500,000.00) per occurrence and One Million and
No/100 Dollars ($1,000,000.00) cumulative. Administrative Agent agrees that
until such time as insurance coverage is generally available in the nursing home
industry at commercially affordable rates, Administrative Agent agrees to accept
Borrower’s current coverage. Borrower shall provide Administrative Agent, (a) on
an annual basis, information from its insurance representative,

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insurance carrier or from comparable insurance carriers regarding availability
of insurance and (b) with respect to the insurance policies contemplated by this
Section 8.6 and those certain insurance policies contemplated by Section 8.7
below, prompt (but in any event, within five (5) Business Days of any such
occurrence) written notice of any alteration or cancellation of such insurance
policy.
8.7    Property and Other Insurance. The Borrower shall, at its expense, keep
and maintain its assets material to the Business of Borrower insured against (i)
loss or damage by fire, theft, explosion, flood, earthquake, spoilage and all
other hazards and risks and (ii) business interruption, in such amounts with
such deductibles (which may include self-insurance trusts) ordinarily insured
against by other owners or users of such properties in similar businesses of
comparable size operating in the same or similar locations. Borrower, at
Borrower’s expense, shall keep and maintain workers compensation insurance as
may be required by applicable Laws. The Borrower Agent shall deliver to the
Administrative Agent the original (or a certified) copy of each policy of
insurance and evidence of payment of all premiums therefor. All such policies of
insurance shall be in form and substance reasonably satisfactory to the
Administrative Agent. Such policies of insurance shall contain an endorsement,
in form and substance satisfactory to the Administrative Agent, showing the
Administrative Agent as “Lender’s Loss Payee” and all loss payable to the
Administrative Agent (for the ratable benefit of the Lenders), as its interests
may appear, as provided in this Section. Such endorsement shall provide that
such insurance company will give the Administrative Agent at least thirty (30)
days prior written notice before any such policy or policies of insurance shall
be altered or canceled and that no act or default of the Borrower or any other
Person shall affect the right of the Administrative Agent to recover under such
policy or policies of insurance in case of loss or damage. The Borrower hereby
directs all insurers under such policies of insurance to pay all proceeds of
insurance policies directly to the Administrative Agent and the Administrative
Agent shall absent an Event of Default permit the Borrower to use such proceeds
to restore or rebuild the damaged property as the Borrower shall determine in
its reasonable and good faith determination.
Upon the occurrence of an Event of Default under this Agreement, the Borrower
irrevocably makes, constitutes and appoints the Administrative Agent (and all
officers, employees or agents designated by the Administrative Agent in writing
to the Borrower) as the Borrower’s true and lawful attorney-in-fact for the
purpose, subject at all times to the terms and conditions of the Commercial
Leases (if and as applicable), of making, settling and adjusting claims on
behalf of the Borrower under all such policies of insurance, endorsing the name
of the Borrower on any check, draft, instrument or other item of payment
received by the Borrower or the Administrative Agent pursuant to any such
policies of insurance, and for making all determinations and decisions of
Borrower with respect to such policies of insurance.
UNLESS THE BORROWER PROVIDES THE ADMINISTRATIVE AGENT WITH EVIDENCE OF THE
INSURANCE COVERAGE REQUIRED BY THIS AGREEMENT WITHIN THREE BUSINESS DAYS
FOLLOWING ADMINISTRATIVE AGENT’S REQUEST, THE ADMINISTRATIVE AGENT MAY PURCHASE
INSURANCE AT THE BORROWER’S EXPENSE TO PROTECT THE ADMINISTRATIVE AGENT’S
INTERESTS IN THE COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT, PROTECT THE
INTERESTS IN THE COLLATERAL. THE COVERAGE PURCHASED BY THE ADMINISTRATIVE AGENT
MAY NOT PAY ANY CLAIMS THAT THE BORROWER MAKES OR ANY CLAIM THAT IS

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MADE AGAINST THE BORROWER IN CONNECTION WITH THE COLLATERAL. THE BORROWER MAY
LATER CANCEL ANY SUCH INSURANCE PURCHASED BY THE ADMINISTRATIVE AGENT, BUT ONLY
AFTER PROVIDING THE ADMINISTRATIVE AGENT WITH EVIDENCE THAT THE BORROWER HAS
OBTAINED INSURANCE AS REQUIRED BY THIS AGREEMENT. IF THE ADMINISTRATIVE AGENT
PURCHASES INSURANCE FOR THE COLLATERAL, THE BORROWER WILL BE RESPONSIBLE FOR THE
COSTS OF THAT INSURANCE, INCLUDING INTEREST AND ANY OTHER CHARGES THAT THE
ADMINISTRATIVE AGENT MAY IMPOSE IN CONNECTION WITH THE PLACEMENT OF THE
INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE
INSURANCE. THE COSTS OF THE INSURANCE MAY BE ADDED TO THE LIABILITIES SECURED
HEREBY. THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST OF INSURANCE THE
BORROWER MAY BE ABLE TO OBTAIN ON ITS OWN.
8.8    Environmental. The Borrower shall promptly notify and furnish
Administrative Agent with a copy of any and all Environmental Notices which are
received by it. Except where not required to do so pursuant to any Commercial
Lease, the Borrower shall take prompt and appropriate action in response to any
and all such Environmental Notices and shall promptly furnish Administrative
Agent with a description of the Borrower’s Response thereto. The Borrower shall
(a) obtain and maintain all permits required under all applicable federal,
state, and local Environmental Laws, except as to which the failure to obtain or
maintain would not have a Material Adverse Effect; and (b) except where not
required to do so pursuant to any Commercial Lease, keep and maintain the
Property and each portion thereof in compliance with, and not cause or permit
the Property or any portion thereof to be in violation of, any Environmental
Law, except as to which the failure to comply with or the violation of which,
would not have a Material Adverse Effect. During the term of this Agreement, the
Borrower shall not permit others to, Manage, whether on or off Borrower’s
Property, Hazardous Substances, except to the extent such Management does not or
is not reasonably likely to result in or create a Material Adverse Effect.
Except where not required to do so pursuant to any Commercial Lease, the
Borrower shall take prompt action in material compliance with applicable
Environmental Laws to Respond to the on-site or off-site Release of Hazardous
Substances connected with operation of its business or Property.
8.9    Banking Relationship. Except as otherwise provided in the Revolving Loan
Agreement the Borrower and the Guarantor shall at all times maintain all of
their respective primary deposit and operating accounts with the Administrative
Agent and the Administrative Agent will act as the principal depository and
remittance agent for the Borrower and Guarantor. The Borrower agrees to pay to
the Administrative Agent reasonable and customary fees for banking services/cash
management services of Borrower and Guarantor (the “Service Fee”). The
Administrative Agent shall be and hereby is authorized to charge any deposit or
operating account of the Borrower in respect of the Service Fee.
8.10    Intellectual Property. If after the Closing Date the Borrower shall own
or otherwise possess any registered patents, copyrights, trademarks, trade
names, or service marks other than those owned by Guarantor or any derivation
thereof (or file an application to attempt to register any of the foregoing),
the Borrower shall promptly notify the Administrative Agent in writing of

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same and execute and deliver any documents or instruments (at the Borrower’s
sole cost and expense) reasonably required by Administrative Agent to perfect a
security interest in and lien on any such federally registered Intellectual
Property in favor of the Administrative Agent and assist in the filing of such
documents or instruments with the United States Patent and Trademark Office
and/or United States Copyright Office or other applicable registrar.
8.11    Change of Location; Etc. Any of the Collateral may be moved to another
location within the continental United States so long as: (i) the Borrower
provides the Administrative Agent with at least thirty (30) days prior written
notice, (ii) no Event of Default then exists, and (iii) the Borrower provides
the Administrative Agent with, at Borrower’s sole cost and expense, such
financing statements, landlord waivers, bailee and processor letters and other
such agreements and documents as the Administrative Agent shall reasonably
request. The Borrower shall defend and protect the Collateral against and from
all claims and demands of all Persons at any time claiming any interest therein
adverse to the Administrative Agent. If the Borrower desires to change its
principal place of business and chief executive office or its name, the Borrower
shall notify the Administrative Agent thereof in writing no later than thirty
(30) days prior to such change and the Borrower shall provide the Administrative
Agent with, at Borrower’s sole cost and expense, such financing statements,
amendment statements and other documents as the Administrative Agent shall
reasonably request in connection with such change. If the Borrower shall decide
to change the location where its books and records are maintained, the Borrower
shall notify the Administrative Agent thereof in writing no later than thirty
(30) days prior to such change.
8.12    Health Care Related Matters. To the extent applicable, the Borrower
shall cause all licenses, permits, certificates of need, reimbursement contracts
and programs, and any other agreements necessary for the use and operation of
its business or as may be necessary for participation in Medicaid and other
applicable reimbursement programs, to remain in full force and effect, except to
the extent that the failure to do so would not cause a Material Adverse Effect
or a material adverse effect on the prospects of the Borrowers on a consolidated
basis.
8.13    US Patriot Act. Borrower covenants to Administrative Agent and Lenders
that if Borrower becomes aware that it or any of its Affiliates is identified on
any Blocked Persons List (as identified in Section 7.29 hereof), Borrower shall
immediately notify Administrative Agent and Lenders in writing of such
information. Borrower further agrees that in the event any of them or any
Affiliate is at any time identified on any Blocked Persons List, such event
shall be an Event of Default, and shall entitle Administrative Agent and Lenders
to exercise any and all remedies provided in any Financing Agreements or
otherwise permitted by Law. In addition, Administrative Agent and Lenders may
immediately contact the Office of Foreign Assets Control and any other
government agency Administrative Agent or Lenders deem appropriate in order to
comply with its respective obligations under any Law regulating or relating to
terrorism and international money laundering.
8.14    Single Purpose Entity Provisions. (a) The business and purposes of
Borrower is and will continue to be limited to the following: (i) except for
Diversicare Holding and Diversicare Kansas, to acquire, own, hold, lease,
operate, manage, maintain, develop and/or improve the Property; (ii) to enter
into and perform its obligations under this Agreement and the other Financing

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Agreements; (iii) except for Diversicare Holding and Diversicare Kansas, to
sell, transfer, service, convey, dispose of, pledge, assign, borrow money
against, finance or otherwise deal with the Property to the extent permitted
under this Agreement and the other Financing Agreements; (iv) except for
Diversicare Holding and Diversicare Kansas, to lease the Property to the
Affiliated Revolving Borrowers; and (v) to engage in any lawful act or activity
and to exercise any powers permitted to entities of its type pursuant to the
laws of its state of organization that are related or incidental to and
necessary, convenient or advisable for the accomplishment of the above mentioned
purposes.
(b)    Borrower shall do all of the following: (i) maintain its intention to
remain Solvent and pay its debts and liabilities (including, as applicable,
shared personnel and overhead expenses) from its assets, to the extent of its
assets, as the same shall become due; (ii) do or cause to be done all things
necessary to observe organizational formalities of Borrower and preserve its
existence; and (iii) to the extent of cash flow available from operations,
intend to maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its
contemplated business operations.
8.15    Further Assurances. The Borrower shall, at its own cost and expense,
cause to be promptly and duly taken, executed, acknowledged and delivered all
such further acts, documents and assurances as may from time to time be
necessary or as the Administrative Agent or any Lender may from time to time
reasonably request in order to carry out the intent and purposes of this
Agreement and the other Financing Agreements and the transactions contemplated
hereby and thereby, including, without limitation, all such actions to
establish, create, preserve, protect and perfect a first-priority Lien in favor
of the Administrative Agent (for the ratable benefit of Lenders and
Administrative Agent) on the Collateral (including Collateral acquired after the
date hereof), including on any and all unencumbered assets of Borrower whether
now owned or hereafter acquired.
8.16    Compliance with Anti-Terrorism Orders. Administrative Agent and Lenders
hereby notify Borrowers that pursuant to the requirements of the USA Patriot Act
(Title III of Pub. L. 107-56, signed into law October 26, 2001) (the “Patriot
Act”), and the policies and practices of Administrative Agent and Lenders, the
Administrative Agent and Lenders are required to obtain, verify and record
certain information and documentation that identifies each Borrower, which
information includes the name and address of each Borrower and such other
information that will allow the Administrative Agent and Lenders to identify
each Borrower in accordance with the Patriot Act. In addition, Borrowers shall
(a) ensure that no Person who owns a controlling interest in or otherwise
controls any Borrower is or shall be listed on the OFAC Lists, (b) not use or
permit the use of the proceeds of the Loan to violate any of the foreign asset
control regulations of OFAC or any enabling statute or Executive Order relating
thereto, and (c) comply with all applicable Bank Secrecy Act laws and
regulations, as amended. Borrower shall not permit the transfer of any interest
in Borrower to any Person (or any beneficial owner of such entity) who is listed
on the OFAC Lists. Borrower shall not knowingly enter into a Lease with any
party who is listed on the OFAC Lists. Borrower shall immediately notify
Administrative Agent and Lenders if Borrower has knowledge that the Guarantor,
manger or any member or beneficial owner of Borrower, Guarantor, Manager is
listed on the OFAC Lists or (i) is indicted on or (ii) arraigned and held over
on charges involving money laundering or predicate crimes to money laundering.
Borrower shall immediately notify

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Administrative Agent and Lenders if Borrower knows that any Tenant is listed on
the OFAC Lists or (A) is convicted on, (B) pleads nolo contendere to, (C) is
indicted on or (D) is arraigned and held over on charges involving money
laundering or predicate crimes to money laundering.
8.17    Hedging Agreement. Within fifteen (15) days of the Closing Date, the
Borrower will execute and deliver to the Administrative Agent a Hedging
Agreement covering an amount no less than Twenty-Two Million Five Hundred
Thousand Dollars ($22,500,000) for no less than five (5) years.
8.18    ERISA. The Borrower shall maintain, or cause its ERISA Affiliates to
maintain, each Plan in compliance in all material respects with all material
applicable requirements of ERISA and the Tax Code.
8.19    Certain Healthcare Matters. Borrower shall, promptly following the
Closing Date, apply for, diligently prosecute, and promptly upon obtaining
provide Administrative Agent with copies of, certificates of need, certificates
of medical necessity, Medicaid and Medicare provider numbers, license, permits
and authorizations that are necessary in the generation of accounts receivable
for and with respect to the Kansas Borrowers.
9.    NEGATIVE COVENANTS.
The Borrower covenants and agrees on a joint and several basis with
Administrative Agent and Lenders that as long as any Liabilities or Affiliate
Revolving Loan Liabilities remain outstanding, and (even if there shall be no
such Liabilities or Affiliate Revolving Loan Liabilities outstanding) as long as
this Agreement remains in effect (unless the Required Lenders shall give (or
Administrative Agent upon instruction by Required Lenders to give) prior written
consent thereto):
9.1    Encumbrances. The Borrower shall not create, incur, assume or suffer to
exist any Lien of any nature whatsoever on any of its assets or property,
including, without limitation, the Collateral, other than the following
(“Permitted Liens”): (i) Liens securing the payment of taxes, either not yet due
or the validity of which is being contested in good faith by appropriate
proceedings, and as to which the Borrower shall, if appropriate under GAAP, have
set aside on its books and records adequate reserves, provided, that such
contest does not have a material adverse effect on the ability of the Borrower
to pay any of the Liabilities, or the priority or value of the Administrative
Agent’s Lien in the Collateral; (ii) deposits under workmen’s compensation,
unemployment insurance, social security and other similar laws made in ordinary
course of business; (iii) Liens in favor of the Administrative Agent (for the
ratable benefit of Lenders and Administrative Agent); (iv) liens imposed by law,
such as mechanics’, materialmen’s, landlord’s, warehousemen’s, carriers’ and
other similar liens, securing obligations incurred in the ordinary course of
business that are not past due for more than thirty (30) calendar days, or that
are being diligently contested in good faith by appropriate proceedings and for
which appropriate reserves have been established, or that are not yet due and
payable; (v) purchase money security interests upon or in any property acquired
or held by the Borrower in the ordinary course of business to secure the
purchase price of such property so long as: (a) the aggregate indebtedness
relating to such purchase money security interests and Capitalized Lease
Obligations does not at any time exceed Three Million and No/100 Dollars
($3,000,000.00) in the aggregate at any time, (b) each such lien shall only
attach to the property to

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be acquired; and (c) the indebtedness incurred shall not exceed one hundred
percent (100%) of the purchase price of the item or items purchased; (v) pledges
and deposits made in the ordinary course of business in compliance with
workmen’s compensation laws, unemployment insurance and other social security
laws or regulations, or deposits to secure performance of tenders, statutory
obligations, trade contracts (other than for Indebtedness), leases (other than
Capital Lease Obligations), surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of Borrower’s
business as presently conducted; (vi) any Lien securing a judgment; provided,
that any Lien securing a judgment in excess of Five Hundred Thousand Dollars
($500,000.00) that remains unsatisfied or undischarged for more than thirty (30)
days shall not be a Permitted Lien, unless such judgment is either (x) fully
insured and such insurer has admitted liability or (y) is being contested or
appealed by appropriate proceedings and the enforcement of such judgment is
stayed during the course of such contest or appeal, provided that Borrower has
established reserves adequate for payment of such judgment and in the event such
contest or appeal is ultimately unsuccessful pays such judgment within ten (10)
days of the final, non-appealable ruling rendered in such contest or appeal; and
(vii) financing statements with respect to a lessor’s rights in and to personal
property leased to a Borrower in the ordinary course of business other than
through a Capitalized Lease Obligations.
9.2    Indebtedness; Capital Expenditures. Borrower shall not incur, create,
assume, become or be liable in any manner with respect to, or permit to exist,
any Indebtedness, except (i) the Liabilities, (ii) HUD Financing (but only for
purposes of payment and release of a Borrower and such Borrower’s Collateral in
accordance with Section 6.8 hereof), (iii) the Commercial Leases, and any
extensions or renewals thereof, (iv) trade obligations and normal accruals in
the ordinary course of business not yet due and payable, (v) the indebtedness
not to at any time exceed Three Million and No/100 Dollars ($3,000,000.00)
relating to the purchase money security interests and Capitalized Lease
Obligations permitted pursuant to Section 9.1 hereof, and (vi) intercompany
Indebtedness of the Borrower to the extent permitted under Section 9.4.
9.3    Consolidations, Mergers or Transactions; Subsidiary. Other than the
Kansas Acquisition and a Permitted Acquisition, the Borrower shall not be a
party to any merger, consolidation, recapitalization or other exchange of Stock,
or purchase or otherwise acquire all or substantially all of the assets or Stock
of any class of, or any other evidence of an equity interest in, or any
partnership, limited liability company, or joint venture interest in, any other
Person (whether in one transaction or a series of related transactions);
provided, that, with prior written notice to Administrative Agent, a Borrower
may merge or consolidate with, or dissolve into, another Borrower so long as the
surviving entity remains a Borrower for all purposes under this Agreement and
the other Financing Agreements. The Borrower shall not form or establish any
Subsidiary without the Administrative Agent’s prior written consent, unless each
of the requirements identified on Schedule 9.3 hereto are satisfied, as
reasonably determined by the Administrative Agent. With prior notice to
Administrative Agent, Borrower may dissolve an inactive Subsidiary that does not
conduct any business operations and has assets with a book value not in excess
of Ten Thousand and No/100 Dollars ($10,000.00) (“Inactive Subsidiary”),
provided that any assets are transferred to Guarantor or an existing Subsidiary
which is a Borrower under this Agreement or the Revolving Loan Agreement.

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9.4    Investments or Loans. The Borrower shall not make, incur, assume or
permit to exist any loans or advances, or any investments in or to any other
Person, except (i) investments in short-term direct obligations of the United
States Government, agency or instrumentality thereof; or any (ii) investments in
negotiable certificates of deposit issued by the Administrative Agent or by any
other bank reasonably satisfactory to the Administrative Agent, payable to the
order of the Borrower or to bearer, (iii) investments in commercial paper rated
at least A-1 by Standard & Poor’s Corporation or P-1 by Moody’s Investors
Service, Inc., or carrying an equivalent rating by a nationally recognized
rating agency if both of the two named rating agencies cease publishing ratings
of investments, (iv) investments in money market funds which invest
substantially all their assets in securities of the types described in clauses
(i) through (iii), above; provided that, in each case, such investment is
reasonably acceptable to the Administrative Agent, (iv) other short-term
investments as may be permitted by Administrative Agent, (vi) loans or advances
made by any Borrower to Guarantor, any other Borrower or any Affiliated
Revolving Borrower, (vii) loans and advances to employees permitted under
Section 9.8; and (viii) investments by the Borrowers in their respective
Subsidiaries existing on the date hereof and additional investments by the
Borrower in their respective Subsidiaries so long as such Subsidiary is a
Borrower under this Agreement.
9.5    Guarantees. The Borrower shall not guarantee, endorse or otherwise in any
way become or be responsible for obligations of any other Person, whether by
agreement to purchase the Indebtedness of any other Person or through the
purchase of goods, supplies or services, or maintenance of working capital or
other balance sheet covenants or conditions, or by way of stock purchase,
capital contribution, advance or loan for the purpose of paying or discharging
any Indebtedness or obligation of such other Person or otherwise, except (i)
endorsements of negotiable instruments for collection in the ordinary course of
business, and (ii) the Indebtedness permitted under Section 9.2, above.
9.6    Disposal of Property. The Borrower shall not sell, assign, lease, convey,
lease, transfer or otherwise dispose of (whether in one transaction or a series
of transactions) all or any substantial part of its properties, assets and
rights (or sell or assign, with or without recourse, any receivables) to any
Person except (a) sales of Inventory in the ordinary course of business, (b)
sales of Equipment being replaced in the ordinary course of business with other
Equipment with a fair market value and orderly liquidation value equal to or
greater than the Equipment being replaced, (c) sales in the ordinary course of
business of personal property that is obsolete, unmerchantable or otherwise
unsalable, unusable or unnecessary to Borrower’s business, (d) sales, leases and
assignments of personal property between one Borrower to another Borrower, and
(e) the sale, conveyance or transfer (a “Permitted Disposition”) of any one or
more of the Facilities provided that:
(i)     at the time of each such Permitted Disposition, no Default or Event of
Default shall have occurred and be continuing or would result from such
transaction (including, without limitation, any breach or violation of any
financial ratio covenant set forth in Section 9.12 hereof);
(ii)     that such Permitted Disposition is an arm’s length transaction for the
fair value of the Facility being sold or transferred;

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(iii)     such Permitted Disposition shall be consummated in accordance with all
applicable Law; and
(iv)     at least five (5) Business Days prior to the consummation of the
Permitted Disposition, the Borrower whose Facility is being disposed of shall
have delivered to the Administrative Agent an Officer’s Certificate certifying
that such transactions comply with the foregoing provisions (which shall have
attached thereto reasonable back-up data and calculations showing such
compliance).
Solely for purpose of this Section 9.6, in connection with the consummation of
any one or more Permitted Dispositions complying in all respects with the
foregoing requirements, Administrative Agent and Lender will fully release and
discharge the applicable lien and security interest granted to Administrative
Agent to secure the Loan (for the ratable benefit of the Lenders and the
Administrative Agent) under this Agreement and the Financing Agreements on the
specific Collateral of such applicable Borrower or Borrowers (the “Released
Collateral”), and will fully release and discharge such Borrower or Borrowers
(the “Released Borrowers”) from their obligations under this Agreement and any
Financing Agreement, including the Term Loan Note (except for contingent
indemnification obligations that survive by their terms herein, including,
without limitation, pursuant to Sections 12.9 and 12.16), provided that and
conditioned upon satisfaction of each of the foregoing, in the sole
determination of the Administrative Agent:
(i)    The release documents are reasonably acceptable to Administrative Agent
and customary for recording the release of liens and security interests in the
applicable Collateral in the jurisdictions where the liens and security in the
Released Collateral are filed or recorded. Released Borrowers shall be
responsible for the cost and expense of preparing and recording the applicable
release documents;
(ii)    All reasonably requested instruments, documents and agreements by the
Administrative Agent and Lenders in connection with such Permitted Dispositions
are duly executed and delivered by the Released Borrowers and, if applicable,
any other Borrower (including amendments to this Agreement and the other
Financing Agreements); and
(iii)    The Released Borrowers shall, substantially simultaneously with (and in
any event not later than the first (1st) Business Day following the receipt of
the net cash proceeds from the insurance or incurrence of the Permitted
Disposition), apply and pay in immediately available funds without setoff or
deduction of any kind an amount equal to the loan value apportioned to the
Facility or Facilities being disposed of as set forth on Schedule 9.6 attached
hereto (which Schedule shall identify the values given to the respective
Facilities for purposes of achieving such loan to value).
Notwithstanding the release and discharge of the Released Borrowers and the
Released Collateral as provided in this Section 9.6, this Agreement, the other
Financing Agreements and the Lien of the Administrative Agent on the Collateral
(and any other Lien provided by the other Financing Agreements, including
pursuant to the applicable Mortgages), shall remain and continue in full force
and effect as to the Borrowers other than the Released Borrower and the
Collateral

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(and other assets and property subject to the other Financing Agreements) other
than the Released Collateral. No Prepayment Premium shall be required or due in
respect of any prepayment on the Loan made by Borrower pursuant to a Permitted
Disposition.
9.7    Use of Proceeds. The Borrower shall use the proceeds of the Term Loan
only for the following purposes: (a) to consummate the Kansas Acquisition; (b)
to fund the Restricted Balance Account for the purposes specified in Section
2.19, (c) payment of certain ordinary course capital expenditure purposes, and
(d) to pay reasonable and actually incurred transaction costs and expenses in
connection with this Agreement, the Acquisition Agreement and the transactions
contemplated hereby and thereby.
9.8    Loans to Officers; Consulting and Management Fees. The Borrower shall not
make any loans to its officers, directors, equity holders, manager, member, or
employees or to any other Person, and the Borrower shall not pay any consulting,
management fees or similar fees to its officers, directors, equity holders,
member, manager, employees, or Affiliates or any other Person, whether for
services rendered to the Borrower or otherwise; provided, however, the Borrower
shall be permitted to (i) make advances to its employees in an aggregate amount
not to exceed One Hundred Thousand Dollars ($100,000) in any Fiscal Year of
Borrower for all such employees collectively, in each case, provided that both
immediately before such contemplated payment(s) or after giving effect to any
such payment(s) no Default or Event of Default shall exist or have occurred or
result therefrom; (ii) pay reasonable outside directors fees; and (iii) pay the
management fees permitted by the Management Agreements (with an absolute cap on
the payment of any and all management fees notwithstanding anything to the
contrary contained in the Management Agreements of five percent (5.0%) of the
total revenues of Borrowers on a consolidated basis during any Fiscal Year).
Administrative Agent acknowledges that travel advances issued in the ordinary
course of business do not constitute loans for purposes of this Section 9.8.
9.9    Dividends, Distributions and Stock Redemptions. The Borrower shall not
(a) declare, make or pay any dividend or other distribution (whether in cash,
property or rights or obligations) to or for the benefit of any officer, member,
equity holder, director, or any Affiliate or any other Person other than (i) to
Guarantor, provided that both immediately before such contemplated payment(s) or
after giving effect to any such payment(s) Borrower is in compliance with
Section 9.12(a) hereof, (ii) the Required Dividends and Redemption Amounts,
(iii) distributions under the Borrower Cash Management Program, including
distributions for Guarantor’s normal quarterly dividends to common shareholders,
and (iv) payment of the management fees under the Management Agreements (subject
to subsection (iii) of Section 9.8 above), or (b) purchase or redeem any of the
Stock of the Borrower or any options or warrants with respect thereto, declare
or pay any dividends or distributions thereon, or set aside any funds for any
such purpose. Notwithstanding the foregoing or anything to the contrary
contained herein, the foregoing declarations, payments, distributions, purchases
or redemptions set forth in this Section 9.9 shall, in each case, be in both
manner and amount consistent with the Borrower’s historical practices.

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9.10    Payments in Respect of Subordinated Debt.
(a)    [Intentionally Omitted.]
(b)    The Borrower shall not make any payment in respect of any Indebtedness
for borrowed money that is subordinated to the Liabilities (including, without
limitation, the Subordinated Debt); provided, however, the Borrower shall be
permitted to make solely those payments expressly permitted pursuant to the
terms of any Subordination Agreements, in each case, as long as the Borrower is
in compliance with Section 9.12 hereof both immediately before and after any
such contemplated or actual payment, provided, further, that both immediately
before any such contemplated payment or after giving effect to any such payments
no Default or Event of Default shall exist or have occurred or result therefrom,
unless otherwise permitted expressly under the terms of such Subordination
Agreements.
9.11    Transactions with Affiliates. Except as expressly permitted under this
Agreement, and except for the Management Agreements and payment of the fee
permitted by the terms of the Management Agreements (subject to subsection (iii)
of Section 9.8 above), and the Borrower Cash Management Program, the Borrower
shall not transfer any cash or property to any Affiliate or enter into any
transaction, including, without limitation, the purchase, lease, sale or
exchange of property or the rendering of any service to any Affiliate; provided,
however, except as otherwise expressly restricted under this Agreement, that the
Borrower may transfer cash or property to Affiliates and enter into transactions
with Affiliates for fair value in the ordinary course of business pursuant to
terms that are no less favorable to the Borrower than the terms upon which such
transfers or transactions would have been made had such transfers or
transactions been made to or with a Person that is not an Affiliate.
9.12    Financial Ratios. Commencing with the Fiscal Quarter ending June 30,
2013 and continuing thereafter:
(a)    Minimum EBITDAR. The consolidated Borrower shall not permit its EBITDAR
to be less than:
(i)    for the Fiscal Quarter ending June 30, 2013, $1,537,500 measured as of
the last day of the trailing three (3) month period;
(ii)    for the Fiscal Quarter ending September 30, 2013, $3,075,000 measured as
of the last day of the trailing six (6) month period;
(iii)    for the Fiscal Quarter ending December 31, 2013, $4,612,500 measured as
of the last day of the trailing nine (9) month period; and
(iv)    for the Fiscal Quarter ending March 31, 2014, and for each Fiscal
Quarter thereafter, $6,150,000 measured as of the last day of the trailing
twelve (12) month period;

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provided, Administrative Agent acknowledges the minimum EBITDAR herein will need
to be adjusted to a mutually acceptable dollar amount as a result of any HUD
Financing in accordance with Section 6.8.
(b)    Minimum Fixed Charge Coverage Ratio. The Guarantor shall not permit its
Fixed Charge Coverage Ratio to be less than 1.10 to 1.00, measured as follows:
(i)    for the Fiscal Quarter ending June 30, 2013, as of the last day of the
trailing three (3) month period;
(ii)    for the Fiscal Quarter ending September 30, 2013, as of the last day of
the trailing six (6) month period;
(iii)    for the Fiscal Quarter ending December 31, 2013, as of the last day of
the trailing nine (9) month period; and
(iv)    for the Fiscal Quarter ending March 31, 2014, and for each Fiscal
Quarter thereafter, as of the last day of the trailing twelve (12) month period.
(c)    Minimum Adjusted EBITDA. The Guarantor shall not permit its Adjusted
EBITDA to be less than the following:
(i)    for the Fiscal Quarter ending June 30, 2013, $2,500,000 measured as of
the last day of the trailing three (3) month period;
(ii)    for the Fiscal Quarter ending September 30, 2013, $5,000,000 measured as
of the last day of the trailing six (6) month period;
(iii)    for the Fiscal Quarter ending December 31, 2013, $7,500,000 measured as
of the last day of the trailing nine (9) month period; and
(iv)    for the Fiscal Quarter ending March 31, 2014, and for each Fiscal
Quarter thereafter, $10,000,000, measured as of the last day of the trailing
twelve (12) month period.
(d)    Guarantor’s Cash Balance. The Guarantor shall not permit its Cash Balance
(as defined below), tested as of the last day of each month, to be less than
Four Million Dollars ($4,000,000); provided, a violation of this requirement for
any month may be cured within fifteen (15) days of the last day of such month
and will not constitute an Event of Default unless not cured by such day. As
used in this Section, the term “Cash Balances” means the aggregate amount of
unrestricted cash of Guarantor collectively on deposit with PrivateBank. For the
avoidance of doubt, (x) cash deposits contained in any escrow, pledged,
hypothecated, assigned or restricted accounts shall not be included in the
calculation of the Cash Balance; and (y) any draws on the Revolving Loan
Commitment (as defined in the Revolving Loan Agreement) deposited in any account
ultimately controlled by the Guarantor shall also not be included in the
calculation of Cash Balance.

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The Borrower and the Guarantor acknowledge and agree that the calculation and
computation of the foregoing financial ratios and covenants shall be pursuant to
and in accordance with the last sentence of Section 8.1(c) hereof.
Administrative Agent, Lenders, Borrower and Guarantor acknowledge and agree that
for purposes of the calculation and computation of the foregoing financial
ratios and covenants in subparagraphs (b), (c) and (d), the terms “Minimum
EBITDAR” and “Fixed Charge Coverage Ratio,” together with the terms “EDITDA,”
“Adjusted EBITDA,” “Adjusted EBITDAR,” “Capital Expenditures,” “Net Capital
Expenditures” and “Fixed Charges” for purposes of this Section 9.12, shall all
be as defined, calculated and measured in the Revolving Loan Agreement, on a
consolidated basis, for all Borrowers thereunder.
9.13    Change in Nature of Business. Borrower shall not engage, directly or
indirectly, in any business other than owning, operating and/or leasing the
Property to the Operators and matters incidental or directly related thereto.
9.14    Other Agreements. The Borrower shall not enter into any agreement
containing any provision which would be violated or breached by the performance
of its obligations hereunder or under any Financing Agreement to which Borrower
is a party or which would violate or breach any provision hereof or thereof, or
that would or is reasonably likely to adversely affect the Administrative
Agent’s or any Lender’s interests or rights under this Agreement and the other
Financing Agreements to which Borrower is a party or the likelihood that the
Liabilities will be paid in full when due, nor shall the Borrower’s certificate
of formation, bylaws, articles of incorporation, operating agreement,
partnership agreement or other governing document (each a “Governing Document”),
as applicable, be amended or modified in any way that would violate or breach
any provision hereof or of any Financing Agreement to which Borrower is a party,
or that would or is reasonably likely to adversely affect the Administrative
Agent’s or any Lender’s interests or rights under this Agreement and the other
Financing Agreements to which Borrower is a party or the likelihood that the
Liabilities will be paid in full when due; provided, prior to any amendment or
modification of any of the Borrower’s Governing Documents, the Borrower shall
furnish a correct and complete copy of any such proposed amendment or
modification to the Administrative Agent.
9.15    Blocked Accounts and Lock Box Accounts. The Borrower shall not establish
or open any blocked account or any lock box accounts after the Closing Date
unless in favor of and with the Administrative Agent.
9.16    Amendments to Restricted Agreements. The Borrower shall not amend,
modify or supplement any Restricted Agreement in any manner that would or is
reasonably likely to adversely affect the Administrative Agent’s or any Lender’s
interests under this Agreement and the other Financing Agreements to which
Borrower is a party, without the Administrative Agent’s prior written consent.
Within three (3) Business Days after entering into any non-adverse amendment,
modification or supplement to any Restricted Agreement, the Borrower Agent shall
deliver to the Administrative Agent a complete and correct copy of such
amendment, modification or supplement.
9.17    State of Incorporation or Formation. The Borrower shall not change its
state of incorporation or formation, as applicable, from that set forth on
Schedule 1 hereto.

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9.18    Environmental. Except as to environmental conditions for which it is not
responsible pursuant to any Commercial Lease, the Borrower shall not permit the
Property or any portion thereof to be involved in the use, generation,
manufacture, storage, disposal or transportation of Hazardous Substances except
in compliance in all material respects with all Environmental Laws.
9.19    Fiscal Year. The Borrower shall not change its Fiscal Year.
9.20    Restrictions on Fundamental Changes. Without duplication of any of the
foregoing, Borrower shall not:
(a)    except as expressly permitted in accordance with Section 9.3 hereof,
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution);
(b)    except as required upon the termination of a Commercial Lease, transfer,
assign, convey or grant to any other Person, other than another Borrower, the
right to operate or control any Location, whether by lease, sublease, management
agreement, joint venture agreement or otherwise;
(c)    without providing Administrative Agent with thirty (30) days’ prior
written notice, change its legal name (and Borrower shall provide Administrative
Agent with, at Borrower’s sole cost and expense, such amendment and financing
statements and other documents as Administrative Agent shall reasonably request
in connection with such contemplated change);
(d)    except as expressly permitted in accordance with Section 9.3 hereof,
suffer or permit to occur any change in the legal or beneficial ownership of the
capital stock, partnership interests or membership interests, or in the capital
structure, or any material change in the organizational documents or governing
documents, of Borrower;
(e)    change the licensed operator, manager or property manager for any
Property; or
(f)    consent to or acknowledge any of the foregoing.
9.21    Margin Stock. Borrower shall not carry or purchase any “margin security”
within the meaning of Regulations U, T or X of the Board of Governors of the
Federal Reserve System.
9.22    Truth of Statements and Certificates. Borrower shall not furnish to the
Administrative Agent or any Lender any certificate or other document that
contains any untrue statement of a material fact or that omits to state a
material fact necessary to make it not misleading in light of the circumstances
under which it was furnished.
9.23    Commercial Leases. Without the prior written consent of Administrative
Agent, which consent will not unreasonably be withheld: (a) Borrower shall not
enter into any Commercial Lease as to which a Borrower would be the lessee; (b)
no Person shall be the Operator of the Facility other than Borrower; and (c) no
Operating Lease will be entered into between Borrower and any Operator of the
Facilities.

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9.24    ERISA. Borrower shall not, and shall not cause or permit any ERISA
Affiliate to, cause or permit to occur an unfunded pension fund obligation and
liability to the extent such unfunded pension fund obligation and liability
would reasonably be expected to result in taxes, penalties and other liability
in excess of Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate.
9.25    Miscellaneous. Borrower shall not (a) voluntarily cancel any claim or
debt owing to it, except for reasonable consideration or in the ordinary course
of business, the effect of which would be a Material Adverse Change, (b) enter
into any agreement containing any provision that would (i) be violated or
breached by any borrowing by Borrower hereunder or the performance by Borrower
of any of its Liabilities hereunder or under any other Financing Agreement to
which it is a party, or (ii) prohibit Borrower from granting to Administrative
Agent (for the benefit of the Lenders and itself) a Lien on any of Borrower’s
assets as contemplated hereunder, except for (w) any restrictions imposed by any
Permitted Lien pursuant to Section 9.1; (x) any restrictions imposed by any
agreement relating to any Indebtedness permitted by Section 9.2; (y) customary
provisions contained in leases and licenses entered into in the ordinary course
of Borrower’s business restricting the assignment thereof; and (z) any
restrictions imposed by applicable Laws. Without the prior written consent of
Administrative Agent and Required Lenders, the management fees payable by
Borrower to Manager pursuant to the Management Agreements shall not include any
amount of profit (but shall entirely be used to cover and pay for actually
incurred, ordinary course costs).
The Borrower agrees that compliance with this Article 9 is a material inducement
to the Lenders’ advancing credit under this Agreement. The Borrower further
agrees that in addition to all other remedies available to the Administrative
Agent and the Lenders, the Administrative Agent and Lenders shall be entitled to
specific enforcement of the covenants in this Article 9, including injunctive
relief.
10.    HEALTH CARE MATTERS.
Without limiting the generality of any representation or warranty made in
Article 7 or any covenant made in Articles 8 or 9, each Borrower represents and
warrants on a joint and several basis to and covenants with the Administrative
Agent and each Lender (or any Affiliate Revolving Loan Liabilities shall be
outstanding under the Revolving Loan Agreement), that:
10.1    [Intentionally Omitted].
10.2    Certificate of Need. If required under applicable Law, each Borrower has
and shall maintain in full force and effect a valid certificate of need (“CON”)
or similar certificates, license, permit, registration, certification or
approval issued by the State Regulator for the requisite number of beds in each
Property (the “Licenses”). Borrower shall cause to be operated the Location and
the Property in a manner such that the Licenses shall remain in full force and
effect at all times, except to the extent the failure to do so would not cause a
Material Adverse Effect or a material adverse effect on the prospects of the
Borrowers on a consolidated basis. True and complete copies of the Licenses have
been delivered to Administrative Agent.
10.3    Licenses. The Licenses: (i) are and shall continue in full force and
effect at all times throughout the term of this Agreement and are and shall be
free from restrictions or known conflicts

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which would materially impair the use or operation of any Property for its
current use, and if any Licenses become provisional, probationary, conditional
or restricted in any way (collectively “Restrictions”), Borrower shall take or
cause to be taken prompt action to correct such Restrictions; (ii) may not be,
and have not been, and will not be transferred to any location other than the
Property; and (iii) have not been and will not be pledged as collateral security
for any other loan or indebtedness. Borrower shall not do (or suffer to be done)
any of the following:
(a)    Rescind, withdraw, revoke, amend, modify, supplement, or otherwise alter
the nature, tenor or scope of the Licenses for any Property without
Administrative Agent’s prior written consent;
(b)    Amend or otherwise change any Property’s licensed beds capacity and/or
the number of beds approved by the State Regulator without Administrative
Agent’s prior written consent; or
(c)    Replace, assign or transfer all or any part of any Property’s beds to
another site or location (other than to any other Property) without
Administrative Agent’s prior written consent.
11.    DEFAULT, RIGHTS AND REMEDIES OF THE ADMINISTRATIVE AGENT.
11.1    Event of Default. Any one or more of the following shall constitute an
“Event of Default” under this Agreement:
(a)    the Borrower fails to pay (i) any principal or interest payable hereunder
or under the Term Loan Note on the date due, declared due or demanded
(including, without limitation, any amount due under Section 2.15); or (ii) any
other amount payable to the Administrative Agent or any Lender under this
Agreement or under any other Financing Agreement to which the Borrower is a
party (including, without limitation, the Term Loan Notes) within five (5)
calendar days after the date when any such payment is due and, with respect to
clause (ii) only, such failure is not cured within five (5) calendar days after
notice to Borrower by Administrative Agent;
(b)    the Borrower fails or neglects to perform, keep or observe any of the
covenants, conditions or agreements set forth in (i) Sections 8.1(a), 8.1(c),
8.2, 8.5, 8.6, 8.7, 8.9, 8.11, 8.12, or Section 8.17 hereof, (ii) any Section of
Article 9 hereof (other than Section 9.18 hereof), or (iii) any Section of
Article 10 hereof and, with respect to such Sections in Article 10 only, such
failure or neglect shall continue for a period of five (5) calendar days after
the earlier of (1) the date the Borrower actually knew of such failure or
neglect and (2) notice to the Borrower by the Administrative Agent.
(c)    the Borrower fails or neglects to perform, keep or observe any of the
covenants, conditions, promises or agreements contained in this Agreement (which
is not otherwise specifically referenced in this Section 11.1) and such failure
or neglect shall continue for a period of thirty (30) calendar days after the
earlier of (i) the date the Borrower actually knew of such failure or neglect
and (ii) notice to the Borrower by the Administrative Agent;

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(d)    any representation or warranty heretofore, now or hereafter made by the
Borrower in connection with this Agreement or any of the other Financing
Agreements to which Borrower is a party is untrue, misleading or incorrect in
any material respect, or any schedule, certificate, statement, report, financial
data, notice, or writing furnished at any time by the Borrower to the
Administrative Agent or any Lender is untrue, misleading or incorrect in any
material respect, on the date as of which the facts set forth therein are stated
or certified;
(e)    a judgment, decree or order requiring payment in excess of Five Hundred
Thousand Dollars ($500,000) shall be rendered against the Borrower and such
judgment or order shall remain unsatisfied or undischarged and in effect for
thirty (30) consecutive days without a stay of enforcement or execution,
provided that this clause (e) shall not apply to any judgment, decree or order
for which the Borrower is fully insured and with respect to which the insurer
has admitted liability, or such judgment, decree or order is being contested or
appealed by appropriate proceedings;
(f)    a notice of Lien, levy or assessment is filed or recorded with respect to
any of the assets of the Borrower (including, without limitation, the
Collateral), by the United States, or any department, agency or instrumentality
thereof, or by any state, county, municipality or other governmental agency or
any taxes or debts owing at any time or times hereafter to any one or more of
them become a Lien, upon any of the assets of the Borrower (including, without
limitation, the Collateral), provided that this clause (f) shall not apply to
any Liens, levies, or assessments which a Borrower is diligently contesting in
good faith (provided the Borrower has complied with the provisions of clauses
(a) and (b) of Section 8.4 hereof) or which relate to current taxes not yet due
and payable;
(g)    any material portion of the Collateral is attached, seized, subjected to
a writ or distress warrant, or is levied upon, or comes within the possession of
any receiver, trustee, custodian or assignee for the benefit of creditors;
(h)    a proceeding under any bankruptcy, reorganization, arrangement of debt,
insolvency, readjustment of debt or receivership law or statute is filed against
the Borrower or any guarantor of the Liabilities, including Guarantor, and any
such proceeding is not dismissed within sixty (60) days of the date of its
filing, or a proceeding under any bankruptcy, reorganization, arrangement of
debt, insolvency, readjustment of debt or receivership law or statute is filed
by the Borrower or any guarantor of the Liabilities, including Guarantor, or the
Borrower or any guarantor of the Liabilities, including Guarantor, makes an
assignment for the benefit of creditors, or the Borrower or any guarantor of the
Liabilities, including Guarantor, takes any action to authorize any of the
foregoing;
(i)    except as permitted for an Inactive Subsidiary, the Borrower or Guarantor
voluntarily or involuntarily dissolves or is dissolved, or its existence
terminates or is terminated; provided that in the case of an administrative
dissolution or revocation of existence for failure to file the proper reports or
returns with the applicable governmental authorities, no Event of Default shall
be deemed to have occurred if an application for reinstatement is (i) filed
promptly (but in any event, within fifteen (15) calendar days) upon Guarantor or
Borrower receiving notice of such dissolution or revocation from the applicable
Governmental Authority and (ii) diligently pursued

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to completion (if reasonably capable of being completed), as determined by the
Administrative Agent in its sole and absolute discretion;
(j)    the Credit Parties, taken as a whole, fail, at any time, to be Solvent;
(k)    the Borrower or any guarantor of the Liabilities, including Guarantor, is
enjoined, restrained, or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting all or any material part of
its business affairs;
(l)    a breach by the Borrower shall occur under any agreement, document or
instrument (other than an agreement, document or instrument evidencing the
lending of money), whether heretofore, now or hereafter existing between the
Borrower and any other Person and the effect of such breach if not cured within
any applicable cure period will or is likely to have or create a Material
Adverse Effect;
(m)    the Borrower shall fail to make any payment due on any other obligation
for borrowed money or shall be in breach of any agreement evidencing the lending
of money and the effect of such failure or breach if not cured within any
applicable cure period would be to permit the acceleration of any obligation,
liability or indebtedness in excess of Five Hundred Thousand Dollars ($500,000);
(n)    there shall be instituted in any court criminal proceedings against the
Borrower, or the Borrower shall be indicted for any crime, in either case for
which forfeiture of a material amount of its property is a potential penalty,
unless (i) such actions are being contested or appealed in good faith by
appropriate proceedings, (ii) the potential forfeiture has been stayed during
the pendency of such proceedings, and (iii) no Medicare or Medicaid
reimbursement obligations are materially adversely affected by such proceedings;
(o)    a Change of Control shall occur;
(p)    any Lien securing the Liabilities shall, in whole or in part, cease to be
a perfected first priority Lien (subject only to the Permitted Liens); this
Agreement or any of the Financing Agreements to which the Borrower is a party,
shall (except in accordance with its terms), in whole or in part, terminate,
cease to be effective or cease to be the legally valid, binding and enforceable
obligations of the Borrower; or the Borrower shall directly or indirectly,
contest in any manner such effectiveness, validity, binding nature or
enforceability;
(q)    any breach, non-compliance, default or event of default shall occur under
or pursuant to any Subordination Agreement, or any other Financing Agreement
(including, without limitation, the Guaranty, any Hedging Agreement, any
Mortgage or any Pledge Agreement) by any party thereto (other than by the
Administrative Agent), and the same is not cured or remedied within any
applicable cure period, provided that if such default or event of default,
breach, noncompliance or default, requires the giving of notice by
Administrative Agent to any party in addition to or other than Borrower,
Administrative Agent shall have provided Borrower with such notice at the same
time as it provides such notice to such other party;

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(r)    any material adverse breach by Borrower that would materially adversely
effect the Administrative Agent or the Lenders or their respective rights or
remedies hereunder shall occur under or pursuant to the Acquisition Documents,
after expiration of any applicable notice or cure period provided therein, if
any;
(s)    institution by the PBGC, the Borrower or any ERISA Affiliate of steps to
terminate any Plan or to organize, withdraw from or terminate a Multiemployer
Plan if as a result of such reorganization, withdrawal or termination, the
Borrower or any ERISA Affiliate could be required to make a contribution to such
Plan or Multiemployer Plan, or could incur a liability or obligation to such
Plan or Multiemployer Plan, in excess of Two Hundred Fifty Thousand Dollars
($250,000), or (ii) a contribution failure occurs with respect to any Plan
sufficient to give rise to a Lien under ERISA, which Lien is not fully
discharged within fifteen (15) days;
(t)    a Material Adverse Change shall occur;
(u)    Borrower or any Affiliate of Borrower, shall challenge or contest, in any
action, suit or proceeding, the validity or enforceability of this Agreement, or
any of the other Financing Agreements, the legality or the enforceability of any
of the Liabilities or the perfection or priority of any Lien granted to the
Administrative Agent;
(v)    Guarantor shall revoke or attempt to revoke, terminate or contest its
obligations under the Guaranty, or the Guaranty or any provision thereof shall
cease to be in full force and effect in accordance with its terms and
provisions;
(w)    Any Pledgor shall revoke or attempt to revoke, terminate or contest in
any way its respective Pledge Agreement, or any provision thereof shall cease to
be in full force and effect in accordance with its terms and provisions;
(x)    Borrower shall be prohibited or otherwise restrained from conducting the
business theretofore conducted by it in any manner that has or could reasonably
be expected to have or result in a Material Adverse Effect;
(y)    there shall occur with respect to the Operator of any Location any
Medicare or Medicaid survey deficiencies at Level I, J, K, L or worse (i) which
deficiencies are not cured within the amount of time permitted by the applicable
reviewing agency; (ii) which result in the imposition by any Government
Authority or the applicable state survey agency of sanctions in the form of
either a program termination, temporary management, denial of payment for new
admission (which continues for thirty (30) days or more or pertains to more than
one Location) or facility closure and (iii) which sanctions could have a
Material Adverse Effect as determined by Administrative Agent in its reasonable
discretion. Upon the occurrence of such event, Borrower shall submit to
Administrative Agent its plan of correction for dealing with such event, and
shall periodically review its progress under the plan of correction with
Administrative Agent. Provided that Administrative Agent remains satisfied with
the progress under the plan of correction, then such Event shall not be an Event
of Default unless formal notice is given by Administrative Agent to Borrower;

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(z)    a state or federal regulatory agency shall have revoked any license,
permit, certificate or Medicaid or Medicare qualification pertaining to the
Property or any Location, regardless of whether such license, permit,
certificate or qualification was held by or originally issued for the benefit of
Borrower, a tenant or any other Person, the revocation of which could reasonably
be expected to have a Material Adverse Effect;
(aa)    any material default by Borrower under the terms of any material Lease
following the expiration of any applicable notice and cure period (if any);
(bb)    Kelly J. Gill or James R. McKnight, Jr. shall not be senior officers of
the Borrower and devote significant time and energy to the business of the
Borrower; provided, however, it shall not constitute an Event of Default if any
such individual shall fail for any reason to be a senior officer of the Borrower
or fail to devote significant time and energy to the business of the Borrower,
and such individual shall be promptly replaced by the Borrower, whether on an
interim or permanent basis, with an individual with substantially similar skills
and experience (but in no event later than within 90 calendar days of the former
individual’s resignation, termination, permanent disability or death) and
otherwise acceptable to the Administrative Agent in its reasonable and good
faith determination;
(cc)    any subordination provision in any document or instrument governing
Subordinated Debt, or any subordination provision in any guaranty by any
Subsidiary of any Subordinated Debt, shall cease to be in full force and effect,
or any Credit Party or any other Person (including the holder of any applicable
Subordinated Debt) shall contest in any manner the validity, binding nature or
enforceability of any such provision;
(dd)    Borrower shall fail to take commercially reasonable best efforts to
comply with each of the items set forth in Exhibit D attached hereto and made a
part hereof within the time frames set forth therein; or Borrower shall fail to
make the Required Repairs within the time frame set forth in Section 2.19
hereof; provided, however, that no Event of Default shall be deemed to have
occurred with respect to this subsection (dd) if Borrower has commenced the work
or repairs required within the specified time frames and is diligently
prosecuting the same to completion, but has been unable to do so solely due to
unavoidable delays beyond the control of Borrower (provided that lack of funds
shall not be deemed a cause beyond the reasonable control of Borrower) and
Borrower continues to diligently prosecute the same to completion subject to
such unavoidable delay; or
(ee)    an “Event of Default” shall occur under or pursuant to the Revolving
Loan Agreement or any Affiliate Revolving Loan Financing Agreement.
Notwithstanding the foregoing, in the situations described in clauses (l), (t),
(x) and (z), above, where an Event of Default is triggered by the occurrence of
a Material Adverse Change or a Material Adverse Effect, events which could
reasonably be expected to have or result in a Material Adverse Effect or
Material Adverse Change, such occurrence shall not be deemed to be an Event of
Default hereunder provided that Borrower shall within forty-eight (48) hours
after the occurrence thereof submit to Administrative Agent in writing a plan of
correction for dealing with such Material Adverse Change or Material Adverse
Effect that is acceptable to Administrative Agent in its sole

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and absolute discretion, and, if such plan of correction is so acceptable, for
so long as Administrative Agent remains satisfied in all respects with the
progress under such plan of correction and until written notice that
Administrative Agent is not so satisfied is given by Administrative Agent to
Borrower.
11.2    Acceleration. Upon the occurrence of any Event of Default described in
Sections 11.1(h), (i), or (j), the Commitment (if it has not theretofore
terminated) shall automatically and immediately terminate and all of the
Liabilities shall immediately and automatically, without presentment, demand,
protest or notice of any kind (all of which are hereby expressly waived), be
immediately due and payable; and upon the occurrence of any other Event of
Default, the Administrative Agent may with the consent of the Required Lenders
(or, upon written request of Required Lenders shall) declare the Commitment (if
it has not theretofore terminated) to be terminated and any or all of the
Liabilities may, at the option of the Administrative Agent with the consent of
the Required Lenders (or, upon written request of Required Lenders shall), and
without presentment, demand, protest or notice of any kind (all of which are
hereby expressly waived), be declared, and thereupon shall become, immediately
due and payable, whereupon the Commitment shall immediately terminate.
11.3    Rights and Remedies Generally.
(b)    Upon the occurrence of any Event of Default, the Administrative Agent and
Lenders shall have, in addition to any other rights and remedies contained in
this Agreement and in any of the other Financing Agreements, all of the rights
and remedies of a secured party under the Code or other applicable laws, all of
which rights and remedies shall be cumulative, and non-exclusive, to the extent
permitted by Laws, including, without limitation, the right of Administrative
Agent (with the consent of or at the direction of the Required Lenders) to sell,
assign, or lease any or all of the Collateral. The exercise of any one right or
remedy shall not be deemed a waiver or release of any other right or remedy, and
the Administrative Agent, upon the occurrence of an Event of Default, may
proceed against Borrower, and/or the Collateral (with the consent of or at the
direction of the Required Lenders), at any time, under any agreement, with any
available remedy and in any order. All sums received from Borrower and/or the
Collateral in respect of the Loan may be applied by the Administrative Agent to
any Liabilities in such order of application and in such amounts as the
Administrative Agent shall deem appropriate in its discretion (subject to
Section 12.8). Borrower waives any right it may have to require the
Administrative Agent to pursue any Person for any of the Liabilities.
(c)    Upon notice to Borrower after an Event of Default, Borrower at its own
expense shall assemble all or any part of the Collateral as determined by
Administrative Agent and make it available to Administrative Agent at any
location designated by Administrative Agent. In such event, Borrower shall, at
its sole cost and expense, store and keep any Collateral so assembled at such
location pending further action by Administrative Agent and provide such
security guards and maintenance services as shall be necessary to protect and
preserve such Collateral. In addition to all such rights and remedies, the sale,
lease or other disposition of the Collateral, or any part thereof, by the
Administrative Agent after an Event of Default may be for cash, credit or any
combination thereof, and the Administrative Agent (on behalf of Lenders and
itself) may purchase

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all or any part of the Collateral at public or, if permitted by law, private
sale, and in lieu of actual payment of such purchase price, may set-off the
amount of such purchase price against the Liabilities of the Borrower then
owing. Any sales of such Collateral may be adjourned from time to time with or
without notice. The Administrative Agent may, in its sole discretion, cause the
Collateral to remain on the Borrower’s premises, at the Borrower’s expense,
pending sale or other disposition of such Collateral. The Administrative Agent
shall have the right after an Event of Default to conduct such sales (with the
consent of the Required Lenders) on the Borrower’s premises, at the Borrower’s
expense, or elsewhere, on such occasion or occasions as the Administrative Agent
may see fit.
11.4    Entry Upon Premises and Access to Information. Upon the occurrence of
any Event of Default, the Administrative Agent shall have the right to enter
upon the premises of the Borrower where the Collateral is located without any
obligation to pay rent to the Borrower, or any other place or places where such
Collateral is believed to be located and kept, and remove such Collateral
therefrom to the premises of the Administrative Agent or any agent of the
Administrative Agent, for such time as the Administrative Agent may desire, in
order to effectively collect or liquidate such Collateral. Upon the occurrence
of any Event of Default, the Administrative Agent shall have the right to obtain
access to the Borrower’s data processing equipment, computer hardware and
software relating to the Collateral and subject to the privacy requirements and
regulations of HIPAA and of any applicable state or federal patients bill of
rights, to use all of the foregoing and the information contained therein in any
manner the Administrative Agent deems appropriate. Upon the occurrence of any
Event of Default, the Administrative Agent shall have the right to receive, open
and process all mail addressed to the Borrower and relating to the Collateral.
11.5    Sale or Other Disposition of Collateral by the Administrative Agent. Any
notice required to be given by the Administrative Agent of a sale, lease or
other disposition or other intended action by the Administrative Agent, with
respect to any of the Collateral, which is deposited in the United States mails,
postage prepaid and duly addressed to the Borrower at the address specified in
Section 12.12 hereof, at least ten (10) calendar days prior to such proposed
action shall constitute fair and reasonable notice to the Borrower of any such
action. The net proceeds realized by the Administrative Agent upon any such sale
or other disposition, after deduction for the expense of retaking, holding,
preparing for sale, selling or the like and the attorneys’ and paralegals’ fees
and legal expenses incurred by the Administrative Agent in connection therewith,
shall be applied as provided herein toward satisfaction of the Liabilities,
including, without limitation, such Liabilities described in Sections 8.2 and
11.2 hereof. The Administrative Agent shall account to the Borrower for any
surplus realized upon such sale or other disposition, and the Borrower shall
remain liable for any deficiency. The commencement of any action, legal or
equitable, or the rendering of any judgment or decree for any deficiency shall
not affect the Administrative Agent’s Liens in the Collateral until Payment in
Full. The Borrower agrees that the Administrative Agent has no obligation to
preserve rights to the Collateral against any other Person. If and to the extent
applicable, the Administrative Agent is hereby granted a license or other right
to use, without charge, the Borrower’s labels, patents, copyrights, rights of
use of any name, trade secrets, trade names, trade styles, trademarks, service
marks and advertising matter or any property of a similar nature, as it pertains
to the Collateral, in completing production of, advertising for sale and selling
any such Collateral, and the Borrower’s rights and benefits under all licenses
and franchise agreements, if any, shall inure to the Administrative Agent’s
benefit until Payment in Full. Borrower covenants

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and agrees not to interfere with or impose any obstacle to Administrative
Agent’s exercise of its rights and remedies with respect to the Collateral.
11.6    Waivers (General).
(a)    Except as otherwise provided for in this Agreement and to the fullest
extent permitted by applicable Law, Borrower hereby waives: (i) presentment,
demand and protest, and notice of presentment, dishonor, intent to accelerate,
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all Financing Agreements, the Term
Loan Notes or any other notes, commercial paper, Accounts, contracts, documents,
instruments, chattel paper and guaranties at any time held by Administrative
Agent or any Lender on which Borrower may in any way be liable, and hereby
ratifies and confirms whatever Administrative Agent and Lenders may do in this
regard; (ii) all rights to notice and a hearing prior to Administrative Agent’s
taking possession or control of, or to Administrative Agent’s replevy,
attachment or levy upon, any Collateral or any bond or security which might be
required by any court prior to allowing Administrative Agent to exercise any of
its remedies; and (iii) the benefit of all valuation, appraisal and exemption
Laws. Borrower acknowledges that it has been advised by counsel of its choice
and decision with respect to this Agreement, the other Financing Agreements and
the transactions evidenced hereby and thereby.
(b)    Borrower for itself and all endorsers, guarantors and sureties and their
heirs, legal representatives, successors and assigns, (i) agrees that its
liability shall not be in any manner affected by any indulgence, extension of
time, renewal, waiver, or modification granted or consented to by Administrative
Agent; (ii) consents to any indulgences and all extensions of time, renewals,
waivers, or modifications that may be granted by Administrative Agent with
respect to the payment or other provisions of this Agreement, the Term Loan
Notes, and to any substitution, exchange or release of the Collateral, or any
part thereof, with or without substitution, and agrees to the addition or
release of any Borrower, endorsers, guarantors, or sureties, or whether
primarily or secondarily liable, without notice to Borrower and without
affecting its liability hereunder; (iii) agrees that its liability shall be
unconditional and without regard to the liability of any other tax; and (iv)
expressly waives the benefit of any statute or rule of law or equity now
provided, or which may hereafter be provided, which would produce a result
contrary to or in conflict with the foregoing.
(c)    Subject to Section 12.1, each and every covenant and condition for the
benefit of Administrative Agent and Lenders contained in this Agreement and the
other Financing Agreements may be waived by Administrative Agent. Any
forbearance by Administrative Agent in exercising any right or remedy under any
of the Financing Agreements, or otherwise afforded by applicable Law, including
any failure to accelerate the Stated Maturity Date shall not be a waiver of or
preclude the exercise of any right or remedy nor shall it serve as a novation of
the Term Loan Note or as a reinstatement of the Loan or a waiver of such right
of acceleration or the right to insist upon strict compliance of the terms of
the Financing Agreements. Administrative Agent’s acceptance of payment of any
sum secured by any of the Financing Agreements after the due date of such
payment shall not be a waiver of Administrative Agent’s right to either require
prompt payment when due of all other sums so secured or to declare a default for
failure to make prompt payment. The procurement of insurance or the payment of
taxes or other liens or charges by

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Administrative Agent shall not be a waiver of Administrative Agent’s right to
accelerate the maturity of the Loan, nor shall Administrative Agent’s receipt of
any condemnation awards, insurance proceeds, or damages under this Agreement
operate to cure or waive Borrower’s or Guarantor’s default in payment of sums
secured by any of the Financing Agreements.
(d)    Without limiting the generality of anything contained in this Agreement
or the other Financing Agreements, Borrower agrees that if an Event of Default
is continuing (i) Administrative Agent is not subject to any “one action” or
“election of remedies” law or rule, and (ii) all liens and other rights,
remedies or privileges provided to Administrative Agent shall remain in full
force and effect until Administrative Agent has exhausted all of its remedies
against the Collateral and any other properties owned by Borrower and the
Financing Agreements and other security instruments or agreements securing the
Liabilities has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Liabilities.
(e)    Nothing contained herein or in any other Financing Agreement shall be
construed as requiring Administrative Agent to resort to any part of the
Collateral for the satisfaction of any of Borrower’s obligations under the
Financing Agreements in preference or priority to any other Collateral, and
Administrative Agent may (with the consent of or at the direction of the
Required Lenders) seek satisfaction out of all of the Collateral or any part
thereof, in its absolute discretion in respect of Borrower’s obligations under
the Financing Agreements. In addition, Administrative Agent shall have the right
from time to time to partially foreclose upon any Collateral in any manner and
for any amounts secured by the Financing Agreements then due and payable as
determined by Administrative Agent (with the consent of or at the direction of
the Required Lenders), including, without limitation, the following
circumstances: (i) if Borrower defaults beyond any applicable grace period in
the payment of one or more scheduled payments of principal and interest,
Administrative Agent may (with the consent of or at the direction of the
Required Lenders) foreclose upon all or any part of the Collateral to recover
such delinquent payments, or (ii) if Administrative Agent elects (with the
consent of or at the direction of the Required Lenders) to accelerate less than
the entire outstanding principal balance of the Term Loan Notes, Administrative
Agent may (with the consent of or at the direction of the Required Lenders)
foreclose all or any part of the Collateral to recover so much of the principal
balance of the Term Loan Note as Administrative Agent may accelerate and such
other sums secured by one or more of the Financing Agreements as Administrative
Agent may elect (with the consent of or at the direction of the Required
Lenders). Notwithstanding one or more partial foreclosures, any unforeclosed
Collateral shall remain subject to the Financing Agreements to secure payment of
sums secured by the Financing Agreements and not previously recovered.
(f)    To the fullest extent permitted by Law, Borrower, for itself and its
successors and assigns, waives in the event of foreclosure of any or all of the
Collateral any equitable right otherwise available to Borrower which would
require the separate sale of any of the Collateral or require Administrative
Agent to exhaust its remedies against any part of the Collateral before
proceeding against any other part of the Collateral; and further in the event of
such foreclosure Borrower does hereby expressly consent to and authorize, at the
option of Administrative Agent, the foreclosure and sale either separately or
together of each part of the Collateral.

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11.7    Waiver of Notice. UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, THE
BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND PRIOR TO THE
EXERCISE BY THE ADMINISTRATIVE AGENT OF ITS RIGHTS TO REPOSSESS THE COLLATERAL
WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL
WITHOUT PRIOR NOTICE OR HEARING.
11.8    Injunctive Relief. The parties acknowledge and agree that, in the event
of a breach or threatened breach of any Credit Party’s obligations under any
Financing Agreements, Administrative Agent may have no adequate remedy in money
damages and, accordingly, shall be entitled to an injunction (including without
limitation, a temporary restraining order, preliminary injunction, writ of
attachment, or order compelling an audit) against such breach or threatened
breach. However, no specification in this Agreement of a specific legal or
equitable remedy shall be construed as a waiver or prohibition against any other
legal or equitable remedies in the event of a breach or threatened breach of any
provision of this Agreement. Each Credit Party waives the requirement of the
posting of any bond in connection with such injunctive relief.
11.9    Marshalling; Recourse to Borrower. Administrative Agent shall have no
obligation to marshal any assets in favor of any Credit Party, or against or in
payment of any of the other Liabilities or any other obligation owed to the
Administrative Agent and Lenders by any Credit Party. Notwithstanding anything
to the contrary contained herein or in any other Financing Agreement, the Loan
and other Liabilities shall be fully recourse to Borrower, and Administrative
Agent shall be authorized, in its sole and absolute discretion, to enforce any
or all of its remedies hereunder against Borrower, including all present and
future revenue and assets of Borrower, whether or not such assets have been
pledged as collateral for the Loan.
11.10    Advice of Counsel. The Borrower acknowledges that it has been advised
by its counsel with respect to this transaction and this Agreement, including,
without limitation, all waivers contained herein.
11.11    Credit Bidding. Without limiting the foregoing, Borrower and Lenders
hereby irrevocably authorize (and by entering into a Bank Product Agreement,
each Bank Product provider shall be deemed to authorize) Administrative Agent,
based upon the written instruction of the Required Lenders, to Credit Bid (as
defined below) and purchase (either directly or through one or more acquisition
vehicles) all or any portion of the Collateral (and Borrower shall approve
Administrative Agent as a qualified bidder and such Credit Bid as a qualified
bid) at any sale thereof conducted by Administrative Agent, based upon the
written instruction of the Required Lenders, to Credit Bid (as defined below)
and purchase (either directly or through one or more acquisition vehicles) all
or any portion of the Collateral (and Borrower shall approve Administrative
Agent as a qualified bidder and such Credit Bid as a qualified bid) at any sale
thereof conducted by Administrative Agent, based upon the written instruction of
the Required Lenders, (a) under any provisions of the UCC, including pursuant to
Sections 9-610 or 9-620 of the UCC, (b) under the provisions of the Bankruptcy
Code, including pursuant to Section 363 thereof, or any applicable insolvency,
reorganization or similar law, or (c) at any other sale or foreclosure conducted
by (or with the consent or at the direction of) the Administrative Agent
(whether by judicial action or otherwise) in accordance with applicable law or
by the exercise of any legal or equitable remedy;

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provided, however, that (i) the Required Lenders may not direct Administrative
Agent in any manner that does not treat each of the Lenders equally, without
preference or discrimination, in respect of consideration received as a result
of the Credit Bid, (ii) the acquisition documents shall be commercially
reasonable and contain customary protections for minority holders, such as
anti-dilution and tag-along rights, (iii) the exchanged debt or equity
securities must be freely transferable, without restriction (subject to
applicable securities laws) and (iv) reasonable efforts shall be made to
structure the acquisition in a manner that causes the governance documents
pertaining thereto to not impose any obligations or liabilities upon the Lenders
individually (such as indemnification obligations). Each Lender hereby agrees
that, except as otherwise provided in this Agreement or with the written consent
of the Administrative Agent and the Required Lenders, it will not exercise any
right that it might otherwise have to Credit Bid at any sales of all or any
portion of the Collateral conducted under the provisions of the UCC, the
Bankruptcy Code, foreclosure sales or other similar dispositions of Collateral.
For purposes of the preceding sentence, the term “Credit Bid” shall mean, an
offer submitted at a public or private sale of all or any portion of the
Collateral by Administrative Agent (on behalf of the Lender group), based upon
the written instruction of the Required Lenders, to acquire all of the
Collateral of any Borrower or any portion thereof in exchange for and in full
and final satisfaction of all or a portion (as determined by Administrative
Agent, based upon the written instruction of the Required Lenders) of the
Liabilities owing to the Lenders under this Agreement and the other Financing
Agreements.
12.    MISCELLANEOUS.
12.1    Waiver; Amendment. The Administrative Agent’s or Lenders’ failure, at
any time or times hereafter, to require strict performance by the Borrower of
any covenant, condition or provision of this Agreement shall not waive, affect
or diminish any right of the Administrative Agent thereafter to demand strict
compliance and performance therewith. Any suspension or waiver by the
Administrative Agent or the Lenders, as applicable, of an Event of Default under
this Agreement or a default under any of the other Financing Agreements shall
not suspend, waive or affect any other Event of Default under this Agreement or
any other default under any of the other Financing Agreements, whether the same
is prior or subsequent thereto and whether of the same or of a different kind or
character. None of the undertakings, agreements, warranties, covenants and
representations of the Borrower contained in this Agreement or any of the other
Financing Agreements and no Event of Default under this Agreement or default
under any of the other Financing Agreements shall be deemed to have been
suspended or waived by the Administrative Agent unless such suspension or waiver
is in writing signed by an officer of the Administrative Agent, and directed to
the Borrower specifying such suspension or waiver.
Except as otherwise set forth herein, no amendment or modification or waiver of,
or consent with respect to (as reasonably determined by Administrative Agent)
any provision of this Agreement or the other Financing Agreements shall in any
event be effective unless the same shall be in writing and acknowledged by
Borrower and either (i) Required Lenders, or (ii) Administrative Agent with a
certification that consent from the Required Lenders has been obtained, and then
any such amendment, modification, waiver or consent shall be effective only in
the specific instance and for

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the specific purpose for which given. Notwithstanding anything contained herein
to the contrary, no amendment, modification, waiver or consent shall (a) extend
or increase the Commitment of any Lender without the written consent of such
Lender, as applicable, (b) extend the date scheduled for payment of any
principal (exclusive of mandatory prepayments) of or interest on the Loan or any
fees payable hereunder without the written consent of each Lender directly
affected thereby, (c) extend the Stated Maturity Date of the Loan without the
written consent of all Lenders (except in accordance with the terms of this
Agreement, if applicable), (d) reduce the principal amount of the Loan, the rate
of interest thereon or any fees payable hereunder, without the consent of each
Lender directly affected thereby (except for any periodic adjustments of
interest rates and fees as provided for in this Agreement), provided, that only
the consent of the Required Lenders shall be necessary (i) to amend the
definition of “Default Rate” or to waive any obligation of the Borrower to pay
interest at the Default Rate or (ii) to amend or waive any financial covenant
hereunder (or any defined term used therein) even if the effect of such
amendment or waiver would be to reduce the rate of interest on any Loan or any
unreimbursed drawing under a Letter of Credit or to reduce any fee payable
hereunder, (e) release any party from its obligations under any guaranty at any
time hereafter provided, if any, or all or substantially all of the Collateral
granted hereunder or under any of the Financing Agreements (except as otherwise
specifically permitted or provided in this Agreement), subordinate the Liens of
Administrative Agent on all or substantially all of the Collateral or
subordinate any guaranty, change the payment application waterfall in Section
12.8 or the pro rata sharing provision in Section 2.13(d), change the definition
of Required Lenders, change any provision of this Section 12.1 or reduce the
aggregate Pro Rata Share required to effect an amendment, modification, waiver
or consent, without, in each case with respect to this subsection (e), the
written consent of all Lenders, or (f) waive any material condition set forth in
Section 5 without the prior written consent of each Lender directly affected
thereby. No provision in this Agreement with respect to the timing or
application of mandatory prepayments of the Loan shall be amended, modified or
waived without the consent of Required Lenders. No provision of Section 13 or
other provision of this Agreement affecting Administrative Agent as such shall
be amended, modified or waived without the prior written consent of
Administrative Agent. Notwithstanding anything to the contrary herein, no
Defaulting Lender shall have any right to approve or disapprove any amendment,
waiver or consent hereunder, except for the matters set forth in subsections
(a), (b), (c) or (d)(subject to the proviso contained therein) of this Section
12.1.
12.2    Costs and Attorneys’ Fees.
(d)    Borrower agrees to jointly and severally pay on demand all of the costs
and expenses of the Administrative Agent (including, without limitation, the
reasonable fees and out-of-pocket expenses of the Administrative Agent’s
counsel, all UCC tax, lien, judgment, pending suit, and bankruptcy search fees
and costs, UCC filing fee and costs, recording, filing and registration fees and
charges, mortgage or documentary taxes, all costs of Intralinks, DebtX or other
similar transmission system, if applicable, all corporate search fees and
certified documents, all financial and legal due diligence expenses, all audit,
field exam and appraisal costs and fees, costs incurred by Administrative Agent
in connection with travel expenses of its associates, background checks on
members of management of Borrower, and real estate appraisal fees, survey fees,
recording and title insurance costs, and any environmental report or analysis)
in connection with the structuring, preparation, negotiation, execution,
delivery and closing of: (i) this Agreement, the other Financing

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Agreements and all other instruments, agreements, certificates or documents
provided for herein or delivered or to be delivered hereunder, and (ii) any and
all amendments, modifications, supplements and waivers executed and delivered
pursuant hereto or any other Financing Agreement or in connection herewith or
therewith. Borrower further agrees that the Administrative Agent, in its sole
discretion, may deduct all such unpaid amounts from the aggregate proceeds of
the Loan or debit such amounts from the operating accounts of Borrower
maintained with the Administrative Agent.
(e)    The costs and expenses that the Administrative Agent and Lenders incur in
any manner or way with respect to the following shall be part of the
Liabilities, payable by Borrower jointly and severally on demand if at any time
after the date of this Agreement the Administrative Agent or any Lender: (i)
employs counsel in good faith for advice or other representation, (ii) with
respect to the amendment, modification or enforcement of this Agreement or the
other Financing Agreements, or with respect to any Collateral hereunder or other
collateral under the other Financing Agreements securing the Liabilities
hereunder, (iii) to represent the Administrative Agent and Lender in any
work-out or any type of restructuring of the Liabilities, or any litigation,
contest, dispute, suit or proceeding or to commence, defend or intervene or to
take any other action in or with respect to any litigation, contest, dispute,
suit or proceeding (whether instituted by the Administrative Agent, Lenders,
Borrower or any other Person) in any way or respect relating to this Agreement,
the other Financing Agreements, Borrower’s affairs or any Collateral hereunder
or under any other Financing Agreement, (iv) to protect, preserve, or enforce
any of the rights of the Administrative Agent or Lenders with respect to
Borrower provided in this Agreement, under any of the other Financing
Agreements, or otherwise (whether at law or in equity) (including any
foreclosure sale, deed in lieu transaction or costs incurred in connection with
any litigation or bankruptcy or administrative hearing and any appeals therefrom
and any post-judgment enforcement action including, without limitation,
supplementary proceedings in connection with the enforcement of this Agreement);
(v) takes any action to protect, preserve, store, ship, appraise, prepare for
sale, collect, sell, liquidate or otherwise dispose of any Collateral hereunder
or any other collateral under any other Financing Agreement; and/or (vi) seeks
to enforce or enforces any of the rights and remedies of the Administrative
Agent or Lenders with respect to Borrower or any guarantor of the Liabilities.
Without limiting the generality of the foregoing, such expenses, costs, charges
and fees include: reasonable fees, costs and expenses of attorneys, accountants,
environmental consultants, and other consultants (whether work out, financial or
otherwise); court costs and expenses; court reporter fees, costs and expenses;
long distance telephone charges; and courier and telecopier charges.
(f)    Borrower further agrees to pay, and to save the Administrative Agent and
Lenders harmless from all liability for, any documentary stamp tax, intangible
tax, or other stamp tax or taxes of any kind which may be payable in connection
with or related to the execution or delivery of this Agreement, the other
Financing Agreements, the borrowing hereunder, the issuance of the Term Loan
Note or of any other instruments, agreements, certificates or documents provided
for herein or delivered or to be delivered hereunder or in connection herewith,
provided that Borrower shall not be liable for Administrative Agent’s or any
Lender’s income tax liabilities.

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(g)    All of the Borrower’s obligations provided for in this Section 12.2 shall
be Liabilities secured by the Collateral and shall survive repayment of the Loan
or any termination of this Agreement or any Financing Agreements.
12.3    Expenditures by the Administrative Agent. In the event the Borrower
shall fail to pay taxes, insurance, audit fees and expenses, consulting fees,
filing, recording and search fees, assessments, fees, costs or expenses which
the Borrower is, under any of the terms hereof or of any of the other Financing
Agreements, required to pay, or fails to keep the Collateral free from other
Liens, except as permitted herein, the Administrative Agent may, in its sole
discretion, pay or make expenditures for any or all of such purposes, and the
amounts so expended, together with interest thereon at the Default Rate (from
the date the obligation or liability of Borrower is charged or incurred until
actually paid in full to Administrative Agent and Lenders, as applicable) and
shall be part of the Liabilities of the Borrower, payable on demand and secured
by the Collateral.
12.4    Custody and Preservation of Collateral. The Administrative Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral in its possession if it takes such action for that purpose
as the Borrower shall request in writing, but failure by the Administrative
Agent to comply with any such request shall not of itself be deemed a failure to
exercise reasonable care, and no failure by the Administrative Agent to preserve
or protect any right with respect to such Collateral against prior parties, or
to do any act with respect to the preservation of such Collateral not so
requested by a Borrower, shall of itself be deemed a failure to exercise
reasonable care in the custody or preservation of such Collateral.
12.5    Reliance by the Lenders. The Borrower acknowledges that the Lenders and
Administrative Agent, in entering into this Agreement and agreeing to make the
Loan to the Borrower hereunder, has relied upon the accuracy of the covenants,
agreements, representations and warranties made herein by the Borrower and the
information delivered by the Borrower to the Administrative Agent and Lenders in
connection herewith (including, without limitation, all financial information
and data).
12.6    Assignability; Parties. This Agreement (including, without limitation,
any and all of the Borrower’s rights, obligations and liabilities hereunder) may
not be assigned by the Borrower without the prior written consent of
Administrative Agent and Required Lenders. Whenever in this Agreement there is
reference made to any of the parties hereto, such reference shall be deemed to
include, wherever applicable, a reference to the successors and permitted
assigns of the Borrower and the successors and assigns of the Administrative
Agent and (subject to Section 12.15 hereof) the Lenders.
12.7    Severability; Construction. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provisions or the remaining provisions of this Agreement. The parties
hereto have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly

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by the parties hereto, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.
12.8    Application of Payments. Notwithstanding any contrary provision
contained in this Agreement or in any of the other Financing Agreements, after
the occurrence of a Default or an Event of Default Borrower irrevocably waives
the right to direct the application of any and all payments at any time or times
hereafter received by Administrative Agent or any Lender from Borrower or with
respect to any of the Collateral, and Borrower and Administrative Agent does
hereby irrevocably agree that any and all payments or proceeds so received shall
be applied in the following manner:
First, to the payment of all fees, costs, expenses and indemnities of
Administrative Agent (in its capacity as such), including reasonable attorneys’
fees and costs of Administrative Agent, and any other Liabilities owing to
Administrative Agent in respect of sums advanced by Administrative Agent to
preserve the Collateral or to preserve its security interest in the Collateral
(or any other collateral provided pursuant to any other Financing Agreement);
Second, to payment of that portion of the Liabilities constituting fees, costs,
expenses and indemnities of Administrative Agent;
Third, to payment of that portion of the Liabilities constituting fees,
Prepayment Premium, costs, expenses and indemnities of the Lenders as provided
herein, ratably among them in proportion to the respective amounts described in
this clause Third payable to them;
Fourth, to the payment of all of the Liabilities consisting of accrued and
unpaid interest owing to the Lenders, ratably among them in proportion to the
respective amounts described in this clause Fourth payable to them;
Fifth, to the payment of all Liabilities consisting of principal owing to the
Lenders, ratably among them in proportion to the respective amounts described in
this clause Fifth payable to them;
Sixth, to the payment of all Bank Product Obligations (including with respect to
any Hedging Agreement) owing to the applicable Lenders or their Affiliates,
ratably among such Lenders and their Affiliates in proportion to the respective
amounts described in this clause Sixth payable to them;
Seventh, to the payment of all other Liabilities owing to the Lenders;
Eighth, to the payment of all Affiliated Revolving Loan Liabilities pursuant to
Section 12.8 of the Affiliate Revolving Loan Financing Agreements; and
Last, the payment of any remaining proceeds, if any, to whomever may be lawfully
entitled to receive such amounts, including, if applicable, Borrower.
All amounts owing under this Agreement in respect of Liabilities including fees,
interest, default interest, interest on interest, expense reimbursements and
indemnities, shall be payable in

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accordance with the foregoing waterfall provisions irrespective of whether a
claim in respect of such amounts is allowed or allowable in any insolvency
proceeding.
12.9    Payments Set Aside. To the extent that the Borrower makes a payment or
payments to the Administrative Agent or Lenders or the Administrative Agent or
Lenders enforce their respective Liens or exercise their respective 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 or Person under any bankruptcy law, state or federal
law, common law or equitable cause or otherwise (including, without limitation,
provisions of the federal bankruptcy code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property), then to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied shall be automatically revived, reinstated,
restored and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred. The provisions of and
undertakings set out in this Section 12.9 shall survive the satisfaction and
payment of the Liabilities of Borrower and the termination of this Agreement.
12.10    Sections and Titles; UCC Termination Statements. The sections and
titles contained in this Agreement shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto. Upon Payment in Full, the Administrative Agent will, upon
Borrower’s written request and at the Borrower’s cost and expense, timely file
all Uniform Commercial Code termination statements reasonably required by the
Borrower to evidence the termination of the Liens in the Collateral in favor of
the Administrative Agent (for the ratable benefit of Lenders and Administrative
Agent).
12.11    Continuing Effect; No Joint Venture. This Agreement, the Administrative
Agent’s Liens in the Collateral, and all of the other Financing Agreements shall
continue in full force and effect so long as any Liabilities shall be owed to
the Lenders and Administrative Agent, and (even if there shall be no such
Liabilities outstanding) so long as this Agreement has not been terminated as
provided in Section 2.9 hereof. The relationship between Administrative Agent
and Lenders on the one hand and Borrower on the other hand shall be that of
creditor-debtor only. No term in this Agreement or in any other Financing
Agreement and no course of dealing between the parties shall be deemed to create
any relationship or agency, partnership or joint venture or any fiduciary duty
by Administrative Agent or any Lender to Borrower or any other party. In
exercising its rights hereunder and under any other Financing Agreements or
taking any actions herein or therein, Administrative Agent and Lenders may act
through its respective employees, agents or independent contractors as
authorized by Administrative Agent or such Lender.
12.12    Notices. Any notice or other communication required or permitted under
this Agreement shall be in writing and personally delivered, mailed by
registered or certified U.S. mail (return receipt requested and postage
prepaid), sent by telecopier (with a confirming copy sent by regular mail), or
sent by prepaid nationally recognized overnight courier service, and addressed
to the relevant party at its address set forth below, or at such other address
as such party may, by written notice, designate as its address for purposes of
notice under this Agreement:

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(a)    If to the Administrative Agent, at:
The PrivateBank and Trust Company
120 South LaSalle Street
Chicago, Illinois 60603
Attention: Adam D. Panos, Managing Director
Telephone No.: 312-564-1278
Facsimile No.: 312-564-6889
With a copy to:

Duane Morris LLP
190 South LaSalle Street - Suite 3700
Chicago, Illinois 60603
Attention: Brian P. Kerwin, Esq.
Telephone No: 312-499-6737
Facsimile No: 312-499-6701
(b)    If to the Borrower or Borrower Agent, at:
Diversicare Healthcare Services, Inc.
1621 Galleria Boulevard
Brentwood, Tennessee 37027
Attention: James R. McKnight, Jr.
Telephone No.: 615-771-7575
Facsimile No.: 615-771-7409
With a copy to:

Harwell Howard Hyne Gabbert & Manner
315 Deaderick Street, Suite 1800
Nashville, Tennessee 37238
Attention: John N. Popham IV, Esq.
Telephone No.: 615-251-1093
Facsimile No.: 615-251-1059
(c)    If to Lenders, as identified on Annex A hereto.
If mailed, notice shall be deemed to be given three (3) days after being sent,
and if sent by personal delivery, telecopier or prepaid courier, notice shall be
deemed to be given when delivered. If any notice is tendered to an addressee and
delivery thereof is refused by such addressee, such notice shall be effective
upon such tender unless expressly set forth in such notice.
12.13    Equitable Relief. The Borrower recognizes that, in the event the
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to the Administrative Agent and Lenders; therefore, the

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Borrower agrees that the Administrative Agent and Lenders, if the Administrative
Agent or Lenders so request, shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
12.14    Entire Agreement. This Agreement, together with the Financing
Agreements (and, as applicable, the Revolving Loan Agreement) executed in
connection herewith, constitutes the entire agreement among the parties with
respect to the subject matter hereof, and supersedes all prior written or oral
understandings, discussions and agreements with respect thereto (including,
without limitation, any term sheet, proposal letter or commitment letter).
Notwithstanding anything to the contrary contained in this Agreement, Borrower
is and shall be required to observe, perform and comply with each of the terms,
representations, warranties, covenants, conditions and provisions set forth in
the Revolving Loan Agreement applicable to Borrower and such terms,
representations, warranties, covenants, conditions and provisions are hereby
incorporated into this Agreement by this reference thereto.
12.15    Participations and Assignments. (a) Any Lender may at any time assign
to one or more Persons that extends secured commercial loans in its ordinary
course of business and has assets or capital of at least $100,000,000 (other
than (i) a natural person or (ii) any Defaulting Lender or its wholly-owned
subsidiaries or its other Affiliates) (any such Person, an “Assignee”) all or
any portion of such Lender’s Pro Rata Share of the Loan and also such Lender’s
Pro Rata Share of the Revolving Loans, with the prior written consent of
Administrative Agent, and, so long as no Event of Default has occurred and is
continuing, Borrower (all of which consents shall not be unreasonably withheld,
conditioned or delayed and shall not be required for an assignment by a Lender
to another Lender or an Affiliate of a Lender). Except as Administrative Agent
may otherwise agree (and, so long as no Event of Default has occurred and is
continuing, Borrower otherwise consents in writing, which consent shall not be
unreasonably withheld, conditioned or delayed), any such assignment shall be in
a minimum aggregate amount equal to Five Million Dollars ($5,000,000) or, if
less, the remaining Loan held by the assigning Lender. Borrower and
Administrative Agent shall be entitled to continue to deal solely and directly
with such Lender in connection with the interests so assigned to an Assignee
until Administrative Agent shall have received and accepted an effective
assignment agreement in substantially the form of Exhibit B hereto (an
“Assignment Agreement”) executed, delivered and fully completed by the
applicable parties thereto and a processing fee of Five Thousand Dollars
($5,000). No assignment may be made to any Person if at the time of such
assignment Borrower would be obligated to pay any greater amount under Sections
3.1 or 3.3 to the Assignee than Borrower is then obligated to pay to the
assigning Lender under such Sections (and if any assignment is made in violation
of the foregoing, Borrower will not be required to pay such greater amounts).
Any attempted assignment not made in accordance with this Section 12.15 shall be
treated as the sale of a participation hereunder. Borrower shall be deemed to
have granted its consent to any assignment requiring its consent hereunder
unless Borrower has expressly objected to such assignment within three (3)
Business Days after notice thereof. Notwithstanding the foregoing, no consent of
Borrower or Administrative Agent shall be required for any assignment to a
Lender or an Affiliate of a Lender (provided that no assignment shall be made to
any Defaulting Lender or its wholly-owned subsidiaries).

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(b)    From and after the date on which the conditions described above have been
met, (i) such Assignee shall be deemed automatically to have become a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to such Assignee pursuant to such Assignment Agreement, shall have the
rights and obligations of a Lender hereunder and (ii) the assigning Lender, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment Agreement, shall be released from its rights (other
than its indemnification rights) and obligations hereunder. Upon the request of
the Assignee (and, as applicable, the assigning Lender) pursuant to an effective
Assignment Agreement, Borrower shall execute and deliver to Administrative Agent
for delivery to the Assignee (and, as applicable, the assigning Lender) a Term
Loan Note in the principal amount of the Assignee’s Term Loan Commitment (and,
as applicable, a Term Loan Note in the principal amount of the Term Loan
Commitment retained by the assigning Lender). Each such Term Loan Note shall be
dated the effective date of such assignment. Upon receipt by the assigning
Lender of such Term Loan Note, the assigning Lender shall return to Borrower any
prior Term Loan Note held by it.
(c)    Notwithstanding anything to the contrary set forth herein, any Lender may
at any time pledge or assign a security interest in all or any portion of its
rights under this Agreement and applicable promissory note to secure obligations
of such Lender, including any pledge or assignment to secure obligations to any
Federal Reserve Bank (including as collateral security pursuant to Regulation A
and any Operating Circular issued by such Federal Reserve Bank), and such
Loan(s) and promissory note(s) shall be fully transferable as provided therein,
and this Section shall not apply to any such pledge or assignment of a security
interest; provided that no such pledge or assignment of a security interest
shall release a Lender from any of its obligations hereunder or substitute any
such pledgee or assignee for such Lender as a party hereto.
(d)    Subject to the last sentence in Section 13.9, any Lender may at any time
(without any required consent) sell to one or more Persons (other than (i) a
natural person or (ii) a Defaulting Lender or its wholly-owned subsidiaries or
its other Affiliates) participating interests in its respective Loan or other
interests hereunder (any such Person, a “Participant”). In the event of a sale
by a Lender of a participating interest to a Participant, (a) such Lender’s
obligations under this Agreement shall remain unchanged for all purposes, (b)
Administrative Agent and Borrower shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under
this Agreement and (c) all amounts payable by Borrower shall be determined as if
such Lender had not sold such participation and shall be paid directly to such
Lender. No Participant shall have any direct or indirect voting rights under
this Agreement except with respect to any event described in Section 12.1
expressly requiring the unanimous vote of all Lenders or, as applicable, all
affected Lenders. Each Lender agrees to incorporate the requirements of the
preceding sentence into each participation agreement which such Lender enters
into with any Participant. Borrower agrees that if amounts outstanding under
this Agreement are due and payable (as a result of acceleration or otherwise),
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement; provided that such right of set-off shall be
subject to the obligation of each Participant to share with Lenders, and Lenders
agree to share with each Participant, as provided in Section 2.13(d). Borrower
agrees that each Participant shall be entitled to the benefits of Sections 3.1
or 3.3 as if it were a

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Lender (provided that on the date of the participation no Participant shall be
entitled to any greater compensation pursuant to Sections 3.1 or 3.3 than would
have been paid to the participating Lender on such date if no participation had
been sold and that each Participant complies with Section 3.3 as if it were an
Assignee).
(e)    Administrative Agent will maintain a copy of each Assignment Agreement
delivered and accepted by it and register (the “Register”) for the recordation
of names and addresses of Lenders, the Pro Rata Share of each Lender and the
portion of the Loan of each Lender and whether such Lender is the original
Lender or the Assignee. No assignment shall be effective unless and until the
Assignment Agreement is accepted and registered in the Register. All records of
transfer of a Lender’s interest in the Register shall be conclusive, absent
manifest error, as to the ownership of the interests in such Loan.
Administrative Agent shall not incur any liability of any kind with respect to
any Lender with respect to the maintenance of the Register. Upon the reasonable
written request of Borrower, Administrative Agent will furnish a copy of the
Register to the Borrower Agent or Borrower (at the cost, if any, to Borrower).
12.16    INDEMNIFICATION BY BORROWER. IN CONSIDERATION OF THE EXECUTION AND
DELIVERY OF THIS AGREEMENT BY ADMINISTRATIVE AGENT AND LENDERS AND THE AGREEMENT
TO EXTEND THE TERM LOAN COMMITMENT PROVIDED HEREUNDER, EACH BORROWER HEREBY
JOINTLY AND SEVERALLY AGREES TO AND SHALL INDEMNIFY, DEFEND, PROTECT, EXONERATE
AND HOLD ADMINISTRATIVE AGENT, EACH LENDER, AND EACH OF THE OFFICERS, DIRECTORS,
EMPLOYEES, PARENT ENTITIES, AFFILIATES, ATTORNEYS AND AGENTS OF ADMINISTRATIVE
AGENT AND EACH LENDER (EACH A “INDEMNIFIED PARTY”) FREE AND HARMLESS FROM AND
AGAINST ANY AND ALL ACTIONS, CAUSES OF ACTION, SUITS, JUDGMENTS, CLAIMS, LOSSES,
LIABILITIES, DAMAGES, PENALTIES, COSTS, AND EXPENSES, INCLUDING, WITHOUT
LIMITATION, ATTORNEYS’ FEES AND COSTS (COLLECTIVELY, THE “INDEMNIFIED
LIABILITIES”), INCURRED BY THE INDEMNIFIED PARTIES OR ANY OF THEM AS A RESULT
OF, OR ARISING OUT OF, OR RELATING TO (a) ANY REFINANCING, TENDER OFFER, MERGER,
PURCHASE OF STOCK, PURCHASE OF ASSETS OR OTHER SIMILAR TRANSACTION FINANCED OR
PROPOSED TO BE FINANCED IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, WITH THE
PROCEEDS OF THE LOAN, (b) THE USE, HANDLING, RELEASE, EMISSION, DISCHARGE,
TRANSPORTATION, STORAGE, TREATMENT OR DISPOSAL OF ANY HAZARDOUS SUBSTANCE AT ANY
PROPERTY OWNED OR LEASED BY ANY BORROWER, (c) ANY VIOLATION OF ANY ENVIRONMENTAL
LAWS WITH RESPECT TO CONDITIONS AT ANY PROPERTY OWNED OR LEASED BY ANY BORROWER
OR THE OPERATIONS CONDUCTED THEREON, (d) THE INVESTIGATION, CLEANUP OR
REMEDIATION OF OFFSITE LOCATIONS AT WHICH ANY BORROWER OR THEIR RESPECTIVE
PREDECESSORS ARE ALLEGED TO HAVE DIRECTLY OR INDIRECTLY DISPOSED OF HAZARDOUS
SUBSTANCES, (e) THE USE, MAINTENANCE OR OPERATION OF THE FACILITIES, OR (f) THE
EXECUTION, DELIVERY, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR ANY OTHER
FINANCING AGREEMENT BY ANY OF THE

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INDEMNIFIED PARTIES, EXCEPT FOR ANY SUCH INDEMNIFIED LIABILITIES (A) ARISING ON
ACCOUNT OF THE APPLICABLE INDEMNIFIED PARTY’S GROSS NEGLIGENCE, WILLFUL
MISCONDUCT OR ILLEGAL ACTIVITY AS DETERMINED BY A FINAL, NON-APPEALABLE JUDGMENT
BY A COURT OF COMPETENT JURISDICTION, OR (B) AS ARE IN RESPECT OF ANY PROPERTY
FOR ANY OCCURRENCE ARISING DIRECTLY FROM THE ACTS OR OMISSIONS OF THE
ADMINISTRATIVE AGENT OR ANY LENDER DURING THE PERIOD AFTER WHICH SUCH PERSON,
ITS SUCCESSORS OR ASSIGNS HAVE OBTAINED TITLE AND POSSESSION OF SUCH PROPERTY BY
FORECLOSURE OR DEED IN LIEU OF FORECLOSURE; PROVIDED, HOWEVER, THAT THE
INDEMNIFICATION IN THIS SECTION 12.16 SHALL NOT EXTEND TO DISPUTES SOLELY AND
ENTIRELY BETWEEN OR AMONG ADMINISTRATIVE AGENT, THE LENDERS OR THEIR RESPECTIVE
AFFILIATES NOT IN ANY WAY OR MANNER DIRECTLY OR INDIRECTLY CAUSED BY OR THE
FAULT OF ANY BORROWER OR ANY OF ITS RESPECTIVE AFFILIATES. IF AND TO THE EXTENT
THAT THE FOREGOING UNDERTAKING MAY BE UNENFORCEABLE FOR ANY REASON, EACH
BORROWER HEREBY AGREES TO MAKE THE MAXIMUM CONTRIBUTION TO THE PAYMENT AND
SATISFACTION OF EACH OF THE INDEMNIFIED LIABILITIES THAT IS PERMISSIBLE UNDER
APPLICABLE LAW. ALL OBLIGATIONS PROVIDED FOR IN THIS SECTION 12.16 SHALL SURVIVE
REPAYMENT OF THE LOAN, CANCELLATION OF THE NOTES, ANY FORECLOSURE UNDER, OR ANY
MODIFICATION, RELEASE OR DISCHARGE OF, ANY OR ALL OF THE OTHER FINANCING
AGREEMENTS AND TERMINATION OF THIS AGREEMENT. Any liability, obligation, loss,
damage, penalty, cost or expense incurred by the Indemnified Parties shall be
paid to the Indemnified Parties on demand, together with interest thereon at the
Default Rate from the date incurred by the Indemnified Parties until paid by
Borrower, be added to the Liabilities, and be secured by the Collateral. The
provisions of and undertakings and indemnifications set out in this Section
12.16 shall survive the satisfaction and payment of the Liabilities of Borrower
and the termination of this Agreement. Borrower agrees that neither
Administrative Agent nor any Lender shall have liability to any Borrower
(whether sounding in tort, contract or otherwise) for losses suffered by any
Borrower in connection with, arising out of, or in any way related to the
transactions contemplated and the relationship established by this Agreement and
the other Financing Agreements, or any act, omission or event occurring in
connection herewith or therewith, unless it is determined in a final
non-appealable judgment by a court of competent jurisdiction that such losses
resulted from the gross negligence, willful misconduct or illegal activity of
the party from which recovery is sought. NO INDEMNIFIED PARTY SHALL BE LIABLE
FOR ANY DAMAGES ARISING FROM THE USE BY OTHERS OF ANY INFORMATION OR OTHER
MATERIALS OBTAINED THROUGH INTRALINKS, DEBTX, OR OTHER SIMILAR INFORMATION
TRANSMISSION SYSTEMS IN CONNECTION WITH THIS AGREEMENT, NOR SHALL ANY
INDEMNIFIED PARTY HAVE ANY LIABILITY WITH RESPECT TO, AND BORROWER HEREBY
WAIVES, RELEASES AND AGREES NOT TO SUE FOR ANY SPECIAL, PUNITIVE, EXEMPLARY,
INDIRECT OR CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT OR ANY OTHER
FINANCING AGREEMENT OR ARISING OUT OF ITS ACTIVITIES IN CONNECTION HEREWITH OR
THEREWITH (WHETHER BEFORE OR AFTER THE CLOSING

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DATE). Each Borrower acknowledges that it has been advised by counsel in the
negotiation, execution and delivery of this Agreement and the other Financing
Agreements to which it is a party.
12.17    Representations and Warranties. Notwithstanding anything to the
contrary contained herein, each representation or warranty contained in this
Agreement or any of the other Financing Agreements shall survive the execution
and delivery of this Agreement and the other Financing Agreements and the making
of the Loan and the repayment of the Liabilities hereunder.
12.18    Counterparts. This Agreement and any amendment or supplement hereto or
any waiver granted in connection herewith may be executed in any number of
counterparts and by the different parties on separate counterparts and each such
counterpart shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same Agreement.
12.19    Limitation of Liability of Administrative Agent and Lenders. It is
hereby expressly agreed that:
(a)    Administrative Agent and Lenders may conclusively rely and shall be
protected in acting or refraining from acting upon any document, instrument,
certificate, instruction or signature believed to be genuine and may assume and
shall be protected in assuming that any Person purporting to give any notice or
instructions in connection with any transaction to which this Agreement relates
has been duly authorized to do so. Administrative Agent and Lenders shall not be
obligated to make any inquiry as to the authority, capacity, existence or
identity of any Person purporting to have executed any such document or
instrument or have made any such signature or purporting to give any such notice
or instructions;
(b)    Administrative Agent and Lenders shall not be liable for any acts,
omissions, errors of judgment or mistakes of fact or law, including, without
limitation, acts, omissions, errors or mistakes with respect to the Collateral,
except for those arising out of or in connection with Administrative Agent’s and
Lender’s gross negligence, willful misconduct or illegal activity. Without
limiting the generality of the foregoing, Administrative Agent and Lenders shall
be under no obligation to take any steps necessary to preserve rights in the
Collateral against any other parties, but may do so at its option, and all
expenses incurred in connection therewith shall be payable by Borrower; and
(c)    Administrative Agent and Lenders shall not be liable for any action taken
in good faith and believed to be authorized or within the rights or powers
conferred by this Agreement and the other Financing Agreements.
12.20    Borrower Authorizing Accounting Firm. Borrower shall authorize its
accounting firm and/or service bureaus to provide Administrative Agent with such
information as is requested by Administrative Agent in accordance with this
Agreement. Borrower authorizes Administrative Agent to contact directly any such
accounting firm and/or service bureaus to obtain such information.

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12.21    Joint and Several Liability; Binding Obligations.
(a)    Borrower is defined collectively to include all Persons constituting the
Borrower; provided, however, that any references herein to “any Borrower”, “each
Borrower” or similar references, shall be construed as a reference to each
individual Person comprising the Borrower; provided, further, in case of any
question as to which particular Person is to be deemed a Borrower in any given
context for purposes of any term or provision contained in this Agreement, the
Lender shall make such determination. Each Person comprising Borrower shall be
jointly and severally liable for all of the liabilities and obligations of
Borrower under this Agreement, regardless of which of the Borrowers actually
receives the proceeds of the Loan hereunder, or the manner in which the
Borrowers, or the Administrative Agent or Lenders accounts therefor in their
respective books and records. In addition, each entity comprising Borrower
hereby acknowledges and agrees that all of the representations, warranties,
covenants, obligations, conditions, agreements and other terms contained in this
Agreement shall be applicable to and shall be binding upon and measured and
enforceable individually against each Person comprising Borrower as well as all
such Persons when taken together. By way of illustration, but without limiting
the generality of the foregoing, the terms of Article 11 of this Agreement are
to be applied to each individual Person comprising the Borrower (as well as to
all such Persons taken as a whole), such that the occurrence of any of the
events described in Article 11 of this Agreement as to any Person comprising the
Borrower shall constitute an Event of Default even if such event has not
occurred as to any other Persons comprising the Borrower or as to all such
Persons taken as a whole (except as otherwise expressly provided therein by, for
example, the use of the term “Material Adverse Effect”).
(b)    Each Borrower acknowledges that it will enjoy significant benefits from
the business conducted by the other Borrowers because of, inter alia, their
combined ability to bargain with other Persons including, without limitation,
their ability to receive the credit facilities hereunder and other Financing
Agreements which would not have been available to an individual Borrower acting
alone. Each Borrower has determined that it is in its best interest to procure
the Loan with the credit support of the other Borrowers as contemplated by this
Agreement and the other Financing Agreements as well as permit the
cross-collateralization and cross-default with the Affiliate Term Loan
Liabilities, Term Loan Agreement and Affiliate Term Loan Financing Agreements as
contemplated hereunder.
(c)    The Administrative Agent and the Lenders have advised the Borrowers that
the Administrative Agent and the Lenders are unwilling to enter into this
Agreement and the other Financing Agreements and make available the Loan
extended hereby or thereby to any Borrower unless each Borrower agrees, among
other things, to be jointly and severally liable for the due and proper payment
of the Liabilities of each other Borrower under this Agreement and other
Financing Agreements. Each Borrower has determined that it is in its best
interest and in pursuit of its purposes that it so induce the Lenders to extend
credit pursuant to this Agreement and the other documents executed in connection
herewith (i) because of the desirability to each Borrower of the Loan and the
interest rates and the modes of borrowing available hereunder, (ii) because each
Borrower may engage in transactions jointly with other Borrowers and
(iii) because each Borrower may require, from time to time, access to funds
under this Agreement for the purposes herein set forth. Each Borrower,
individually, expressly understands, agrees and acknowledges, that the Loan
would not

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be made available on the terms herein in the absence of the collective credit of
all of the Persons constituting the Borrower, the joint and several liability of
all such Persons, and the cross-collateralization of the collateral of all such
Persons hereunder and under the other Financing Agreements. Accordingly, each
Borrower, individually acknowledges that the benefit to each of the Persons
comprising the Borrower as a whole constitutes reasonably equivalent value,
regardless of the amount of the Loan actually borrowed by, advanced to, or the
amount of collateral provided by, any individual Borrower.
(d)    Each Borrower has determined that it has and, after giving effect to the
transactions contemplated by this Agreement and the other Financing Agreements
(including, without limitation, the inter-Borrower arrangement set forth in this
Section) will have, assets having a fair saleable value in excess of the amount
required to pay its probable liability on its existing debts as they fall due
for payment and that the sum of its debts is not and will not then be greater
than all of its property at a fair valuation, that such Borrower has, and will
have, access to adequate capital for the conduct of its business and the ability
to pay its debts from time to time incurred in connection therewith as such
debts mature and that the value of the benefits to be derived by such Borrower
from the access to funds under this Agreement (including, without limitation,
the inter-Borrower arrangement set forth in this Section) is reasonably
equivalent to the obligations undertaken pursuant hereto.
(e)    The Borrower Agent (on behalf of each Borrower) shall maintain records
specifying (a) all Liabilities incurred by each Borrower, (b) the date of such
incurrence, (c) the date and amount of any payments made in respect of such
Liabilities and (d) all inter-Borrower obligations pursuant to this Section. The
Borrower Agent shall make copies of such records available to the Administrative
Agent, upon request.
(f)    To the extent that applicable Law otherwise would render the full amount
of the joint and several obligations of any Borrower hereunder and under the
other Financing Agreements invalid or unenforceable, such Borrower’s obligations
hereunder and under the other Financing Agreements shall be limited to the
maximum amount which does not result in such invalidity or unenforceability,
provided, however, that each Borrower’s obligations hereunder and under the
other Financing Agreements shall be presumptively valid and enforceable to their
fullest extent in accordance with the terms hereof or thereof, as if this
Section were not a part of this Agreement.
(g)    To the extent that any Borrower shall make a payment under this Section
of all or any of the Liabilities (a “Joint Liability Payment”) which, taking
into account all other Joint Liability Payments then previously or concurrently
made by any other Borrower, exceeds the amount which such Borrower would
otherwise have paid if each Borrower had paid the aggregate Liabilities
satisfied by such Joint Liability Payments in the same proportion that such
Borrower’s “Allocable Amount” (as defined below) (as determined immediately
prior to such Joint Liability Payments) bore to the aggregate Allocable Amounts
of each of the Borrowers as determined immediately prior to the making of such
Joint Liability Payments, then, following indefeasible payment in full in cash
of the Liabilities and termination of the Loan, such Borrower shall be entitled
to receive contribution and indemnification payments from, and be reimbursed by,
each other Borrower for the amount of

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such excess, pro rata based upon their respective Allocable Amounts in effect
immediately prior to such Joint Liability Payments. As of any date of
determination, the “Allocable Amount” of any Borrower shall be equal to the
maximum amount of the claim which could then be recovered from such Borrower
under this Section without rendering such claim voidable or avoidable under
Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state
Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar
statute or common law.
(h)    The term “Borrower” as used herein shall mean either one or more
particular Borrowers or all of the Borrowers collectively as the Administrative
Agent shall determine in its sole and absolute good faith discretion.
(i)    [Intentionally Omitted.]
(j)    [Intentionally Omitted.]
(k)    Each Borrower hereby agrees that, except as hereinafter provided, its
obligations hereunder shall be unconditional, irrespective of (i) the absence of
any attempt to collect the Liabilities from any obligor or other action to
enforce the same; (ii) the waiver or consent by Administrative Agent with
respect to any provision of any instrument evidencing the Liabilities, or any
part thereof, or any other agreement heretofore, now or hereafter executed by a
Borrower and delivered to Administrative Agent or any Lender; (iii) failure by
Administrative Agent to take any steps to perfect and maintain its security
interest in, or to preserve its rights to, any security or collateral for the
Liabilities; (iv) the institution of any proceeding under the United States
Bankruptcy Code, or any similar proceeding, by or against a Borrower or
Administrative Agent’s election in any such proceeding of the application of
Section 1111(b)(2) of the United States Bankruptcy Code; (v) any borrowing or
grant of a security interest by a Borrower as debtor-in-possession, under
Section 364 of the United States Bankruptcy Code; (vi) the disallowance, under
Section 502 of the United States Bankruptcy Code, of all or any portion of
Administrative Agent’s claim(s) for repayment of any of the Liabilities; or
(vii) any other circumstance other than payment in full of the Liabilities which
might otherwise constitute a legal or equitable discharge or defense of a
guarantor or surety.
(l)    Until Payment in Full, no payment made by or for the account of a
Borrower including, without limitation, (i) a payment made by such Borrower on
behalf of the liabilities of any other Borrower or (ii) a payment made by any
other Person under any guaranty, shall entitle such Borrower, by subrogation or
otherwise, to any payment from any other Borrower or from or out of any other
Borrower’s property and such Borrower shall not exercise any right or remedy
against any other Borrower or any property of any other Borrower by reason of
any performance of such Borrower of its joint and several obligations hereunder.
(m)    Any notice given by one Borrower hereunder shall constitute and be deemed
to be notice given by all Borrowers, jointly and severally. Notice given by
Administrative Agent to any one Borrower hereunder or pursuant to any Financing
Agreements in accordance with the terms hereof or thereof shall constitute
notice to each and every Borrower. The knowledge of one Borrower shall be
imputed to all Borrowers and any consent by one Borrower shall constitute the
consent of and shall bind all Borrowers.

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(n)    This Section is intended only to define the relative rights of Borrower
and nothing set forth in this Section is intended to or shall impair the
obligations of Borrower, jointly and severally, to pay any amounts as and when
the same shall become due and payable in accordance with the terms of this
Agreement or any other Financing Agreements. Nothing contained in this Section
shall limit the liability of any Borrower to pay the Loan made directly or
indirectly to that Borrower and accrued interest, fees and expenses with respect
thereto for which such Borrower shall be primarily liable.
(o)    The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of each Borrower to which such
contribution and indemnification is owing. The rights of any indemnifying
Borrower against the other Borrowers under this Section shall be exercisable
upon the full and indefeasible payment of the Liabilities and the termination of
the Loan.
12.22    Confidentiality; Press Releases. Borrower shall not disclose the
contents of this Agreement and the other Financing Agreements to any third party
(including, without limitation, any financial institution or intermediary),
unless required by applicable Laws or by any subpoena, judicial order or similar
legal process, without Administrative Agent’s prior written consent, other than
to Borrower’s officers, lawyers and other professional advisors on a
need-to-know basis, and in connection with any filings required to be made under
any applicable federal or state securities laws or regulations (“Securities
Laws”). Borrower agrees to inform all such Persons who receive information
concerning this Agreement that such information is confidential and may not be
disclosed to any other Person, except as required by applicable Laws, including
Securities Laws, or by any subpoena, judicial order or similar legal process. No
party hereto shall, and no party hereto shall permit its Affiliates to, at any
time issue any press release or other public disclosure using the name of any
Borrower, Lender, Administrative Agent or any of their respective Affiliates or
referring to this Agreement or the other Financing Agreements without at least
two (2) Business Days prior written notice to Borrower, Administrative Agent and
the applicable Lender and, except for press releases or other public disclosures
required under applicable Securities Laws, without the prior written consent of
Borrower, Administrative Agent and the applicable Lender, which consent shall
not unreasonably be withheld, conditioned or delayed. Upon Borrower’s prior
written consent, which consent shall not unreasonably be withheld, conditioned
or delayed, each Lender and Administrative Agent may publish or disseminate a
tombstone or similar advertising material relating to the financing transactions
contemplated by this Agreement. Nothing contained in this Agreement is intended
to permit or authorize Borrower to make any contract on behalf of Administrative
Agent or any Lender. Each of the Administrative Agent and the Lenders agrees to
maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to each of its and its Affiliates’ respective
directors, officers, managers, employees and agents, including, without
limitation, accountants, legal counsel and other professional advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable Laws or regulations or by
any subpoena, judicial order or similar legal process or bank regulatory
process, (d) to any other party to this Agreement or any other Financing
Agreement, (e) in connection with the exercise of any remedies hereunder or
under any Financing Agreement or any suit, action or

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proceedings relating to this Agreement or any Financing Agreement or the
enforcement of rights hereunder or thereunder, or (f) subject to an agreement
containing provisions substantially the same as those of this Section 12.22, to
any assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement.
For the purpose of this Section 12.22, “Information” means all information
received from the Borrower or any other Credit Party relating to the Borrower or
any other Credit Party and their businesses, other than any information (i) that
is available to the Administrative Agent or any Lender on a non-confidential
basis prior to disclosure by the Borrower or any Credit Party, (ii) that is
publicly disclosed by the Borrower or any Credit Party in connection with public
filings with the Securities and Exchange Commission, (iii) without limitation of
subsection (i) immediately above, that was in the possession of the
Administrative Agent or Lender prior to its disclosure by the Borrower or any
Credit Party pursuant hereto provided that the source of such information was
not known by the Administrative Agent or Lender to be bound by a confidentiality
agreement with or other contractual, legal or fiduciary obligation of
confidentiality to the Borrower or any Credit Party with respect to such
information, (iv) is or becomes generally available to the public by acts other
than those of the Administrative Agent or any Lender or their respective
Affiliates, officers, directors, managers, employees or agents in breach of the
terms hereof, (v) that has been or is received by the Administrative Agent or
any Lender from a third party who is not known by Administrative Agent or any
Lender, as applicable, to be bound by a confidentiality agreement with or other
contractual, legal or fiduciary obligation of confidentiality to the Borrower or
any Credit Party with respect to such information, or (vi) has been or is
developed independently without use of or reference to Confidential Information.
Any Person required to maintain the confidentiality of Information as provided
in this Section 12.22 shall be considered to have complied with its obligation
to do so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information. Without limiting anything to the contrary contained in
this Agreement, each of the obligations contained in this Section 12.22 are
several (and not joint and several) and Administrative Agent shall not be liable
or responsible in any way for any breach of this Section 12.22 by any Lender or
any other Person.
12.23    Fax Signatures. A signature hereto sent or delivered by facsimile or
other electronic transmission shall be as legally binding and enforceable as a
signed original for all purposes.
12.24    Release. For and in consideration of the Loan hereunder, each Borrower,
voluntarily, knowingly, unconditionally, and irrevocably, with specific and
express intent, for and on behalf of itself and its agents, attorneys, heirs,
successors, and assigns (collectively the “Releasing Parties”) does hereby fully
and completely release, acquit and forever discharge the Administrative Agent
and each Lender, and each of their respective successors, assigns, heirs,
affiliates, subsidiaries, parent companies, principals, directors, officers,
employees, shareholders and agents (hereinafter called the “Lender Parties”),
and any other person, firm, business, corporation, insurer, or association which
may be responsible or liable for the acts or omissions of the Lender Parties, or
who may be liable for the injury or damage resulting therefrom (collectively the
“Released Parties”), of and from any and all actions, causes of action, suits,
debts, disputes, damages, claims, obligations, liabilities, costs, expenses,
fees (including, without limitation, reasonable attorneys’ fees) and demands of
any kind whatsoever, at law or in equity, whether matured or unmatured,
liquidated or unliquidated,

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vested or contingent, choate or inchoate, known or unknown that the Releasing
Parties (or any of them) have or may have, against the Released Parties or any
of them (whether directly or indirectly) relating to events occurring on or
before the date of this Agreement, other than any claim as to which a final
determination is made in a judicial proceeding (in which the Administrative
Agent and Lenders or any of the Released Parties have had an opportunity to be
heard) which determination includes a specific finding that one of the Released
Parties acted in a grossly negligent manner or with actual willful misconduct or
illegal activity. Each Borrower acknowledges that the foregoing release is a
material inducement to Administrative Agent’s and each Lender’s decision to
extend to Borrower the financial accommodations hereunder and has been relied
upon by the Lenders in agreeing to make the Loan hereunder. Borrower
understands, acknowledges and agrees that the release set forth above may be
pleaded as a full and complete defense and may be used as a basis for an
injunction against any action, suit or other proceeding which may be instituted,
prosecuted or attempted in breach of the provisions of such release. To the
furthest extent permitted by law, Borrower hereby knowingly, voluntarily,
intentionally and expressly waives and relinquishes any and all rights and
benefits that it respectively may have as against any of the Lender Parties or
any other Released Parties under any law, rule or regulation of any jurisdiction
that would or could have the effect of limiting the extent to which a general
release extends to claims which any of the Releasing Parties does not know or
suspect to exist as of the date hereof.
12.25    Time; Inconsistency. Time is of the essence in Borrower’s performance
under this Agreement and all other Financing Agreements. Notwithstanding
anything to the contrary contained in any Financing Agreement, if and to the
extent any terms or provisions contained in any Financing Agreement are
inconsistent or conflict with the terms and provisions of this Agreement, the
terms and provisions of this Agreement shall control and govern.
12.26    Relationship. The relationship between, on the one hand, the
Administrative Agent and Lenders, and the Borrower, on the other hand, shall be
that of creditor-debtor only. No term in this Agreement or in the other
Financing Agreements and no course of dealing between the parties shall be
deemed to create any relationship of agency, partnership or joint venture or any
fiduciary duty by the Administrative Agent and Lenders to Borrower or any other
party.
12.27    Borrower Agent. Each Borrower hereby irrevocably appoints Borrower
Agent as the borrowing agent and attorney-in-fact for all Borrowers which
appointment shall remain in full force and effect unless and until
Administrative Agent shall have received prior written notice signed by each
Borrower that such appointment has been revoked and that another Borrower has
been appointed Borrower Agent. Each Borrower hereby irrevocably appoints and
authorizes the Borrower Agent (i) to provide Administrative Agent with all
notices with respect to Loan obtained for the benefit of Borrower and all other
notices and instructions under this Agreement, (ii) for all purposes of delivery
or receipt of communications, preparation and delivery of financial reports,
receipt and payment of Liabilities, requests for waivers, amendments or other
accommodations and/or actions under this Agreement, and to duly execute and
deliver on behalf of Borrower any and all instruments, amendments,
modifications, reaffirmations, agreements, certificates and documents made to,
in favor of or with Administrative Agent and Lenders in connection with this
Agreement or the Financing Agreements, and (iii) to take such other action as
Borrower Agent deems appropriate on its behalf to obtain the Loan and to
exercise such other powers as are reasonably incidental

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thereto to carry out the purposes of this Agreement. Each Borrower agrees that
any notice, election, communication, representation, instrument, amendment,
modification, reaffirmation, certificate, document, agreement or undertaking
made on its behalf by Borrower Agent shall be legally binding upon and
enforceable against each such Borrower. It is understood that the handling of
the Loan Account and Collateral of Borrowers in a combined fashion, as more
fully set forth in this Agreement, is done solely as an accommodation to
Borrowers in order to utilize the collective borrowing powers of Borrowers in
the most efficient and economical manner and at their request, and
Administrative Agent and Lenders shall not incur liability to any Borrower as a
result hereof. Each Borrower expects to derive benefit, directly or indirectly,
from the handling of the Loan Account and the Collateral in a combined fashion
since the successful operation of each Borrower is dependent on the continued
successful performance of the integrated group. To induce the Administrative
Agent and Lenders to do so, and in consideration thereof, but without limiting
any other provision contained in this Agreement, each Borrower hereby jointly
and severally agrees to indemnify Administrative Agent and each Lender and hold
Administrative Agent and Lenders harmless against any and all liability,
expense, loss or claim of damage or injury, made against Administrative Agent or
any Lender by any Borrower or by any third party or Person whosoever, arising
from or incurred by reason of (a) the handling of the Loan Account and
Collateral as herein provided, (b) the Administrative Agent’s relying on any
instructions of the Borrower Agent, or (c) any other action taken by the
Administrative Agent hereunder or under the other Financing Agreements, except
that Borrowers will have no liability to the Administrative Agent under this
Section with respect to any liability that has been finally determined by a
court of competent jurisdiction in a non-appealable proceeding to have resulted
solely from the gross negligence, willful misconduct, or illegal activity of
Administrative Agent.
12.28    Acting Through Agents. In exercising any rights under the Financing
Agreements or taking any actions provided for therein, the Administrative Agent
may act through its employees, agents or independent contractors as authorized
by the Administrative Agent. Borrower shall authorize its accounting firm and/or
service bureaus to provide Administrative Agent with such information as is
requested by Administrative Agent in accordance with this Agreement. Borrower
authorizes the Administrative Agent to contact directly any such accounting firm
and/or service bureaus to obtain such information.
12.29    Additional Provisions.
(a)    Consents. Each Borrower, as joint and several primary obligor of the
Liabilities directly incurred by any other Borrower, authorizes Administrative
Agent, without giving notice to such Borrower or to any other Borrower (to the
extent permitted hereunder) or obtaining such Borrower’s consent or any other
Borrower’s consent (to the extent permitted hereunder) and without affecting the
liability of such Borrower for the Liabilities directly incurred by the other
Borrower, from time to time to:
(1)    compromise, settle, renew, extend the time for payment, change the manner
or terms of payment, discharge the performance of, decline to enforce, or
release all or any of the Liabilities; grant other indulgences to any Borrower
in respect thereof; or modify in any manner any documents relating to the
Liabilities;

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(2)    declare all Liabilities due and payable upon the occurrence and during
the continuance of an Event of Default;
(3)    take and hold security for the performance of the Liabilities of any
Borrower and exchange, enforce, waive and release any such security;
(4)    apply and reapply such security and direct the order or manner of sale
thereof as Administrative Agent, in its sole discretion, may determine;
(5)    release, surrender or exchange any deposits or other property securing
the Liabilities or on which Administrative Agent at any time may have a Lien;
release, substitute or add any one or more endorsers or guarantors of the
Liabilities of any other Borrower or such Borrower; or compromise, settle,
renew, extend the time for payment, discharge the performance of, decline to
enforce, or release all or any obligations of any such endorser or guarantor or
other Person who is now or may hereafter be liable on any Liabilities or
release, surrender or exchange any deposits or other property of any such
Person;
(6)    apply payments received by Administrative Agent from any Borrower to any
Liabilities, in such order as Administrative Agent shall determine, in its sole
discretion, subject to Section 12.8; and
(7)    assign this Agreement in whole or in part.
(b)    Waivers. Each Borrower, as a primary, joint and several obligor with
respect to the Liabilities directly incurred by any other Borrower, hereby
waives:
(1)    any defense based upon any legal disability or other defense of any other
Borrower, or by reason of the cessation or limitation of the liability of any
other Borrower from any cause (other than full payment of all Liabilities),
including, but not limited to, failure of consideration, breach of warranty,
statute of frauds, statute of limitations, accord and satisfaction, and usury;
(2)    any defense based upon any legal disability or other defense of any other
guarantor or other Person;
(3)    any defense based upon any lack of authority of the officers, directors,
members, managers, partners or agents acting or purporting to act on behalf of
any other Borrower or any principal of any other Borrower or any defect in the
formation of any other Borrower or any principal of any other Borrower;
(4)    any defense based upon the application by any other Borrower of the
proceeds of the Loan for purposes other than the purposes represented by such
other Borrower to Administrative Agent or intended or understood by
Administrative Agent or such Borrower;
(5)    any defense based on such Borrower’s rights, under statute or otherwise,
to require Administrative Agent to sue any other Borrower or otherwise to
exhaust its

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rights and remedies against any other Borrower or any other Person or against
any collateral before seeking to enforce its right to require such Borrower to
satisfy the Liabilities of any other Borrower;
(6)    any defense based on Administrative Agent’s failure at any time to
require strict performance by any Borrower of any provision of the Financing
Agreements. Such Borrower agrees that no such failure shall waive, alter or
diminish any right of Administrative Agent thereafter to demand strict
compliance and performance therewith. Nothing contained herein shall prevent
Administrative Agent from foreclosing on any Lien, or exercising any rights
available to Administrative Agent thereunder, and the exercise of any such
rights shall not constitute a legal or equitable discharge of such Borrower;
(7)    [intentionally omitted];
(8)    any defense based upon Administrative Agent’s election of any remedy
against such Borrower or any other Borrower or any of them; any defense based on
the order in which Administrative Agent enforces its remedies;
(9)    any defense based on (A) Administrative Agent’s surrender, release,
exchange, substitution, dealing with or taking any additional collateral, (B)
Administrative Agent’s abstaining from taking advantage of or realizing upon any
Lien or other guaranty, and (C) any impairment of collateral securing the
Liabilities, including, but not limited to, Administrative Agent’s failure to
perfect or maintain a Lien in such collateral;
(10)    any defense based upon Administrative Agent’s failure to disclose to
such Borrower any information concerning any other Borrower’s financial
condition or any other circumstances bearing on any other Borrower’s ability to
pay the Liabilities;
(11)    any defense based upon any statute or rule of law which provides that
the obligation of a surety must be neither larger in amount nor in any other
respects more burdensome than that of a principal;
(12)    any defense based upon Administrative Agent’s election, in any
proceeding instituted under the Bankruptcy Code, of the application of
Bankruptcy Code §1111(b)(2) or any successor statute;
(13)    any defense based upon any borrowing or any grant of a security interest
under Bankruptcy Code §364;
(14)    [intentionally omitted];
(15)    except as otherwise expressly set forth herein: notice of acceptance
hereof; notice of the existence, creation or acquisition of any Liability;
notice of any Event of Default; notice of the amount of the Liabilities
outstanding from time to time; notice of any other fact which might increase
such Borrower’s risk; diligence; presentment; demand of payment; protest; filing
of claims with a court in the event of any other Borrower’s receivership or
bankruptcy and all other notices and demands to which such Borrower might
otherwise be entitled (and agrees

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the same shall not have to be made on the other Borrower as a condition
precedent to such Borrower’s obligations hereunder);
(16)    [intentionally omitted];
(17)    any defense based on application of fraudulent conveyance or transfer
law or shareholder distribution law to any of the Liabilities or the security
therefor;
(18)    any defense based on Administrative Agent’s failure to seek relief from
stay or adequate protection in any other Borrower’s bankruptcy proceeding or any
other act or omission by Administrative Agent which impairs such Borrower’s
prospective subrogation rights;
(19)    any defense based on legal prohibition of Administrative Agent’s
acceleration of the maturity of the Liabilities during the occurrence of an
Event of Default or any other legal prohibition on enforcement of any other
right or remedy of Administrative Agent with respect to the Liabilities and the
security therefor;
(20)    any defense available to a surety under applicable Law; and
(21)    the benefit of any statute of limitations affecting the liability of
such Borrower hereunder or the enforcement hereof.
Each Borrower further agrees that its obligations hereunder shall not be
impaired in any manner whatsoever by any bankruptcy, extensions, moratoria or
other relief granted to any other Borrower pursuant to any statute presently in
force or hereafter enacted.
(c)    Additional Waivers. Each Borrower authorizes Administrative Agent to
exercise, in its sole discretion, any right, remedy or combination thereof which
may then be available to Administrative Agent, since it is such Borrower’s
intent that the Liabilities be absolute, independent and unconditional
obligations of such Borrower under all circumstances. Notwithstanding any
foreclosure of any Lien with respect to any or all of any property securing the
Liabilities, whether by the exercise of the power of sale contained therein, by
an action for judicial foreclosure or by an acceptance of a deed in lieu of
foreclosure, each Borrower shall remain bound under such Borrower’s guaranty of
the Liabilities directly incurred by any other Borrower.
(d)    Primary Obligations. This Agreement is a primary and original obligation
of each of the Borrowers and each of the Borrowers shall be liable for all
existing and future Liabilities of any other Borrower as fully as if such
Liabilities were directly incurred by such Borrower.
12.30    Nonliability of Administrative Agent and Lenders. The relationship
between the Borrowers on the one hand and the Administrative Agent and Lenders
on the other hand shall be solely that of borrower and lender. The
Administrative Agent and Lenders do not have any fiduciary relationship with or
duty to any Credit Party arising out of or in connection with this Agreement or
any of the other Financing Agreements, and the relationship between the Credit
Parties, on the one hand, and the Administrative Agent and Lenders, on the other
hand, in connection herewith or

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therewith is solely that of debtor and creditor. The Administrative Agent does
not undertake any responsibility to any Credit Party to review or inform any
Credit Party of any matter in connection with any phase of any Credit Party’s
business or operations. The Borrower Agent agrees, on behalf of itself and each
other Borrower, that the Administrative Agent and Lenders shall have no
liability to any Credit Party (whether sounding in tort, contract or otherwise)
for losses suffered by any Credit Party in connection with, arising out of, or
in any way related to the transactions contemplated and the relationship
established by the Financing Agreements, or any act, omission or event occurring
in connection therewith, unless it is determined in a final non-appealable
judgment by a court of competent jurisdiction that such losses resulted from the
gross negligence, willful misconduct or illegal activity of the party from which
recovery is sought. NO LENDER OR ADMINISTRATIVE AGENT SHALL BE LIABLE FOR ANY
DAMAGES ARISING FROM THE USE BY OTHERS OF ANY INFORMATION OR OTHER MATERIALS
OBTAINED THROUGH INTRALINKS, DEBTX OR OTHER SIMILAR INFORMATION TRANSMISSION
SYSTEMS IN CONNECTION WITH THIS AGREEMENT, NOR SHALL ANY LENDER OR
ADMINISTRATIVE AGENT HAVE ANY LIABILITY WITH RESPECT TO, AND THE BORROWER AGENT
ON BEHALF OF ITSELF AND EACH OTHER CREDIT PARTY, HEREBY WAIVES, RELEASES AND
AGREES NOT TO SUE FOR ANY SPECIAL, PUNITIVE, EXEMPLARY, INDIRECT OR
CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT OR ANY OTHER FINANCING
AGREEMENT OR ARISING OUT OF ITS ACTIVITIES IN CONNECTION HEREWITH OR THEREWITH
(WHETHER BEFORE OR AFTER THE CLOSING DATE). Each Borrower and the Borrower Agent
acknowledges that it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and the other Financing Agreements to which it is
a party. No joint venture is created hereby or by the other Financing Agreements
or otherwise exists by virtue of the transactions contemplated hereby by the
Administrative Agent and Lenders or among the Credit Parties and the
Administrative Agent and Lenders.
12.31    Amendment and Restatement. On the date hereof (the “Restatement Date”),
the Original Term Loan Agreement shall be amended, restated and superseded by
this Agreement. The parties hereto acknowledge and agree that (a) this
Agreement, the Term Loan Notes delivered pursuant to this Agreement (the
“Restated Notes”) and the other Financing Agreements executed and delivered in
connection herewith do not constitute a novation, payment and reborrowing, or
termination of the “Liabilities” (as defined in the Original Term Loan
Agreement) under the Original Term Loan Agreement as in effect prior to the
Restatement Date; (b) such “Liabilities” are in all respects continuing with
only the terms thereof being amended and modified as provided in this Agreement;
(c) the Liens granted in the Collateral pursuant to the Financing Agreements
securing payment of such “Liabilities” are in all respects continuing and in
full force and effect and secure the payment of the Liabilities (as defined in
this Agreement) and are hereby fully ratified and affirmed; and (d) upon the
effectiveness of this Agreement all loans outstanding under the Original Term
Loan Agreement immediately before the effectiveness of this Agreement will be
part of the Loans hereunder on the terms and conditions set forth in this
Agreement. Without limitation on the foregoing, each of the Borrowers hereby
fully and unconditionally ratifies and affirms all of the Financing Agreements,
as amended, and agrees that all security interests granted to PrivateBank or the
Administrative Agent in the Collateral thereunder shall from and after the date
hereof secure all Liabilities hereunder but in favor of the Administrative Agent
for the ratable benefit of the Lenders

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and the Administrative Agent. Notwithstanding the modifications effected by this
Agreement of the representations, warranties and covenants of the Borrowers
contained in the Original Term Loan Agreement, each of the Borrowers
acknowledges and agrees that any choses in action or other rights created in
favor of PrivateBank or the Administrative Agent and its successors and assigns
arising out of the representations and warranties of the Borrowers contained in
or delivered (including representations and warranties delivered in connection
with the making of the loans or other extensions of credit thereunder) in
connection with the Original Term Loan Agreement, shall survive the execution
and delivery of this Agreement but in favor of the Lenders and the
Administrative Agent; provided, however, that it is understood and agreed that
the Borrowers’ monetary obligations under the Original Term Loan Agreement in
respect of the loans and letters of credit thereunder are evidenced by this
Agreement. All indemnification obligations of the Borrowers pursuant to the
Original Term Loan Agreement shall survive the amendment and restatement of the
Original Term Loan Agreement pursuant to this Agreement. On and after the
Restatement Date, (a) each reference in the Financing Agreements to the “Loan
Agreement”, “Loan and Security Agreement”, “thereunder”, “thereof” or similar
words referring to the Loan Agreement shall mean and be a reference to this
Agreement and (b) each reference in the Financing Agreements to a “Note” or
“Term Loan Note” shall mean and be a Term Loan Note as defined in this
Agreement.
13.    AGENCY.
Administrative Agent, Lenders and Borrower agree that, except for the rights
expressly granted to Borrower under Section 13.9 and Section 13.15 and
Borrower’s obligations pursuant to Section 13.14, Borrower shall not be a party
to the agreements contained in this Section 13, and shall have no obligations
under this Section 13. Without limitation of the foregoing, Administrative
Agent, Lenders and Borrower agree that in no event shall Borrower be required to
seek comment from, deliver notices to or otherwise deal with any Lender other
than Administrative Agent (except as otherwise specifically stated in this
Agreement), nor shall Borrower be required to make an independent investigation
of whether Administrative Agent has obtained any consents from the Lenders or as
may be required (it being agreed that all communications from Administrative
Agent may conclusively be deemed to be authorized by Lenders in accordance with
this Section 13). Borrower shall not have any benefits or rights as a third
party beneficiary of any term or condition contained in this Section 13.
13.1    Appointment and Authorization. Each Lender hereby irrevocably (subject
to Section 13.9) appoints, designates and authorizes Administrative Agent to
take such action on its behalf under the provisions of this Agreement and each
other Financing Agreement and to exercise such powers and perform such duties as
are expressly delegated to it by the terms of this Agreement or any other
Financing Agreement, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained elsewhere in
this Agreement or in any other Financing Agreement, Administrative Agent shall
not have any duty or responsibility except those expressly set forth herein, nor
shall Administrative Agent have or be deemed to have any fiduciary relationship
with any Lender or participant, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Financing Agreement or otherwise exist against
Administrative Agent. The duties of Administrative Agent shall be mechanical and
administrative in nature. Without limiting the generality of the

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foregoing sentence, the use of the term “agent” herein and in other Financing
Agreements with reference to Administrative Agent is not intended to connote any
fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.
13.2    Delegation of Duties. Administrative Agent may execute any of its duties
under this Agreement or any other Financing Agreement by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of legal counsel
and other consultants, independent public accountants or experts concerning all
matters pertaining to such duties. Administrative Agent shall not be responsible
for the negligence or misconduct of any agent or attorney-in-fact that it
selects in the absence of gross negligence or willful misconduct.
13.3    Exculpation of Administrative Agent. None of Administrative Agent nor
any of its directors, officers, employees, Affiliates or agents shall (a) be
liable to any Lender or any other Person for any action taken or omitted to be
taken by any of them under or in connection with this Agreement or any other
Financing Agreement or the transactions contemplated hereby (except to the
extent resulting from its own gross negligence or willful misconduct in
connection with its duties expressly set forth herein as determined by a final,
nonappealable judgment by a court of competent jurisdiction), or (b) be
responsible in any manner to any Lender or participant for any recital,
statement, representation or warranty made by Borrower or any Affiliate, or any
officer thereof, contained in this Agreement or in any other Financing
Agreement, or in any certificate, report, statement or other document referred
to or provided for in, or received by Administrative Agent under or in
connection with, this Agreement or any other Financing Agreement, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Financing Agreement (or the creation, perfection or
priority of any Lien or security interest therein), or for any failure of
Borrower or any other party to any Financing Agreement to perform its
obligations and Liabilities hereunder or thereunder, or be responsible for or
have any duty to ascertain or verify the satisfaction of any conditions
specified in this Agreement or any other Financing Agreement, except receipt of
items required to be delivered to Administrative Agent. Administrative Agent
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Financing Agreement, or to inspect
the properties, books or records of Borrower or its Affiliates.
13.4    Reliance by Administrative Agent. Administrative Agent shall be entitled
to rely, and shall be fully protected in relying, upon any writing,
communication, signature, resolution, representation, notice, consent,
certificate, electronic mail message, affidavit, letter, telegram, facsimile,
telex or telephone message, statement or other document or conversation believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons, and upon advice and statements of legal counsel
(including legal counsel to Borrower), independent accountants and other experts
selected by Administrative Agent. Administrative Agent shall be fully justified
in failing or refusing to take any action under this Agreement or any other
Financing Agreement unless it shall first receive such advice or concurrence of
the Required Lenders or such other number or percentage of Lenders as shall be
required elsewhere in this Agreement as it deems appropriate and, if it so
requests, confirmation from Lenders of their obligation to indemnify

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Administrative Agent against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action.
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Financing Agreement in
accordance with a request or consent of the Required Lenders or such other
number or percentage of Lenders as shall be required elsewhere in this Agreement
and such request and any action taken or failure to act pursuant thereto shall
be binding upon each Lender. For purposes of determining compliance with the
conditions specified in Section 5.1, each Lender that has signed this Agreement
shall be deemed to have consented to, approved or accepted or to be satisfied
with, each document or other matter required thereunder to be consented to or
approved by or acceptable or satisfactory to a Lender unless Administrative
Agent shall have received written notice from such Lender prior to the Closing
Date specifying its objection thereto.
13.5    Notice of Default. Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default except
with respect to defaults in the payment of principal, interest and fees required
to be paid to Administrative Agent for the account of the Lenders, unless
Administrative Agent shall have received written notice from a Lender or
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a “notice of default”. Administrative
Agent will notify Lenders of its receipt of any such notice. Administrative
Agent shall take such action with respect to such Default or Event of Default as
may be requested by the Required Lenders in accordance with Section 11.2;
provided that unless and until Administrative Agent has received any such
request, Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable or in the best interest of Lenders.
13.6    Credit Decision. Each Lender acknowledges that Administrative Agent has
not made any representation or warranty to it, and that no act by Administrative
Agent hereafter taken, including any consent and acceptance of any assignment or
review of the affairs of Borrower, shall be deemed to constitute any
representation or warranty by Administrative Agent to any Lender as to any
matter, including whether Administrative Agent has disclosed material
information in its possession. Each Lender represents to Administrative Agent
that it has, independently and without reliance upon Administrative Agent and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrower, and
made its own decision to enter into this Agreement and to extend credit to
Borrower hereunder. Each Lender also represents that it will, independently and
without reliance upon Administrative Agent and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Financing Agreements, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of Borrower. Except for notices, reports and other documents
expressly herein required to be furnished to Lenders by Administrative Agent,
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, prospects,
operations, property, financial or other condition or creditworthiness of
Borrower which may come into the possession of Administrative Agent.

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13.7    Indemnification. Whether or not the transactions contemplated hereby are
consummated, each Lender shall severally indemnify, defend and hold harmless
upon demand Administrative Agent and its directors, officers, employees,
Affiliates and agents (to the extent not reimbursed by or on behalf of Borrower
and without limiting the obligation of Borrower to do so), according to its
applicable Pro Rata Share, from and against any and all Indemnified Liabilities,
provided that no Lender shall be liable for any payment to any such Person of
any portion of the Indemnified Liabilities to the extent determined by a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from the applicable Person’s own gross negligence or willful misconduct. No
action taken in accordance with the directions of Required Lenders shall be
deemed to constitute gross negligence or willful misconduct for purposes of this
Section. Without limitation of the foregoing, each Lender shall reimburse
Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including, without limitation, reasonable attorneys’
fees and costs) incurred by Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Financing Agreement, or any document contemplated by or referred to
herein, to the extent that Administrative Agent is not reimbursed for such
expenses by or on behalf of Borrower. If any indemnity furnished to
Administrative Agent for any purpose shall, in the reasonable, good faith
opinion of Administrative Agent, be insufficient or become impaired,
Administrative Agent may call for additional reasonable indemnity and cease, or
not commence, to do the acts indemnified against even if so directed by Required
Lenders until such additional reasonable indemnity is furnished. The undertaking
in this Section shall survive repayment of the Loan and other Liabilities,
cancellation of any promissory notes, any foreclosure under, or modification,
release or discharge of, any or all of the Financing Agreements, termination of
this Agreement and the resignation or replacement of Administrative Agent.
13.8    Administrative Agent in Individual Capacity. PrivateBank and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with Borrower
and its Affiliates as though PrivateBank were not Administrative Agent hereunder
and without notice to or consent of any Lender. Each Lender acknowledges that,
pursuant to such activities, PrivateBank or its Affiliates may receive
information regarding Borrower or its Affiliates (including information that may
be subject to confidentiality obligations in favor of Borrower or such
Affiliates) and acknowledge that Administrative Agent shall be under no
obligation to provide such information to them. With respect to its portion of
the Loan, PrivateBank and its Affiliates shall have the same rights and powers
under this Agreement as any other Lender and may exercise the same as though
PrivateBank were not Administrative Agent, and the terms “Lender” and “Lenders”
include PrivateBank and its Affiliates, to the extent applicable, in their
individual capacities.
13.9    Successor Administrative Agent. Administrative Agent may resign as
Administrative Agent upon at least thirty (30) days’ notice to Lenders. If
Administrative Agent resigns under this Agreement, Required Lenders shall, with
(so long as no Default or Event of Default exists) the consent of Borrower
(which shall not be unreasonably withheld, conditioned or delayed), appoint from
among Lenders a successor agent for Lenders. Notwithstanding the

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immediately foregoing sentence, if no successor agent is appointed prior to the
effective date of the resignation of Administrative Agent, Administrative Agent
may appoint, after consulting with Lenders and Borrower, a successor agent from
among Lenders. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to and become vested with all the
rights, powers and duties of the retiring Administrative Agent and the term
“Administrative Agent” shall mean such successor agent, and the retiring
Administrative Agent’s appointment, powers and duties as Administrative Agent
shall be terminated. After any retiring Administrative Agent’s resignation
hereunder as Administrative Agent, the provisions of this Section 13 and
Sections 12.2 and 12.16 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this
Agreement. If no successor agent has accepted appointment as Administrative
Agent by the date which is thirty (30) days following a retiring Administrative
Agent’s notice of resignation, the retiring Administrative Agent’s resignation
shall nevertheless thereupon become effective and Lenders shall perform all of
the duties of Administrative Agent hereunder until such time, if any, as
Required Lenders appoint a successor agent as provided for above. The fees
payable by Borrower to a successor agent in its capacity as such agent shall be
the same as those payable to its predecessor unless otherwise agreed in writing
between Borrower and such successor.
13.10    Collateral Matters; Restriction on Lenders; Etc. Each Lender authorizes
and directs Administrative Agent to enter into the other Financing Agreements
for the benefit of Lenders. Each Lender hereby agrees that, except as otherwise
set forth herein, any action taken by Required Lenders in accordance with the
provisions of this Agreement or the other Financing Agreements, and the exercise
by the Required Lenders of the powers set forth herein or therein, together with
such other powers as are reasonably incidental thereto, shall be authorized and
binding upon all Lenders. Administrative Agent is hereby authorized on behalf of
all Lenders, without the necessity of any notice to or further consent from any
Lender, to take any action with respect to any Collateral and any of the other
collateral pursuant to Financing Agreements that may be necessary to perfect and
maintain perfected the Liens upon the Collateral and the other collateral
pursuant to the other Financing Agreements. Lenders irrevocably authorize
Administrative Agent, at its option and in its discretion, (a) to release any
Lien granted to or held by Administrative Agent under this Agreement and any
other Financing Agreement (i) upon Payment in Full; (ii) constituting property
sold or to be sold or disposed of, financed or refinanced, as part of or in
connection with any sale, disposition, financing or refinancing which is
expressly permitted by this Agreement or the Revolving Loan Agreement at any
time; or (iii) subject to Section 12.1, if approved, authorized or ratified in
writing by Required Lenders; or (b) to subordinate its interest in any
Collateral to any holder of a Lien on such Collateral which is expressly
permitted by this Agreement or the Revolving Loan Agreement at any time. Upon
request by Administrative Agent at any time, Lenders will promptly confirm in
writing Administrative Agent’s authority to release, or subordinate its interest
in, particular types or items of Collateral pursuant to this Section 13.10.
Administrative Agent and each Lender hereby appoint each other Lender as agent
for the purpose of perfecting Administrative Agent’s security interest in assets
and Collateral which, in accordance with the Uniform Commercial Code in any
applicable jurisdiction, can be perfected by possession or control. Should any
Lender (other than Administrative Agent) obtain possession or control of any
such assets or Collateral, such Lender shall promptly notify Administrative
Agent thereof in writing, and, promptly upon Administrative Agent’s written
request therefor, shall deliver such assets or Collateral to Administrative
Agent or

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in accordance with Administrative Agent’s instructions or transfer control to
Administrative Agent in accordance with Administrative Agent’s instructions.
Each Lender agrees that, except as otherwise expressly provided herein, it will
not have any right individually to enforce or seek to enforce this Agreement or
any Financing Agreement or to realize upon any Collateral for the Liabilities
unless instructed in writing to do so by Administrative Agent, it being
understood and agreed that such rights and remedies may be exercised only by
Administrative Agent. Each Lender agrees that it shall not, without the express
written consent of Administrative Agent, and shall, upon the written request of
Administrative Agent (to the extent it is lawfully entitled to do so), set off
against the Liabilities, any amounts owing by such Lender to a Credit Party or
any deposit accounts of any Credit Party now or hereafter maintained with such
Lender. Each of the Lenders further agrees that it shall not, unless
specifically requested to do so in writing by Administrative Agent, take or
cause to be taken, any action, including the commencement of any legal or
equitable proceedings to foreclose any loan or otherwise enforce any security
interest in any of the Collateral or to enforce all or any part of this
Agreement or the other Financing Agreements. All enforcement actions under this
Agreement and the other Financing Agreements against the Credit Parties or any
third party with respect to the Liabilities or the Collateral may only be taken
by Administrative Agent (at the direction of the Required Lenders or as
otherwise permitted in this Agreement) or by its agents at the direction of
Administrative Agent.
13.11    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
Borrower, Administrative Agent (irrespective of whether the principal of the
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 Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise:
(d)    to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loan, and all other Liabilities that
are owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of Lenders and Administrative Agent
(including any claim for the reasonable compensation, expenses, disbursements
and advances of Lenders and Administrative Agent and their respective agents and
attorneys and all other amounts due Lenders and Administrative Agent under this
Agreement) allowed in such judicial proceedings; and
(e)    to collect and receive any monies 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 Administrative Agent and
its agents and attorneys, and any other amounts due Administrative Agent under
this Agreement.

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Nothing contained herein 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 Liabilities
or the rights of any Lender or to authorize Administrative Agent to vote in
respect of the claim of any Lender in any such proceeding.
13.12    Other Agents; Arrangers and Managers. None of Lenders or other Persons
identified on the facing page or signature pages of this Agreement as, if
applicable, a “joint arranger,” “syndication agent,” “documentation agent,”
“co-agent,” “book manager,” “lead manager,” “joint lead lender”, “arranger,”
“lead arranger” or “co-arranger”, if any, shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other than,
in the case of such Lenders, those applicable to all Lenders as such. Without
limiting the foregoing, none of Lenders or other Persons so identified shall
have or be deemed to have any fiduciary relationship with any Lender. Each
Lender acknowledges that it has not relied, and will not rely, on Administrative
Agent, any of Lenders or other Persons so identified in deciding to enter into
this Agreement or in taking or not taking action hereunder.
13.13    Return of Payments. If Administrative Agent pays an amount to a Lender
under this Agreement in the belief or expectation that a related payment has
been or will be received by Administrative Agent from Borrower and such related
payment is not received by Administrative Agent, then Administrative Agent will
be entitled to recover such amount from such Lender on demand without setoff,
counterclaim or deduction of any kind, together with interest accruing on a
daily basis at the Federal Funds Rate (as defined below). If Administrative
Agent determines at any time that any amount received by Administrative Agent
under this Agreement must be returned to Borrower or paid to any other Person
pursuant to any insolvency law or otherwise, then, notwithstanding any other
term or condition of this Agreement or any other Financing Agreement,
Administrative Agent will not be required to distribute any portion thereof to
any Lender. In addition, each Lender will repay to Administrative Agent on
demand any portion of such amount that Administrative Agent has distributed to
such Lender, together with interest at such rate, if any, as Administrative
Agent is required to pay to Borrower or such other Person, without setoff,
counterclaim or deduction of any kind. As used herein, the term “Federal Funds
Rate” means for any day, 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; provided, Administrative Agent’s determination
of such rate shall be binding and conclusive absent manifest error.
13.14    Defaulting Lender. Notwithstanding any provision of this Agreement to
the contrary, if any Lender becomes a Defaulting Lender, then the following
provisions shall apply for so long as such Lender is a Defaulting Lender:
(a)    Any amount payable to a Defaulting Lender hereunder (whether on account
of principal, interest, fees or otherwise) shall, in lieu of being distributed
to such Defaulting

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Lender, be retained by Administrative Agent in a segregated account and, subject
to any applicable requirements of law, be applied at such time or times as may
be determined by Administrative Agent (i) first, to the payment of any amounts
owing by such Defaulting Lender to Administrative Agent hereunder, (ii) second,
if so determined by Administrative Agent and Borrower, held in such account as
cash collateral for future funding obligations (if any) of the Defaulting Lender
under this Agreement, (iii) third, pro rata, to the payment of any amounts owing
to Borrower, Administrative Agent or the Lenders as a result of any judgment of
a court of competent jurisdiction obtained by Borrower, Administrative Agent or
any Lender against such Defaulting Lender as a result of such Defaulting
Lender’s breach of its obligations under this Agreement, and (vi) fourth, to
such Defaulting Lender or as otherwise directed by a court of competent
jurisdiction; provided, that if such payment is (x) a prepayment of the
principal amount of any Loans and (y) made at a time when the conditions set
forth in Section 5.1 are satisfied, such payment shall be applied solely to
prepay the Loans of all Lenders that are not Defaulting Lenders pro rata prior
to being applied to the prepayment of any Loans of any Defaulting Lender.
(b)    Notwithstanding anything set forth herein to the contrary, a Defaulting
Lender shall not have any voting or consent rights under or with respect to this
Agreement or any other Financing Agreement or constitute a “Lender” (or be
included in the calculation of “Required Lenders” hereunder) for any voting or
consent rights under or with respect to this Agreement or any other Financing
Agreement except with respect to items which require the vote or consent of all
Lenders or all affected Lenders, and no Defaulting Lender shall have any other
right to approve or disapprove any amendment, waiver, consent or any other
action the Lenders or the Required Lenders have taken or may take hereunder
(including any consent to any amendment or waiver pursuant to Section 12.1),
provided that any waiver, amendment or modification requiring the consent of all
Lenders or each directly affected Lender which affects such Defaulting Lender
differently than other affected Lenders shall require the consent of such
Defaulting Lender.
(c)    The failure of any Defaulting Lender to make any Loan, advance or any
payment required by it hereunder shall not relieve any other Lender of its
obligations to make such Loan, advance or payment, but neither any Lender nor
Administrative Agent shall be responsible for the failure of any Defaulting
Lender to make a Loan, advance or make any other payment required hereunder.
At Borrower’s written request, Administrative Agent or a Person reasonably
acceptable to Administrative Agent shall have the right with Administrative
Agent’s written consent and in Administrative Agent’s sole discretion (but
without no obligation whatsoever on Administrative Agent) to purchase from any
Defaulting Lender, and each Defaulting Lender agrees that it shall, at
Administrative Agent’s written request, promptly sell and assign to
Administrative Agent or such Person, all of the lending commitments and
commitment interests of that Defaulting Lender for an amount equal to the
principal balance of all Loans held by such Defaulting Lender and all accrued
interest and fees with respect thereto through the date of sale, such purchase
and sale to be consummated (if at all upon Administrative Agent’s election)
pursuant to an executed Assignment Agreement.
13.14    [Intentionally Omitted].

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13.15    Replacement of Certain Lenders.
(a)    Each of the following shall constitute a “Replacement Event”:
(i)    if in connection with any proposed change, waiver, discharge or
termination of or to any of the provisions of this Agreement and/or any
Financing Agreement as contemplated by Section 12.1, the consent of each Lender
or each affected Lender, as applicable, is required and the consent of the
Required Lenders at such time is obtained but the consent of one or more of such
other Lenders (other than Administrative Agent) whose consent is required is not
obtained (each such other Lender, a “Non-Consenting Lender”);
(ii)    if any Lender (other than Administrative Agent) is a Defaulting Lender;
or
(iii)    if any Lender (other than Administrative Agent) requests compensation
under Section 3.1 and the condition giving rise to such compensation still
exists (each such Lender, an “Affected Lender”).
(b)    For so long as any Replacement Event exists, the Borrower may seek one or
more Assignees eligible under Section 12.15, for clarification, with the prior
written consent of the Administrative Agent (each, a “Replacement Lender”) at
Borrower’s sole cost and expense to purchase the affected Loans and Commitments
of the Non-Consenting Lender, Defaulting Lender or Affected Lender, as the case
may be (such Lender, the “Replaced Lender”). Such purchase may be made, in whole
or in part (subject to the minimum amount requirements in Section 12.15 and a
requirement that the Replacement Lender assume a portion of the Commitment of
the Replaced Lender that corresponds to the purchased portion of the Loans of
such Replaced Lender), at an aggregate price no less than the outstanding
principal amount of the purchased Loans plus accrued interest with respect
thereto. In such case, the Borrower, the Administrative Agent, the Replaced
Lender and each Replacement Lender shall execute and deliver (at Borrower’s sole
cost and expense) an appropriately completed Assignment and Assumption pursuant
to Section 12.15 to effect the assignment of rights to, and the assumption of
obligations by, each Replacement Lender; provided that any fees required to be
paid by Section 12.15 in connection with such assignment shall be paid by the
Borrower or the Replacement Lender. In the case of each replacement of a Lender
(other than a Defaulting Lender), the Borrower shall pay such Replaced Lender,
any commitment fees and other amounts then due and owing to such Lender
(including any additional amounts owing under Section 3.1) prior to such
replacement.
(c)    If a Replaced Lender does not execute and deliver to the Administrative
Agent a duly completed Assignment and Assumption and/or any other reasonable
documentation necessary to reflect such replacement within a period of time
deemed reasonable by the Administrative Agent after the later of (x) the date on
which each Replacement Lender executes and delivers such Assignment and
Assumption and/or such other reasonable documentation and (y) the date as of
which all obligations of the Borrower owing to the Replaced Lender relating to
the Loans and participations so assigned have been paid in full by each
Replacement Lender to such Replaced Lender, then such Replaced Lender shall be
deemed to have executed and delivered such Assignment and Assumption

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and/or such other documentation as of such date and the Borrower shall be
entitled (but not obligated) to execute and deliver such Assignment and
Assumption and/or such other documentation on behalf of such Replaced Lender.
(d)    Notwithstanding anything herein, neither the Administrative Agent nor any
Lender shall have any obligation to the Borrower to find a Replacement Lender.
14.    JURISDICTION; JURY TRIAL WAIVER.
14.1    SUBMISSION TO JURISDICTION; WAIVER OF VENUE. THE BORROWER HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(a)    SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT AND THE OTHER FINANCING AGREEMENTS TO WHICH IT IS A
PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO
THE EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS, THE
COURTS OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ILLINOIS AND
APPELLATE COURTS FROM ANY THEREOF, LOCATED IN COOK COUNTY;
(b)    CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS
AND WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW IN CONNECTION WITH ANY SUCH
ACTION OR PROCEEDING (i) ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM
THE SAME, (ii) THE RIGHT TO ASSERT OR IMPOSE ANY CLAIM, NONCOMPULSORY SET-OFF,
COUNTERCLAIM OR CROSS-CLAIM IN RESPECT THEREOF IN SUCH PROCEEDING; PROVIDED,
HOWEVER, THIS WAIVER DOES NOT PRECLUDE THE RIGHT TO ASSERT A DEFENSE IN SUCH
ACTION OR PROCEEDING OR TO ASSERT OR IMPOSE ANY CLAIM, COUNTERCLAIM OR
CROSS-CLAIM WHICH THE BORROWER WISHES TO PURSUE IN A SEPARATE PROCEEDING AT ITS
SOLE COST AND EXPENSE, AND (iii) ALL STATUTES OF LIMITATIONS WHICH MAY BE
RELEVANT THERETO; AND
(c)    AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE
EFFECTED BY MAILING A COPY THEREOF BY CERTIFIED MAIL (OR ANY SUBSTANTIALLY
SIMILAR FORM OF MAIL), POSTAGE PREPAID, RETURN RECEIPT REQUESTED, TO THE
BORROWER AT ITS ADDRESS SET FORTH ABOVE OR AT SUCH OTHER ADDRESS OF WHICH THE
ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO. THE BORROWER
AGREES THAT SUCH SERVICE, TO THE FULLEST EXTENT PERMITTED BY LAW (i) SHALL BE
DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE BORROWER IN ANY
SUIT, ACTION OR PROCEEDING, AND (ii) SHALL BE TAKEN AND HELD TO BE VALID
PERSONAL SERVICE UPON AND PERSONAL DELIVERY TO THE BORROWER. SOLELY TO THE
EXTENT PROVIDED BY APPLICABLE LAW, SHOULD THE BORROWER, AFTER BEING SERVED, FAIL
TO APPEAR OR ANSWER TO ANY SUMMONS, COMPLAINT,

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PROCESS OR PAPERS SO SERVED WITHIN THE NUMBER OF DAYS PRESCRIBED BY LAW AFTER
THE DELIVERY OR MAILING THEREOF, THE BORROWER SHALL BE DEEMED IN DEFAULT AND AN
ORDER AND/OR JUDGMENT MAY BE ENTERED BY THE COURT AGAINST THE BORROWER AS
DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS.
(d)    NOTHING HEREIN SHALL AFFECT THE ADMINISTRATIVE AGENT’S OR ANY LENDER’S
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR LIMIT THE
ADMINISTRATIVE AGENT’S OR ANY LENDER’S RIGHT TO BRING PROCEEDINGS AGAINST THE
BORROWER OR ITS PROPERTY IN ANY COURT OR ANY OTHER JURISDICTION.
14.2    GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ALL RESPECTS IN
ACCORDANCE WITH, AND ENFORCED AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
14.3    JURY TRIAL. THE BORROWER, ADMINISTRATIVE AGENT AND THE LENDERS HEREBY
IRREVOCABLY AND KNOWINGLY WAIVE (TO THE FULLEST EXTENT PERMITTED BY LAW) ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING (INCLUDING, WITHOUT
LIMITATION, ANY COUNTERCLAIM) ARISING OUT OF THIS AGREEMENT, THE FINANCING
AGREEMENTS OR ANY OTHER AGREEMENTS OR TRANSACTIONS RELATED HERETO OR THERETO,
INCLUDING, WITHOUT LIMITATION, ANY ACTION OR PROCEEDING (A) TO ENFORCE OR DEFEND
ANY RIGHTS UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH, OR (B) ARISING FROM ANY DISPUTE OR CONTROVERSY IN
CONNECTION WITH OR RELATED TO THIS AGREEMENT AND THE FINANCING AGREEMENTS. THE
ADMINISTRATIVE AGENT, THE LENDERS AND THE BORROWER AGREE THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT A JURY.
[Signature Page Follows]

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IN WITNESS WHEREOF, this Amended and Restated Term Loan and Security Agreement
has been duly executed as of the day and year first above written.
BORROWER:
DIVERSICARE AFTON OAKS, LLC
DIVERSICARE BRIARCLIFF, LLC
DIVERSICARE CHISOLM, LLC
DIVERSICARE HARTFORD, LLC
BY:
DIVERSICARE LEASING CORP., its sole member
 
By:
/s/ James R. McKnight, Jr.
 
Name: James R. McKnight, Jr.
 
Its: Executive Vice President &
Chief Financial Officer
DIVERSICARE OF CHANUTE, LLC
DIVERSICARE OF COUNCIL GROVE, LLC
DIVERSICARE OF HAYSVILLE, LLC
DIVERSICARE OF SEDGWICK, LLC
DIVERSICARE OF LARNED, LLC
BY:
Diversicare Kansas, LLC,
its sole member

 
By:
/s/ James R. McKnight, Jr.
 
Name: James R. McKnight, Jr.
 
Its: Executive Vice President &
Chief Financial Officer
DIVERSICARE WINDSOR HOUSE, LLC
DIVERSICARE HILLCREST, LLC
DIVERSICARE LAMPASAS, LLC
DIVERSICARE YORKTOWN, LLC
BY:
DIVERSICARE LEASING CORP., its sole member
 
By:
/s/ James R. McKnight, Jr.
 
Name: James R. McKnight, Jr.
 
Its: Executive Vice President &
Chief Financial Officer

DIVERSICARE HOLDING COMPANY, LLC

By: /s/ James R. McKnight, Jr.        
Name: James R. McKnight, Jr.
Its:     Executive Vice President &

Amended and Restated Term Loan and Security Agreement

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

Chief Financial Officer

DIVERSICARE KANSAS, LLC

By: /s/ James R. McKnight, Jr.        
Name: James R. McKnight, Jr.
Its:     Executive Vice President &
     Chief Financial Officer

Amended and Restated Term Loan and Security Agreement

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

Acknowledged and Agreed
solely for purposes of Sections 8.9 and 9.12 hereof:
DIVERSICARE HEALTHCARE SERVICES, INC. (F/K/A ADVOCAT INC.)
By:
/s/ Kelly J. Gill
 
Name: Kelly J. Gill
 
Its: President and Chief Executive
          Officer
 
 

Amended and Restated Term Loan and Security Agreement

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

ADMINISTRATIVE AGENT:
THE PRIVATEBANK AND TRUST COMPANY, in its capacity as administrative agent
By:
/s/ Adam D. Panos
 
Name: Adam D. Panos
 
Its: Managing Director

Amended and Restated Term Loan and Security Agreement

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

LENDER:
THE PRIVATEBANK AND TRUST COMPANY
By:
/s/ Adam D. Panos
 
Name: Adam D. Panos
 
Its: Managing Director

Amended and Restated Term Loan and Security Agreement

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

LENDER:
BANKERS TRUST COMPANY
By:
/s/ Jon M. Doll
 
Name: Jon M. Doll
 
Its: Vice President

Amended and Restated Term Loan and Security Agreement

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

LENDER:
BOKF, NA D/B/A BANK OF OKLAHOMA
By:
/s/ Ryan Kirk
 
Name: Ryan Kirk
 
Its: Assistant Vice President

Amended and Restated Term Loan and Security Agreement

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

LENDER:
CIT FINANCE LLC
By:
/s/ William Douglas
 
Name: William Douglas
 
Its: Managing Director

Amended and Restated Term Loan and Security Agreement

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

LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 1
Borrowers
Schedule 1.1(a)
Facilities
Schedule 1.1(b)
Real Property
Schedule 7.8
Other Names
Schedule 7.12
Organizational Chart
Schedule 7.13
Litigation
Schedule 7.17
Environmental Matters
Schedule 7.26
Medicare and Medicaid Penalties
Schedule 7.33
Capitalization
Schedule 9.3
Requirements for Subsidiary Formation
Schedule 9.6
Released Collateral Information

EXHIBITS
Exhibit A
Form of Term Loan Note
Exhibit B
Form of Assignment Agreement
Exhibit C
Permitted Acquisition
Exhibit D
Environmental Work
Exhibit E
Required Repairs (per Section 2.19)

ANNEX
Annex A
Lenders, Pro Rata Shares/Dollar Allocations, and Notice Information

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

SCHEDULE 1
AFFILIATED REVOLVING BORROWERS
Name
State of Incorporation or Formation
Principal Place of Business and Chief Executive Office
Advocat Ancillary Services, Inc.
Tennessee corporation
1621 Galleria Blvd., Brentwood, TN 37027
Advocat Finance, Inc.
Delaware corporation
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Management Services Co.
Tennessee corporation
1621 Galleria Blvd., Brentwood, TN 37027
Advocat Distribution Services, Inc.
Tennessee corporation
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Assisted Living Services, Inc.
Tennessee corporation
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Assisted Living Services NC, LLC
Tennessee limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Leasing Corp.
Tennessee corporation
1621 Galleria Blvd., Brentwood, TN 37027
Sterling Health Care Management, Inc.
Kentucky corporation
1621 Galleria Blvd., Brentwood, TN 37027
Senior Care Cedar Hills, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Senior Care Golfcrest, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Senior Care Golfview, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Senior Care Florida Leasing, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Senior Care Southern Pines, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Afton Oaks, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Assisted Living Services NC I, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Assisted Living Services NC II, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Briarcliff, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Chisolm, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Hartford, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Hillcrest, LLC,
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027

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

Name
State of Incorporation or Formation
Principal Place of Business and Chief Executive Office
Diversicare Lampasas, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Pinedale, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Windsor House, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Yorktown, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Ballinger, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Doctors, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Estates, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Humble, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Katy, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Normandy Terrace, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Texas I, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Treemont, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Rose Terrace, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Paris, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Therapy Services, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare of Chanute, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare of Council Grove, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare of Haysville, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare of Sedgwick, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare of Larned, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Highlands, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027
Diversicare Holding Company, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027

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

Name
State of Incorporation or Formation
Principal Place of Business and Chief Executive Office
Diversicare Kansas, LLC
Delaware limited liability company
1621 Galleria Blvd., Brentwood, TN 37027

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

Schedule 9.3
(Requirements for Subsidiary Formation)
(a) the due execution of a joinder by such subsidiary and the other Borrowers to
this Agreement and each other applicable Financing Agreement, in form and
substance reasonably satisfactory to Administrative Agent (“Joinders”) shall be
delivered to the Administrative Agent, including pursuant to which such
subsidiary shall then absolutely and unconditionally (i) join as and become a
party to this Agreement as a Borrower hereunder and under each other Financing
Agreement to which a Borrower is a party, (ii) assume, as a joint and several
obligor hereunder, all of the obligations, liabilities and indemnities of
Borrower under this Agreement (including the Liabilities) and the Financing
Agreements to which a Borrower is a party, (iii) covenant and agree to be bound
by and adhere to all of the terms, representations, warranties, covenants,
waivers, releases, agreements and conditions of or respecting Borrower with
respect to this Agreement and the other Financing Agreements to which a Borrower
is a party, and (iv) grant in favor of Administrative Agent (for benefit of
Lenders and itself) a present first priority perfected security interest and
Lien in all of such subsidiary’s Collateral (other than Permitted Liens);
(b) the business of such subsidiary is and will be engaged in substantially the
same line of business or a related business engaged in by the other Borrowers at
such time; (c) immediately before and immediately after giving effect to the
formation of such subsidiary, no Default or Event of Default shall exist or be
reasonably likely to occur as a result of such subsidiary formation; (d) unless
otherwise agreed in writing by Administrative Agent, the equity of such
subsidiary shall be pledged to Administrative Agent pursuant to a pledge
agreement in form and substance substantially similar to the Pledge Agreement,
or if applicable, the applicable Pledge Agreement shall be amended, to provide
for the first priority perfected pledge of the equity of such subsidiary (and
the original stock certificate regarding such subsidiary shall be delivered to
Administrative Agent, together with an applicable assignment separate from
certificate, if such Stock is certificated, and in any case, the filing of an
applicable UCC Financing Statement); (e) all of the representations and
warranties of the Borrowers (and with respect to such subsidiary, except as
otherwise noted in the Joinder) contained in this Agreement shall be true and
correct in all material respects (without duplication of materiality); (f) a
copy of the resolutions of the Board of Directors or other governing body of
such subsidiary authorizing or ratifying the execution, delivery and performance
by such subsidiary of the Joinders, this Agreement and the Financing Agreements
to which such subsidiary is a party shall be delivered to the Administrative
Agent; (g) a written legal opinion of Borrower’s counsel with respect to such
subsidiary, in form and substance as reasonably requested by Administrative
Agent, shall be delivered to the Administrative Agent; (h) certified copies of
such subsidiary’s organizational documents from the secretary of state of the
state of organization, together with applicable good standing certificate(s),
operating agreement and/or bylaws, shall be furnished to the Administrative
Agent; (i) a UCC Financing Statement naming such subsidiary as debtor and the
Administrative Agent as secured party shall be filed with the secretary of state
of the applicable state of organization for such subsidiary; (j) UCC tax, lien,
bankruptcy, pending suit and judgment searches for such subsidiary shall be
furnished to the Administrative Agent, if requested; (k) a certificate from the
insurance carrier of such subsidiary evidencing that all required insurance
coverage for such subsidiary as a Borrower is in effect, designating the
Administrative Agent as “lender’s loss payee”

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

and an additional insured thereunder, in form and substance reasonably
satisfactory to Administrative Agent; and (l) any other applicable Financing
Agreement (including, without limitation, Mortgage) or other instrument,
document, agreement, opinion or certificate shall be duly executed and delivered
to the Administrative Agent as it may reasonably require in its reasonable
discretion in connection with the creation of such subsidiary.

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EXHIBIT A
FORM OF TERM LOAN NOTE
See attached.

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EXHIBIT B
FORM OF ASSIGNMENT AGREEMENT
See attached.

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EXHIBIT C
PERMITTED ACQUISITION

With respect to any Permitted Acquisition to be consummated after the Closing
Date, each of the following conditions precedent shall be satisfied, in form and
substance (and in results) satisfactory to the Administrative Agent and the
Required Lenders:

(a)    immediately before and after giving effect to such Permitted Acquisition,
no Default or Event of Default shall exist, or be reasonably likely to occur, as
a result of such Permitted Acquisition;

(b)    the business, division, property or assets to be acquired are for use, or
the Person to be acquired is engaged, in substantially the same line of business
or a related business engaged in by Borrower on the Closing Date;

(c)    reasonably prior to such Acquisition, Administrative Agent shall have
received true, complete copies of each material document, instrument and
agreement contemplated to be executed in connection with such Acquisition
(including all Acquisition Documents and the disclosure schedules thereto),
together with all appraisals, surveys, environmental testing results and
reports, title commitments, property condition reports, applicable documents of
record, UCC, tax, judgment, bankruptcy, pending suit and lien search reports
(from all reasonably required jurisdictions and under all corporate and trade
names), lien and ownership searches from the U.S. Patent and Trademark Office
and U.S. Copyright Office (if applicable), and payoff letters, lien release
letters, UCC termination statements and other documents as Administrative Agent
may require to evidence the existence and termination of Liens on the assets or
business to be acquired (and fully-executed or conformed copies of such
documents when final), except only to the extent such Liens constitute Permitted
Liens;

(d)    as soon as possible but in no event less than fifteen (15) Business Days
prior to such Acquisition, Administrative Agent shall have received an
acquisition summary with respect to the property, Person and/or business or
division to be acquired, such summary to include a reasonably detailed
description thereof (including financial information) and operating results
(including financial statements for the most recent twelve (12) month period for
which they are available and as otherwise available), the terms and conditions,
including economic terms, and anticipated closing date, of the proposed
Acquisition, and a calculation of pro forma EBITDA relating thereto (provided by
a third party experienced in such matters acceptable to Administrative Agent in
the event of any Acquisition with purchase consideration of $2,500,000 or more),
with adjustments thereto to be acceptable to Administrative Agent and subject to
GAAP (and verified by a third party experienced in such matters in the event of
any Acquisition

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

with purchase consideration of $2,500,000 or more), in each case at Borrower’s
sole cost and expense; Administrative Agent shall have approved prior to
consummation of any contemplated Acquisition such computation of pro forma
EBITDA;

(e)    the operations and business of the acquired Person (if applicable) in the
Acquisition must have a positive adjusted EBITDA as reasonably determined by
Administrative Agent;

(f)    receipt of due diligence with respect to environmental, insurance and
management background checks; provided, all such due diligence must be performed
by parties reasonably acceptable to Administrative Agent and the results thereof
may not have findings that could be deemed to have a Material Adverse Effect;
provided, further, Administrative Agent shall have completed its own due
diligence with respect to the applicable/target/property and the results thereof
shall be reasonably satisfactory to Administrative Agent;

(g)    in the case of an Acquisition of any Person (which must be a business in
the United States), the applicable governing body of such Person has approved
such Acquisition, and such transaction shall in any event not be deemed to be,
as is customarily known as, a “hostile takeover” or “tender offer”;

(h)    simultaneously with the closing of such Acquisition, any and all
additional documents, opinions, joinders, affidavits, instruments, notes,
amendments, modifications, security agreements, pledge agreements, and other
Financing Agreements reasonably required by Administrative Agent and Required
Lenders shall be duly executed and delivered by Borrower, Guarantor and their
applicable Affiliates;

(i)    any and all indebtedness of any kind incurred by Borrower from a third
party in making such Acquisition is made expressly subordinate to the
Liabilities pursuant to a Subordination Agreement duly executed and delivered by
all applicable parties in connection with such Acquisition in favor of and
reasonably acceptable to Administrative Agent;

(j)    all representations and warranties made by Borrower in this Agreement and
in the Acquisition Documents shall be true and correct as of the date made
therein (except where the failure to do so could not reasonably be expected to
have an adverse effect on such Acquisition or any portion thereof or a Material
Adverse Effect), and to the best of Borrower’s knowledge, as of such closing
date, and except as disclosed to Administrative Agent in writing, all
representations made by the applicable seller/target in such Acquisition
Documents, shall be true and correct in all material respects (without the
duplication of materiality that may be set forth therein); and none of such
representations and warranties are inconsistent in any material respect with the
representations and warranties of Borrower made in this Agreement or in any
other Financing Agreement;

(k)    all consents and approvals of, and filings and registrations with, and
all other actions by, any Governmental Authority and (except where the failure
to obtain or make the same could not reasonably be expected to have an adverse
effect on such Acquisition or any portion thereof or a Material Adverse Effect)
each other Person required in order to make or consummate such

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Acquisition will have been obtained, given, filed or taken and are or will be in
full force and effect at such time;

(l)    Borrower shall not, directly or indirectly, have any obligation or
liability to any Person in respect of any finder’s, brokers or similar fee in
connection with such Acquisition that will not be fully paid concurrent with the
closing of such Acquisition;

(m)    resolutions, certified organization documents, good standing
certificates, secretary’s certificates, landlord waivers, insurance certificates
(each designating Lender as “lender’s loss payee” and additional insured
thereunder, with required endorsements), and related certificates and documents
customarily required by Administrative Agent in connection with such type of
transaction as the contemplated Acquisition (similar to those required pursuant
to Section 5 hereof) shall be duly executed and delivered to Administrative
Agent;

(n)    immediately prior to and after giving effect to such Acquisition,
Borrower must be in pro forma compliance with the financial ratios contained in
this Agreement;

(o)    such contemplated Acquisition does not result in a Change of Control;

(p)    the Acquisition closes in accordance with the terms of the applicable
Acquisition Agreement and the other relevant Acquisition Documents and in
accordance in all material respects with all applicable laws;

(q)    Administrative Agent shall have received a certificate signed on behalf
of Borrower by a Duly Authorized Officer and dated the date of the contemplated
Acquisition certifying satisfaction of each of the conditions precedent
specified in this Exhibit;

(r)    payment by Borrower of the reasonable fees and out-of-pocket costs and
expenses of counsel to Administrative Agent in connection with such Acquisition
and the items identified in this Exhibit;

(s)    Borrower duly executes and delivers to Administrative Agent such other
instruments, certificates, schedules, exhibits, opinions, affidavits,
amendments, instruments, agreements and documents reasonably required by
Administrative Agent in connection with such contemplated Acquisition; and

(t)    such other conditions precedent as reasonably required by Administrative
Agent or its legal counsel in connection with such contemplated Acquisition.

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EXHIBIT D
ENVIRONMENTAL WORK
Facility
Recommendation

We currently do not support nested tables...

Transformer – Three out-of-service pole transformers are stored in a cabinet
adjacent to the pad-mounted transformer. The pad-mounted transformer has been
reported to be leaking. The out-of-service transformer should be recycled or
disposed and the leaking pad-mounted transformer should be repaired or replace.
Within 60 days following the Closing Date, the Borrower shall provide to the
Administrative Agent documentation that this issue has been satisfactorily
addressed.

We currently do not support nested tables...
Emergency Generator – Stained soils in the immediate vicinity of the emergency
generator appear to be a result of leaking generator equipment and pumping
system. The stained soil should be removed and disposed of in accordance with
local regulatory requirements. The emergency generator should be inspected and
repaired. The Borrower shall provide to the Administrative Agent documentation
that this issue has been satisfactorily addressed within 60 days following the
Closing Date.

We currently do not support nested tables...
Mold – A 2-square-foot area of suspect mold was observed on the ceiling in Room
5, and a 25-square-foot area was observed in the water heater closet. Within 60
days following the Closing Date, the Borrower shall provide to the
Administrative Agent documentation that the suspect mold has been removed and
the source of moisture has been eliminated.

We currently do not support nested tables...
Suspect Mold – Two areas of suspect mold were observed in the attic duct work.
The areas were approximately 10-square-foot and 20-square-foot in size.
Within 60 days following the Closing Date, the Borrower shall provide to the
Administrative Agent documentation that the areas affected by suspect mold have
been cleaned and the source of moisture has been eliminated.

We currently do not support nested tables...
Radon – The facility is located in Zone 1 for radon (>4 pCi/L). Within 60 days
following the Closing Date, site-specific testing is required. The Borrower
shall provide the Administrative Agent documentation with the test results.
Further action may be required pending test results in the Administrative
Agent’s reasonable determination.

We currently do not support nested tables...
Transformer – Minor staining was observed around the base of a pad-mounted
electrical transformer. The staining should be reported to the public utility
that owns the unit. Within 60 days following the Closing Date, the Borrower
shall provide to the Administrative Agent documentation that this issue has been
reported to the public utility.

Afton Oaks, Chisolm Trail, Council Grove, Lampas, Chanute, Haysville, Larned,
Windsor and Yorktown
O&M plans for ACM’s and LBP. Within 60 days following the Closing Date, the
Borrower shall provide to the Administrative Agent satisfactory documentation.

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EXHIBIT E
REQUIRED REPAIRS

 
 
 
 
 
 
 
Portfolio PCA - Summary
 
Property Name
Property Address
City
State
Immediate
Repairs
Immediate
Repair Items
Short Term Repairs
Short Term Repair Items
 
Hillcrest Manor Nursing and Rehab
208 Maple Street
Luling
Texas
$ -
 
$3,326
ADA
 
Lampasas Nursing & Rehab
611 North Broad
Lampasas
Texas
$3,000
Electric Panel
$318
ADA
 
Yorktown Manor Nursing & Rehab
670 West 4th Street
Yorktown
Texas
$ -
 
$14,026
Asphalt
 
Windsor House of Huntsville
4411 McAlister Drive
Huntsville
Alabama
$14,450
Moisture Intrusion
$22,241
Asphalt
 
Hartford Health Care
217 Toro Road
Hartford
Alabama
$ -
 
$2,326
ADA
 
Chisolm Trail Nursing & Rehab
107 North Medina Street
Lockhart
Texas
$3,000
 
$4,481
ADA
 
Afton Oaks Nursing & Rehabilitation
7514 Kingsley
Houston
Texas
$10,000
Electric Panel
$3,880
ADA
 
Briarcliff Health Care Center
100 Elmhurst Drive
Oak Ridge
Tennessee
$1,200
 
$1,487
ADA
 
Council Grove Health Care Center
400 Sunset Drive
Council Grove
Kansas
$ -
 
$302,050
Replace wood and metal windows, tear-off and replace roofing with EPDM, upgrade
galv. pipe with copper, upgrade cabiners at NS. Med. and soils storage rooms
 
Larned Health Care Center
1114 West 11th Street
Larned
Kansas
$ -
 
$265,700
Replace exterior walls shake siding and paint entire building, upgrade medicine
storage closet, soiled linen, replace remaining heal/cool units
 

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

 
 
 
 
 
 
 
Chanute Health Care Center
530 West 14th Street
Chanute
Kansas
$3,500
 
$160,400
Replace areas of concrete with cracking, regrade gravel, ADA van-stall striping,
new carpeting, upgrade lighting, upgrade emergency call systems
 
Haysville Health Care Center
215 North Lamar Avenue
Haysville
Kansas
$92,172
 
$477,750
Sealcoat paving, ADA van-stall striping, slab repair foundation and under pin
footing, repair roof with leaks. Per Spectrum Contracting Services' inspection
report dated 1/21/13, the total budget cost for necessary structural repairs for
Haysville Health Care Center is $92,171.75.
 

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

 
 
 
 
 
 
 
Sedgwick Health Care Center
712 North Monroe Avenue
Sedgwick
Kansas
$545,316
Stabilize foundation settling with underpinning foundation to proper bearing
depth and mud jack underneath the floor slabs to correct cracking and level
$145,560
Repair damaged brick veneer of exterior walls, replace VCT floor of units,
replace nurse desk. Per Spectrum Contracting Services' inspection report dated
1/21/13, the total budget cost for necessary structural repairs for Sedgwick
Health Care Center is $420,916. Terracon Consultants completed a geotechnical
investigation and found the following: the subsurface soils are active and prone
to volume change with variations in moisture content, repairs to the building
could include underpinning the existing footings or supporting it on steel
helical piles, the grading of the exposed ground should be adjusted to provide
effective drainage away from the building, close monitoring of the construction
operations will be critical in achieving the design subgrade and foundation
support
 
Totals
$672,638
 
$1,403,545
 
 

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ANNEX A
(Lenders, Pro Rata Shares/Dollar Allocations, and Notice Information)
Lender
Contact Information
Pro Rata Shares
The PrivateBank and
Trust Company
120 South LaSalle Street
Chicago, IL 60603
Attn.: Adam D. Panos
Managing Director
Tel.: (312) 564-1278
Fax: (312) 683-0446
Dollar Allocation:
$21,115,384.62
46.153846150%
Bankers Trust Company
453 7th Street
Des Moines, IA 50304-0897
Attn.: Jon M. Doll
Vice President
Tel.: (515) 245-2837
Fax: (515) 245-5216
Dollar Allocation:
$8,653,846.15

19.230769230%
CIT Finance LLC
30 South Wacker Drive
Suite 2900
Chicago, IL 60606
Attn.: James Harper
Vice President
Tel.: (312) 906-5793
Fax: (312) 906-5820
Dollar Allocation:
$9,692,307.69

21.538461540%
 
 
 

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

BOKF, NA d/b/a Bank of Oklahoma
One Williams Center, 8th Floor
Tulsa, OK 74172
Attn.: Ryan Kirk
Assistant Vice President
Tel.: (918) 588-6743
Fax: (918) 280-3368

Dollar Allocation:
$5,538,461.54
12.307692310%