EXHIBIT 10.2



















TERM LOAN AND NOTE PURCHASE AGREEMENT

among

SUN HEALTHCARE GROUP, INC.andEACH OTHER PERSON LISTED ON SCHEDULE 1A HERETO,Borrowers

U.S. BANK NATIONAL ASSOCIATION,Administrative Agent

and

THE LENDERS AND PURCHASERS NAMED HEREIN,Holders

$20,000,000 Term Loan
$23,675,000 Stated Principal Amount of Discount Notes

Dated as of February 28, 2002

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TABLE OF CONTENTS

|          |                                                        | Page
|--------- | ------------------------------------------------------ | ----
|          |                                                        |     
|SECTION 1 | DEFINITIONS AND
    TERMS                              | 1   
|1.1       | Definitions                                            | 1   
|1.2       | Number and Gender of Words; Other References           | 15  
|1.3       | Accounting Principles                                  | 16  
|SECTION 2 | BORROWING
    PROVISIONS                               | 16  
|2.1       | Term Loan Tranche                                      | 16  
|2.2       | Term Debt Increase                                     | 16  
|2.3       | Purchase of Discount Notes                             | 17  
|SECTION 3 | TERMS OF PAYMENT                                       | 17  
|3.1       | Loan Accounts, Notes and Payments                      | 17  
|3.2       | Interest and Principal Payments                        | 18  
|3.3       | Prepayments                                            | 19  
|3.4       | Interest Options                                       | 20  
|3.5       | Quotation of Rates                                     | 21  
|3.6       | Default Rate                                           | 21  
|3.7       | Interest Recapture                                     | 21  
|3.8       | Interest Calculations                                  | 21  
|3.9       | Maximum Rate                                           | 21  
|3.10      | Interest Periods                                       | 22  
|3.11      | Conversions                                            | 22  
|3.12      | Order of Application                                   | 22  
|3.13      | Sharing of Payments, Etc.                              | 23  
|3.14      | Offset                                                 | 23  
|3.15      | Booking Borrowings                                     | 23  
|SECTION 4 | CHANGE IN
    CIRCUMSTANCES                            | 24  
|4.1       | Increased Cost and Reduced Return                      | 24  
|4.2       | Limitation on Types of Loans                           | 25  
|4.3       | Illegality                                             | 25  
|4.4       | Treatment of Affected Loans                            | 25  
|4.5       | Compensation                                           | 26  
|4.6       | Taxes                                                  | 26  
|SECTION 5 | FEES                                                   | 28  
|5.1       | Treatment of Fees                                      | 28  
|5.2       | Fees of Administrative Agent                           | 28  
|5.3       | Fees of Highland Capital                               | 28  
|5.4       | Termination Fee                                        | 28  
|5.5       | Upfront Fees                                           | 28  
|SECTION 6 | SECURITY;
    GUARANTIES                               | 29  
|6.1       | Collateral                                             | 29  
|6.2       | Future Liens                                           | 29  
|6.3       | Release of Collateral                                  | 29  
|6.4       | Negative Pledge                                        | 30  
|SECTION 7 | CONDITIONS
    PRECEDENT                               | 30  
|7.1       | Conditions Precedent to Closing                        | 30  
|SECTION 8 | Representations, Warranties, and Certain
    Covenants | 30  
|8.1       | Organization, Powers, Capitalization                   | 30  
|8.2       | Authorization of Borrowing, No Conflict                | 31  

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|8.3        | Financial Condition                            | 31
|---------- | ---------------------------------------------- | --
|8.4        | Indebtedness and Liabilities                   | 31
|8.5        | Title to Properties; Liens                     | 32
|8.6        | Litigation; Adverse Facts                      | 32
|8.7        | Payment of Taxes                               | 32
|8.8        | Performance of Agreements                      | 33
|8.9        | Employee Plans                                 | 33
|8.10       | Broker's Fees                                  | 33
|8.11       | Environmental Compliance                       | 33
|8.12       | Solvency                                       | 33
|8.13       | Disclosure                                     | 33
|8.14       | Insurance                                      | 33
|8.15       | Compliance with Laws; Authorizations; Consents | 34
|8.16       | Employee Matters                               | 35
|8.17       | Governmental Regulation                        | 35
|8.18       | Access to Accountants and Management           | 35
|8.19       | Inspection                                     | 35
|8.20       | Borrowers' Receipt of Payments                 | 35
|8.21       | Reports                                        | 35
|8.22       | Compliance with Health Care Laws               | 36
|8.23       | Funds from Restricted Grants                   | 36
|8.24       | HIPAA Compliance                               | 37
|8.25       | Licenses                                       | 37
|8.26       | Certificates of Need                           | 37
|8.27       | Inactive Entities                              | 37
|8.28       | Supplemental Schedules                         | 37
|8.29       | Amendment to Senior Loan Agreement             | 37
|SECTION 9  | REPORTING AND
    OTHER AFFIRMATIVE COVENANTS  | 38
|9.1        | Financial Statements and Other Reports         | 38
|9.2        | Endorsement; Insurance Claims                  | 38
|9.3        | Maintenance of Properties                      | 38
|9.4        | Further Assurances                             | 38
|9.5        | Mortgages; Title Insurance; Surveys            | 38
|9.6        | Use of Proceeds and Margin Security            | 39
|9.7        | Licensure; Medicaid/Medicare Cost Reports      | 39
|9.8        | Termination/Default of Contracts               | 39
|9.9        | Notice of Event of Default and Other Matters   | 39
|9.10       | Inactive Entities                              | 39
|9.11       | Payment of the Obligation                      | 40
|SECTION 10 | FINANCIAL
    COVENANTS                        | 40
|10.1       | Tangible Net Work                              | 40
|10.2       | Minimum Operating Cash Flow                    | 40
|10.3       | Capital Expenditure Limits                     | 41
|10.4       | Fixed Charge Coverage                          | 41
|10.5       | Debt to EBITDA Ratio                           | 42
|10.6       | Census                                         | 42
|SECTION 11 | NEGATIVE
    COVENANTS                         | 42
|11.1       | Debt                                           | 42
|11.2       | Guaranties                                     | 43
|11.3       | Transfers, Liens, and Related Matters          | 43

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|11.4       | Investments and Loans                                   | 44
|---------- | ------------------------------------------------------- | --
|11.5       | Restricted Junior Payments                              | 44
|11.6       | Restriction on Fundamental Changes                      | 44
|11.7       | Changes Relating to Senior Loan Documents               | 45
|11.8       | Transactions with Affiliates                            | 45
|11.9       | Conduct of Business                                     | 45
|11.10      | Tax Consolidations                                      | 45
|11.11      | Subsidiaries                                            | 45
|11.12      | Fiscal year; Tax Designation                            | 45
|11.13      | Use of Holders' Name                                    | 45
|11.14      | IRS Form 8821                                           | 45
|11.15      | Certificates of Need                                    | 46
|11.16      | Sale Lease-back Transactions                            | 46
|11.17      | Plan and Confirmation Order                             | 46
|SECTION 12 | DEFAULT, RIGHTS,
    AND REMEDIES                       | 46
|12.1       | Event of Default                                        | 46
|12.2       | Remedies Upon Default                                   | 49
|12.3       | Borrower Waivers                                        | 49
|12.4       | Performance by Administrative Agent                     | 50
|12.5       | Delegation of Duties; Reliance                          | 50
|12.6       | Not in Control                                          | 50
|12.7       | Course of Dealing                                       | 51
|12.8       | Cumulative Rights                                       | 51
|12.9       | Application of Proceeds                                 | 51
|12.10      | Certain Proceedings                                     | 51
|12.11      | Expenditures by Holders                                 | 51
|12.12      | Indemnification                                         | 52
|SECTION 13 | AGREEMENT AMONG
    HOLDERS                             | 52
|13.1       | Administrative Agent                                    | 52
|13.2       | Expenses                                                | 54
|13.3       | Proportionate Absorption of Losses                      | 54
|13.4       | [Intentionally Omitted]                                 | 54
|13.5       | Limitation of Liability                                 | 54
|13.6       | Default; Collateral                                     | 55
|13.7       | Limitation of Liability                                 | 56
|13.8       | Relationship of Holders                                 | 57
|13.9       | Benefits of Agreement                                   | 57
|13.10      | Obligations Several                                     | 57
|SECTION 14 | MISCELLANEOUS                                           | 57
|14.1       | Headings                                                | 57
|14.2       | Nonbusiness Days                                        | 57
|14.3       | Communications                                          | 57
|14.4       | Form and Number of Documents                            | 58
|14.5       | Survival                                                | 58
|14.6       | Governing Law                                           | 58
|14.7       | Invalid Provisions                                      | 59
|14.8       | Entirety                                                | 59
|14.9       | Jurisdiction; Venue; Service of Process; Jury
    Trial | 59
|14.10      | Amendments, Consents, Conflicts, and Waivers            | 60
|14.11      | Multiple Counterparts                                   | 60

iii

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|14.12 | Successors and Assigns; Assignments and
    Participations                    | 61
|----- | ----------------------------------------------------------------------------- | --
|14.13 | Decisions by Borrowers                                                        | 62
|14.14 | Confidentiality                                                               | 63
|14.15 | Publication                                                                   | 63
|14.16 | Company as Agent                                                              | 63
|14.17 | Intercreditor Agreement                                                       | 63
|14.18 | Discharge Only Upon Payment in Full;
    Restatement in Certain Circumstances | 64

iv

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SCHEDULES AND EXHIBITS



|Schedule 1A     | - | Borrowers                                                     
|--------------- | - | --------------------------------------------------------------
|Schedule 1B     | - | Mortgaged Property                                            
|Schedule 1C     | - | Liens in Certain Accounts                                     
|Schedule 1D     | - | Other Liens                                                   
|Schedule 2.1A   | - | Lenders and Commitments                                       
|Schedule 2.1B   | - | Purchasers and Discount Note Amounts                          
|Schedule 7.1    | - | Conditions Precedent to Closing                               
|Schedule 8.1    | - | Capitalization of Borrowers                                   
|Schedule 8.4    | - | Debt and Liabilities                                          
|Schedule 8.7    | - | Federal Tax Identification Numbers and Returns
    Under Audit
|Schedule 8.15   | - | Compliance with Laws                                          
|Schedule 8.16   | - | Employee Matters                                              
|Schedule 8.25   | - | Authorizations                                                
|Schedule 8.27   | - | Inactive Entities                                             
|Schedule 11.1   | - | Existing Debt                                                 
|Schedule 11.4   | - | Existing Investments and Loans                                
|Schedule 11.11  | - | Subsidiaries                                                  
|                |   |                                                               
|Reporting Rider |   |                                                               
|                |   |                                                               
|Exhibit A-1     | - | Form of Term Loan Note                                        
|Exhibit A-2     | - | Form of Discount Note                                         
|Exhibit B       | - | Form of Conversion Notice                                     
|Exhibit C       | - | Form of Security Agreement                                    
|Exhibit D       | - | Form of Assignment and Assumption Agreement                   
|Exhibit E       | - | Form of Reconciliation Report                                 
|Exhibit F       | - | Form of Compliance Certificate                                

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TERM LOAN AND NOTE PURCHASE AGREEMENT

THIS TERM
LOAN AND NOTE PURCHASE AGREEMENT is entered into as of February 28, 2002, among SUN
HEALTHCARE GROUP, INC., a Delaware corporation (the "Company"), and each
direct or indirect Subsidiary (hereinafter defined) of the Company listed on Schedule 1hereto (individually, a "Borrower," and all Borrowers, including the
Company, collectively, the "Borrowers"), Holders (hereinafter defined),
and U.S. Bank National Association, as Administrative Agent (hereinafter defined), for
itself and the other Holders.

RECITALS

A.     On
October 14, 1999, Borrowers filed voluntary petitions under Chapter 11 of the Bankruptcy
Code and became debtors in jointly administered Chapter 11 bankruptcy cases pending in the
United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court")
as Case No. 99-3657 (MFW) (Jointly Administered) (each, a "Case" and,
collectively, the "Cases");

B.     After
a hearing held by the Bankruptcy Court on February 4-5, 2002 (the "Confirmation
Hearing"), and by its "Findings Of Fact, Conclusions Of Law, And Order
Under 11 U.S.C. Section1129(a) and (b) and Fed. R. Bankr. P. 3020 Confirming Debtors'
Joint Plan Of Reorganization" dated February __, 2002 (the "Confirmation
Order"), the Bankruptcy Court confirmed the "Debtors' Joint Plan Of
Reorganization Under Chapter 11 Of The Bankruptcy Code", dated as of December 8,
2001 (as amended) (as confirmed by the Confirmation Order, the "Plan");

C.     Borrowers
have requested that (i) Lenders extend credit to Borrowers and (ii) Purchasers
purchase notes from Borrowers in the form and on the terms of this Term Loan and Note
Purchase Agreement (this "Agreement") to enable Borrowers to fund their
obligations under the Plan and to provide working capital financing funds for other
general corporate purposes;

D.     To
secure Borrowers' obligations under the Loan Documents (hereinafter defined), Borrowers
shall grant to Administrative Agent, for the benefit of Holders, a security interest in
and lien upon all of the Borrowers' personal property and certain of the Borrowers' real
property.

Accordingly,
in consideration of the mutual covenants contained herein, the parties hereto agree as
follows:

SECTION 1     DEFINITIONS AND TERMS.

1.1     Definitions.
As used herein:

Adjusted
Eurodollar Rate means, for any Eurodollar Rate Borrowing for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined by Administrative Agent to be equal to the quotient obtained by dividing (a)
the Eurodollar Rate for such Eurodollar Rate Borrowing for such Interest Period by (b) 1
minus the Reserve Requirement for such Eurodollar Rate Borrowing for such Interest Period;
provided however, that in no event shall the Adjusted Eurodollar Rate be less than
2.15%.

Administrative
Agent means U.S. Bank National Association, and its permitted successors and
assigns as "Administrative Agent" for Holders under the Loan Documents.

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Affiliate
of any Person means any other individual or entity (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under common
control with, such Person, provided, however, that no individual shall be an
Affiliate of any Person solely by reason of his or her being a director, officer, or
employee of such Person, or (ii) 10% or more of the voting stock (or in the case of an
entity which is not a corporation, 10% or more of the voting equity interest) of which is
beneficially owned or held by such Person; and, for purposes of this definition only, "control,"
"controlled by," and "under common control with" mean
possession, directly or indirectly, of the power to direct or cause the direction of
management or policies (whether through ownership of voting securities, by contract, or
otherwise); provided that, for purposes of this Agreement neither Administrative
Agent nor any Holder shall be deemed to be an Affiliate of any Borrower and no Borrower
shall be deemed to be an Affiliate of any other Borrower.

Aggregate
Discount Note Amountmeans, on any date of determination, the sum of the Stated
Principal Amount of all outstanding Discount Notes.

Aggregate
Principal Debt means the sum of the Aggregate Discount Note Amount plus
the Term Loan Principal Debt.

Agreementmeans this Term Loan and Note Purchase Agreement (as the same may hereafter be
amended, modified, supplemented, or restated from time to time).

Applicable
Lending Office means, for each Holder and for each Type of Borrowing, the "Lending
Office" of such Holder (or an affiliate of such Holder) designated on Schedule
2.1Aor Schedule 2.1B, as applicable, attached hereto or such other office that
such Holder (or an affiliate of such Holder) may from time to time specify to
Administrative Agent and Borrowers by written notice in accordance with the terms hereof.

Applicable
Margin means (a) for the Term Loan Tranche (other than Term Loan Principal
Debt as a result of the Term Debt Increase if required by clause (b) hereof), 4.00%
for Base Rate Borrowings and 6.85% for Eurodollar Rate Borrowings, (b) to the extent
required as a result of the application of any Debtor Relief Law, for the Term Loan
Principal Debt attributable to the Term Debt Increase, the "Base Rate Margin"
under the Senior Loan Agreement (as of the date of the Option Closing (as defined in the
Intercreditor Agreement)) for Base Rate Borrowings and the "LIBOR Margin"
under the Senior Loan Agreement (as of the date of the Option Closing (as defined in the
Intercreditor Agreement)) for Eurodollar Rate Borrowings, and (c) for the Note Purchase
Tranche, 0.00% for Base Rate Borrowings and 0.50% for Eurodollar Rate Borrowings.

Asset
Disposition means the disposition, whether by sale, lease, transfer, loss, damage,
destruction, condemnation, or otherwise, of any or all of the assets of any Borrower or
any of its Subsidiaries other than (a) sales of inventory in the ordinary course of
business, (b) disposition of worn out or obsolete equipment, (c) transfers or other
dispositions of assets or property by a Borrower to another Borrower, (d) Permitted
Divestitures, (e) the Campus Transaction, and (f) the THCI Turnover.

Assignment
and Assumption means

Authorizations
means all material filings, recordings, and registrations with, and all material
validations or exemptions, approvals, orders, authorizations, consents, franchises,
licenses, certificates, certificates of compliance, grants of authority, and permits from,
any Governmental Authority.

2

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Base
Rate means, for any day, the rate per annum equal to the higher of (a) the
Federal Funds Rate for such day plus 0.5% and (b) the Prime Rate for such day. Any
change in the Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall
be effective on the effective date of such change in the Prime Rate or the Federal Funds
Rate.

Base
Rate Borrowing means a Borrowing bearing interest at the per annum rate equal to
the greater of (a) the sum of the Base Rate plus the Applicable
Margin for Base Rate Borrowings and (b) 9% per annum.

Borrower and Borrowers
are defined in the preamble to this Agreement.

Borrowing
means any amount disbursed (a) by one or more Holders under the Term Loan Tranche or the
Note Purchase Tranche pursuant to the terms of this Agreement or any other Loan Document,
whether such amount constitutes an original disbursement of funds or the continuation of
an amount outstanding, or (b) by any Holder in accordance with, and to satisfy the
obligations of any Borrower under, any Loan Document.

Business
Day means (a) for all purposes, any day other than Saturday, Sunday, and
any other day on which commercial banking institutions are required or authorized by Law
to be closed in Dallas, Texas, Minneapolis, Minnesota, or New York, New York, and (b) in
addition to the foregoing, in respect of any Eurodollar Rate Borrowing, a day on which
dealings in United States dollars are conducted in the London interbank market and
commercial banks are open for international business in London.

Campus
Transaction means the sale of the headquarters office complex of the Company,
located in Albuquerque, New Mexico pursuant to the Plan.

Capital
Expenditures shall mean, for any period, the aggregate of all expenditures
(whether paid in cash or accrued as liabilities during such period and excluding that
portion of Capital Leases (except any cash down payment) which is capitalized on the
consolidated balance sheet of the Company and its Subsidiaries) net of cash amounts
received by the Borrowers from other Persons during such period in reimbursement of
Capital Expenditures made by the Borrowers, excluding interest capitalized during
construction by the Borrowers during such period, that, in conformity with GAAP, are
required to be included in or reflected by the property, plant, equipment, or intangibles
or similar fixed asset accounts reflected in the consolidated balance sheet of the Company
and its Subsidiaries (including equipment which is purchased simultaneously with the
trade-in of existing equipment owned by any Borrower to the extent of the gross amount of
such purchase price less the book value of the equipment being traded in at such time),
but excluding expenditures made in connection with the replacement or restoration of
assets, to the extent reimbursed or financed from insurance proceeds paid on account of
the loss of or the damage to the assets being replaced or restored, or from awards of
compensation arising from the taking by condemnation or eminent domain of such assets
being replaced.

Capital
Lease means any lease of any property (whether real, personal or mixed) that, in
conformity with GAAP, should be accounted for as a capital lease.

Cash Equivalents
means:

(a)     Readily
marketable, direct, full faith and credit obligations of the United States of America or
any agency thereof, or obligations guaranteed by the full faith and credit of the United
States of America, maturing within not more than six (6) months from the date of
acquisition;

3

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(b)     Commercial
paper maturing no more than six (6) months from the date of issuance and rated, at the
time of acquisition, at least P-1 from Moody's Investors Service, Inc. ("Moody's")
or at least A-1 from Standard and Poor's Rating Group (a division of McGraw-Hill, Inc.,
"S&P");

(c)     Short
term certificates of deposit or banker's acceptances maturing within six (6) months from
the date of issuance issued by, or overnight reverse purchase agreements from any
commercial bank organized under the Laws of the United States of America, or any state
thereof or the District of Columbia, having combined capital and surplus of not less than
$250,000,000 and not subject to set off rights in favor of such bank; and

(d)     any
money market fund registered under the Investment Company Act of 1940, as amended,
investing in the above-described securities or commercial paper if such fund holds
investments in excess of $100,000,000 and Borrowers' aggregate investment in such funds is
less than 10% of the total amount invested in such fund.

Closing
Date means the date upon which this Agreement has been executed by Borrowers,
Holders, and Administrative Agent and all conditions precedent specified in Section 7
have been satisfied or waived.

Code
means the Internal Revenue Code of 1986, as amended, together with the rules
and regulations promulgated thereunder.

Collateralmeans all of the items and types of property described as "Collateral"
in now existing or hereafter created Collateral Documents and all cash and non-cash
proceeds thereof.

Collateral
Documentsmeans all security agreements, pledge agreements, financing statements,
assignments of partnership interests, guaranties, Mortgages, assignments of rents, and any
other collateral documents at any time delivered to Administrative Agent to create or
evidence Liens securing the Obligation, together with all reaffirmations,
amendments, and modifications thereof or supplements thereto.

Commitment
Percentage means, for any Lender, at any date of determination occurring prior to
the initial Borrowing, the proportion (stated as a percentage) that its Committed Sum
bears to the aggregate Committed Sums of all Lenders.

Committed
Sum means, at any date of determination occurring prior to the initial Borrowing,
the amount stated beside such Holder's name on the most-recently amended Schedule 2.1A
to this Agreement (which amount is subject to increase, reduction, or cancellation in
accordance with the Loan Documents).

Company
means Sun Healthcare Group, Inc.

Company's
Accountants means the independent certified public accountants selected by the
Company and its Subsidiaries and reasonably acceptable to Administrative Agent, which
selection shall not be modified during the terms of this Agreement (except if the Company
retains another of the so-called "Big Five" accounting firms) without the
Collateral Agent's prior written consent, which consent shall not be unreasonably
withheld.

Confirmation
Hearingis defined in the Recitals to this Agreement.

4

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Confirmation
Order is defined in the Recitals to this Agreement.

Consequential
Loss means any loss or expense which any Holder may reasonably incur in respect of
a Eurodollar Rate Borrowing as a consequence of any event described in Section 4.5.

Conversion
Noticemeans a request pursuant to Section 3.11, substantially in the form
of Exhibit B.

Corporate
Integrity Agreement means the agreement dated as of July 12, 2001, between the
Office of the Inspector General of the Department of Health and Human Services and the
Company.

Debt
means (without duplication), for any Person (a) all indebtedness for borrowed money; (b)
obligations under leases which in accordance with GAAP constitute Capital Leases; (c)
notes payable and drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money; (d) any obligation owed for all or any part
of the deferred purchase price of property or services if the purchase price is due more
than six months from the date the obligation is incurred or is evidenced by a note or
similar written instrument; (e) all indebtedness secured by any Lien on any property or
asset owned or held by that Person regardless of whether the indebtedness secured thereby
shall have been assumed by that Person or is non-recourse to the credit of that Person;
(f) obligations in respect of Letters of Credit; (g) any advances under any factoring
arrangement; and (h) obligations under the Settlement Agreement.

Debtor
Relief Laws means the Bankruptcy Code of the United States of America and
all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, fraudulent transfer or conveyance, suspension of
payments, or similar Laws from time to time in effect affecting the Rights of creditors
generally.

Defaultis
defined in Section 12.

Default
Rate means, (i) with respect to any Borrowing under the Term Loan Tranche, on any
date, a per annum rate of interest equal from day to day to the lesser of (a) the
non-Default interest rate applicable to such Borrowing, plus 2% and (b) the Maximum
Rate, and (ii) with respect to any other Obligation under the Loan Documents, the lesser
of (a) the Base Rate plus the then-effective Applicable Margin for Base Rate
Borrowings for the Term Loan Tranche plus 2% and (b) the Maximum Rate.

Discount
Note means an original issue discount promissory note substantially in the form of
Exhibit A-2 and all renewals and extensions of all or any part thereof.

Dollarsand
the symbol $means lawful money of the United States of America.

EBITDA
means, for any period, without duplication, the total of the following for the Borrowers
on a consolidated basis, each calculated for such period: (a) net income determined
in accordance with GAAP; plus, (b) to the extent included in the calculation
of net income, the sum of (i) income and franchise taxes paid or accrued;
(ii) interest expenses, net of interest income, paid or accrued;
(iii) amortization and depreciation; and (iv) other non-cash charges (excluding
accruals for cash expenses made in the ordinary course of business); less,
(c) to the extent included in the calculation of net income, the sum of (i) the
income of any Person in which any Borrower has a direct or indirect ownership interest except
to the extent such income is received by such Borrower in a cash distribution during such
period; (ii) gains or losses from sales or other dispositions of assets (other
than inventory in the normal course of business); and (iii) extraordinary or
non-recurring gains and non-recurring losses.

5

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Eligible
Assignee means (a) a commercial bank organized under the Laws of the United
States, or any state thereof, and having a combined capital and surplus of at least
$100,000,000; (b) a commercial bank organized under the Laws of any other country which is
a member of the Organization for Economic Cooperation and Development (the "OECD"),
or a political subdivision of any such country, and having a combined capital and surplus
of at least $100,000,000, provided thatsuch bank is acting through a branch or
agency located in the country in which it is organized or another country which is also a
member of the OECD; (c) any other entity which is an "accredited investor"
(as defined in Regulation D under the Securities Act) which extends credit or buys loans
as one of its businesses, including but not limited to, insurance companies, mutual funds,
and lease financing companies, (d) a Related Fund, and (e) a Person that is primarily
engaged in the business of lending that is (i) a Subsidiary of a Holder, (ii) a
Subsidiary of a Person of which a Holder is a Subsidiary, or (iii) a Person of which
a Holder is a Subsidiary; provided,however, that no Affiliate of any
Borrower shall be an Eligible Assignee.

Employee
Plan means, at any time, each Single-Employer Plan and each Multiemployer Plan.

Environmental
Law means any applicable Law that relates to (a) the quality or protection of air,
groundwater, surface water, soil, other environmental media, or natural resources, (b) the
Release or threatened Release of Hazardous Substances, (c) the regulation of any
pollutants, contaminants, wastes, substances, and Hazardous Substances, or (d) health or
safety, including without limitation, employee safety in the workplace, including, without
limitation, the Comprehensive Environmental Response, Compensation, and Liability Act (42
U.S.C. Section 9601 et seq.) ("CERCLA"), the Clean Air Act
(42 U.S.C. Section 7401 et seq.), the Federal Water Pollution Control Act,
as amended by the Clean Water Act (33 U.S.C. Section 1251 et seq.), the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.),
the Emergency Planning and Community Right to Know Act of 1986 (42 U.S.C. Section 11001 et
seq.), the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et
seq.), the National Environmental Policy Act of 1969 (42 U.S.C. Section 4321 et
seq.), the Oil Pollution Act (33 U.S.C. Section 2701 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Rivers and Harbors Act (33 U.S.C. Section 401 et seq.), the Safe Drinking
Water Act (42 U.S.C. Section 201 and Section 300f et seq.), the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and the
Hazardous and Solid Waste Amendments of 1984 (42 U.S.C. Section 6901 et seq.),
the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.), the
Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651 et seq., and
analogous state and local Laws, as any of the foregoing may have been and may be amended
or supplemented from time to time, and any analogous future enacted or adopted Law.

ERISA
means the Employee Retirement Income Security Act of 1974, as amended, and the
regulations and rulings thereunder.

ERISA
Affiliate means any Borrower or trade or business (whether or not incorporated)
which, for purposes of Title IV of ERISA, is, or has been within the past six
years, a member of any Borrower's controlled group or which is, or has been within the
past six years, under common control with any Borrower within the meaning of Section
414(b), (c), (m), or (o) of the Code.

Eurodollar
Rate means, for any Eurodollar Rate Borrowing for any Interest Period therefor,
the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing
on Dow Jones Markets Page 3750 (or any successor page) as the London interbank offered
rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period for a term comparable to such Interest
Period. If for any reason such rate is not available, the term "Eurodollar
Rate" shall mean, for any Eurodollar Rate Borrowing for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to

6

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such Interest Period; provided, however, if more than one rate
is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean
of all such rates (rounded upwards, if necessary, to the nearest 1/100 of 1%).

Eurodollar
Rate Borrowing means a Borrowing bearing interest at the sum of the
Adjusted Eurodollar Rate plus the Applicable Margin for Eurodollar Rate Borrowings.

Exhibit means
an exhibit to this Agreement unless otherwise specified.

Facilities
means any hospital, outpatient clinic, long term care facility, nursing home or
rehabilitation center and related medical office building or other facility owned or used
by any Borrower in its business.

Federal
Funds Rate means, for any day, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) determined (which determination shall be conclusive and
binding, absent manifest error) by Administrative Agent to be equal to the weighted
average of the rates on overnight Federal funds transactions with member banks of the
Federal Reserve System arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding such day; provided
that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so published on
the next succeeding Business Day, and (b) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day shall be the average rate
charged to Administrative Agent (in its individual capacity) on such day on such
transactions as determined by Administrative Agent (which determination shall be
conclusive and binding, absent manifest error).

Financial
Statements means balance sheets, statements of operations, statements of
shareholders' equity, and statements of cash flows prepared in accordance with GAAP, which
statements of operations and statements of cash flows shall be in comparative form to the
corresponding period of the preceding fiscal year, and which balance sheets and statements
of shareholders' equity shall be in comparative form to the prior fiscal year-end figures.

Fiscal
Yearmeans each twelve (12) month period ending on the last day of December in
each year.

Fixed
Charge Coverage means, for any period of determination, Operating Cash Flow divided
by Fixed Charges.

Fixed
Charges means, for any period, and each calculated for such period (without
duplication), (a) Interest Expense of the Company and its Subsidiaries; plus (b)
scheduled payments of principal with respect to all Debt of the Company and its
Subsidiaries payable during such period; plus (c) any provision for (to the
extent it is greater than zero) income or franchise taxes included in the determination of
net income, excluding any provision for deferred taxes; plus (d) payment of
deferred Taxes accrued in any prior period; plus (e) Restricted Junior
Payments made in cash.

GAAP
means generally accepted accounting principles of the Accounting Principles Board of the
American Institute of Certified Public Accountants and the Financial Accounting Standards
Board which are applicable from time to time.

Governmental
Authority means any (a) state, county, city, town, village, or other local, state,
or federal judicial, executive, regulatory, or legislative instrumentality, (b) private
arbitration board or panel, or (c) central bank.

7

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Hazardous
Substance means all or any of the following: (a) substances that are defined or
listed in, or otherwise classified pursuant to, any Environmental Laws or regulations as
"hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended
to define, list, or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, or toxicity; (b) oil, petroleum,
or petroleum derived substances, natural gas, natural gas liquids, or synthetic gas, and
drilling fluids, produced waters, and other wastes associated with the exploration,
development, or production of crude oil, natural gas, or geothermal resources; (c) any
flammable substances, explosives, or any radioactive materials; (d) asbestos in any form
or electrical equipment which contains any oil or dielectric fluid containing
polychlorinated biphenyls; and (e) mold of any form or type arising from any moisture
source.

Healthcare Laws
is defined in Section 8.22.

HIPAA
means the Health Insurance Portability and Accountability Act of 1996 and the federal
standard for privacy of individually identifiable health information promulgated
thereunder, and any and all rules or regulations promulgated from time to time thereunder
including the regulations set forth at 45 CFR parts 160 and 164 as such provisions
are currently drafted and, if applicable, updated, amended, or revised.

Holders
means, on any date of determination, collectively, all Lenders and all Purchasers.

Inactive Entity
means each entity listed on Schedule 8.27.

Insurer
means a Person that (a) insures a Patient against certain of the costs incurred in the
receipt by such Patient of Medical Services, or (b) has an agreement with any Borrower to
compensate such Borrower for providing services to a Patient.

Intangible
Assets means all intangible assets (determined in conformity with GAAP) including,
without limitation, goodwill, intellectual property, software, licenses, organizational
costs, deferred amounts, covenants not to compete, unearned income, and restricted funds.

Intercreditor
Agreement means that certain Intercreditor Agreement dated of even date herewith
by and among the Borrowers, Administrative Agent and Senior Agent.

Interest
Expense means, without duplication, for any period, for Borrowers and their
Subsidiaries each calculated for such period, interest expenses deducted in the
determination of net income (excluding (a) the amortization of fees and costs with respect
to the transactions contemplated by this Agreement and the Senior Loan Agreement which
have been capitalized as transaction costs in accordance with GAAP; and (b) interest
paid in kind).

Interest Period
is determined in accordance with Section 3.10.

Laws
means all applicable statutes, laws, treaties, ordinances, tariff requirements, rules,
regulations, orders, writs, injunctions, decrees, judgments, opinions, or interpretations
of any Governmental Authority.

Lenders
means, on any date of determination, the financial institutions named on Schedule 2.1A,
and subject to the terms and conditions of this Agreement, their respective successors and
assigns, but not any Participant who is not otherwise a party to this Agreement as a
Lender.

8

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Liabilities
has the meaning given that term in accordance with GAAP and includes Debt.

Lien
means any lien, mortgage, security interest, pledge, assignment, charge, title retention
agreement, or encumbrance of any kind, and any other Right of or arrangement with any
creditor (other than under or relating to subordination or other intercreditor
arrangements) to have its claim satisfied out of any property or assets, or the proceeds
therefrom, prior to the general creditors of the owner thereof.

Litigation
means any action by or before any Governmental Authority.

Loan
Documents means (a) this Agreement, the Notes, and the Collateral Documents, (b)
all agreements, documents, or instruments in favor of Administrative Agent or Holders
delivered concurrently herewith or at any time hereafter pursuant to this Agreement or
otherwise in connection with all or any part of the Obligation, and (c) any and all future
renewals, extensions, restatements, reaffirmations, or amendments of, or supplements to,
all or any part of the foregoing.

Material
Adverse Event means any set of one or more circumstances or events which,
individually or collectively, results in any (a) material adverse effect on the ability of
Borrowers (taken as a whole) to perform any obligations under any Loan Document or the
ability of Administrative Agent or any Holder to enforce any such obligations or any of
their respective Rights under the Loan Documents, or (b) material and adverse effect on
the business, operations, prospects, properties, assets, or condition (financial or
otherwise) of Borrowers (taken as a whole).

Material
Contracts means a contract or agreement (including, without limitation, a provider
agreement) the default (or event of default) under, termination of, or expiration of
which, individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Event.

Maximum
AmountandMaximum Rate respectively mean, for each Holder, the
maximum non-usurious amount and the maximum non-usurious rate of interest which, under
applicable Law, such Holder is permitted to contract for, charge, take, reserve, or
receive on the Obligation.

Medical
Servicesmeans medical and health care services provided to a Patient, including,
but not limited to, medical, pharmacy, and health care services performed by any Borrower
which are covered by a policy of insurance issued by an Insurer, and includes physician
services, nurse and therapist services, dental services, hospital services, skilled
nursing facility services, comprehensive outpatient rehabilitation services, home health
care services, residential and out-patient behavioral healthcare services, and medicine or
health care equipment provided by any Borrower to a Patient for a necessary or
specifically requested valid and proper medical or health purpose.

Mortgage
means each of the mortgages, deeds of trust, leasehold mortgages, leasehold deeds of
trust, collateral assignments of leases, or other real estate security documents delivered
by any Borrower to Administrative Agent, on behalf of Holders, with respect to the
Mortgaged Property, all in form and substance satisfactory to Administrative Agent.

Mortgaged
Property means that certain real property owned by certain Borrowers and described
on Schedule 1(B).

Multiemployer
Planmeans a multiemployer plan as defined in Sections 3(37) or 4001(a)(3)
of ERISA or Section 414(f) of the Code to which any Borrower, any Subsidiary
thereof, or any ERISA Affiliate of any Borrower is making, has made, is accruing, or has
accrued, an obligation to make contributions or has, within any of the preceding five plan
years, made or accrued an obligation to make contributions.

9

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Net Income
means, as of any date, net income calculated in accordance with GAAP.

Net
Worth means, as of any date of determination, for the Company and its Subsidiaries
on a consolidated basis, the sum of the capital stock and additional paid-in
capital plus retained earnings (or less accumulated deficit) calculated in
conformity with GAAP.

Note
Purchase Tranche means the obligation to purchase and sell the Discount Notes as
described in and subject to the limitations set forth in Section 2.3 hereof.

Notes
means, at the time of any determination thereof, all outstanding and unpaid Term Loan
Notes and Discount Notes.

Obligation
means all present and future indebtedness, liabilities, and obligations, and all renewals
and extensions thereof, or any part thereof, now or hereafter owing, due, or payable to
Administrative Agent, any Holder, or any Affiliate of any Holder by any Borrower arising
from, by virtue of, or pursuant to any Loan Document, including, without limitation, any
increase in the Term Loan Principal Debt as the result of the exercise of the Partial
Purchase Option pursuant to Section 2.2, together with all interest
accruing thereon, fees, costs, and expenses (including, without limitation, all reasonable
attorneys' fees and expenses incurred in the enforcement or collection thereof) payable
under the Loan Documents.

Operating
Cash Flow means, for any period of determination, (a) EBITDA; plus
(b) the net change in the accrued general and professional insurance liability as set
forth in the cash flow statement delivered from time to time by the Company; minus
(c) Capital Expenditures.

Option
Price has the meaning assigned to that term in the Intercreditor Agreement.

Partial
Purchase Option has the meaning giving such term in the Intercreditor Agreement.

Participant
is defined in Section 14.12(d).

Patient
means any Person receiving Medical Services from any Borrower and all Persons legally
liable to pay any Borrower for such Medical Services other than Insurers.

PBGC
means the Pension Benefit Guaranty Corporation, or any successor thereof, established
pursuant to ERISA.

Permitted
Divestitures means the disposition on commercially reasonable terms and conditions
of (i) the mobile x-ray business formerly known as TLC Mobile Medical and operated by
SunAlliance Healthcare Services, Inc. and (ii) the respiratory services supplies and
equipment business operated by SunCare Respiratory Services, each of which shall have
occurred on or before May 31, 2002.

Permitted
Liens means the following types of Liens: (a) Liens (other than Liens
relating to Environmental Claims or ERISA) for Taxes not yet due and payable; (b)
statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen, and other
similar Liens imposed by Law, which are incurred in the ordinary course of business for
sums not more than 30 days delinquent; (c) Liens (other than any Lien imposed by
ERISA) incurred or deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance, and other types of social security,
statutory obligations, surety, and appeal bonds, bids, leases, government contracts, trade
contracts, performance and return-of-money bonds, and other similar obligations (exclusive
of obligations for the payment of borrowed money); (d) easements, rights-of-way,
restrictions, and other similar charges or

10

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encumbrances not interfering in any material respect with the ordinary
conduct of the business of any Borrower; (e) Liens for purchase money obligations, provided
that (i) the purchase of the asset subject to any such Lien is permitted under Sections
10.4 and 11.1(d), (ii) the Debt secured by any such Lien is permitted under Section
11.1, and (iii) such Lien encumbers only the asset so purchased; (f) Liens in
respect of Debt permitted under Section 11.1(d); provided that such Liens
encumber only the asset which is subject to a Capital Lease; (g) Liens in favor of
Administrative Agent, on behalf of itself and the other Holders securing the Obligation;
(h) Liens on or security interests in certain accounts granted by a Borrower to the
lessor of certain nursing home Facilities, all as set forth on Schedule 1(C) or
otherwise consented to in writing by Required Holders; (i) Liens granted to the
Senior Agent pursuant to the Senior Loan Documents securing Senior Debt and in accordance
with the Intercreditor Agreement, (j) Liens with respect to, or hereafter incurred in
connection with, the Sumitomo Transaction and the SunTrust Transaction, in each case, as
set forth on Schedule 1(D), and (k) Liens existing on the Closing
Date to the extent set forth on Schedule 1(D).

Person means
any individual, entity, or Governmental Authority.

Plan is
defined in the Recitals to this Agreement.

Potential
Defaultmeans the occurrence of any event or existence of any circumstance which,
after the giving of notice or lapse of time or both, would become a Default.

Prime
Rate means the per annum rate of interest established from time to time by
Administrative Agent, as its prime rate, which rate may not be the lowest rate of interest
charged by Administrative Agent to its customers.

Pro
Forma means the unaudited consolidated balance sheet of the Company and its
Subsidiaries as of the Closing Date after giving effect to the transactions contemplated
by this Agreement.

Projections
means Borrowers' forecasted consolidated: (a) balance sheets; (b) capitalization
statements; (c) cash flow statements; and (d) profit and loss statements, all
prepared on a division by division and Subsidiary by Subsidiary basis consistent with the
Company's historical Financial Statements and based upon good faith estimates and
assumptions by Borrowers believed to be reasonable at the time made, together with
appropriate supporting details and a statement of underlying assumptions.

Pro
Rata or Pro Rata Part, for each Holder, means on any date of
determination, the proportion which the portion of the Term Loan Principal Debt or the
Aggregate Discount Note Amount owed to such Holder (as applicable) bears to the Aggregate
Principal Debt owed to all Holders at the time in question.

Purchasers
means, on any date of determination, the Persons named on Schedule 2.1B, and
subject to the terms and conditions of this Agreement, their respective successors and
assigns, but not any Participant who is not otherwise a party to this Agreement as a
Purchaser.

Register is
defined in Section 14.12(c).

Regulation
D means Regulation D of the Board of Governors of the Federal Reserve System,
as amended.

Regulation
U means Regulation U of the Board of Governors of the Federal Reserve System, as
amended.

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Related
Fund means, with respect to any Holder, a fund or other investment vehicle that
invests in commercial loans and is managed by such Holder or by the same investment
advisor that manages such Holder or by an Affiliate of such Holder or investment advisor.

Release
means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping, disposal, deposit, dispersal, migrating, or other movement
into the air, ground, or surface water, or soil.

Representatives
means representatives, officers, directors, employees, attorneys, and agents.

Required
Holdersmeans, on any date of determination, those Holders holding 50.1% or more
of the Aggregate Principal Debt.

Reserve
Requirement means, at any time, the maximum rate at which reserves (including,
without limitation, any marginal, special, supplemental, or emergency reserves) are
required to be maintained under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) by member banks of the Federal
Reserve System against, in the case of Eurodollar Rate Borrowings, "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the Reserve Requirement shall reflect any other reserves required to be
maintained by such member banks with respect to (a) any category of liabilities which
includes deposits by reference to which the Adjusted Eurodollar Rate is to be determined,
or (b) any category of extensions of credit or other assets which include Eurodollar Rate
Borrowings. The Adjusted Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Requirement.

Restricted
Junior Payment means: (a) any dividend or other distribution, direct or indirect,
on account of any shares of any class of stock of the Company, any other Borrower, or any
of their Subsidiaries now or hereafter outstanding, except a dividend payable
solely with shares of the class of stock on which such dividend is declared; (b) any
redemption, conversion, exchange, retirement, defeasance, sinking fund, or similar
payment, purchase or other acquisition for value, direct or indirect, of any shares of any
class of stock of the Company or any of its Subsidiaries now or hereafter outstanding, or
the issuance of a notice of an intention to do any of the foregoing; (c) any payment
made to retire, or to obtain the surrender of, any outstanding warrants, options or other
rights to acquire shares of any class of stock of any Borrower or any of its Subsidiaries
now or hereafter outstanding; and (d) any payment by any Borrower or any of its
Subsidiaries of any management, consulting, or similar fees to any Affiliate, whether
pursuant to a management agreement or otherwise.

Rights means
rights, remedies, powers, privileges, and benefits.

Schedule
means, unless specified otherwise, a schedule attached to this Agreement, as the same may
be supplemented and modified from time to time in accordance with the terms of the Loan
Documents.

Securities
Act means the Securities Act of 1933, 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.

Security
Agreementmeans (a) a Pledge, Assignment, and Security Agreement in substantially
the form and upon the terms of Exhibit C, executed by any Person pursuant to the
requirements of the Loan Documents; and (b) any amendments, modifications, supplements,
restatements, ratifications, or reaffirmations of any Security Agreement made in
accordance with the Loan Documents.

12

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Senior
Agent means collectively the "Administrative Agent" and the
"Collateral Agent" as defined in the Senior Loan Agreement.

Senior
Lendersmeans, on any date of determination, the Lenders under the Senior Loan
Agreement.

Senior
Loan Agreement means the Loan and Security Agreement dated as of February ____,
2002, executed by Borrowers, Citicorp USA, Inc., as Administrative Agent, Heller
HealthCare Finance, Inc., as Collateral Agent, and the Senior Lenders, as it may be
further modified, amended, renewed, extended, refunded, refinanced, replaced, or restated
from time to time in accordance with the terms thereof and subject to the terms of the
Intercreditor Agreement.

Senior
Loan Documents means the "Loan Documents" as defined in the
Senior Loan Agreement.

Settlement
Agreementmeans the "Settlement Agreement Entered Into Among the United
States Of America, acting through the United States Department of Justice and Centers for
Medicare and Medicaid Services, the TRICARE Management Activity Support Office, Sun
Healthcare Group, Inc. and its subsidiaries who filed bankruptcy in the District of
Delaware on October 14, 1999, and Stephen Beaujon, Renee Lundgren, Thomas DeLay, David
Junga, K.G. Simmons, Judith R. Barry, Saul Epstein, Vida M. Melton and Diane Lind",
date on or about February 1, 2002, which is the subject of Sections 4.3 and 5.12 of
the Plan and which was incorporated into the Plan and approved by the Bankruptcy Court as
part of the Confirmation Order.

SHS means
Shared Healthcare Systems, Inc., a Delaware corporation.

Single-Employer
Plan means an employee pension benefit plan covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412of the Code and
established or maintained by any Borrower, Subsidiary thereof, or ERISA Affiliate of any
Borrower, but not including any Multiemployer Plan.

Social
Security Act shall mean the Social Security Act as codified at 42 U.S.C. Section
1395 et seq., as amended.

Solventmeans, as to a Person, that (a) the aggregate fair saleable value of such Person's
assets exceeds its liabilities (whether contingent, subordinated, unmatured, unliquidated,
or otherwise), (b) such Person does not intend to incur and does not believe that it will
incur Debt beyond its ability to pay such Debt as it becomes due, and (c) such Person does
not have unreasonably small capital to conduct such Person's businesses as presently
conducted or contemplated.

Stated
Principal Amount means, as to each Discount Note for each Purchaser, the "Stated
Principal Amount at Maturity" of such Discount Note, as set forth on Schedule
2.1B.

Subsidiary
of any Person means (a) any entity of which an aggregate of more than 50% (in number of
votes) of the stock, membership interests, or other equity interests is owned of record or
beneficially, directly or indirectly, by such Person, or (b) any partnership (limited or
general) of which such Person shall at any time be the controlling general partner
determined in accordance with GAAP or own more than 50% of the issued and outstanding
partnership interests.



13

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Sumitomo Transaction
means the conversion of the Sumitomo synthetic leases to mortgages as described in Schedule 1D.

SunScript
means SunScript Pharmacy Corporation, SunFactors, Inc., Pharmacy Factors of Florida, Inc.,
Pharmacy Factors of Texas, Inc., Pharmacy Factors of California, Inc., Advantage Health
Services, Inc., HoMed Convalescent Equipment, Inc., SunScript/HRA LLC, First Class
Pharmacy, Inc., and Executive Pharmacy Services, Inc.

SunScript Assets
means all of the real and personal assets of SunScript.

SunScript Stock
means the stock or other equity interests issued by SunScript.

SunTrust
Transaction means the conversion of the SunTrust synthetic leases to mortgages as
described in Schedule 1D.

Tangible
Net Worth of any Person means as of any date of determination, an amount equal to:
(a) Net Worth of such Person; less (b) Intangible Assets of such Person; less
(c) prepaid expenses of such Person; less (d) all obligations owed to such
Person by any Affiliate of such Person or any of its Subsidiaries (determined in each case
in conformity with GAAP).

Taxes
means, for any Person, taxes, assessments, or other governmental charges or levies imposed
upon such Person, its income, or any of its properties, franchises, or assets.

Term
Debt Increase means the increase in the Term Loan Principal Debt as a result of
the exercise of the Partial Purchase Option as provided in Section 2.2 and in
compliance with the Intercreditor Agreement.

Termination
Datemeans the earlier of (a) February 28, 2005, and (b) the effective date
of any other termination, cancellation, redemption, or acceleration of the Term Loan
Tranche or the Note Purchase Tranche.

Termination
Fee means, with respect to the payment of any Term Loan Principal Debt, an amount
equal to the amount of such payment times the Termination Fee set forth below that
corresponds to the date such payment is made:

Period during which
    payment occurs
    Termination
    FeePrior to February 28, 2003
    2.0%On or after February 28, 2003, but prior to
    (and not including) February 28, 2005
    1.0%


Term
Loan Tranche means the credit facility as described in and subject to the
limitations set forth in Section 2.2 hereof.

Term
Loan Note means a promissory note substantially in the form of Exhibit A-1,
and all renewals and extensions of all or any part thereof.

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Term
Loan Principal Debt means, on any date of determination, the aggregate unpaid
principal balance of all Borrowings under the Term Loan Tranche, including, without
limitation, any Term Debt Increase.

THCI
Transfer Facilitiesmeans, collectively, the following nursing home facilities:
(a) Mediplex Rehab. of Denver, located in Denver, Colorado, (b) Mediplex of Stamford,
located in Stamford, Connecticut, (c) SunBridge Care and Rehabilitation for Brookline,
located in Brookline, Massachusetts, and (d) SunBridge Care and Rehabilitation for East
Boston, located in East Boston, Massachusetts. THCI Turnover means the going
concern transfer of the THCI Transfer Facilities by Borrowers to THCI Mortgage Company
Holdings LLC.

Total
Assets means the "Total Assets" as reflected on the Consolidated
Legal Entities report, dated February 11, 2002 (11:18 AM) prepared by the Company and
previously provided to Administrative Agent.

Total
Revenues means the "4th Qtr Total Revenue" as
reflected on the Consolidated Legal Entities report, dated February 11, 2002 (11:18
AM) prepared by the Company and previously provided to Administrative Agent.

Tranches
means, collectively, the Term Loan Tranche and the Note Purchase Tranche; Tranche
means either the Term Loan Tranche or the Note Purchase Tranche.

TRICARE
means, collectively, a program of medical benefits covering former and active members of
the uniformed services and certain of their dependents, financed and administered by the
United States Departments of Defense, Health and Human Services and Transportation, which
program was formerly known as the "Civilian Health and Medical Program of the
Uniformed Services (CHAMPUS)".

Type
means any type of Borrowing determined with respect to the interest option applicable
thereto.

1.2     Number
and Gender of Words; Other References. Unless otherwise specified in the Loan
Documents, (a) where appropriate, the singular includes the plural and vice versa,
and words of any gender include each other gender, (b) heading and caption references may
not be construed in interpreting provisions, (c) monetary references are to currency of
the United States of America, (d) section, paragraph, annex, schedule, exhibit, and
similar references are to the particular Loan Document in which they are used, (e)
references to "telecopy," "facsimile," "fax," or
similar terms are to facsimile or telecopy transmissions, (f) references to "including"
mean including without limiting the generality of any description preceding that word, (g)
the rule of construction that references to general items that follow references to
specific items are limited to the same type or character of those specific items is not
applicable in the Loan Documents, (h) references to any Person include that Person's
heirs, personal representatives, successors, trustees, receivers, and permitted assigns,
(i) references to any Law include every amendment or supplement to it, rule and regulation
adopted under it, and successor or replacement for it, and (j) references to any Loan
Document or other document include every renewal and extension of it, amendment and
supplement to it, and replacement or substitution for it.

1.3     Accounting
Principles. Except as otherwise expressly provided herein, all accounting
and financial terms used in the Loan Documents and the compliance with each financial
covenant therein shall be determined in accordance with GAAP, and, all accounting
principles shall be applied on a consistent basis so that the accounting principles in a
current period are comparable in all material

15

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respects to those applied during the preceding comparable period. If
Borrowers or Required Holders determine that a change in GAAP from that in effect on the
date hereof has altered the treatment of certain financial data to its detriment under
this Agreement, such party may, by written notice to the others and Administrative Agent
not later than ten days after the effective date of such change in GAAP, request
renegotiation of the financial covenants affected by such change. If Borrowers and
Required Holders have not agreed on revised covenants within 30 days after delivery of
such notice, then, for purposes of this Agreement, GAAP will mean generally accepted
accounting principles on the date just prior to the date on which the change that gave
rise to the renegotiation occurred.

SECTION 2     BORROWING/PURCHASE PROVISIONS.

2.1     Term
Loan Tranche. Each Lender severally, but not jointly, agrees to lend to Borrowers
in a single advance on the Closing Date such Lender's Commitment Percentage of
$20,000,000. If all or any portion of the Term Loan Principal Debt is paid or prepaid,
then the amount so repaid may not be reborrowed.

2.2     Term
Debt Increase.

(a)     Lenders'
Decision Regarding Partial Purchase Option. Administrative Agent shall notify Lenders
promptly upon receipt of notice of a Senior Payment Default or any Proceeding by or
involving any Borrower (in each case as defined in the Intercreditor Agreement). Any
Lender may, at its option, consent to the exercise of the Partial Purchase Option (the "Option
Exercise")by giving written notice to Administrative Agent within three
Business Days after of the receipt of notice from Administrative Agent (such date, the "Response
Date") of its desire to increase its Term Loan Principal Debt in an aggregate
amount equal to its ratable portion of the Option Price. If all Lenders consent to the
Option Exercise on or before the Response Date, Administrative Agent shall notify Senior
Agent of Lenders' intent to the exercise the Partial Purchase Option and the provisions of
clause (b) shall apply. If any Lender fails to give notice of consent to the Option
Exercise to Administrative Agent on or before the Response Date, such Lender shall be
deemed to have not approved the Option Exercise and the provisions of clause (c)
shall apply.

(b)     Exercise
Option. If all Lenders consent to the Option Exercise on or before the Response Date,
Administrative Agent shall notify Senior Agent of Lenders' intent to exercise the Partial
Purchase Option. If Administrative Agent gives notice of Lenders' intent to exercise the
Partial Purchase Option pursuant to this Section 2.2, each Lender consenting to the
Option Exercise (each, an "Accepting Lender")shall remit to
Administrative Agent the portion of the Option Price attributable to such Accepting Lender
and Administrative Agent, on behalf of Lenders, shall consummate the Partial Purchase
Option. Upon the consummation of the Partial Purchase Option, the Option Price shall be
treated for all purposes under this Agreement (including, without limitation,
amortization) as Term Loan Principal Debt, subject to each provision of the Loan
Documents.

(c)     Additional
Procedures Regarding the Option Exercise. If any Lender fails to give notice to
Administrative Agent of its consent to the Option Exercise as provided in clause (a)
(each Lender not consenting to the Option Exercise, a "Rejecting Lender"),
then Administrative Agent shall promptly notify (the "Rejected Amount Notice
Date")the Accepting Lendersof the aggregate Option Price that
would otherwise be attributable to Rejecting Lenders (the "Rejected Amount").
Each Accepting Lender shall have the Right, but not the obligation, to elect to increase
its portion of the Option Price by an amount not to exceed the Rejected Amount, and shall
notify Administrative Agent of that election on or before two Business Days after the
Rejected Amount Notice Date, specifying the proposed amount of the increase in such
Accepting Lender's portion of the Option Price. If the aggregate amount of the proposed
increases of all Accepting Lenders making an election to increase their respective
portions of the Option

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Price is less than the Rejected Amount, then Administrative
Agent shall not exercise the Partial Purchase Option. If the aggregate amount of the
proposed increases of all Accepting Lenders making an election to increase their
respective portions of the Option Price is equal to or greater than the Rejected
Amount, Administrative Agent shall notify Senior Agent of Lenders' intent to exercise the
Partial Purchase Option and the provisions of clause (b) shall apply. If the
aggregate amount of the proposed increases of all Accepting Lenders making an election to
increase their respective portions of the Purchase is greater than the Rejected
Amount, then the Rejected Amount shall be allocated ratably among such Accepting Lenders
based on the respective amounts of the proposed increases elected by such Accepting
Lenders.

2.3     Purchase of Discount Notes. Each Purchaser severally, but not jointly, agrees
to purchase from Borrowers (and Borrowers agree to sell to Purchasers), on the Closing
Date, the Stated Principal Amount of Discount Notes set forth opposite the name of such
Purchaser on Schedule 2.1B for the purchase price set forth opposite the name of
the Purchaser on Schedule 2.1B. Borrowers and each Purchaser agree that for
purposes of Sections 1271through1275 of the Code, the aggregate original
purchase price of the Discount Notes is as set forth under the heading "Purchase
Price"on Schedule 2.1B and such price will be appropriately used by
Borrowers and such Purchaser for financial reporting and income Tax purposes.

SECTION 3     TERMS OF PAYMENT.

3.1     Loan
Accounts, Notes, and Payments.

(a)     Loan
Accounts; Noteless Transaction. The Term Loan Principal Debt owed to each Lender shall
be evidenced by one or more loan accounts or records maintained by such Lender in the
ordinary course of business. The loan accounts or records maintained by Administrative
Agent (including, without limitation, the Register) and each Lender shall be prima
facie evidence absent manifest error of the Term Loan Principal Debt owned by
Borrowers to each Lender and the interest and principal payments thereon. Any failure to
so record or any error in doing so shall not, however, limit or otherwise affect the
obligation of Borrowers under the Loan Documents to pay any amount owing with respect to
the Obligation.

(b)     Term
Loan Notes. Upon the request of any Lender, made through Administrative Agent, the
Term Loan Principal Debt owed to such Lender may be evidenced by a Term Loan Note. In such
event, Borrowers shall promptly prepare, execute, and deliver to such Lender such Term
Loan Note payable to the order of such Lender. Upon the occurrence of the Term Debt
Increase, Borrowers shall promptly prepare, execute, and deliver any additional Term Loan
Notes requested by any Lender to reflect such Term Debt Increase. In the event Borrowers
are unable or unwilling to issue any additional Term Loan Notes to reflect the Term Debt
Increase, any Term Loan Notes delivered hereunder shall be deemed to be automatically
amended to reflect the Term Debt Increase.

(c)     Discount
Notes. On the Closing Date, Borrowers will deliver to each Purchaser a Discount Note
in the name of such Purchaser and in the Stated Principal Amount as set forth on Schedule
2.1B. Upon any assignment of any portion of any Purchaser's Discount Notes, Borrowers
shall issue new Discount Notes to both the assigned Purchaser and the assignee to reflect
such assignment.

(d)     Payment.
All payments of principal, interest, and other amounts to be made by Borrowers under this
Agreement and the other Loan Documents shall be made to Administrative Agent at its
principal office in Minneapolis, Minnesota in Dollars and in funds which are or will be
available for immediate use by Administrative Agent by 1:00 p.m. central time on the day
due, without setoff,

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deduction, or counterclaim. Payments made after 1:00 p.m. central time
shall be deemed made on the Business Day next following. Administrative Agent shall pay to
each Holder any payment of principal, interest, or other amount to which such Holder is
entitled hereunder on the same day Administrative Agent shall have received the same from
Borrowers; provided such payment is received by Administrative Agent prior to 1:00
p.m. central time, and otherwise before 1:00 p.m. central time on the Business Day next
following.

(e)     Payment
Assumed. Unless Administrative Agent has received notice from Borrowers prior to the
date on which any payment is due under this Agreement that Borrowers will not make that
payment in full, Administrative Agent may assume that Borrowers have made the full payment
due and Administrative Agent may, in reliance upon that assumption, cause to be
distributed to the appropriate Holder on that date the amount then due to such Holders. If
and to the extent Borrowers do not make the full payment due to Administrative Agent, each
Holder shall repay to Administrative Agent on demand the amount distributed to that Holder
by Administrative Agent together with interest for each day from the date that Holder
received payment from Administrative Agent until the date that Holder repays
Administrative Agent (unless such repayment is made on the same day as such
distribution), at an annual interest rate equal to the Federal Funds Rate.

3.2     Interest
and Principal Payments.

(a)     Interest.
Accrued interest on each Eurodollar Rate Borrowing is due and payable on the last day of
its respective Interest Period and on the Termination Date. Accrued interest on each Base
Rate Borrowing shall be payable monthly in arrears on the first day of each month,
commencing March 31, 2002, and on the Termination Date.

(b)     Term
Loan Principal Debt. The Term Loan Principal Debt is due and payable in quarterly
installments of $840,000 each (a "quarterly installment"), commencing on
June 1, 2002, and continuing thereafter on the first Business Day of each March,
June, September, and December, with the final installment of $9,920,000 (the "final
installment"); provided that, if the Term Debt Increase has occurred, the
amortization shall be recalculated such that each quarterly installment principal
installment shall be increased by an amount equal to 4.2% of the Term Debt Increase and
the final installment shall be equal to all Term Loan Principal Debt outstanding on such
date.

(c)     Discount
Notes. The Aggregate Discount Note Amount on all outstanding Discount Notes is due and
payable on the Termination Date.

3.3     Prepayments.

(a)     Optional
Prepayments.

(i)     Except
    as set forth herein, after giving Administrative Agent advance written notice of the
    intent to prepay, Borrowers may voluntarily prepay all or any part of the Aggregate
    Principal Debt, from time to time and at any time, in whole or in part; provided that:
    (A) such notice must be received by Administrative Agent by 11:00 a.m. central time, three
    Business Days preceding the date of prepayment; (B) each such partial prepayment must
    be in a minimum amount of at least $1,000,000 or such lesser amount as may be outstanding
    under the applicable Tranche; (C) any Eurodollar Rate Borrowing may only be prepaid at the
    end of an applicable Interest Period (unless Borrowers pay the amount of any
    Consequential Loss); (D) Borrowers shall pay any

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related Consequential Loss within ten days after demand therefor;
    (E) Borrower shall pay the applicable Termination Fee on the amount of any Term Loan
    Principal Debt being prepaid; and (F) concurrently with the delivery of such notice,
    Borrowers shall deliver to Administrative Agent evidence satisfactory to Administrative
    Agent that such prepayment is permitted by the terms of the Senior Loan Agreement and the
    Intercreditor Agreement. Conversions under Section 3.11 are not prepayments. Each
    notice of prepayment shall specify the prepayment date, the Tranche hereunder being
    prepaid, and the Type of Borrowing(s) and amount(s) of such Borrowing(s) to be prepaid and
    shall constitute a binding obligation of Borrowers to make a prepayment on the date stated
    therein, together with (unless such prepayment is made with respect to a
    Base Rate Borrowing) accrued and unpaid interest to the date of such payment on the
    aggregate principal amount prepaid.

(ii)     Application
    of Voluntary Prepayment. If no Default or Potential Default then exists or arises as a
    result therefrom (whereupon the provisions of Section 3.12(b) shall apply), any
    voluntary prepayment of the Term Loan Principal Debt shall be applied (A) first, to
    the Term Loan Principal Debt not attributable to the Term Debt Increase in inverse order
    of maturity and (B) second, to the Term Loan Principal Debt attributable to the
    Term Debt Increase in inverse order of maturity. All voluntary prepayments of Term Loan
    Principal Debt shall be allocated Pro Rata to each Lender. All voluntary prepayments of
    the Discount Notes shall be allocated Pro Rata to each Purchaser.

(b)     Mandatory
Prepayments from Proceeds from the Sale of SunScript Stock or SunScript Assets. Until
such time as the Obligation has been repaid in full, the Obligation shall be permanently
prepaid immediately upon receipt by any Borrower or any of its Subsidiaries of proceeds of
any Asset Disposition of all or any portion of the SunScript Stock or, after the Term Debt
Increase, the SunScript Assets (in one or a series of related transactions) in an amount
equal to such proceeds. Each prepayment under this Section 3.3(b)shall be applied first,
to the Term Loan Principal Debt in inverse order of maturity, and second, to the
Aggregate Discount Note Amount. All mandatory prepayments of the Term Loan Principal Debt
shall be allocated Pro Rata to each Lender and all mandatory prepayments of the Aggregate
Discount Note Amount shall be allocated Pro Rata to each Purchaser.

(c)     Mandatory
Prepayments from Proceeds. Until such time as the Obligation has been repaid in full,
the Obligation shall be permanently prepaid in the amounts and upon the occurrence of any
of the following events:

(i)     Immediately
    upon receipt by any Borrower or any of its Subsidiaries of proceeds of any Asset
    Disposition (other than an Asset Disposition covered by Section 3.3(b)) (in
    one or a series of related transactions), which proceeds exceed $2,000,000 (it being
    understood that if the proceeds exceed $2,000,000, the entire amount and not just the
    portion above $2,000,000 shall be subject to this Section 3.3(c)(i)), Borrowers
    shall prepay the Obligation in the order and manner specified herein in an amount equal to
    such proceeds. Notwithstanding anything to the contrary in the foregoing, Borrowers shall
    not be required to prepay the Obligation in the event that any Borrower receives proceeds
    in respect of the Campus Transaction or the THCI Turnover.

(ii)    Immediately
    upon the receipt by Borrowers of the proceeds of the issuance of equity securities in
    excess of $1,000,000 individually or in the aggregate (other than the issuance of
    equity securities in connection with any conversion of Debt under and in accordance with
    the Plan or Confirmation Order), Borrowers shall prepay the Obligation in the order and
    manner

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specified herein in an amount equal to such excess proceeds, net of
    underwriting discounts and commissions and other reasonable costs associated therewith.

(iii)   Immediately
    upon the receipt by any Borrower or any of their Subsidiaries of the proceeds of any
    federal, state, or local Tax refund in excess of $1,000,000 individually or in the
    aggregate, Borrowers shall prepay the Obligation in the order and manner specified herein
    in an amount equal to such excess proceeds.

(iv)    Immediately
    upon receipt by Borrowers of any insurance proceeds arising from damage or casualty, or
    any proceeds arising from ay condemnation, which proceeds exceed $1,000,000 individually
    or in the aggregate, Borrowers shall prepay the Obligation in the order and manner
    specified herein in an amount equal to such proceeds in excess of $1,000,000 individually
    or in the aggregate, net of any reasonable costs incurred in connection therewith.

Each prepayment under this Section 3.3(c)shall be
applied first, to the Senior Debt until paid in full to the extent permitted by the
Intercreditor Agreement, second, to the Term Loan Principal Debt not attributable
to the Term Debt Increase in inverse order of maturity, third, to the Term Loan
Principal Debt attributable to the Term Debt Increase in inverse order of maturity, and fourth,
to the Aggregate Discount Note Amount. All mandatory prepayments of the Term Loan
Principal Debt shall be allocated Pro Rata to each Lender and all mandatory prepayments of
the Aggregate Discount Note Amount shall be allocated Pro Rata to each Purchaser.

(d)     Mandatory
Prepayments of Interest/Consequential Loss. All prepayments under Section 3.3shall
be made, together with accrued interest to the date of such prepayment on the principal
amount prepaid, together with any Consequential Loss arising as a result thereof.

3.4     Interest
Options. Except that the Eurodollar Rate may not be selected when a Default
or Potential Default exists and except as otherwise provided in this Agreement,
Borrowings bear interest at a rate per annum equal to (a) for Base Rate Borrowings (i)
under the Term Loan Tranche the lesser of (x) the greater of (A) the
Base Rate plus the Applicable Margin for Base Rate Borrowings or (B) 9% per
annum and (y) the Maximum Rate and (ii) under the Note Purchase Tranche the lesser
of (x) the greater of (A) the Base Rate plus the Applicable Margin
for Base Rate Borrowings or (B) 2.65% per annum and (y) the Maximum Rate and
(b) for Eurodollar Rate Borrowings the lesser of (i) the Adjusted Eurodollar
Rate plus the Applicable Margin for Eurodollar Rate Borrowings and (ii) the
Maximum Rate. Each change in the Base Rate or the Maximum Rate, subject to the terms of
this Agreement, will become effective, without notice to Borrowers or any other person,
upon the effective date of such change.

3.5     Quotation
of Rates. It is hereby acknowledged that an appropriately designated officer of
the Company may call Administrative Agent on or before the date on which a Conversion
Notice is to be delivered by Borrowers in order to receive an indication of the rates then
in effect, but such indicated rates shall neither be binding upon Administrative Agent or
Holders nor affect the rate of interest which thereafter is actually in effect when the
Borrowing Notice is given or on the Borrowing Date.

3.6     Default
Rate. At the option of Required Holders and to the extent permitted by Law, all
past-due Aggregate Principal Debt and past due interest accruing on any of the Obligation
shall bear interest from maturity (stated or by acceleration) at the Default Rate until
paid; provided that, the Default Rate shall automatically apply in the case of Section 12.4
where the Default Rate is specified.

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3.7     Interest
Recapture. If the designated rate applicable to any Borrowing exceeds the Maximum
Rate, the rate of interest on such Borrowing shall be limited to the Maximum Rate, but any
subsequent reductions in such designated rate shall not reduce the rate of interest
thereon below the Maximum Rate until the total amount of interest accrued thereon equals
the amount of interest which would have accrued thereon if such designated rate had at all
times been in effect. In the event that at maturity (stated or by acceleration), or at
final payment of the Aggregate Principal Debt, the total amount of interest paid or
accrued is less than the amount of interest which would have accrued if such designated
rates had at all times been in effect, then, at such time and to the extent permitted by
Law, Borrowers shall pay an amount equal to the difference between (a) the lesser of
the amount of interest which would have accrued if such designated rates had at all times
been in effect and the amount of interest which would have accrued if the Maximum
Rate had at all times been in effect, and (b) the amount of interest actually paid or
accrued on the Aggregate Principal Debt.

3.8     Interest
Calculations. Interest will be calculated on the basis of actual number of days
(including the first day but excluding the last day) elapsed but computed as if each
calendar year consisted of 360 days (unless the calculation would result in an
interest rate greater than the Maximum Rate, in which event interest will be calculated on
the basis of a year of 365 or 366 days, as the case may be). All interest rate
determinations and calculations by Administrative Agent are conclusive and binding absent
manifest error.

3.9     Maximum
Rate. Regardless of any provision contained in any Loan Document, neither
Administrative Agent nor any Holder shall ever be entitled to contract for, charge, take,
reserve, receive, or apply, as interest on all or any part of the Obligation, any amount
in excess of the Maximum Rate, and, if Holders ever do so, then such excess shall be
deemed a partial prepayment of principal and treated hereunder as such and any remaining
excess shall be refunded to Borrowers. In determining if the interest paid or payable
exceeds the Maximum Rate, Borrowers and Holders shall, to the maximum extent permitted
under applicable Law, (a) treat all Borrowings as but a single extension of credit (and
Holders and Borrowers agree that such is the case, (b) characterize any nonprincipal
payment as an expense, fee, or premium rather than as interest, (c) exclude voluntary
prepayments and the effects thereof and any Termination Fee payable as a result thereof,
and (d) amortize, prorate, allocate, and spread the total amount of interest throughout
the entire contemplated term of the Obligation. However, if the Obligation is paid and
performed in full prior to the end of the full contemplated term thereof, and if the
interest received for the actual period of existence thereof exceeds the Maximum Amount,
Holders shall refund such excess, and, in such event, Holders shall not, to the extent
permitted by Law, be subject to any penalties provided by any Laws for contracting for,
charging, taking, reserving, or receiving interest in excess of the Maximum Amount. For
purposes of determining the "Maximum Rate" or the "Maximum
Amount," then those terms mean the "weekly ceiling" from time to
time in effect under Texas Finance Code Section 303.009, as amended. Borrowers
agrees that Chapter 346 of the Texas Finance Code, as amended (which
regulates certain revolving credit loan accounts and revolving tri-party accounts), does
not apply to the Obligation.

3.10    Interest
Periods. When Borrowers request any Eurodollar Rate Borrowing, Borrowers may elect the
interest period (each an "Interest Period") applicable thereto, which
shall be, at Borrowers' option, one, two, or three months; provided, however,that:
(a) the initial Interest Period for a Eurodollar Rate Borrowing shall commence on the date
of such Borrowing (including the date of any conversion thereto), and each Interest Period
occurring thereafter in respect of such Borrowing shall commence on the day on which the
next preceding Interest Period applicable thereto expires; (b) if any Interest Period for
a Eurodollar Rate Borrowing begins on a day for which there is no numerically
corresponding Business Day in the calendar month at the end of such Interest Period, then
such Interest Period shall end on the last Business Day in the calendar month at the end
of such Interest Period; (c) no Interest Period may be chosen with respect to any portion
of the Aggregate Principal Debt which would extend beyond

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the scheduled repayment date (including any dates on which mandatory
prepayments are required to be made) for such portion of the Aggregate Principal Debt; and
(d) no more than an aggregate of four (4) Interest Periods shall be in effect at one time.

3.11    Conversions.
Borrowers may (a) convert a Eurodollar Rate Borrowing on the last day of the applicable
Interest Period to a Base Rate Borrowing, (b) convert a Base Rate Borrowing at any time to
a Eurodollar Rate Borrowing, and (c) elect a new Interest Period (in the case of a
Eurodollar Rate Borrowing), by giving a Conversion Notice of such intent to Administrative
Agent no later than 11:00 a.m. central time on the third Business Day prior to the date of
conversion or the last day of the Interest Period, as the case may be (in the case of a
conversion to a Eurodollar Rate Borrowing or an election of a new Interest Period), and no
later than 11:00 a.m. central time one Business Day prior to the last day of the Interest
Period (in the case of a conversion to a Base Rate Borrowing); provided that, the
principal amount converted to, or continued as, a Eurodollar Rate Borrowing shall be in an
amount not less than $1,000,000 or a greater integral multiple of $100,000 (or such lesser
amount as may be outstanding). Administrative Agent shall timely notify each Holder with
respect to each Conversion Notice. Absent Borrowers' Conversion Notice or election of a
new Interest Period, a Eurodollar Rate Borrowing shall be deemed converted to a Base Rate
Borrowing effective as of the expiration of the Interest Period applicable thereto. No
Eurodollar Rate Borrowing may be either made or continued as a Eurodollar Rate Borrowing,
and no Base Rate Borrowing may be converted to a Eurodollar Rate Borrowing, if the
interest rate for such Eurodollar Rate Borrowing would exceed the Maximum Rate. The right
to convert from a Base Rate Borrowing to a Eurodollar Rate Borrowing, or to continue as a
Eurodollar Rate Borrowing shall not be available during the occurrence of a Default or
Potential Default.

3.12    Order
of Application.

(a)No
    Default. If no Default or Potential Default exists and if no order of application is
    otherwise specified in Section 3.3 or otherwise in the Loan Documents, payments and
    prepayments shall be applied in the order and manner as Borrowers may direct.

(b)     Default.
    If a Default or Potential Default exists (or if Borrowers fail to give directions as
    permitted under Section 3.12(a)), any payment or prepayment (including proceeds
    from the exercise of any Rights) shall be applied to the Obligation in the following
    order: (i) to the ratable payment of all fees, expenses, and indemnities for which
    Administrative Agent or Holders have not been paid or reimbursed in accordance with the
    Loan Documents (as used in this Section 3.12(b)(i), a "ratable
    payment" for any Holder or Administrative Agent shall be, on any date of
    determination, that proportion which the portion of the total fees, expenses, and
    indemnities owed to such Holder or Administrative Agent bears to the total aggregate fees
    and indemnities owed to all Holders and Administrative Agent on such date of
    determination); (ii) to the ratable payment of accrued and unpaid interest on the
    Aggregate Principal Debt (as used in this Section 3.12(b)(ii), "ratable
    payment" means, for any Holder, on any date of determination, that proportion
    which the accrued and unpaid interest on the Aggregate Principal Debt owed to such Holder
    bears to the total accrued and unpaid interest on the Aggregate Principal Debt owed to all
    Holders); (iii) to the ratable payment of the Aggregate Principal Debt (as used in this Section
    3.12(b)(iii), "ratable payment" means, for any Holder, on any date of
    determination, that proportion which the Aggregate Principal Debt owed to such Holder
    bears to the Aggregate Principal Debt owed to all Holders); and (iv) to the payment of the
    remaining Obligation in the order and manner Required Holders deem appropriate.

Subject to the provisions of Section 13 and provided that
Administrative Agent shall not in any event be bound to inquire into or to determine the
validity, scope, or priority of any interest or entitlement of any Holder and may suspend
all payments or seek appropriate relief (including, without limitation,

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instructions from Required Holders or an action in the nature of
interpleader) in the event of any doubt or dispute as to any apportionment or distribution
contemplated hereby, Administrative Agent shall promptly distribute such amounts to each
Holder in accordance with the Agreement and the related Loan Documents.

3.13     Sharing
of Payments, Etc. If any Holder shall obtain any payment or prepayment with
respect to the Obligation (whether voluntary, involuntary, or otherwise, including,
without limitation, as a result of exercising its Rights under Section 3.14) which
is in excess of its share of any such payment in accordance with the relevant Rights of
the Holders under the Loan Documents, then such Holder shall purchase from the other
Holders such participations as shall be necessary to cause such purchasing Holder to share
the excess payment with each other Holder in accordance with the relevant Rights under the
Loan Documents. If all or any portion of such excess payment is subsequently recovered
from such purchasing Holder, then the purchase shall be rescinded and the purchase price
restored to the extent of such recovery. Borrowers agree that any Holder purchasing a
participation from another Holder pursuant to this Section may, to the fullest
extent permitted by Law, exercise all of its Rights of payment (including the Right of
offset) with respect to such participation as fully as if such Holder were the direct
creditor of Borrowers in the amount of such participation.

3.14     Offset.
If a Default exists, each Holder shall be entitled to exercise (for the benefit of all
Holders in accordance with Section 3.13) the Rights of offset and/or banker's Lien
against each and every account and other property, or any interest therein, which any
Borrower may now or hereafter have with, or which is now or hereafter in the possession
of, such Holder to the extent of the full amount of the Obligation.

3.15     Booking
Borrowings. To the extent permitted by Law, any Holder may make, carry, or
transfer its Borrowings at, to, or for the account of any of its branch offices or the
office of any of its Affiliates; provided that, no Affiliate of any Holder shall be
entitled to receive any greater payment under Section 4 than the transferor
Holder would have been entitled to receive with respect to such Borrowings.

SECTION 4     CHANGE IN CIRCUMSTANCES.

4.1     Increased
Cost and Reduced Return.

(a)     Changes
    in Law. If, after the date hereof, the adoption of any applicable Law or any change in
    any applicable Law or any change in the interpretation or administration thereof by any
    Governmental Authority, or compliance by any Holder (or its Applicable Lending Office)
    with any request or directive (whether or not having the force of Law) of any such
    Governmental Authority:

(i)     shall
        subject such Holder (or its Applicable Lending Office) to any Tax or other charge with
        respect to any Eurodollar Rate Borrowing or its obligation to loan Eurodollar Rate
        Borrowings, or change the basis of taxation of any amounts payable to such Holder (or its
        Applicable Lending Office) under the Loan Documents in respect of any Eurodollar Rate
        Borrowings (other than Taxes imposed on the overall net income of such Holder by
        the jurisdiction in which such Holder has its principal office or such Applicable Lending
        Office);

(ii)     shall
        impose, modify, or deem applicable any reserve, special deposit, assessment, or similar
        requirement (other than the Reserve Requirement utilized in the determination of
        the Adjusted Eurodollar Rate) relating to any extensions of credit or other assets of, or
        any deposits with or other liabilities or commitments of, such Holder

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(or its Applicable Lending Office), including the commitment of such
        Holder hereunder; or

(iii)     shall
        impose on such Holder (or its Applicable Lending Office) or the London interbank market
        any other condition affecting the Loan Documents or any of such extensions of credit or
        liabilities or commitments;

and the result of any of the foregoing is to increase the cost to such
    Holder (or its Applicable Lending Office) of making, converting into, continuing, or
    maintaining any Eurodollar Rate Borrowings or to reduce any sum received or receivable by
    such Holder (or its Applicable Lending Office) under the Loan Documents with respect to
    any Eurodollar Rate Borrowing, then Borrowers shall pay to such Holder on demand such
    amount or amounts as will compensate such Holder for such increased cost or reduction. If
    any Holder requests compensation by Borrowers under this Section 4.1(a), Borrowers
    may, by notice to such Holder (with a copy to Administrative Agent), suspend the
    obligation of such Holder to loan or continue Borrowings of the Type with respect to which
    such compensation is requested, or to convert Borrowings of any other Type into Borrowings
    of such Type, until the event or condition giving rise to such request ceases to be in
    effect (in which case the provisions of Section 4.4 shall be applicable); provided,
    that such suspension shall not affect the Right of such Holder to receive the
    compensation so requested.

(b)     Capital
    Adequacy. If, after the date hereof, any Holder shall have determined that the
    adoption of any applicable Law regarding capital adequacy or any change therein or in the
    interpretation or administration thereof by any Governmental Authority charged with the
    interpretation or administration thereof, or any request or directive regarding capital
    adequacy (whether or not having the force of Law) of any such Governmental Authority has
    or would have the effect of reducing the rate of return on the capital of such Holder or
    any corporation controlling such Holder as a consequence of such Holder's obligations
    hereunder to a level below that which such Holder or such corporation could have achieved
    but for such adoption, change, request, or directive (taking into consideration its
    policies with respect to capital adequacy), then from time to time upon demand Borrowers
    shall pay to such Holder such additional amount or amounts as will compensate such Holder
    for such reduction.

(c)     Changes
    in Applicable Lending Office. Compensation Statement. Each Holder shall promptly
    notify Borrowers and Administrative Agent of any event of which it has knowledge,
    occurring after the date hereof, which will entitle such Holder to compensation pursuant
    to this Section and will designate a different Applicable Lending Office if such
    designation will avoid the need for, or reduce the amount of, such compensation and will
    not, in the judgment of such Holder, be otherwise disadvantageous to it. Any Holder
    claiming compensation under this Section shall furnish to Borrowers and Administrative
    Agent a statement setting forth the additional amount or amounts to be paid to it
    hereunder which shall be conclusive in the absence of manifest error. In determining such
    amount, such Holder may use any reasonable averaging and attribution methods.

4.2     Limitation
on Types of Loans. If on or prior to the first day of any Interest Period for any
Eurodollar Rate Borrowing:

(a)     Inability
    to Determine Eurodollar Rate. Administrative Agent determines (which determination
    shall be conclusive) that by reason of circumstances affecting the relevant market,
    adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such
    Interest Period; or

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(b)     Cost
    of Funds. Required Holders determine (which determination shall be conclusive) and
    notify Administrative Agent that the Adjusted Eurodollar Rate will not adequately and
    fairly reflect the cost to the Holders of funding Eurodollar Rate Borrowings for such
    Interest Period;

then Administrative Agent shall give Borrowers prompt notice thereof
specifying the relevant amounts or periods, and so long as such condition remains in
effect, the Holders shall be under no obligation to fund additional Eurodollar Rate
Borrowings, continue Eurodollar Rate Borrowings, or to convert Base Rate Borrowings into
Eurodollar Rate Borrowings, and Borrowers shall, on the last day(s) of the then current
Interest Period(s) for the outstanding Eurodollar Rate Borrowings, either prepay such
Borrowings or convert such Borrowings into Base Rate Borrowings in accordance with the
terms of this Agreement.

4.3     Illegality.
Notwithstanding any other provision of the Loan Documents, in the event that it becomes
unlawful for any Holder or its Applicable Lending Office to make, maintain, or fund
Eurodollar Rate Borrowings hereunder, then such Holder shall promptly notify Borrowers
thereof and such Holder's obligation to make or continue Eurodollar Rate Borrowings and to
convert other Base Rate Borrowings into Eurodollar Rate Borrowings shall be suspended
until such time as such Holder may again make, maintain, and fund Eurodollar Rate
Borrowings (in which case the provisions of Section 4.4 shall be applicable).

4.4     Treatment
of Affected Loans. If the obligation of any Holder to fund Eurodollar Rate
Borrowings or to continue, or to convert Base Rate Borrowings into Eurodollar Rate
Borrowings, shall be suspended pursuant to Sections 4.1, 4.2,or4.3 hereof,
such Holder's Eurodollar Rate Borrowings shall be automatically converted into Base Rate
Borrowings on the last day(s) of the then current Interest Period(s) for Eurodollar Rate
Borrowings (or, in the case of a conversion required by Section 4.3 hereof, on such
earlier date as such Holder may specify to Borrowers with a copy to Administrative Agent)
and, unless and until such Holder gives notice as provided below that the circumstances
specified in Sections 4.1, 4.2,or4.3 hereof that gave rise to such
conversion no longer exist:

(a)     to
    the extent that such Holder's Eurodollar Rate Borrowings have been so converted, all
    payments and prepayments of principal that would otherwise be applied to such Holder's
    Eurodollar Rate Borrowings shall be applied instead to its Base Rate Borrowings; and

(b)     all
    Borrowings that would otherwise be made or continued by such Holder as Eurodollar Rate
    Borrowings shall be made or continued instead as Base Rate Borrowings, and all Borrowings
    of such Holder that would otherwise be converted into Eurodollar Rate Borrowings shall be
    converted instead into (or shall remain as) Base Rate Borrowings.

If such Holder gives notice to Borrowers (with a copy to Administrative
Agent) that the circumstances specified in Sections 4.1, 4.2,or4.3 hereof
that gave rise to the conversion of such Holder's Eurodollar Rate Borrowings pursuant to
this Section 4.4 no longer exist (which such Holder agrees to do promptly upon such
circumstances ceasing to exist) at a time when Eurodollar Rate Borrowings made by other
Holders are outstanding, such Holder's Base Rate Borrowings shall be automatically
converted, on the first day(s) of the next succeeding Interest Period(s) for such
outstanding Eurodollar Rate Borrowings, to the extent necessary so that, after giving
effect thereto, all Eurodollar Rate Borrowings held by the Holders and by such Holder are
held pro rata (as to principal amounts, Types, and Interest Periods) in accordance with
their ratable shares of the Aggregate Principal Debt. If Borrowers are required to pay or
will be required to pay additional amounts to or for the account of any Holder pursuant to
this Section 4.4, then such Holder will agree to use reasonable efforts to change
the jurisdiction of its Applicable Lending

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Office so as to eliminate or reduce any such additional payment which
may thereafter accrue if such change, in the judgment of such Holder, is not otherwise
disadvantageous to such Holder.

4.5     Compensation.
Upon the request of any Holder, Borrower shall pay to such Holder such amount or amounts
as shall be sufficient (in the reasonable opinion of such Holder) to compensate it for any
loss, cost, or expense (including loss of anticipated profits) incurred by it as a result
of:

(a)     any
    payment, prepayment, or conversion of a Eurodollar Rate Borrowing for any reason
    (including, without limitation, the acceleration of the loan pursuant to Section 11.1)
    on a date other than the last day of the Interest Period for such Borrowing; or

(b)     any
    failure by Borrower for any reason to borrow, convert, continue, or prepay a Eurodollar
    Rate Borrowing on the date for such borrowing, conversion, continuation, or prepayment
    specified in the relevant notice of prepayment, continuation, or conversion under this
    Agreement.

4.6     Taxes.

(a)     General.
    Any and all payments by Borrowers to or for the account of any Holder or Administrative
    Agent hereunder or under any other Loan Document shall be made free and clear of and
    without deduction for any and all present or future Taxes, excluding, in the case
    of each Holder and Administrative Agent, Taxes imposed on its income and franchise Taxes
    imposed on it by the jurisdiction under the Laws of which such Holder (or its Applicable
    Lending Office) or Administrative Agent (as the case may be) is organized, or any
    political subdivision thereof. If Borrowers shall be required by Law to deduct any Taxes
    from or in respect of any sum payable under any Loan Document to any Holder or
    Administrative Agent, (i) the sum payable shall be increased as necessary so that after
    making all required deductions (including deductions applicable to additional sums payable
    under this Section 4.6) such Holder or Administrative Agent receives an amount
    equal to the sum it would have received had no such deductions been made, (ii) Borrowers
    shall make such deductions, (iii) Borrowers shall pay the full amount deducted to the
    relevant taxation authority or other authority in accordance with applicable Law, and (iv)
    Borrowers shall furnish to Administrative Agent, the original or a certified copy of a
    receipt evidencing payment thereof.

(b)     Stamp
    and Documentary Taxes. In addition, Borrowers agree to pay any and all present or
    future stamp or documentary taxes and any other excise or property taxes or charges or
    similar levies which arise from any payment made under any Loan Document or from the
    execution or delivery of, or otherwise with respect to, any Loan Document (hereinafter
    referred to as "Other Taxes").

(c)     Indemnification
    for Taxes. Borrowers agree to indemnify each Holder and Administrative Agent for the
    full amount of Taxes and Other Taxes (including, without limitation, any Taxes or Other
    Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 4.6)
    paid by such Holder or Administrative Agent (as the case may be) and any liability
    (including penalties, interest, and expenses) arising therefrom or with respect thereto.

(d)     Withholding
    Tax Forms. Each Holder organized under the Laws of a jurisdiction outside the United
    States, on or prior to the date of its execution and delivery of this Agreement in the
    case of each Holder listed on the signature pages hereof and on or prior to the date on
    which it becomes a Holder in the case of each other Holder, and from time to time
    thereafter, including, without limitation, upon the expiration or obsolescence of any
    previously delivered

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form or upon the written request of Borrower or Administrative Agent
    (but only so long as such Holder remains lawfully able to do so) shall provide Borrower
    and Administrative Agent with (i) two duly completed copies of Internal Revenue Service
    Form W-BEN, W-8ECI, W-8IMY, W-9, or other applicable form, as the
    case may be, certifying in each case that such Holder is entitled to benefits under an
    income tax treaty to which the United States is a party which reduces the rate of
    withholding tax on payments of interest or certifying that the income receivable pursuant
    to this Agreement is effectively connected with the conduct of a trade or business in the
    United States, or certifying that such Holder is entitled to an exemption from or a
    reduced rate of tax on payment pursuant to the "portfolio interest" exception
    under section 871(h) or 881(c) of the Code, (ii) if applicable, a statement
    indicating that such Holder is entitled to the "portfolio interest" exception
    under Section 871(h) or 881(c)(3) of the Code, and (iii) any other governmental forms or
    certificates which are necessary or required under an applicable tax treaty or otherwise
    by law to reduce or eliminate withholding tax, which has been reasonably requested by
    Borrower or Administrative Agent. If an event (including without limitation any change in
    treaty, law, or regulation) has occurred prior to the date on which any delivery required
    by the preceding sentence would otherwise be required which renders all such forms
    inapplicable or which would prevent any Holder from duly completing and delivering any
    such form with respect to it and such Holder advises Borrower and Administrative Agent
    that it is not capable of receiving payments without any deduction or withholding of
    United States federal income tax, such Holder shall not be required to deliver such forms.
    If the form provided by a Holder at the time such Holder first becomes a party to this
    Agreement indicates a United States interest withholding tax rate in excess of zero,
    withholding at such rate shall be considered excluded from "Taxes".

(e)     Failure
    to Provide Withholding Forms; Changes in Tax Laws. For any period with respect to
    which a Holder has failed to provide Borrowers and Administrative Agent with the
    appropriate form pursuant to Section 4.6(d) (unless such failure is due to a
    change in Law occurring subsequent to the date on which a form originally was required to
    be provided), such Holder shall not be entitled to indemnification under Section 4.6(a)
    or 4.6(b) with respect to Taxes imposed by the United States; provided, however,
    that should a Holder, which is otherwise exempt from or subject to a reduced rate of
    withholding tax, become subject to Taxes because of its failure to deliver a form required
    hereunder, Borrowers shall take such steps as such Holder shall reasonably request to
    assist such Holder to recover such Taxes.

(f)     Changes
    in Applicable Lending Office. If Borrowers are required to pay or will be required to
    pay additional amounts to or for the account of any Holder pursuant to this Section 4.6,
    then such Holder will agree to use reasonable efforts to change the jurisdiction of its
    Applicable Lending Office so as to eliminate or reduce any such additional payment which
    may thereafter accrue if such change, in the judgment of such Holder, is not otherwise
    disadvantageous to such Holder.

(g)     Tax
    Payment Receipt. Within 30 days after the date of any payment of Taxes, Borrowers
    shall furnish to Administrative Agent the original or a certified copy of a receipt
    evidencing such payment.

(h)     Survival.
    Without prejudice to the survival of any other agreement of Borrowers hereunder, the
    agreements and obligations of Borrowers contained in this Section 4.6 shall survive
    the payment in full of the Obligation.

SECTION 5     FEES.

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5.1     Treatment
of Fees. Except as otherwise provided by Law, the fees described in this Section
5: (a) do not constitute compensation for the use, detention, or forbearance of money,
(b) are in addition to, and not in lieu of, interest and expenses otherwise described in
the Loan Documents, (c) shall be payable in accordance with Section 3.1(c),
(d) shall be non-refundable, (e) shall, to the fullest extent permitted by Law, bear
interest, if not paid when due, at the Default Rate, and (f) shall be calculated on the
basis of actual number of days (including the first day but excluding the last day)
elapsed, but computed as if each calendar year consisted of 365 or 366 days, as the case
may be.

5.2     Fees
of Administrative Agent. Borrowers shall pay to Administrative Agent (for its own
account) the fees described in the certain fee letter with Administrative Agent.

5.3     Fees
of Highland Capital. Borrowers shall pay to Highland Capital Management, L.P. (for
its own account) the fees described in the certain fee letter with Highland Capital
Management, L.P.

5.4     Termination
Fee. With respect to any voluntary prepayment of the Term Loan Principal Debt,
Borrowers shall pay to Administrative Agent, for the benefit of Lenders, the Termination
Fee required pursuant to Section 3.3.

5.5     Upfront
Fees. On the Closing Date, Borrowers shall pay to Administrative Agent, for the
benefit of Lenders, an upfront fee equal to $400,000.

SECTION 6     SECURITY.

6.1     Collateral.
To secure the full and complete payment and performance of the Obligation or the Closing
Date, each Borrower shall enter into Collateral Documents (in form and substance
acceptable to Administrative Agent) pursuant to which, among other things, each such
entity shall, to the extent permitted by applicable Law, grant, pledge, assign, and create
first priority Liens (except to the extent Permitted Liens (including, without
limitation, the Liens of Senior Agent under the Senior Loan Documents and in accordance
with the Intercreditor Agreement) affect such priority) in favor of Administrative Agent
for the ratable benefit of Holders) in and to: (a) 100% of each such entity's Rights,
titles, and interests in the issued and outstanding stock, equity, or other investment
securities of each Subsidiary of such entity; (b) all Rights, titles, and interests
in all other personal property of each Borrower; and (c) all Rights, titles, and interests
in certain real property of each Borrower.

6.2     Future
Liens. Promptly after (a) the acquisition of any material assets (real, personal,
tangible, or intangible) by any Borrower, (b) the removal, termination, or expiration of
any prohibitions upon the granting of a Lien in any asset (real, personal, tangible, or
intangible) of any Borrower, or (c) upon the designation, formation, or acquisition
of any new Subsidiary of any Borrower (the assets described in clauses (a)
through (c) hereof are referred to herein as the "Additional Assets"),
such Borrower shall (or shall cause the appropriate new Subsidiary to) execute and deliver
to Administrative Agent all further instruments and documents (including, without
limitation, Collateral Documents, and all certificates and instruments representing shares
of stock or evidencing Debt and any realty appraisals as Administrative Agent may require
with respect to any such Additional Assets), and shall take all further action that may be
necessary or desirable, or that Administrative Agent may reasonably request, to grant,
perfect, and protect Liens in favor of Administrative Agent for the benefit of Holders in
such Additional Assets; it being expressly understood that the granting of such
additional security for the Obligation is a material inducement to the execution and
delivery of this Agreement by each Holder. Upon satisfying the terms and conditions
hereof, such Additional Assets shall be included in the "Collateral" for
all purposes under the Loan Documents, and all references to the "Collateral"
in the Loan Documents shall include the Additional Assets. Notwithstanding the foregoing,
no Borrower shall be required to grant Liens to Administrative Agent for the benefit of
Holders in Additional Assets except to the extent Senior Lenders

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have been granted Liens in such Additional Assets, in which event
Administrative Agent for the benefit of Holders shall take a second priority Lien in such
Additional Assets subject to the terms of the Intercreditor Agreement.

6.3     Release
of Collateral.

(a)     Upon
    Sale or Disposition of Collateral. Upon any sale, transfer, or disposition of
    Collateral which is expressly permitted pursuant to the Loan Documents (or is otherwise
    authorized by requisite Holders), and promptly upon written request by Borrowers (which
    request must be accompanied by true and correct copies of (i) all documents of transfer or
    disposition, including any contract of sale, and (ii) all requested release instruments),
    Administrative Agent shall (and is hereby irrevocably authorized by Holders to) execute
    such documents as may be necessary to evidence the release of Liens granted to
    Administrative Agent for the benefit of Holders pursuant hereto in such Collateral.

(b)Intercreditor
    Agreement. To the extent any Liens are required to be released by the terms of the
    Intercreditor Agreement, Administrative Agent is hereby irrevocably authorized by Holders
    to execute such documents as may be necessary to evidence the release of Liens granted to
    Administrative Agent for the benefit of Holders pursuant hereto in such Collateral.

(c)General
    Provisions. The actions of Administrative Agent under this Section 6.3 are
    subject to the following: (i) unless such release is required by the terms of the
    Intercreditor Agreement, no such release of Liens shall be granted if any Default or
    Potential Default has occurred and is continuing, including, without limitation, the
    failure to make certain mandatory prepayments in accordance with Sections 3.3(b)and3.3(c) in conjunction with the sale or transfer of such Collateral; (ii)
    Administrative Agent shall not be required to execute any such document on terms which, in
    Administrative Agent's opinion, would expose Administrative Agent to liability or create
    any obligation or entail any consequence other than the release of such Liens
    without recourse or warranty; and (iii) such release shall not in any manner discharge,
    affect, or impair the Obligation or Liens upon all interests retained by Borrowers.

6.4     
Negative Pledge. The Borrowers hereby covenant and agree not to directly
create, incur, grant, suffer, or permit to be created or incurred any Lien on any assets
of Borrowers, other than Permitted Liens and other Liens incurred in connection
with Debt permitted under clauses (f), (g),and(h) of Section 11.1;
it being expressly understood that the provisions of this negative pledge are a
material inducement to the execution and delivery of this Agreement by each Holder.

SECTION 7     CONDITIONS PRECEDENT TO CLOSING.

7.1     Conditions
Precedent to Closing. This Agreement shall not become effective, and Lenders shall
not be obligated to advance any Term Loan Principal Debt and Purchasers shall not be
obligated to purchase any Discount Notes, unless Administrative Agent has received
all of the agreements, documents, instruments, and other items described on Schedule
7.1(other than each item, if any, listed on Schedule 7.1A, which
items are hereby permitted to be delivered after the Closing Date but not later than the
respective date for delivery of each such item specified on Schedule 7.1A or
such later date as agreed to by Required Holders). Each condition precedent in this
Agreement is material to the transactions contemplated in this Agreement, and time is of
the essence in respect of each thereof.

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SECTION 8.     REPRESENTATIONS, WARRANTIES, AND CERTAIN
COVENANTS

To induce
Administrative Agent and each Holder to enter into the Loan Documents, to advance any Term
Loan Principal Debt or purchase any Discount Notes, as applicable, the Company represents,
warrants, and covenants on behalf of itself and the other Borrowers (and each of the other
Borrowers, jointly and severally, accepts responsibility for such representations and
warranties) to Administrative Agent and Holders that the following statements are and will
be true, correct, and complete and, unless specifically limited, shall remain so
until indefeasible payment in full, in cash, of the Obligation:

8.1     Organization,
Powers, Capitalization.

(a)     Organization
    and Powers. Each Borrower is an entity duly organized, validly existing, and in good
    standing under the laws of its jurisdiction of organization and qualified to do business
    in each jurisdiction where such qualification is required except where failure to
    be so qualified could not reasonably be expected to be a Material Adverse Event. Each
    Borrower has all requisite power and authority to own and operate its properties, to carry
    on its business as now conducted, and proposed to be conducted and to enter into each Loan
    Document to which it is a party.

(b)     Capitalization.
    Except as set forth on Schedule 8.1, each Borrower (other than the
    Company) is a direct or indirect Subsidiary of the Company. The authorized and the issued
    capital stock of each Borrower and each of their respective Subsidiaries (except
    the Inactive Entities) is as set forth on Schedule 8.1, including all
    preemptive or other outstanding rights, options, warrants, conversion rights, or similar
    agreements or understandings for the purchase or acquisition from any Borrower of any
    shares of capital stock or other securities of any such entity. All issued and outstanding
    shares of capital stock of each Borrower are duly authorized and validly issued, fully
    paid, nonassessable, free and clear of all Liens other than (1) Liens securing
    the Obligation and Liens granted in favor of Senior Agent for the benefit of Senior Agent
    and Senior Lenders and (2) as to the Company only, any pledge of the Company's
    capital stock by its shareholders, and such shares were issued in compliance with all
    applicable state and federal laws concerning the issuance of securities. Each Borrower
    will promptly notify Holders of any change in its ownership or corporate structure.

8.2     Authorization
of Borrowing, No Conflict. Each Borrower has the power and authority to incur the
Obligation and to grant security interests in the Collateral. On the Closing Date, the
execution, delivery, and performance of the Loan Documents by each Borrower signatory
thereto will have been duly authorized by all necessary corporate and shareholder action.
The execution, delivery, and performance by each Borrower of each Loan Document to which
it is a party and the consummation of the transactions contemplated thereby do not
contravene any applicable Law, the corporate charter or bylaws, or other organizational
documents of any Borrower or any material agreement or order by which any Borrower, or any
Borrower's property, is bound. This Agreement and the other Loan Documents are the legal,
valid, and binding obligations of the applicable Borrowers respectively, each enforceable
against Borrowers, as applicable, in accordance with their respective terms.

8.3     Financial
Condition. All Financial Statements concerning the Company and its Subsidiaries
(a) furnished on or before the Closing Date to Administrative Agent or any Holder by
the Company in connection with this Agreement (except for the Financial Statements or
financial reports dated February 11, 2002), and (b) furnished subsequent to the
Closing Date to Administrative Agent or any Holder pursuant to this Agreement have been
prepared in accordance with GAAP consistently applied throughout the periods involved
(except as disclosed therein) and present fairly the financial condition of Persons
covered thereby as at the dates thereof and the results of their operations for the
periods then ended. The

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Pro Forma was prepared by Borrowers based on the unaudited consolidated
balance sheet of Borrowers dated as of October 31, 2001. The Projections delivered by
Borrowers will be prepared in light of the past operations of the business of Borrowers
and their Subsidiaries, and such Projections will represent the good faith estimate of
Borrowers concerning the most probable course of their business as of the date such
Projections are delivered.

8.4     Debt
and Liabilities. As of the Closing Date, except as set forth on Schedule 8.4,
no Borrower has any (a) Debt or other obligations for borrowed money except as
reflected on the Pro Forma; or (b) Liabilities other than as reflected on the
Pro Forma or otherwise as incurred in the ordinary course of business following the date
of the Pro Forma. The Company, or if applicable the other Borrowers, shall promptly
deliver copies of all notices given or received by any Borrower with respect to
noncompliance with any term or condition of (i) any Debt (other than the Senior Debt)
in a principal amount in excess of $5,000,000 or (ii) the Senior Loan Documents, and
shall promptly notify Administrative Agent of any default or event of default with respect
to (x) any Debt in a principal amount in excess of $5,000,000 which default or event
of default gives the holders of such Debt the right to accelerate the maturity thereof or
(y) any Senior Loan Document.

8.5     Title
to Properties; Liens. Each Borrower has good, sufficient, and legal title to all
of the Collateral (and any other material properties and assets, if any) and will have
good, sufficient, and legal title of all after-acquired Collateral (and any other
after-acquired material properties and assets, if any), in each case, free and clear of
all Liens except for Permitted Liens. Administrative Agent for the benefit of
Holders has a valid, perfected, and first priority Lien in the SunScript Stock and, after
the exercise of the Partial Purchase Option, the SunScript Assets, and a valid, perfected,
and second priority Liens on the other Collateral (subject only to Permitted Liens),
securing the payment of the Obligation, and such Liens are entitled to all of the Rights,
priorities, and benefits afforded by the UCC or other applicable Law as enacted in any
relevant jurisdiction which relates to perfected Liens.

8.6     Litigation;
Adverse Facts. There are no judgments outstanding against any Borrower or
affecting any property of any Borrower nor are there any actions, suits, proceedings,
governmental investigations, or arbitrations now pending or, to the best knowledge of any
Borrower after due inquiry, threatened against or affecting any Borrower or any of its
property which, if adversely determined, could reasonably be expected to result in a
Material Adverse Event. Promptly upon any Borrower obtaining knowledge of (a) the
institution of any action, suit, proceeding, governmental investigation, or arbitration
against or affecting any Borrower or any of its property, not previously disclosed by
Borrowers to Administrative Agent, which if adversely determined could reasonably be
expected to be a Material Adverse Event or (b) any development in any action, suit,
proceeding, governmental investigation, or arbitration at any time pending or affecting
any Borrower or any of its property which could reasonably be expected to be a Material
Adverse Event, Borrowers will promptly give notice thereof to Administrative Agent and
provide such other information as may be reasonably available to enable Administrative
Agent and its counsel to evaluate such matter.

8.7     Payment
of Taxes. Except as disclosed on Schedule 8.7, all material Tax returns and
reports of each Borrower required to be filed by any of them have been timely filed and
are complete and accurate in all material respects. All Taxes which are due and payable by
each Borrower have been paid when due (except as otherwise permitted by the terms of the
Plan, in which case Borrowers have complied with and shall comply with the Plan in all
material respects); provided that no such Tax need be paid if such Borrower is
contesting same in good faith by appropriate proceedings promptly instituted and
diligently conducted and if such Borrower has established appropriate reserves as required
in conformity with GAAP. As of the Closing Date, except as set forth in Schedule
8.7,none of the income Tax returns of any Borrower is under audit. Other than
tax liens filed prior to October 14, 1999 and other than those tax liens filed after
October 14, 1999 and prior to the date of this Agreement, that have or will be

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discharged pursuant to the Plan, no other tax liens have been filed
against any Borrower with respect to payroll taxes, and to Borrowers' knowledge, no other
tax liens have been filed against any Borrower since October 14, 1999 that are in excess
of $250,000, individually or in the aggregate. The charges, accruals, and reserves on the
books of each Borrower in respect of any Taxes are in accordance with GAAP. Each Borrower
has executed United States of America Internal Revenue Service ("IRS")
Form 8821 designating Administrative Agent as such Borrower's appointee to receive
directly from the IRS, on an on-going basis, certain Tax information, notices, and other
written communication and each Borrower authorizes Administrative Agent to file such Form
8821 with the IRS. Each Borrower's federal tax identification number is listed on Schedule 8.7.

8.8     
Performance of Agreements. No Borrower is in default in the performance,
observance, or fulfillment of any of the obligations, covenants, or conditions contained
in any Material Contract, and no condition exists that, with the giving of notice or the
lapse of time or both, would constitute such a default.

8.9     Employee
Plans. Each of the Borrowers, their Subsidiaries, and their ERISA Affiliates are
in compliance, and will continue to remain in compliance, in all material respects with
all applicable provisions of ERISA, the Code, and all other applicable Laws and the
regulations and interpretations thereof with respect to all Employee Plans. No material
liability has been incurred by the Borrowers, their Subsidiaries, or their ERISA
Affiliates which remains unsatisfied for any funding obligation, Taxes, or penalties with
respect to any Employee Plan. No Borrower, nor any of its Subsidiaries, shall establish
any new Employee Plan or amend any existing Employee Plan if the liability or increased
liability resulting from such establishment or amendment is material.

8.10     Broker's
Fees. No broker's or finder's fee or commission will be payable with respect to
this Agreement.

8.11     Environmental
Compliance. Each Borrower is and shall continue to remain in compliance with all
applicable Environmental Laws except where failure to be in such compliance could
not reasonably be expected to result in a Material Adverse Event. To Borrowers' knowledge,
there are no claims, liabilities, Liens, investigations, litigation, administrative
proceedings, whether pending or threatened, judgments, or orders relating to any Hazardous
Substance asserted or threatened against any Borrower or relating to any real property
currently or formerly owned, leased or operated by any Borrower.

8.12     Solvency.
From and after the date of this Agreement, the Company and its Subsidiaries, on a
consolidated basis, are Solvent.

8.13     Disclosure.
No representation or warranty of any Borrower contained in this Agreement, the other Loan
Documents, or any other document, certificate, or written statement furnished to
Administrative Agent or any Holder by or on behalf of any such Person for use in
connection with the Loan Documents contains any untrue statement of a material fact or
omitted, omits, or will omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading in light of the circumstances in
which the same were made. There is no material fact known to any Borrower that is or could
reasonably be expected to be a Material Adverse Event and that has not been disclosed
herein or in such other documents, certificates, and statements furnished to
Administrative Agent or any Holder for use in connection with the transactions
contemplated hereby.

8.14     Insurance.
Each Borrower and each of its Subsidiaries maintains and shall continue to maintain
adequate insurance policies and shall provide Administrative Agent with evidence of such
insurance coverage for public liability, professional liability, property damage, and
product liability with

32

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respect to its business and properties and the business and properties
of its Subsidiaries against loss or damage commensurate with the kinds and amounts
customarily carried or maintained by corporations of similar size, established reputation,
and engaged in similar businesses and in amounts acceptable to Administrative Agent in its
reasonable discretion. Each Borrower shall cause Administrative Agent at all times to be
named as additional loss payee, as its interests may appear, on all property damage
insurance policies and shall cause Administrative Agent at all times to be named as
additional insured under all general and professional liability policies relating to the
Collateral, in each case pursuant to appropriate endorsements in form and substance
satisfactory to Administrative Agent. No notice of cancellation has been received with
respect to such policies and each Borrower and each of its Subsidiaries is in compliance
with all material conditions contained in such policies. Any proceeds received from any
policies of insurance relating to any Collateral shall be applied to the Obligation as set
forth in Section 3.3(c). Each Borrower shall provide Administrative Agent evidence
of the insurance coverage and of the assignments and endorsements required by this
Agreement promptly upon request by Administrative Agent and upon renewal of any existing
policy. If any Borrower elects to change insurance carriers, policies, or coverage
amounts, such Borrower shall notify Administrative Agent and provide Administrative Agent
with evidence of the updated insurance coverage and of the assignments and endorsements
required by this Agreement, except that such notice shall not be required
(a) if such change does not materially reduce the coverage amounts or materially and
adversely affect the terms or provisions of the coverage in existence on the Closing Date
or (b) if such change does materially reduce the coverage amounts or does materially
and adversely affect the terms or provisions of such coverage in existence on the Closing
Date, such Borrower shall have obtained the highest amount of coverage and the most
favorable terms and provisions that are then commercially available. In the event such
Borrower fails to provide Administrative Agent with evidence of the insurance coverage
required by this Agreement, Administrative Agent may, but is not required to, purchase
insurance at such Borrower's expense to protect Administrative Agent's and Holder's
interests in the Collateral. This insurance may, but need not, protect such Borrower's
interests. The coverage purchased by Administrative Agent may not pay any claim made by
such Borrower or any claim that is made against such Borrower in connection with the
Collateral. Such Borrower may later cancel any insurance purchased by Administrative
Agent, but only after providing Administrative Agent with evidence that such Borrower has
obtained insurance as required by this Agreement. If Administrative Agent purchases
insurance for the Collateral, such Borrower will be responsible for the costs of that
insurance, including interest thereon and other charges imposed on Administrative Agent in
connection with the placement of the insurance, until the effective date of the
cancellation or expiration of the insurance, and such costs may be added to the
Obligation. The costs of the insurance may be more than the cost of insurance such
Borrower is able to obtain on its own.

8.15     
Compliance with Laws; Authorizations; Consents. Except as set for on Schedule 8.15,no Borrower is in violation of any Law under (a) any Governmental Authority in
all jurisdictions in which such Borrower or any of its Subsidiaries is now doing business,
(b) the Corporate Integrity Agreement, and (c) any Governmental Authority
otherwise having jurisdiction over the conduct of such Borrower or any of its Subsidiaries
or any of its respective businesses, or the ownership of any of its respective properties,
which violation would subject such Borrower or any of its Subsidiaries, or any of their
respective officers to criminal liability or, in each case, could reasonably be expected
to result in a Material Adverse Event and, to Borrowers' knowledge, no such violation has
been alleged. Borrowers will and will cause each of their Subsidiaries to comply with the
requirements of all applicable Laws of (i) any Governmental Authority as now in effect and
which may be imposed in the future in all jurisdictions in which any Borrower or any of
its Subsidiaries is now doing business or may hereafter be doing business, (ii) any
Governmental Authority otherwise having jurisdiction over the conduct of any Borrower or
any of its Subsidiaries or any of its respective businesses, or the ownership of any of
its respective properties, (iii) the Corporate Integrity Agreement, except to the
extent the noncompliance with which could not reasonably be expected to be a Material
Adverse Event. No Authorization, approval or

33

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other action by, and no notice to or filing with, any domestic or
foreign Governmental Authority or regulatory body or consent of any other Person is
required for (x) the grant by any Borrower of the Liens granted hereby or for the
execution, delivery, or performance of this Agreement or the other Loan Documents by any
Borrower; (y) the perfection of the Liens granted hereby and pursuant to any other Loan
Documents (except for  filing UCC financing statements with the appropriate
jurisdiction, any filings with the U.S. Patent and Trademark Office or the U.S. Copyright
Office, and filings of the Mortgages, if any); or (z) the exercise by Administrative
Agent or any Holder of its Rights and remedies hereunder (except as may have been
taken by or at the direction of any Borrower or Administrative Agent).

8.16     Employee
Matters. Except as set forth on Schedule 8.16, (a) no Borrower
nor any of such Borrower's employees is subject to any collective bargaining agreement,
(b) no petition for certification or union election is pending with respect to the
employees of any Borrower, and no union or collective bargaining unit has sought such
certification or recognition with respect to the employees of any Borrower and
(c) there are no strikes, slowdowns, work stoppages, or controversies pending or, to
the knowledge of any Borrower after due inquiry, threatened between any Borrower and its
respective employees, other than employee grievances arising in the ordinary course
of business, which could reasonably be expected to be, either individually or in the
aggregate, a Material Adverse Event. Except as set forth on Schedule 8.16,
no Borrower is party to an employment contract or collective bargaining agreement.

8.17     Governmental
Regulation. No Borrower is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act or the Investment Company Act of 1940, or to
any other Law limiting its ability to incur Debt.

8.18     Access
to Accountants and Management. Borrowers authorize Administrative Agent and Holders to
discuss the financial condition and Financial Statements of any Borrower and its
Subsidiaries with the Company's Accountants upon reasonable notice to the Company (and if
no Default has occurred and is continuing, in the Company's presence, either in person, or
if Administrative Agent or Holders elect, by telephone), authorizes the Company's
Accountants to respond to all of Administrative Agent's and Holders' inquiries.
Administrative Agent and each Holder may confer with each Borrower's management directly
regarding such Borrower's business, operations, and financial condition.

8.19     Inspection.
Subject to Section 13.16, Borrowers shall permit Administrative Agent, any
Holder, and any authorized Representatives designated by Administrative Agent or any
Holder to visit and inspect any of the properties of any Borrower or any of its
Subsidiaries, including their financial and accounting records, and, in conjunction with
such inspection, to make copies and take extracts therefrom, and to discuss their affairs,
finances, and business with their officers and the Company's Accountants, at such
reasonable times during normal business hours and as often as may be reasonably requested
but no more than six times per year; provided, however, that upon the occurrence
and during the continuance of a Default, the number of visits and inspections per year
shall not be limited. Each Holder may accompany Administrative Agent on any such visit or
inspection. All actual out-of-pocket expenses of Administrative Agent in connection with
such visits and inspections shall be paid by Borrowers.

8.20     Borrowers'
Receipt of Payments. If any Borrower, or any of its Subsidiaries, Affiliates,
employees, agents, or any other Persons acting for or in concert with any Borrower, shall
receive any monies, checks, notes, drafts, or any other payments relating to and/or
proceeds of any Collateral (other than pursuant to an Asset Disposition or other
dispositions permitted hereunder as to which Borrowers are expressly permitted to retain
such payments and proceeds for its own account), such Borrower or such Person shall hold
such instrument or funds in trust for Administrative Agent, and, immediately upon receipt
thereof, shall remit the same or cause the same to be remitted, in kind, to Administrative
Agent

34

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unless such payment or proceeds have been paid or will be paid by such
Borrower or such Person to the Senior Agent pursuant to the requirements of the Senior
Agreement or the other Senior Loan Documents in compliance with the Intercreditor
Agreement.

8.21

8.22     Compliance
With Health Care Laws. Without limiting the generality of Section 8.15 or
any other representation or warranty made herein, to Borrowers' knowledge, each of the
Facilities, and each of its licensed employees and contractors (other than
contracted agencies) in the exercise of their respective duties on behalf of each of the
Facilities, is in compliance with all applicable statutes, laws, ordinances, rules, and
regulations of any Governmental Authority (including without limitation Section
1128B(b) of the Social Security Act, as amended, 42 U.S.C. Section 1320a-7(b)
(Criminal Penalties Involving Medicare or State Health Care Programs), commonly referred
to as the "Federal Anti-Kickback Statute," and the Section 1877 of
the Social Security Act(Prohibition Against Certain Referrals), commonly referred
to as "Stark Statute" (collectively, "Healthcare Laws")).
Borrowers have maintained in all material respects all records required to be maintained
by the Joint Commission on Accreditation of Healthcare Organizations, the Food and Drug
Administration, the Drug Enforcement Agency, the State Boards of Pharmacy, and, to the
extent required by the Healthcare Laws, the federal and state Medicare, Medicaid, and
TRICARE programs, and, to the knowledge of Borrowers, there are no presently existing
circumstances which would result or likely would result in material violations of the
Healthcare Laws. Each Borrower and its Affiliates and the owners of the Facilities and
other businesses managed by any Borrower or its Affiliates have such Authorizations of all
Governmental Authorities as are necessary under applicable Law to own their respective
properties and to conduct their respective business (including without limitation such
Authorizations as are required under federal, state and other health care Laws, and under
such HMO or similar licensure Laws and such insurance Laws and regulations applicable
thereto), and with respect to those Facilities and other businesses that participate in
Medicare, Medicaid, and/or TRICARE to receive reimbursement under Medicare, Medicaid, and
TRICARE. To Borrowers' knowledge, there currently exist no restrictions, deficiencies,
required plans of corrective actions, or other such remedial measures with respect to
federal and state Medicare, Medicaid, and TRICARE certifications or licensure that could
reasonably be expected to result in a Material Adverse Event.

8.23     Funds
from Restricted Grants. None of the Facilities or other Collateral is subject to,
and Borrowers shall indemnify and hold Holders harmless from and against, any liability in
respect of

35

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amounts received by Borrower or others for the purchase or improvement
of the Facilities or other Collateral or any part thereof under restricted or conditioned
grants or donations, including, without limitation, monies received under the Public
Health Service Act, 42 U.S.C. Section 291 et seq.

8.24     HIPAA
Compliance. To the extent that and for so long as any Borrower is a "covered
entity" within the meaning of HIPAA, such Borrower (a) has undertaken or will
promptly undertake all necessary surveys, audits, inventories, reviews, analyses, and/or
assessments (including any necessary risk assessments) of all areas of its business and
operations required by HIPAA and/or that could be adversely affected by the failure of
such Borrower to be HIPAA Compliant (as defined below); (b) has developed or will promptly
develop a detailed plan and time line for becoming HIPAA Compliant (a "HIPAA
Compliance Plan"); and (c) has implemented or will implement those provisions of
such HIPAA Compliance Plan in all material respects necessary to ensure that such Borrower
is or becomes HIPAA Compliant. For purposes hereof, "HIPAA Compliant"
shall mean that such Borrower is or will be in compliance with each of the applicable
requirements of the so-called "Administrative Simplification" provisions
of HIPAA on and as of each date that any part thereof, or any final rule or regulation
thereunder, becomes effective in accordance with its or their terms, as the case may be, except
where failure to be in compliance could not reasonably be expected to result in a Material
Adverse Event or otherwise materially adversely affect the rights and remedies of
Administrative Agent and Holders hereunder.

8.25     Licenses.
Except as disclosed in Schedule 8.25, each Borrower has all necessary
Authorizations, certificates of need, and rights to participate in (or the benefit of
valid agreements to participate in) Medicare, Medicaid, TRICARE, and other material third
party payor programs participated in by it, and has all Medicaid, TRICARE, and Medicare
provider numbers, provider agreements, and other rights necessary for the generation of
its Accounts and otherwise for the conduct of its business and for the intended use of its
properties and assets to the extent necessary or appropriate to ensure no material
interruption in cash flow.

8.26     Certificates
of Need. Borrowers are the lawful owner of any certificates of need or other
required Authorization for the operation of each of the Facilities.

8.27     Inactive
Entities. Schedule 8.27 contains a complete and accurate list of all
Inactive Entities as of the Closing Date. Except as set forth on Schedule 8.27,
as of the Closing Date, none of the Inactive Entities (a) has Total Assets valued at
greater than $260,000, (b) had Total Revenues during the fourth calendar quarter of
2001 in excess of $3,000, or (c) is currently conducting any business operations.

8.28     Supplemental
Schedules. Borrowers may amend any one of more of the Schedules referred in this Section
8by notice to Administrative Agent. Any representation, warranty, or covenant
contained herein which refers to any such Schedule shall from and after the date of any
such amendment refer to such Schedule as so amended; provided, however, that in no
event shall the amendment of any such Schedule constitute a waiver by Administrative Agent
or Holders of any Default that has occurred and is continuing at the time of such
amendment unless such Default has been cured by the amendment of such Schedule and
has been expressly waived by Required Holders.

8.29     Amendment
to Senior Loan Agreement. Borrowers agree to give Administrative Agent prior
notice of any amendment or modification to the Senior Loan Agreement (or any other Senior
Loan Documents) and, to the extent permitted by the Intercreditor Agreement, further
agrees to execute any amendments to the Loan Documents as Required Holders may request to
retain consistency between the provisions of the Loan Documents and the provisions of the
Senior Loan Agreement (or any other Senior Loan Documents).

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SECTION 9.     REPORTING AND OTHER AFFIRMATIVE COVENANTS

Each
Borrower covenants and agrees that, until indefeasible payment in full, in cash, of the
Obligation, each Borrower shall perform and shall cause each of its Subsidiaries to
perform, all covenants in this Section 9.

9.1     Financial
Statements and Other Reports. The Company will deliver to Administrative Agent and
each Lender (unless specified to be delivered solely to Administrative Agent) the
Financial Statements and other reports contained in the Reporting Rider attached hereto.

9.2     Endorsement;
Insurance Claims. Borrowers hereby constitute and appoint Administrative Agent and
all Persons designated by Administrative Agent for that purpose as Borrowers' true and
lawful attorney-in-fact, with power in the place and stead of each Borrower and in the
name of each Borrower (a) to endorse such Borrower's name to any of the items of payment
or proceeds described in Section 8.20and all proceeds of Collateral that come into
Administrative Agent's possession or under Administrative Agent's control, and (b) during
the continuance of a Default, to obtain, adjust, and settle insurance claims, which are
required to be paid to Administrative Agent or Holders. Borrowers hereby ratify and
approve all acts of Administrative Agent or Holders made or taken in accordance with this Section
9.2. Both the appointment of Administrative Agent as Borrowers' attorney and
Administrative Agent's Rights and powers hereunder are coupled with an interest and are
irrevocable.

9.3     Maintenance
of Properties. Borrowers will maintain or cause to be maintained in good repair,
working order, and condition all material properties used in the business of Borrowers and
its Subsidiaries and will make or cause to be made all appropriate repairs, renewals, and
replacements thereof.

9.4     Further
Assurances. Borrowers shall from time to time, execute such financing or
continuation statements, documents, security agreements, reports, and other documents or
deliver to Administrative Agent such instruments, certificates of title, mortgages, deeds
of trust, or other documents as Administrative Agent at any time may reasonably request to
evidence, perfect or otherwise implement the security for repayment of the Obligation
provided for in the Loan Documents.

9.5     Mortgages;
Title Reports; Reports.

(a)Title
    Reports. Concurrently with any delivery to Senior Agent or any Senior Lender, but in
    any event within 60 days following the Closing Date, Borrower shall deliver or cause to be
    delivered to Administrative Agent copies of such title reports or title commitments that
    are required to be delivered pursuant to the Senior Loan Agreement so that Administrative
    Agent can determine that the Mortgages shall create second priority mortgage liens on the
    respective Mortgaged Property, free and clear of all mortgages, deeds of trust, and other
    Liens arising from Debt other than Liens in favor of Senior Lenders.

(b)     Mortgages.
    Borrowers shall, concurrently with any delivery to Senior Agent or Senior Lenders, (and in
    any event within 60 days after the Closing Date) deliver to Administrative Agent fully
    executed Mortgages, in form and substance satisfactory to Administrative Agent.

(c)     Other
    Real Property. If Borrowers intend to acquire any real property after the Closing Date
    (i) Borrowers shall comply with all provisions of this Agreement, (ii) Borrowers shall
    grant to Administrative Agent a first priority mortgage or deed of trust upon such real

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property subject only to Permitted Liens, and (iii) Borrowers shall
    obtain such lender's title insurance, ALTA surveys, environmental reports, structural and
    engineering inspection reports and other documents in form and substance satisfactory to
    Administrative Agent.

9.6     Use
of Proceeds and Margin Security. Borrowers shall use the proceeds of all
Borrowings for proper business purposes (as described in the recitals to this Agreement)
consistent with all applicable Laws. No portion of the proceeds of any Borrowing under any
Tranche shall be used for the purpose of purchasing or carrying margin stock within the
meaning of Regulation U, or in any manner that might cause the borrowing or the
application of such proceeds to violate Regulations T, U, or X, or
any other regulation of the Board of Governors of the Federal Reserve System or to violate
the Securities Act.

9.7     Licensure;
Medicaid/Medicare Cost Reports. Borrowers will maintain all certificates of need,
provider numbers, provider agreements, and Authorizations necessary to conduct their
business as currently conducted. Borrowers will take any steps required to comply with any
new or additional requirements that may be imposed on providers of medical products and
Medical Services except where failure to maintain or comply could not reasonably be
expected to result in a Material Adverse Event. All Medicaid, Medicare, and TRICARE cost
reports required by Law and all claims for reimbursement will be properly filed.

9.8     Termination/Default
of Contracts. Borrowers shall notify Administrative Agent of any (a) default
or event of default under, (b) termination of, (c) modification or amendment of, or
(d) failure of any party to renew, any Material Contract as soon as reasonably
possible (other than with respect to any notice of default, termination, or failure
to renew that originates with Borrowers, which notice shall be sent concurrently to
Administrative Agent). Notwithstanding anything in this Section 9.8 to the
contrary, no provision in this Section 9.8 shall modify, reduce, or otherwise
affect Administrative Agent's or any Holder's Rights hereunder or under any other Loan
Document.

9.9     Notice
of Default and Other Matters. Promptly after any of the following, give notice of:

(a)     any
    Default;

(b)     any
    change in the business, assets, liabilities, financial condition, results of operations,
    or business prospects of Borrowers taken as a whole which has had or could reasonably,
    individually, or in the aggregate, be expected to result in a Material Adverse Event; and

(c)     any
    material amendment of the articles of incorporation or by-laws of any Borrower or any of
    its Subsidiaries which could reasonably be expected to materially adversely affect the
    interests and Rights of Administrative Agent or Holders under this Agreement.

9.10     
Inactive Entities. Each Inactive Entity shall be merged into or consolidated
with a Borrower (or with another Inactive Entity that is promptly merged into or
consolidated with a Borrower) as promptly as practicable and in any event by
January 31, 2003, or such later date to which Required Holders may consent in
writing; provided, however, that any Inactive Entity that has Total Assets valued
at greater than zero and less than $10,000 may be dissolved without being merged or
consolidated into a Borrower; provided thatprior notice of such dissolution is
given to Administrative Agent. The Financial Statements relating to each Inactive Entity
shall be maintained in accordance with GAAP, including the financial records relating to
the merger or consolidation of such Inactive Entity as required hereunder. In the event
that any Inactive Entity shall remain in existence after January 31, 2003 (or such
later date to

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which Required Holders have consented in writing), (i) a Default
pursuant to this Section 9.10 shall immediately occur without further action or
notice by Administrative Agent or Holders unless by that date, Borrowers have
caused such Inactive Entity to become a Borrower.

9.11     Payment
of the Obligation. Borrowers shall pay the Obligation in accordance with the terms
and provisions of the Loan Documents. Each Borrower shall be jointly and severally liable
for the Obligation.

SECTION 10.     FINANCIAL COVENANTS

Each
Borrower covenants and agrees that until indefeasible payment in full, in cash, of the
Obligation, Borrowers shall comply with, and shall cause each of their Subsidiaries to
comply with, the following financial covenants:

10.1     Tangible
Net Worth. The Borrowers, on a consolidated basis, shall maintain Tangible Net
Worth of at least the amounts set forth below at the end of each quarter of a Fiscal Year
set forth below.

First Quarter
    AmountMarch 31, 2002
    As set forth on Closing Balance SheetJune 30, 2002
    Amount as of March 31, 2002, plus $500,000September 30, 2002
    Amount as of June 30, 2002, plus $3,300,000December 31, 2002
    Amount as of September 30, 2002, plus
    $5,000,000Each Quarter Thereafter
    (e.g. March 31, 2003,
            June 30, 2003 and so on)
    Amount of as of the end of the immediately
    prior calendar quarter plus 50% of the Net Income earned for the calendar quarter at issue


10.2     Minimum
Operating Cash Flow. The Borrowers, on a consolidated basis, shall at all times
maintain a minimum Operating Cash Flow of at least the amounts set forth below at the end
of each quarter of a Fiscal Year set forth below.

Fiscal Quarter Ending
    AmountMarch 31, 2002
    $48,000,000June 30, 2002
    $42,000,000September 30, 2002
    $36,800,000December 31, 2002
    $44,600,000March 31, 2003
    $45,200,000June 30, 2003
    $45,900,000September 30, 2003
    $46,600,000December 31, 2003
    $47,300,000March 31, 2004
    $48,500,000June 30, 2004
    $49,800,000September 30, 2004
    $51,000,000December 31, 2004
    $52,200,000


10.3     Capital
Expenditure Limits. The aggregate amount of all Capital Expenditures, Capital
Leases with respect to fixed assets of Borrowers and their Subsidiaries (which shall be
considered to be expended in full on the date such Capital Lease is entered into) and
other contracts with respect to fixed assets initially capitalized on the Borrowers' or
any of their Subsidiaries' balance sheet prepared in

39

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accordance with GAAP (which shall be considered to be expended in full
on the date such contract is entered into) (excluding, in each case, expenditures for
trade-ins and replacement of assets to the extent funded with casualty insurance proceeds)
will not exceed the amount set forth below for each period set forth below.

Fiscal Quarter Ending
    AmountMarch 31, 2002
    $11,600,000June 30, 2002
    $11,600,000September 30, 2002
    $11,100,000December 31, 2002
    $10,900,000March 31, 2003
    $12,300,000June 30, 2003
    $12,300,000September 30, 2003
    $12,300,000December 31, 2003
    $12,300,000March 31, 2004
    $13,000,000June 30, 2004
    $13,000,000September 30, 2004
    $13,000,000December 31, 2004
    $13,000,000


10.4     Fixed
Charge Coverage. Borrowers, on a consolidated basis, shall not permit its Fixed
Charge Coverage for the rolling twelve (12) month period ending on the last day of each
fiscal quarter set forth below to be less than the ratio set forth below for such periods.

Fiscal Quarter Ending
    Ratio for Rolling
    Twelve MonthsMarch 31, 2002
    2.45June 30, 2002
    1.70September 30, 2002
    1.25December 31, 2002
    1.15March 31, 2003
    1.15June 30, 2003
    1.15September 30, 2003
    1.15December 31, 2003
    1.15March 31, 2004
    1.15June 30, 2004
    1.15September 30, 2004
    1.15December 31, 2004
    1.15


10.5     Debt
to EBITDA Ratio Borrowers, on a consolidated basis, shall not permit the ratio of
(a) Debt of the Borrowers, on a consolidated basis, to (b) EBITDA of the Borrowers,
on a consolidated basis, each calculated as of the last day of each fiscal quarter set
forth below to be greater than the ratio set forth below for such periods:

Fiscal
    Quarter Ending
    Ratio for Rolling
    Twelve Months
    Ratio for Rolling
    Twelve Months
    If SumitomoTransaction
    Is Not CompletedMarch 31, 2002
    4.50
    4.04


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Fiscal
    Quarter Ending
    Ratio for Rolling
    Twelve Months
    Ratio for Rolling
    Twelve Months
    If SumitomoTransaction
    Is Not CompletedJune 30, 2002
    4.15
    3.69September 30, 2002
    3.75
    3.32December 31, 2002
    3.00
    2.63March 31, 2003
    2.81
    2.46June 30, 2003
    2.63
    2.29September 30, 2003
    2.44
    2.12December 31, 2003
    2.25
    1.95March 31, 2004
    2.25
    1.95June 30, 2004
    2.25
    1.95September 30, 2004
    2.25
    1.95December 31, 2004
    2.25
    1.95


10.6     Census.
The Borrowers, on a consolidated basis, shall not allow the Patient census for any period
of four (4) consecutive weeks for the skilled nursing and hospital Facilities, when taken
as a whole, to fall below eighty-seven percent (87%) of the number of licensed available
beds in such Facilities taken as a whole (computed in a manner consistent with reporting
practices existing on the date of this Agreement); provided that during the period from
December 1st to January 1st of each year, the Borrowers shall not
allow such census to fall below eighty-six percent (86%).

SECTION 11.     NEGATIVE COVENANTS

Each
Borrower covenants and agrees that until indefeasible payment in full, in cash, of the
Obligation, Borrowers shall not and will not permit any of their Subsidiaries to:

11.1     Debt.
Directly or indirectly create, incur, assume, guaranty, or otherwise become or remain
directly or indirectly liable, on a fixed or contingent basis, with respect to any Debt except:
(a) the Obligation; (b) intercompany Debt among Borrowers, incurred in the
ordinary course of business; (c) Debt owing by SHS to the Company or another Borrower
in an aggregate principal amount not to exceed the sum of (i) the principal
balance of such Debt as of the Closing Date and (ii) $1,500,000; (d) Debt
incurred after the Closing Date in connection with Capital Leases or purchases secured by
purchase money Liens, in both cases together not to exceed $5,000,000 in outstanding
principal amount in the aggregate; (e) Debt under the Senior Loan Documents, but only
to the extent permitted under the terms of the Intercreditor Agreement; (f) Debt
existing on the Closing Date and identified on Schedule 11.1; (g) Debt
incurred in connection with refinancing of those certain mortgages existing on the date
hereof that encumber certain real property owned by the Borrowers on the date hereof, as
set forth in Schedule 11.1, which Debt shall not exceed the principal balance
secured by such mortgages on the Closing Date; (h) Debt incurred in connection with
the Sumitomo Transaction and the SunTrust Transaction; and (i) unsecured Indebtedness not
to exceed $2,000,000 in outstanding principal amount in the aggregate. No Borrower will,
and will not permit any of its Subsidiaries to, incur any Liabilities except Debt
permitted herein and trade payables and normal accruals in the ordinary course of business
not yet due and payable or with respect to which any Borrower or any of its Subsidiaries
is contesting in good faith the amount or validity thereof by appropriate proceedings and
then only to the extent that such Borrower or any of its Subsidiaries has established
adequate reserves therefor under GAAP.

11.2     Guaranties.
Except for endorsements of instruments or items of payment for collection in the
ordinary course of business, guaranty, endorse, or otherwise in any way become or be
responsible for

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any obligations of any other Person (unless such obligation
constitutes Debt permitted by Section 11.1), whether directly or indirectly by
agreement to purchase the Debt 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 Debt or obligation of such other Person or otherwise;
provided, however, that any Borrower may guarantee any obligation of any other
Borrower so long as such obligation is otherwise not prohibited under this
Agreement.

11.3     Transfers,
Liens, and Related Matters.

(a)     Transfers.
    Sell, assign (by operation of Law or otherwise), or otherwise dispose of, or grant any
    option (other than the Partial Purchase Option contemplated in the Intercreditor
    Agreement) with respect to any of the Collateral, except that (i) Borrowers
    may permit the Inactive Entities to sell or transfer their respective assets in connection
    with any dissolution or liquidation permitted under Section 9.10, and
    (ii) Borrowers may (x) sell inventory to a buyer in the ordinary course of
    business and license a general intangible to a licensee in the ordinary course of
    business; (y) other than as set forth in clause (iii)below, make Asset
    Dispositions (other than any Asset Dispositions of all or any portion of the
    SunScript Stock or the SunScript Assets, which Asset Dispositions shall be prohibited
    without the prior written consent of the Holders), if all of the following conditions are
    met: (A) if the market value of assets sold or otherwise disposed of in any single
    transaction or series of related transactions does not exceed $2,000,000 or, if such
    market value exceeds $2,000,000, (1) Borrowers shall have complied with Section
    3.3(c), and (2) at least 90% of the consideration received is in the form of
    (x) cash, (y) an assumption of then-existing Debt, or (z) a combination of cash
    and assumption of then-existing Debt; (B) the consideration received is at least
    equal to the fair market value of such assets; (C) after giving effect to the sale or
    other disposition of the assets included within the Asset Disposition and the repayment of
    the Obligation with the proceeds thereof, Borrowers are in compliance on a pro forma basis
    with the covenants set forth in Section 10 recomputed for the most recently
    ended calendar quarter for which information is available as if such Asset Disposition
    occurred at the beginning of such calendar quarter and are in compliance with all other
    terms and conditions contained in this Agreement, as determined by Administrative Agent in
    its reasonable discretion upon receipt of information it deems adequate for such purposes;
    and (D) no Default or Potential Default shall then exist or result from such sale or
    other disposition; (2) enter into sale-leaseback transactions expressly permitted by Section 11.16;
    and (iii) if no Default shall then exist or result from such sale or disposition,
    consummate the Permitted Divestitures, the Campus Transaction, and/or the THCI Turnover.

(b)     Liens.
    Except for Permitted Liens and Liens incurred in connection with Debt permitted under clauses
    (f), (g),and(h) of Section 11.1 (provided that such Liens
    shall not encumber accounts or inventory unless the grantee in respect of such Liens have
    entered into a subordination agreement in form and substance satisfactory to
    Administrative Agent), directly or indirectly create, incur, assume, or permit to exist
    any Lien on or with respect to any of the Collateral or any proceeds, income, or profits
    therefrom.

(c)     No
    Negative Pledges. Except for the Senior Loan Agreement and agreements in connection
    with Debt permitted under clauses (f), (g),and(h) of Section 11.1
    (provided that such agreements shall not restrict encumbrances on accounts or
    inventory unless the parties benefiting from such agreements have entered into
    subordination agreements or other agreements in form and substance satisfactory to
    Administrative Agent), enter into or assume any agreement (other than the Loan
    Documents and the Senior Loan Documents) prohibiting the creation or assumption of any
    Lien upon its properties or assets, whether now owned or hereafter acquired

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except if such agreement is entered into or assumed in
    connection with Capital Leases, or purchases secured by purchase money Liens, in either
    case permitted by Section 11.1.

(d)     No
    Restrictions on Borrower Distributions to Borrowers. Except as provided herein,
    in the Senior Loan Documents, directly or indirectly create or otherwise cause or suffer
    to exist or become effective any consensual encumbrance or restriction of any kind on the
    ability of any Borrower to: (i) pay dividends or make any other distribution on any
    of such Borrower's capital stock owned by any Borrower; (ii) pay any Debt owed to any
    Borrower; (iii) make loans or advances to any Borrower; or (iv) transfer any of its
    property or assets to any Borrower, other than property or assets subject to
    Capital Leases or purchase money Liens permitted by the Agreement.

11.4     Investments
and Loans. Make or permit to exist investments in, loans to, or distributions to
any other Person, except: (a) Cash Equivalents held by a Borrower;
(b) loans and advances to employees of Borrowers for moving, entertainment, travel,
and other similar expenses in the ordinary course of business in an aggregate outstanding
amount not in excess of $250,000 at any time; (c) loans in respect of intercompany
Debt permitted in Section 11.1; (d) investments by any Borrower in the capital
stock of any of its Subsidiaries that is a Borrower on the Closing Date or in any Person
that has become a Subsidiary and a Borrower after the Closing Date in accordance with the
terms of Section 11.11 or otherwise with the prior written consent of Required
Holders; (e) investments after the Closing Date by the Company or any other Borrower
in SHS in an aggregate amount not to exceed $1,500,000; and (f) the investments
disclosed on Schedule 11.4 existing on the Closing Date. Notwithstanding any
contrary provision contained in this Agreement (including, without limitation, the
provisions of Section 11.2), Borrowers shall not permit any Inactive Entity to
acquire any assets, incur any Debt or Liabilities of any kind, conduct any business,
perform any operations (other than those specifically required for liquidation or
dissolution), receive any distributions from any Borrower or from any Subsidiary of any
Borrower, make any investments or issue any stock or other equity interests.

11.5     Restricted
Junior Payments. Directly or indirectly declare, order, pay, make or set apart any
sum for any Restricted Junior Payment.

11.6     Restriction
on Fundamental Changes. (a) Enter into any transaction of merger or
consolidation; (b) liquidate, wind-up, or dissolve itself (or suffer any liquidation
or dissolution); (c) convey, sell, lease, sublease, transfer, or otherwise dispose
of, in one transaction or a series of transactions, all or any substantial part of its
business or assets, or the capital stock of any of its Subsidiaries, whether now owned or
hereafter acquired; or (d) acquire by purchase or otherwise all or any substantial
part of the business or assets of, or stock or other beneficial ownership of, any Person; provided,
however, that notwithstanding anything in the foregoing to the contrary, so long as
no Default shall have occurred and be continuing (or otherwise with the prior written
consent of Administrative Agent (which consent shall not be unreasonably withheld)), the
following shall be permitted under this Agreement upon notice to the Administrative Agent:
(x) the merger, consolidation, or dissolution of any Inactive Entity in accordance with Section 9.10
and (y) the mergers and consolidations of Borrowers with other Borrowers.

11.7     Changes
Relating to Senior Loan Documents. Without the prior written consent of Required
Holders, change or amend the terms of the Senior Loan Documents in a manner prohibited by
the Intercreditor Agreement.

11.8     Transactions
with Affiliates. Directly or indirectly, enter into or permit to exist any
transaction (including the purchase, sale, or exchange of property or the rendering of any
service) with any Affiliate or with any officer, director, or employee of any Borrower, except
for transactions in the

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ordinary course of business and upon fair and reasonable terms which
are fully disclosed to Administrative Agent and which are no less favorable to Borrowers
than they would obtain in a comparable arm's length transaction with an unaffiliated
Person.

11.9     Conduct
of Business. From and after the Closing Date, engage in any business other than
businesses of the type engaged in by Borrowers or their Subsidiaries on the Closing Date.

11.10     Tax
Consolidations. File or consent to the filing of any consolidated income tax
return with any Person other than any of its Subsidiaries.

11.11     Subsidiaries.
Other than the Subsidiaries set forth on Schedule 11.11, establish, create, or
acquire, subject to Section 11.4, any new Subsidiaries without the written consent
of Required Holders. Notwithstanding anything in this Section 11.11 to the
contrary, Borrowers may, without the consent of Administrative Agent, establish any new
domestic Subsidiary that, immediately upon its establishment, becomes a Borrower hereunder
and thus becomes obligated in the same manner and to the same extent of any other Borrower
under this Agreement and the other Loan Documents. Borrowers shall cause each new
Subsidiary to execute and deliver any and all agreements or modifications, revisions, or
amendments to the Loan Documents necessary to evidence the addition of such new Subsidiary
as a Borrower.

11.12     Fiscal
Year; Tax Designation. Change its Fiscal Year; or elect to be designated as an
entity other than a C corporation as defined in the Code.

11.13     Use
of Holders' Name. Borrowers will not and will not permit its Affiliates to, in the
future, issue any press release or other public disclosure using the name of any Holder or
any of their respective Affiliates or referring to this Agreement or the other Loan
Documents without at least two Business Days prior written notice to Holders and without
the prior written consent of Holders unless (and only to the extent that) such
Borrower or Affiliate are required to so disclose under Law and then, in any event, such
Borrower or Affiliate will consult with Holder before issuing such press release or other
public disclosure.

11.14     IRS
Form 8821. Revoke IRS Form 8821 designating Administrative Agent as Borrowers'
appointee to receive directly from the IRS, on an on-going basis, certain tax information,
notices, and other written communication or fail to take actions necessary to renew such
Form 8821 prior to its expiration for all time periods prior to the Termination Date.

11.15     Certificates
of Need. Except in the ordinary course of its business, amend, alter,
suspend, terminate, or make provisional in any material way, any certificate of need,
provider number, or provider agreement without the prior written consent of Required
Holders, which consent shall not be unreasonably withheld.

11.16     Sale
Lease-back Transactions. Directly or indirectly, enter into any arrangement
whereby any Borrower sells or transfers all or any of its assets and, within one (1) year
thereafter, rents or leases such assets so sold or transferred, without the prior consent
of Required Holders; provided that Borrowers may enter into any such arrangements so
long as the aggregate fair market value of all property subject to such arrangements
does not exceed $5,000,000 (based on the fair market value at the time of the
transaction). Notwithstanding anything in the foregoing to the contrary, Borrowers may
enter into sale and lease back transactions (i) in connection with the THCI Turnover and
(ii) in respect of the Campus Transaction.

11.17     Plan
and Confirmation Order. Without the prior written consent of Required Holders,
Borrowers will not (i) make any material change to the Plan, (ii) seek to revise or amend
the Confirmation

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Order, or (iii) fail to fully implement or fail to perform any duty or
other obligation under the Plan or the Confirmation Order, including, but not limited to,
making any payment(s) to creditor(s) when due under the terms of the Plan and the
Confirmation Order, including, but not limited to, any agreement(s) or document(s)
approved or incorporated therein or executed pursuant thereto.

SECTION 12.     DEFAULT, RIGHTS, AND REMEDIES

12.1     Default.
"Default" shall mean the occurrence or existence of any one or more of
the following (for each section a different grace or cure period may be specified, if no
grace or cure period is specified, such occurrence or existence constitutes an immediate
Default):

(a)     Payment.
    Failure of any Borrower to comply with Section 9.11 or any other failure to make
    payment of any of the Obligation when due and in the case of interest, such failure shall
    not be cured within five days of the applicable due date; or

(b)     Default
    in Other Agreements. (i) Failure of any Borrower to pay when due any principal or
    interest on any Debt (other than the Obligation) or (ii) breach or default of any
    Borrower with respect to any Debt (other than the Obligation), in each case, only
    if such failure to pay, breach, or default entitles the holder to cause such Debt having
    an individual principal amount in excess of $1,000,000 or having an aggregate principal
    amount in excess of $3,000,000 to become or be declared due prior to its stated maturity;
    or

(c)     Breach
    of Certain Provisions. Failure of any Borrower to perform or comply with any term or
    condition contained in Sections 9.1, 9.4, 9.10, 10,and11;or

(d)     Breach
    of Warranty. Any representation, warranty, certification, or other statement made by
    any Borrower in any Loan Document or in any statement or certificate at any time given by
    such Person in writing pursuant to or in connection with any Loan Document is false in any
    material respect on the date made; or

(e)     Other
    Defaults Under Loan Documents. Any Borrower defaults in the performance of or
    compliance with any term contained in this Agreement other than those otherwise set
    forth in this Section 12.1 (a, or defaults in the performance of or compliance with
    any term contained in the other Loan Documents and such default is not remedied or waived
    within 15 days after notice from Administrative Agent to Borrowers of such default; provided
    that if such default is not capable of being cured within such 15 day period and
    Borrowers have and continue to diligently, continuously and in good faith pursue a cure,
    Borrowers shall have an additional period of 15 days to cure such default; or

(f)     Change
    in Control. (i) Any Person or group (as defined in the Securities Exchange Act
    of 1934, as amended), other than the holders of the voting stock of the Company
    as of the Closing Date, shall acquire for the first time direct or indirect ownership
    (constructive or otherwise), or the direct or indirect power to vote more than 40% of the
    outstanding voting stock of the Company, or (ii) individuals who, as of the Closing
    Date, were members of the board of officers or directors of the Company (together with
    any new director whose election by the Company's board of directors or whose nomination
    for election by the Company's shareholders were approved by a vote of at least a majority
    of the directors then in office who themselves were either directors as of the Closing
    Date or whose election or nomination for election was previously so approved) cease for
    any reason to constitute at least a majority of the members of the board of directors of
    the Company then in office; or

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(g)     Involuntary
    Bankruptcy; Appointment of Receiver, etc.

(h)     Voluntary
    Bankruptcy; Appointment of Receiver, etc.

(i)     Liens.
    Any Lien, levy, or assessment is filed or recorded with respect to or otherwise imposed
    upon all or any part of the Collateral or the assets of the Company or any of its
    Subsidiaries by the United States or any department or instrumentality thereof or by any
    other Governmental Authority (other than Permitted Liens) and such Lien, levy, or
    assessment is not stayed, vacated, paid, or discharged within ten days; or

(j)     Judgment
    and Attachments. Any money judgment, writ or warrant of attachment, or similar process
    involving (i) an amount in any individual case in excess of $500,000 or (ii) an
    amount in the aggregate at any time in excess of $1,000,000 (in either case not adequately
    covered by insurance as to which the insurance company has acknowledged coverage) is
    entered or filed against the Company or any of its Subsidiaries or any of their respective
    assets and remains undischarged, unvacated, unbonded, or unstayed for a period of 45
    consecutive days; or

(k)     Dissolution.
    Any order, judgment, or decree is entered against the Company or any of its Subsidiaries
    decreeing the dissolution or split up of the Company or such Subsidiary, and such order
    remains undischarged or unstayed for a period in excess of 20 consecutive days, but in any
    event not later than five days prior to the date of any proposed dissolution or split up; provided
    that in the case of a dissolution or split up of a Subsidiary that is not a Borrower,
    such dissolution or split up could reasonably be expected to result in a Material Adverse
    Event; or

(l)     Solvency.
    The Borrowers, on a consolidated basis, cease to be Solvent or any Borrower admits in
    writing its present or prospective inability to pay its debts as they become due; or

(m)     Injunction.
    The Company or any of its Subsidiaries is enjoined, restrained, or in any way prevented by
    the order of Governmental Authority from conducting all or any material part of its
    business and such order continues for 30 consecutive days or more; or

(n)     Invalidity
    of Loan Documents. Any of the Loan Documents for any reason, other than a
    partial or full release in accordance with the terms thereof, ceases to be in full force
    and

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effect or is declared to be null and void, or any Borrower denies that
    it has any further liability under any Loan Documents to which it is party, or gives
    notice to such effect (in each case prior to such respective partial or full release); or

(o)     Failure
    of Security. Administrative Agent, on behalf of itself and Holders, does not have or
    ceases to have a valid and perfected security interest in the Collateral (subject only to
    Permitted Liens), in each case, for any reason other than the failure of
    Administrative Agent or any Holder to take any action within its control; or

(p)     Damage,
    Strike, Casualty. Any damage to, or loss, theft, or destruction of, any Collateral,
    whether or not insured, or any strike, lockout, labor dispute, embargo, condemnation, act
    of God or public enemy, or other casualty which causes, for more than ten consecutive
    days, the cessation or substantial curtailment of revenue producing activities at any
    Facility of any Borrower or any of its Subsidiaries, if any such event or circumstance
    could reasonably be expected to result in a Material Adverse Event; or

(q)     Licenses
    and Permits. The loss, suspension or revocation of, or failure to renew, any license,
    permit or other governmental Authorization now held or hereafter acquired by the Borrowers
    that is required for either the Borrowers to conduct their business as presently conducted
    or for the Borrowers to receive reimbursements, which loss, suspension, revocation, or
    failure to renew could reasonably be expected to result in a Material Adverse Effect; or

(r)     Forfeiture.
    There is filed against any Borrower any civil or criminal action, suit, or proceeding
    under any federal or state racketeering statute (including, without limitation, the
    Racketeer Influenced and Corrupt Organization Act of 1970), which action, suit or
    proceeding (i) is not dismissed within 120 days; and (ii) could reasonably be expected to
    result in the confiscation or forfeiture of any material portion of the Collateral; or

(s)     Default
    Under Plan and/or Confirmation Order. The default by Borrowers (or any of them) under
    any of Borrowers' duties under the Plan or the Confirmation Order, including, but not
    limited to the failure of Borrowers (or any of them) to make any payment(s) to creditor(s)
    when due under the terms of the Plan or the Confirmation Order, including, but not limited
    to, any agreement(s) or document(s) approved or incorporated therein or executed pursuant
    thereto and subject to any applicable grace periods.

(t)     Alteration
    Or Revocation Of Plan Or Confirmation Order. Any change to the Plan or Confirmation
    Order requested by Borrowers without the prior written consent of Required Holders and any
    change to, or the revocation or change of the terms of the Plan or the Confirmation Order
    approved by the Bankruptcy Court on any basis, including, but not limited to orders of the
    Bankruptcy Court entered under Bankruptcy Code Section1127(b), Bankruptcy Code
    Section1144, and Federal Rule of Civil Procedure 60, as incorporated by Bankruptcy
    Rule 9024 in each case which could reasonably be expected to result in a Material
    Adverse Event; or

(u)     Senior
    Loan Documents. The occurrence of an "Event of Default" by any
    Borrower under the Senior Loan Agreement (or any other Senior Loan Documents) which event
    of default gives the holders of the obligations under such Term Loan Documents the right
    to accelerate the Debt thereunder prior to the stated maturity thereof; or

(v)     Material
    Contracts. The termination of, expiration (without renewal or replacement on
    then-market terms) of, or occurrence of an event of default by any Borrower under any

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Material Contract that could reasonably be expected to result in a
    Material Adverse Event.

12.2     Remedies
Upon Default.

(a)     Debtor
    Relief. If a Default exists under Section 12.1(g) or 12.1(h), the
    commitment to extend credit hereunder shall automatically terminate and the entire unpaid
    balance of the Obligation shall automatically become due and payable without any action or
    notice of any kind whatsoever.

(b)     Other
    Defaults. If any Default exists, Administrative Agent may (and, subject to the terms
    of Section 13, shall upon the request of Required Holders) or Required Holders may,
    do any one or more of the following: (i) if the maturity of the Obligation has not already
    been accelerated under Section 12.2(a), declare the entire unpaid balance of the
    Obligation, or any part thereof, immediately due and payable, whereupon it shall be due
    and payable; (ii) terminate the commitments of Holders to extend credit hereunder; (iii)
    reduce any claim to judgment; (iv) to the extent permitted by Law, exercise (or request
    each Holder to, and each Holder shall be entitled to, exercise) the Rights of offset or
    banker's Lien against the interest of each Borrower in and to every account and other
    property of any Borrower which are in the possession of Administrative Agent or any Holder
    to the extent of the full amount of the Obligation (to the extent permitted by Law, each
    Borrower being deemed directly obligated to each Holder in the full amount of the
    Obligation for such purposes); and (v) exercise any and all other legal or equitable
    Rights afforded by the Loan Documents, the Laws of the State of New York, or any other
    applicable jurisdiction as Administrative Agent or Required Holders (as the case may be)
    shall deem appropriate, or otherwise, including, but not limited to, the Right to bring
    suit or other proceedings before any Governmental Authority either for specific
    performance of any covenant or condition contained in any of the Loan Documents or in aid
    of the exercise of any Right granted to Administrative Agent or any Holder in any of the
    Loan Documents.

12.3     Borrower
Waivers. To the extent permitted by Law, the Borrowers hereby waive presentment
and demand for payment, protest, notice of intention to accelerate, notice of
acceleration, and notice of protest and nonpayment, and agree that their respective
liability with respect to the Obligation (or any part thereof) shall not be affected by
any renewal or extension in the time of payment of the Obligation (or any part thereof),
by any indulgence, or by any release or change in any security for the payment of the
Obligation (or any part thereof).

12.4     Performance
by Administrative Agent. If any covenant, duty, or agreement of any Borrower is
not performed in accordance with the terms of the Loan Documents, after the occurrence and
during the continuance of a Default, Administrative Agent may, at its option (but subject
to the approval of Required Holders), perform or attempt to perform such covenant, duty,
or agreement on behalf of such Borrower. In such event, any amount expended by
Administrative Agent in such performance or attempted performance shall be payable by the
Borrowers, jointly and severally, to Administrative Agent on demand, shall become part of
the Obligation, and shall bear interest at the Default Rate from the date of such
expenditure by Administrative Agent until paid. Notwithstanding the foregoing, it is
expressly understood that Administrative Agent does not assume, and shall never have,
except by its express written consent, any liability or responsibility for the performance
of any covenant, duty, or agreement of any Borrower.

12.5     Delegation
of Duties; Reliance. Administrative Agent may perform any of its duties or
exercise any of its Rights under the Loan Documents by or through its Representatives.
Administrative Agent and its Representatives shall (a) be entitled to rely upon (and
shall be protected in relying upon)

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any writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telecopy, telegram, telex or teletype message, statement, order, or
other documents or conversation believed by it or them to be genuine and correct and to
have been signed or made by the proper Person and, with respect to legal matters, upon
opinion of counsel selected by Administrative Agent, (b) be entitled to deem and
treat each Holder as the owner and holder of the Obligation owed to such Holder for all
purposes until, subject to Section 14.12, written notice of the assignment or
transfer thereof shall have been given to and received by Administrative Agent (and any
request, authorization, consent, or approval of any Holder shall be conclusive and binding
on each subsequent holder, assignee, or transferee of the Obligation owed to such Holder
or portion thereof until such notice is given and received), (c) not be deemed to
have notice of the occurrence of a Default unless a responsible officer of Administrative
Agent, who handles matters associated with the Loan Documents and transactions thereunder,
has received written notice from a Holder or any Borrower and stating that such notice is
a "Notice of Default," and (d) be entitled to consult with legal
counsel (including counsel for any Borrower), independent accountants, and other experts
selected by Administrative Agent and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants, or experts.

12.6     Not
in Control. Nothing in any Loan Document shall, or shall be deemed to (a) give
Administrative Agent or any Holder the Right to exercise control over the assets
(including real property), affairs, or management of any Borrower, (b) preclude or
interfere with compliance by any Borrower thereof with any Law, or (c) require any act or
omission by any Borrower thereof that may be harmful to Persons or property. Any "Material
Adverse Event" or other materiality qualifier in any representation, warranty,
covenant, or other provision of any Loan Document is included for credit documentation
purposes only and shall not, and shall not be deemed to, mean that Administrative Agent or
any Holder acquiesces in any non-compliance by any Borrower with any Law or document, or
that Administrative Agent or any Holder does not expect the Borrowers to promptly,
diligently, and continuously carry out all appropriate removal, remediation, and
termination activities required or appropriate in accordance with all Environmental Laws.
The Administrative Agent and the Holders have no fiduciary relationship with or fiduciary
duty to any Borrower arising out of or in connection with the Loan Documents, and the
relationship between the Administrative Agent and the Holders, on the one hand, and
Borrowers, on the other hand, in connection with the Loan Documents is solely that of
debtor and creditor. The power of the Administrative Agent and Holders under the Loan
Documents is limited to the Rights provided in the Loan Documents, which Rights exist
solely to assure payment and performance of the Obligation and may be exercised in a
manner calculated by the Administrative Agent and Holders in their respective good faith
business judgment.

12.7     Course
of Dealing. The acceptance by Administrative Agent or Holders at any time and from
time to time of partial payment on the Obligation shall not be deemed to be a waiver of
any Default then existing. No waiver by Administrative Agent, Required Holders, or Holders
of any Default shall be deemed to be a waiver of any other then-existing or subsequent
Default. No delay or omission by Administrative Agent, Required Holders, or Holders in
exercising any Right under the Loan Documents shall impair such Right or be construed as a
waiver thereof or any acquiescence therein, nor shall any single or partial exercise of
any such Right preclude other or further exercise thereof, or the exercise of any other
Right under the Loan Documents or otherwise.

12.8     Cumulative
Rights. All Rights available to Administrative Agent and Holders under the Loan
Documents are cumulative of and in addition to all other Rights granted to Administrative
Agent and Holders at law or in equity, whether or not the Obligation is due and payable
and whether or not Administrative Agent or Holders have instituted any suit for
collection, foreclosure, or other action in connection with the Loan Documents.

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12.9     Application
of Proceeds. Any and all proceeds ever received by Administrative Agent or Holders
from the exercise of any Rights pertaining to the Obligation shall be applied to the
Obligation in the order and manner set forth in Section 3.12.

12.10     Certain
Proceedings. Each Borrower will promptly execute and deliver, or cause the
execution and delivery of, all applications, certificates, instruments, registration
statements, and all other documents and papers Administrative Agent or Holders may
reasonably request in connection with the obtaining of any consent, approval,
registration, qualification, permit, license, or Authorization of any Governmental
Authority or other Person necessary or appropriate for the effective exercise of any
Rights under the Loan Documents. Because the Borrowers agree that Administrative Agent's
and Holders' remedies at Law for failure of the Borrowers to comply with the provisions of
this Section would be inadequate and that such failure would not be adequately compensable
in damages, the Borrowers agree that the covenants of this Section may be specifically
enforced.

12.11     Expenditures
by Holders. Borrowers shall promptly pay within fifteen (15) Business Days after
request therefor (a) all reasonable costs, fees, and expenses paid or incurred by
Administrative Agent and Highland Capital Management, L.P., incident to any Loan Document
(including, but not limited to, the reasonable fees and expenses of counsel to
Administrative Agent and Highland Capital Management, L.P. in connection with the
negotiation, preparation, delivery, execution, coordination, and administration of the
Loan Documents and any related amendment, waiver, or consent) and (b) all reasonable costs
and expenses of Holders and Administrative Agent incurred by Administrative Agent or any
Holder in connection with the enforcement of the obligations of any Borrower arising under
the Loan Documents (including, without limitation, costs and expenses incurred in
connection with any workout or bankruptcy) or the exercise of any Rights arising under the
Loan Documents (including, but not limited to, reasonable attorneys' fees including
allocated cost of internal counsel, court costs, and other costs of collection), all of
which shall be a part of the Obligation and shall bear interest at the Default Rate from
the date due until the date repaid.

12.12     Indemnification.
Each Borrower agrees, jointly and severally, to indemnify and hold harmless Administrative
Agent, and each Holder, and each of their respective affiliates and their respective
officers, directors, employees, agents, attorneys, and advisors (each, an "IndemnifiedParty") from and against any and all claims, damages, losses, liabilities
(including, without limitation, any Environmental Liabilities), costs, and expenses
(including, without limitation, reasonable attorneys' fees) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection with any
investigation, litigation, or proceeding or preparation of defense in connection
therewith) the Loan Documents, any of the transactions contemplated herein or the actual
or proposed use of the proceeds of the Borrowings (including any of the foregoing arising
from the negligence of the Indemnified Party), except to the extent such claim, damage,
loss, liability, cost, or expense is found in a final, non-appealable judgment by a court
of competent jurisdiction to have resulted from such Indemnified Party's gross negligence
or willful misconduct. In the case of an investigation, litigation, or other proceeding to
which the indemnity in this Section 11.11 applies, such indemnity shall be
effective whether or not such investigation, litigation, or proceeding is brought by any
Borrower, their directors, shareholders, or creditors or an Indemnified Party or any other
Person or any Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated. Each Borrower agrees not to assert any
claim against any indemnified party on any theory of liability, for special, indirect,
consequential, or punitive damages arising

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out of or otherwise relating to the Loan Documents, any of the
transactions contemplated herein or the actual or proposed use of the proceeds of the
Borrowings. Without prejudice to the survival of any other agreement of the Borrowers
hereunder, the agreements and obligations of the Borrowers contained in this Section
11.11 shall survive the payment in full of the Borrowings and all other amounts
payable under the Loan Documents.

SECTION 13     AGREEMENT AMONG HOLDERS.

13.1     Administrative
Agent

(a)     Appointment
of Administrative Agent. Each Holder hereby appoints U.S. Bank National Association
(and U.S. Bank National Association hereby accepts such appointment) as its nominee and
agent, in its name and on its behalf: (i) to act as nominee for and on behalf of such
Holder in and under all Loan Documents; (ii) to arrange the means whereby the funds of
Holders are to be made available to Borrowers under the Loan Documents; (iii) to take such
action as may be requested by any Holder under the Loan Documents (when such Holder is
entitled to make such request under the Loan Documents and after such requesting Holder
has obtained the concurrence of such other Holders as may be required under the Loan
Documents); (iv) to receive all documents and items to be furnished to Holders under the
Loan Documents; (v) to timely distribute, and Administrative Agent agrees to so
distribute, to each Holder all material information, requests, documents, and items
received from Borrowers under the Loan Documents; (vi) to promptly distribute to each
Holder its ratable part of each payment or prepayment (whether voluntary, as proceeds of
collateral upon or after foreclosure, as proceeds of insurance thereon, or otherwise) in
accordance with the terms of the Loan Documents; and (vii) to deliver to the appropriate
Persons requests, demands, approvals, and consents received from Holders; provided,
however, Administrative Agent shall not be required to take any action which exposes
Administrative Agent to personal liability or which is contrary to the Loan Documents or
applicable Law.

(b)     Resignation
or Removal of Administrative Agent. Successor Administrative Agent. Administrative
Agent may resign at any time with or without cause as Administrative Agent under the Loan
Documents by giving written notice thereof to Holders and may be removed as Administrative
Agent under the Loan Documents at any time with cause by Required Holders. Should the
initial or any successor Administrative Agent ever cease to be a party hereto or should
the initial or any successor Administrative Agent ever resign or be removed as
Administrative Agent, then Required Holders shall elect the successor Administrative Agent
from among the Holders (other than the resigning Administrative Agent). If no successor
Administrative Agent shall have been so appointed by Required Holders, within 30 days
after the retiring Administrative Agent's giving of notice of resignation or Required
Holders' removal of the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of Holders, appoint a successor Administrative Agent. Upon the
acceptance of any appointment as Administrative Agent under the Loan Documents by a
successor Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the Rights of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and obligations of
Administrative Agent under the Loan Documents, and each Holder shall execute such
documents as any Holder may reasonably request to reflect such change in and under the
Loan Documents. After any retiring Administrative Agent's resignation or removal as
Administrative Agent under the Loan Documents, the provisions of this Section 13
shall inure to its benefit as to any actions taken or omitted to be taken by it while it
was Administrative Agent under the Loan Documents.

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(c)     Administrative
Agent as a Holder. Non-Fiduciary. Administrative Agent if also a Holder, in such
capacity as a Holder, shall have the same Rights under the Loan Documents as any other
Holder and may exercise the same as though it were not acting as Administrative Agent; the
term "Holder" shall, unless the context otherwise indicates, include
Administrative Agent; and any resignation, or removal of Administrative Agent hereunder
shall not impair or otherwise affect any Rights which it has or may have in its capacity
as an individual Holder. Each Holder and Borrowers agree that Administrative Agent is not
a fiduciary for Holders or for Borrowers but simply is acting in the capacity described
herein to alleviate administrative burdens for both Borrowers and Holders, that
Administrative Agent has no duties or responsibilities to Holders or Borrowers except
those expressly set forth herein, and that Administrative Agent in its capacity as a
Holder has all Rights of any other Holder.

(d)     Other
Activities of Administrative Agent. Administrative Agent and its Affiliates may now or
hereafter be engaged in one or more loan, letter of credit, leasing, or other financing
transactions with Borrowers, act as trustee or depositary for Borrowers, or otherwise be
engaged in other transactions with Borrowers (collectively, the "other
activities") not the subject of the Loan Documents. Without limiting the Rights
of Holders specifically set forth in the Loan Documents, Administrative Agent and its
Affiliates shall not be responsible to account to Holders for such other activities, and
no Holder shall have any interest in any other activities, any present or future
guaranties by or for the account of Borrowers which are not contemplated or included in
the Loan Documents, any present or future offset exercised by Administrative Agent and its
Affiliates in respect of such other activities, any present or future property taken as
security for any such other activities, or any property now or hereafter in the possession
or control of Administrative Agent or its Affiliates which may be or become security for
the obligations of Borrowers arising under the Loan Documents by reason of the general
description of indebtedness secured or of property contained in any other agreements,
documents, or instruments related to any such other activities; provided that, if
any payments in respect of such guaranties or such property or the proceeds thereof shall
be applied to reduction of the Obligation, then each Holder shall be entitled to share in
such application ratably.

13.2     Expenses.
Upon demand by Administrative Agent, each Holder shall pay its ratable portion (determined
as of the date reimbursement is sought hereunder) of any reasonable expenses (including,
without limitation, court costs, reasonable attorneys' fees, and other costs of
collection) incurred by Administrative Agent in connection with any of the Loan Documents
if and to the extent such Administrative Agent does not receive reimbursement therefor
from other sources within 60 days after incurred; provided that, each Holder shall
be entitled to receive its ratable portion of any reimbursement for such expenses, or part
thereof, which Administrative Agent subsequently receives from such other sources.

13.3     Proportionate
Absorption of Losses. Except as otherwise provided in the Loan Documents, nothing
in the Loan Documents shall be deemed to give any Holder any advantage over any other
Holder insofar as the Obligation is concerned, or to relieve any Holder from absorbing its
ratable portion of any losses sustained with respect to the Obligation (except to the
extent such losses result from unilateral actions or inactions of any Holder that are not
made in accordance with the terms and provisions of the Loan Documents).

13.4

13.5     Limitation
of Liability.

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(a)     General.
    Neither Administrative Agent nor any of its Representatives shall be liable for any action
    taken or omitted to be taken by it or them under the Loan Documents in good faith and
    reasonably believed by it or them to be within the discretion or power conferred upon it
    or them by the Loan Documents or be responsible for the consequences of any error of
    judgment, except for fraud, gross negligence, or willful misconduct; and neither
    Administrative Agent nor any of its Representatives has a fiduciary relationship with any
    Holder by virtue of the Loan Documents (provided that, nothing herein shall negate
    the obligation of Administrative Agent to account for funds received by it for the account
    of any Holder).

(b)     Non-Discretionary
    Actions. Indemnification. Unless indemnified to its satisfaction against loss, cost,
    liability, and expense, neither Administrative Agent nor any other Agent shall be
    compelled to do any act under the Loan Documents or to take any action toward the
    execution or enforcement of the powers thereby created or to prosecute or defend any suit
    in respect of the Loan Documents. If Administrative Agent requests instructions from
    Holders or Required Holders, as the case may be, with respect to any act or action
    (including, but not limited to, any failure to act) in connection with any Loan Document,
    Administrative Agent shall be entitled (but shall not be required) to refrain (without
    incurring any liability to any Person by so refraining) from such act or action unless and
    until it has received such instructions. Except where action of Required Holders or all
    Holders is required in the Loan Documents, Administrative Agent may act hereunder in its
    own discretion without requesting instructions. In no event, however, shall Administrative
    Agent or any of its Representatives be required to take any action which it or they
    determine could incur for it or them criminal or onerous civil liability. Without limiting
    the generality of the foregoing, no Holder shall have any right of action against
    Administrative Agent as a result of Administrative Agent's acting or refraining from
    acting hereunder in accordance with the instructions of Required Holders (or all Holders
    if required in the Loan Documents).

(c)     Independent
    Credit Decision. Neither Administrative Agent nor any other Agent shall be responsible
    in any manner to any Holder or any Participant for, and each Holder represents and
    warrants that it has not relied upon Administrative Agent or any other Agent in respect
    of, (i) the creditworthiness of any Borrower and the risks involved to such Holder, (ii)
    the effectiveness, enforceability, genuineness, validity, or the due execution of any Loan
    Document, (iii) any representation, warranty, document, certificate, report, or statement
    made therein or furnished thereunder or in connection therewith, (iv) the existence,
    priority, or perfection of any Lien hereafter granted or purported to be granted under any
    Loan Document, or (v) observation of or compliance with any of the terms, covenants, or
    conditions of any Loan Document on the part of any Borrower. Each Holder agrees to
    indemnify Administrative Agent and its Representatives and hold them harmless from and
    against (but limited to such Holder's Pro Rata Part of) any and all liabilities,
    obligations, losses, damages, penalties, actions, judgments, suits, costs, reasonable
    expenses, and reasonable disbursements of any kind or nature whatsoever which may be
    imposed on, asserted against, or incurred by them in any way relating to or arising out of
    the Loan Documents or any action taken or omitted by them under the Loan Documents
    (including any of the foregoing arising from the negligence of Administrative Agent or its
    Representatives), to the extent Administrative Agent and its Representatives are not
    reimbursed for such amounts by any Borrower (provided that, Administrative Agent
    and its Representatives shall not have the Right to be indemnified hereunder for its or
    their own fraud, gross negligence, or willful misconduct).

13.6     Default;
Collateral.

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(a)     Upon
    the occurrence and continuance of a Default, Holders agree to promptly confer in order
    that Required Holders or Holders, as the case may be, may agree upon a course of action
    for the enforcement of the Rights of Holders; and Administrative Agent shall be entitled
    to refrain from taking any action (without incurring any liability to any Person for so
    refraining) unless and until Administrative Agent shall have received instructions from
    Required Holders. All Rights of action under the Loan Documents and all Rights to the
    Collateral, if any, hereunder may be enforced by Administrative Agent and any suit or
    proceeding instituted by Administrative Agent in furtherance of such enforcement shall be
    brought in its name as Administrative Agent without the necessity of joining as plaintiffs
    or defendants any other Agent or Holder, and the recovery of any judgment shall be for the
    benefit of Holders subject to the expenses of Administrative Agent. In actions with
    respect to any property of Borrowers, Administrative Agent is acting for the ratable
    benefit of each Holder. Any and all agreements to subordinate (whether made heretofore or
    hereafter) other indebtedness or obligations of Borrowers to the Obligation shall be
    construed as being for the ratable benefit of each Holder.

(b)     Each
    Holder authorizes and directs Administrative Agent to enter into the Collateral Documents
    for the benefit of the Holders. Except to the extent unanimity or a supermajority
    is required hereunder, each Holder agrees that any action taken by the Required Holders in
    accordance with the provisions of the Loan Documents, and the exercise by the Required
    Holders of the powers set forth herein or therein, together with such other powers
    as are reasonably incidental thereto, shall be authorized and binding upon all of the
    Holders.

(c)     Administrative
    Agent is hereby authorized on behalf of all of the Holders, without the necessity of any
    notice to or further consent from any Holder, from time to time to take any action with
    respect to any Collateral or Collateral Documents which may be necessary to perfect and
    maintain perfected the Liens upon the Collateral granted pursuant to the Collateral
    Documents.

(d)     Administrative
    Agent shall have no obligation whatsoever to any Holder or to any other Person to assure
    that the Collateral exists or is owned by any Borrower or is cared for, protected, or
    insured or has been encumbered or that the Liens granted to Administrative Agent herein or
    pursuant hereto have been properly or sufficiently or lawfully created, perfected,
    protected, or enforced, or are entitled to any particular priority, or to exercise at all
    or in any particular manner or under any duty of care, disclosure, or fidelity, or to
    continue exercising, any of the Rights granted or available to Administrative Agent in
    this Section 13.6 or in any of the Collateral Documents; it being understood
    that Administrative Agent shall have no duty or liability whatsoever to any Holder, other
    than to act without gross negligence or willful misconduct.

(e)     Holders
    hereby irrevocably authorize Administrative Agent, at its option and in its discretion, to
    release any Lien granted to or held by Administrative Agent upon any Collateral: (i) upon
    payment and satisfaction of the Obligation; (ii) constituting property in which no
    Borrower owned an interest at the time the Lien was granted or at any time
    thereafter;(iii) upon the sale, transfer, or disposition of Collateral which is expressly
    permitted pursuant to the Loan Documents; (iv) as contemplated in Section 6.3; or
    (v) if approved, authorized, or ratified in writing by all necessary Holders. Upon request
    by Administrative Agent at any time, Holders will confirm in writing Administrative
    Agent's authority to release particular types or items of Collateral pursuant to this Section
    13.6.

(f)     In
    furtherance of the authorizations set forth in this Section 13.6, each Holder
    hereby irrevocably appoints Administrative Agent its attorney-in-fact, with full power of
    substitution, for

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and on behalf of and in the name of each such Holder, (i) to enter into
    Collateral Documents (including, without limitation, any appointments of substitute
    trustees under any Collateral Document), (ii) to take action with respect to the
    Collateral and Collateral Documents to perfect, maintain, and preserve Holder's Liens, and
    (iii) to execute instruments of release or to take other action necessary to release Liens
    upon any Collateral to the extent authorized in Paragraph (e) hereof. This power of
    attorney shall be liberally, not restrictively, construed so as to give the greatest
    latitude to Administrative Agent's power, as attorney, relative to the Collateral matters
    described in this Section 13.6. The powers and authorities herein conferred on
    Administrative Agent may be exercised by Administrative Agent through any Person who, at
    the time of the execution of a particular instrument, is an officer of Administrative
    Agent. The power of attorney conferred by this Section 13.6(f) is granted for
    valuable consideration and is coupled with an interest and is irrevocable so long as the
    Obligation, or any part thereof, shall remain unpaid or Holders are obligated to make any
    Borrowings under the Loan Documents.

13.7     Limitation
of Liability. To the extent permitted by Law, (a) Administrative Agent (acting in
its agent capacity) shall not incur any liability to any Holder or Participant except for
acts or omissions resulting from its own fraud, gross negligence or willful misconduct,
and (b) neither Administrative Agent nor any Holder or Participant shall incur any
liability to any other Person for any act or omission of any other Holder or Participant.

13.8     Relationship
of Holders. Nothing herein shall be construed as creating a partnership or joint
venture among Administrative Agent and Holders.

13.9     Benefits
of Agreement. None of the provisions of this Section 13 shall inure to the
benefit of any Borrower or any other Person other than Holders and Administrative Agent;
consequently, no Borrower or any other Person shall be entitled to rely upon, or to raise
as a defense, in any manner whatsoever, the failure of Administrative Agent or any Holder
to comply with such provisions.

13.10     Obligations
Several. The obligations of Holders hereunder are several, and each Holder
hereunder shall not be responsible for the obligations of the other Holders hereunder, nor
will the failure of one Holder to perform any of its obligations hereunder relieve the
other Holders from the performance of their respective obligations hereunder.

SECTION 14     MISCELLANEOUS.

14.1     Headings.
The headings, captions, and arrangements used in any of the Loan Documents are, unless
specified otherwise, for convenience only and shall not be deemed to limit, amplify, or
modify the terms of the Loan Documents, nor affect the meaning thereof.

14.2     Nonbusiness
Days. In any case where any payment or action is due under any Loan Document on a
day which is not a Business Day, such payment or action may be delayed until the
next-succeeding Business Day, but interest and fees shall continue to accrue in respect of
any payment to which it is applicable until such payment is in fact made; provided
that, if, in the case of any such payment in respect of a Eurodollar Rate Borrowing,
the next-succeeding Business Day is in the next calendar month, then such payment shall be
made on the next-preceding Business Day.

14.3     Communications.
Unless otherwise specifically provided herein or any other Loan Document, all notices
shall be in writing addressed to the respective party as set forth below and may be
personally served, faxed, telecopied, or sent by overnight courier service or United
States mail and shall be deemed to have been given: (a) if delivered in person, when
delivered; (b) if delivered by fax or telecopy, on the date of transmission if transmitted
on a Business Day before 4:00 p.m. New York time

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or, if not, on the next succeeding Business Day; (c) if delivered by
overnight courier, the next succeeding Business Day after delivery to such courier
properly addressed; or (d) if by U.S. Mail, four (4) Business Days after depositing in the
United States mail, with postage prepaid and properly addressed.

If to any
    Borrower:
    
    c/o SUN
    HEALTHCARE GROUP, INC.101 Sun Avenue
    NEAlbuquerque,
    New Mexico 87109Attn: TreasurerFax/Telecopy
    No.: (505) 468-6635With a copy to:
    
    c/o SUN
    HEALTHCARE GROUP, INC.101 Sun Avenue
    NEAlbuquerque,
    New Mexico 87109Attn: General
    CounselFax/Telecopy
    No.: (505) 468-4747If to
    Administrative Agent:
    
    U.S. Bank
    National Association225 South Sixth
    StreetMinneapolis,
    Minnesota 55402-4302With a copy to:
    
    Highland
    Capital Management, L.P.Two Galleria
    Tower, Suit 130013455 Noel RoadDallas, Texas
    75240Attn: Patrick
    H. DaughertyFax/Telecopy
    No.: 972/628-4147With a copy to:
    
    Haynes and
    Boone, LLP901 Main StreetSuite 3100Dallas, Texas
    75202Attn: Laurie G.
    LangFax/Telecopy
    No.: 214/200-0667


If to
any Holder: Its address indicated on the signature page hereto, in an Assignment and
Acceptance Agreement or in a notice to Agents and Borrowers or to such other address as
the party addressed shall have previously designated by written notice to the serving
party, given in accordance with this Section 14.3.

14.4     Form
and Number of Documents. Each agreement, document, instrument, or other writing to
be furnished under any provision of the Loan Documents must be in form and substance and
in such number of counterparts as may be reasonably satisfactory to Administrative Agent
and its counsel.

14.5     Survival.
All covenants, agreements, undertakings, representations, and warranties made in any of
the Loan Documents shall survive all closings under the Loan Documents and, except as
otherwise indicated, shall not be affected by any investigation made by any party. All
Rights of, and provisions relating to, reimbursement and indemnification of Administrative
Agent or any Holder (and any other provision of the Loan Documents that expressly provides
for such survival) shall survive termination of this Agreement, payment in full of the
Obligation, and any assignment by any Holder.

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14.6     Governing
Law. The Loan Documents have been entered into pursuant to Section 5-1401
of the New York General Obligations Law and the substantive laws of the State of New York
(except to the extent the laws of another jurisdiction govern the creation, perfection,
validity, or enforcement of Liens under the Collateral Documents), and the applicable
federal laws of the United States of America shall govern the validity, construction,
enforcement and interpretation of the Loan Documents.

14.7     Invalid
Provisions. In the event that any provision of this Agreement is deemed to be
invalid, illegal, or unenforceable by reason of the operation of any Law or by reason of
the interpretation placed thereon by any Governmental Authority, the validity, legality,
and enforceability of the remaining provisions of this Agreement shall not in any way be
affected or impaired thereby, and the affected provision shall be modified to the minimum
extent permitted by Law so as most fully to achieve the intention of this Agreement.

14.8     Entirety.
The Rights and Obligations of each Borrower, Holders, and Administrative Agent Shall Be
Determined Solely from Written Agreements, Documents, and Instruments, and Any Prior Oral
Agreements Between Such Parties Are Superseded by and Merged into Such Writings. This
Agreement (As Amended in Writing from Time to Time) and the Other Written Loan Documents
Executed by Any Borrower, Any Holder, and/or Administrative Agent (Together with
All Commitment Letters and Fee Letters as They Relate to the Payment of Fees after the
Closing Date) Represent the Final Agreement Between the Borrowers, Holders, and
Administrative Agent, and May Not Be Contradicted by Evidence of Prior, Contemporaneous,
or Subsequent Oral Agreements by Such Parties. There Are No Unwritten Oral Agreements
Between Such Parties.

14.9     Jurisdiction;
Venue; Service of Process; Jury Trial. Each Party Hereto, in Each Case for Itself,
its Successors and Assigns, Hereby (A) irrevocably Submits to the Nonexclusive
Jurisdiction of the State (pursuant to Section 5-1402 of the New York General
Obligations Law) and Federal Courts Located in the Borough of Manhattan in the State of
New York, and Agrees and Consents That Service of Process May Be Made upon it in Any Legal
Proceeding Arising out of or in Connection with the Loan Documents and the Obligation by
Service of Process as Provided by New York Law, (B) irrevocably Waives, to the Fullest
Extent Permitted by Law, Any Objection Which it May Now or Hereafter Have to the Laying of
Venue of Any Litigation Arising out of or in Connection with the Loan Documents and the
Obligation Brought in Any Such Court, (C) irrevocably Waives Any Claims That Any
Litigation Brought in Any Such Court Has Been Brought in an Inconvenient Forum, (D) agrees
to Designate and Maintain an Agent for Service of Process in New York in Connection with
Any Such Litigation and to Deliver to Administrative Agent Evidence Thereof, If Requested,
(E) irrevocably Consents to the Service of Process out of Any of the Aforementioned Courts
in Any Such Litigation by the Mailing of Copies Thereof by Certified Mail, Return Receipt
Requested, Postage Prepaid, at its Address Set Forth Herein, (F) irrevocably Agrees That
Any Legal Proceeding Against Any Party Hereto Arising out of or in Connection with the
Loan Documents or the Obligation Shall Be Brought in One of the Aforementioned Courts, and
(G) irrevocably Waives, to the Fullest Extent Permitted by Law, its Respective Rights to a
Jury Trial of Any Claim or Cause of Action Based upon or Arising out of Any Loan Document
or the Transactions Contemplated Thereby. The scope of each of the foregoing waivers is
intended to be all-encompassing of any and all disputes that may be filed in any court and
that relate to the subject matter of this transaction, including, without limitation,
contract claims, tort claims, breach of duty

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claims, and all other common law and statutory claims. The Borrowers
and each other party to the Loan Documents acknowledge that this waiver is a material
inducement to the agreement of each party hereto to enter into a business relationship,
that each has already relied on this waiver in entering into the Loan Documents, and each
will continue to rely on each of such waivers in related future dealings. The Borrowers
and each other party to the Loan Documents warrant and represent that they have reviewed
these waivers with their legal counsel, and that they knowingly and voluntarily agree to
each such waiver following consultation with legal counsel. THE WAIVERS IN THIS SECTION
14.9 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THESE WAIVERS SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, SUPPLEMENTS, AND
REPLACEMENTS TO OR OF THIS OR ANY OTHER LOAN DOCUMENT. In the event of Litigation, this
Agreement may be filed as a written consent to a trial by the court.

14.10     Amendments,
Consents, Conflicts, and Waivers.

(a)     Except
    as otherwise specifically provided in this Section 14.10 or otherwise in the Loan
    Documents, (i) this Agreement may only be amended, modified, or waived by an instrument in
    writing executed jointly by Borrowers and Required Holders, and, if required by, the
    Intercreditor Agreement, the Senior Agent, and, in the case of any matter affecting
    Administrative Agent (except removal of Administrative Agent as provided in Section
    13) by Administrative Agent, and may only be supplemented by documents delivered or to
    be delivered in accordance with the express terms hereof, and (ii) the other Loan
    Documents may only be the subject of an amendment, modification, or waiver if Borrowers
    and Required Holders, and, in the case of any matter affecting Administrative Agent (except
    as set forth above), such Administrative Agent, have approved same.

(b)     Any
    amendment to or consent or waiver under any Loan Document which purports to accomplish any
    of the following must be approved by Borrowers and by each Holder adversely affected
    thereby, and, if required by, the Intercreditor Agreement, the Senior Agent, and, in the
    case of any matter affecting Administrative Agent, by Administrative Agent: (i) postpones
    or delays any date fixed by the Loan Documents for any payment of all or any part of the
    Obligation payable to such Holder or Administrative Agent; (ii) reduces the interest
    rate or decreases the amount of any payment of principal, interest, fees, or other sums
    payable to Administrative Agent or any such Holder hereunder (except such reductions as
    are contemplated by this Agreement); (iii) changes the definition of "Required
    Holders"or this Section 14.10(b) or any other provisions of the Loan
    Documents that require the unanimous consent of the Holders; (iv) changes the order of
    application of any payment or prepayment set forth in Sections 3.3 and 3.12
    in any manner that adversely affects such Holder or Administrative Agent; or (v) except as
    otherwise permitted by any Loan Document (including, without limitation, Section 6.3),
    releases all or any substantial portion of the Collateral or any material Borrower.
    Without the consent of such Holder, no Holder's "Commitment Percentage"
    may be increased.

(d)     Any
conflict or ambiguity between the terms and provisions of this Agreement and terms and
provisions in any other Loan Document shall be controlled by the terms and provisions
herein.

(e)     No
course of dealing nor any failure or delay by Administrative Agent, any Holder, or any of
their respective Representatives with respect to exercising any Right of Administrative
Agent or any Holder hereunder shall operate as a waiver thereof. A waiver must be in
writing and signed by Administrative Agent and requisite Holders to be effective, and such
waiver will be effective only in the specific instance and for the specific purpose for
which it is given.

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14.11     Multiple
Counterparts. The Loan Documents may be executed in a number of counterparts, each
of which shall be deemed an original for all purposes and all of which constitute,
collectively, one agreement; but, in making proof of any Loan Document, it shall not be
necessary to produce or account for more than one such counterpart. This Agreement shall
become effective when counterparts hereof shall have been executed and delivered to
Administrative Agent by each Holder, Administrative Agent, and Borrowers, or, when
Administrative Agent shall have received telecopied, telexed, or other evidence
satisfactory to it that such party has executed and is delivering to Administrative Agent
a counterpart hereof.

14.12     Successors
and Assigns; Assignments and Participations.

(a)The
provisions of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby, except that
the Borrowers may not, except as otherwise permitted under the Loan Documents, assign or
otherwise transfer any of its Rights or obligations hereunder without the prior written
consent of each Holder and no Holder may assign or otherwise transfer any of its rights or
obligations hereunder except (i) to an Eligible Assignee in accordance with the
provisions of Section 14.12(b), (ii) by way of participation in accordance with the
provisions of Section 14.12(d), or (iii) by way of pledge or assignment of a
security interest subject to the restrictions of Section 14.12(f) (and any other
attempted assignment or transfer by any party hereto shall be null and void). Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any Person (other
than the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in Section 14.12(d)and, to the extent
expressly contemplated hereby, the Affiliates of each of the Administrative Agent and the
Holders) any legal or equitable Right, remedy, or claim under or by reason of this
Agreement.

(b)Any
Holder may at any time assign to one or more Eligible Assignees all or a portion of its
Rights and obligations under this Agreement (including all or a portion of the Aggregate
Principal Debt owing to it); provided that (i) except in the case of an assignment
of the entire remaining amount of the assigning Holder's Aggregate Principal Debt at the
time owing to it or its Discount Notes or in the case of an assignment to a Holder or an
Affiliate of a Holder or a Related Fund with respect to a Holder, the aggregate amount of
the Aggregate Principal Debt of the assigning Holder subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such assignment
is delivered to the Administrative Agent or, if "Trade Date" is specified
in the Assignment and Assumption, as of the Trade Date) shall not be less than $1,000,000,
unless each of Administrative Agent and, so long as no Default or Potential Default has
occurred and is continuing, the Borrowers otherwise consent (each such consent not to be
unreasonably withheld or delayed); (ii) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Holder's Rights and obligations
under this Agreement with respect to the Term Loan Principal Debt or the Discount Notes
assigned, except that this clause (ii) shall not prohibit any Holder from assigning
all or a portion of its Rights and obligations among separate Tranches on a non-pro
rata basis; and (iii) the parties to each assignment shall execute and deliver to
Administrative Agent an Assignment and Assumption, together with a processing and
recordation fee of $3,500, and the Eligible Assignee, if it shall not be a Holder, shall
deliver to the Administrative Agent such information as Administrative Agent shall
reasonably request. Subject to acceptance and recording thereof by Administrative Agent
pursuant to Section 14.12(c), from and after the effective date specified in each
Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this
Agreement and, to the extent of the interest assigned by such Assignment and Assumption,
have the rights and obligations of a Holder under this Agreement, and the assigning Holder
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the case of an
Assignment and Assumption covering all of the assigning Holder's Rights and obligations
under this Agreement, such Holder shall cease to be a

59

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party hereto) but shall continue to be entitled to the benefits of Sections 4,
12, and 14with respect to facts and circumstances occurring prior to the
effective date of such assignment. Any assignment or transfer by a Holder of rights or
obligations under this Agreement that does not comply with this paragraph shall be treated
for purposes of this Agreement as a sale by such Holder of a participation in such rights
and obligations in accordance with Section 14.12(d).

(c)Administrative
Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at one
of its offices in St. Louis, Missouri a copy of each Assignment and Assumption delivered
to it and a register for the recordation of the names and addresses of the Holders,
Aggregate Principal Amount owing to, each Holder pursuant to the terms hereof from time to
time (the "Register"). The entries in the Register shall be conclusive,
and the Borrowers, Administrative Agent, and the Holders may treat each Person whose name
is recorded in the Register pursuant to the terms hereof as a Holder hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrowers and any Holder, at any reasonable time and from
time to time upon reasonable prior notice.

(d)Any
Holder may at any time, without the consent of, or notice to, any Borrower or
Administrative Agent, sell participations to any Person (other than a natural person or
any Borrower or any of Borrowers' Affiliates or Subsidiaries) (each, a "Participant")
in all or a portion of such Holder's Rights and/or obligations under this Agreement
(including all or a portion of the Aggregate Principal Debt owing to it); provided
that (i) such Holder's obligations under this Agreement shall remain unchanged,
(ii) such Holder shall remain solely responsible to the other parties hereto for the
performance of such obligations, and (iii)  Borrowers, Administrative Agent, and the
other Holders shall continue to deal solely and directly with such Holder in connection
with such Holder's Rights and obligations under this Agreement. Any agreement or
instrument pursuant to which a Holder sells such a participation shall provide that such
Holder shall retain the sole right to enforce this Agreement and to approve any amendment,
modification, or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Holder will not, without the consent of the
Participant, agree to any amendment, modification, or waiver with respect to the
following: extending the due date for payment of any amount in respect of principal (other
than mandatory prepayments), interest, or fees due under the Loan Documents, reducing
the interest rate or the amount of principal or fees applicable to the Obligation (except
such reductions as are contemplated by the Loan Documents), or releasing all or any
substantial portion of the Collateral for the Obligation under the Loan Documents (except
such releases of Collateral as are contemplated in Section 6.3) that affects such
Participant. Subject to Section 14.12(e), Borrowers agree that each Participant
shall be entitled to the benefits of Section 4to the same extent as if it were a
Holder and had acquired its interest by assignment pursuant to Section 14.12(b). To
the extent permitted by Law, each Participant also shall be entitled to the benefits of Section 3.14as though it were a Holder, provided such Participant agrees to be subject to Section
3.13as though it were a Holder.

(e)A
Participant shall not be entitled to receive any greater payment under Section 4
than the applicable Holder would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to such
Participant is made with Borrowers' prior written consent. A Participant that would is not
incorporated under the Laws of the United States of America or a state thereof shall not
be entitled to the benefits of Section 4.6unless Borrowers are notified of
the participation sold to such Participant and such Participant agrees, for the benefit of
Borrowers, to comply with Section 4.6(d) as though it were a Holder.

(f)Any
Holder may at any time pledge or assign a security interest in all or any portion of its
Rights under this Agreement to secure obligations of such Holder, including without
limitation any pledge or assignment to secure obligations to a Federal Reserve Bank; provided
that no such pledge or assignment shall release such Holder from any of its obligations
hereunder or substitute any such pledgee or assignee for such Holder as a party hereto.

60

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14.13     Decisions
by Borrowers. To the extent any action under the Loan Documents requires the
consent or direction of all Borrowers and all Borrowers do not agree on the action to be
taken, Administrative Agent shall (a) take the alternative action (if any) provided under
the Loan Documents for circumstances under which no consent or direction is given by
Borrowers, or (b) if no such action is provided, take no action unless otherwise directed
by Required Holders.

14.14     Confidentiality.
Administrative Agent and each Holder agree to exercise its best efforts to keep
confidential any non-public information delivered pursuant to the Loan Documents and
identified as such by Borrowers and not to disclose such information to Persons other than
to: its respective Affiliates, officers, directors, and employees and in each case, on a
need-to-know basis and provided that such recipient complies with the confidentiality
provisions hereof; or its potential assignees or Participants; or Persons employed by or
engaged by Administrative Agent, any Holder, or any Holder's assignees or Participants
including, without limitation, attorneys, auditors, professional consultants, rating
agencies, and portfolio management services and in each case, on a need-to-know basis and
provided that such recipient complies with the confidentiality provisions hereof. The
confidentiality provisions contained in this subsection shall not apply to disclosures (a)
required to be made by Administrative Agent or any Holder to any Governmental Authority or
pursuant to legal process or (b) consisting of general portfolio information that
does not identify any Borrower. The obligations of Administrative Agent and Holders under
this Section 14.14 shall supersede and replace the obligations of Administrative
Agent and Holders under any confidentiality agreement in respect of this financing
executed and delivered by Administrative Agent or any Holder prior to the date hereof. In
no event shall Administrative Agent or any Holder be obligated or required to return any
materials furnished by any Borrower; provided, however, each potential assignee or
Participant shall be required to agree that if it does not become an assignee (or
Participant) it shall return all materials furnished to it by such Borrower in connection
herewith.

14.15     Publication.
Borrowers consent to the publication by Administrative Agent or Holders of a tombstone or
similar advertising material relating to the financing transactions contemplated by this
Agreement; provided, however, Administrative Agent or Holders (as applicable) shall
provide a draft of any such tombstone or similar advertising material to Borrowers for
review prior to the publication thereof. Administrative Agent and Holders reserve the
right to provide industry trade organizations information necessary and customary for
inclusion in league table measurements.

14.16     Company
as Agent. By executing this Agreement, each of the Borrowers confirms to the other
parties to this Agreement that the Company shall (and has been duly appointed by each of
the Borrowers to) act as agent for the Borrowers for all purposes of the Loan Documents,
including, without limitation, taking any action or receiving any communication on behalf
of such Borrower in connection with the Loan Documents. Each of the Holders and
Administrative Agent shall be entitled to deal with any Borrower through the Company and
to rely on any instructions or other communications from the Company on behalf of any
Borrower. None of the Holders or Administrative Agent shall have any responsibility to any
Borrower for dealing with the Borrowers as provided in this Section 14.16, and the
Obligation of each of the Borrowers to the Holders shall not be affected by any matter
relating to acts or omissions of the Company relating to the Borrowing or otherwise as
agent for the Borrowers hereunder. Notwithstanding the appointment of the Company as agent
for the Borrowers hereunder, Administrative Agent and the Holders shall in their sole
discretion be entitled to deal directly with any Borrower for all purposes of the Loan
Documents.

61

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14.17     Intercreditor
Agreement. Notwithstanding any contrary provision in any Loan Document, each Loan
Document is subject to the Intercreditor Agreement, and each Borrower, Administrative
Agent, and each Holder acknowledges and agrees to be bound by the provisions of the
Intercreditor Agreement.

14.18     Discharge
Only Upon Payment in Full; Reinstatement in Certain Circumstances. The obligations
of each Borrower under the Loan Documents shall remain in full force and effect until the
payment in full of the Aggregate Principal Debt and of all interest, fees, and other
amounts of the Obligation then due and owing, except that Sections 4, 12,
and 14, and any other provisions under the Loan Documents expressly intended to
survive by the terms hereof or by the terms of the applicable Loan Documents, shall
survive such termination. If at any time any payment of the principal of or interest on
any Note or any other amount payable by any Borrower under any Loan Document is rescinded
or must be otherwise restored or returned upon the insolvency, bankruptcy, or
reorganization of such Borrower or otherwise, the obligations of each Borrower under the
Loan Documents with respect to such payment shall be reinstated as though such payment had
been due but not made at such time.





[Remainder of Page Intentionally Blank.
Signature Pages Follow.]



62

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REPORTING RIDER



This
Reporting Rider is attached and made a part of that certain Term Loan and Note Purchase
Agreement, dated as of February 28, 2002 and entered into among Borrowers, Administrative
Agent, and Holder.

(A)     Monthly
Financials. As soon as available and in any event within thirty (30) days after the end of
each month, the Company will deliver to Administrative Agent and Holders (1) the
consolidated balance sheet and cash flow statement of the Company and its Subsidiaries as
at the end of such month and the related consolidated statements of income and
stockholders' equity for such month and for the period from the beginning of the then
current Fiscal Year to the end of such month, and (2) a schedule of the outstanding Debt
for borrowed money of the Company and its Subsidiaries describing in reasonable detail
each such debt issue or loan outstanding and the principal amount and amount of accrued
and unpaid interest with respect to each such debt issue or loan.

(B)     Quarterly
Financials. As soon as available and in any event within fifty-five (55) days of the end
of each of the first three calendar quarters of each Fiscal Year, the Company will deliver
to Administrative Agent and (1) Holders the consolidated balance sheet and cash flow
statement of the Company and its Subsidiaries as at the end of each such calendar quarter
and the related consolidated statements of income, stockholders' equity, and cash flow for
each such calendar quarter and for the period from the beginning of the then current
Fiscal Year to the end of each such calendar quarter and (2) a reasonably detailed
schedule of the Capital Expenditures incurred during such calendar quarter.

(C)     Year-End
Financials. As soon as available and in any event within one hundred five (105) days after
the end of each Fiscal Year, the Company will deliver to Administrative Agent and Holders:
(1) the consolidated balance sheet of the Company and its Subsidiaries as at the end
of such year and the related consolidated statements of income, stockholders' equity, and
cash flow for such Fiscal Year; (2) a detailed schedule of the Capital Expenditures
incurred during such Fiscal Year; and (3) report with respect to the Financial
Statements from the Company's Accountants, which report shall be unqualified as to going
concern and scope of audit of the Company and its Subsidiaries and shall provide in
substance that (a) such consolidated Financial Statements present fairly the consolidated
financial position of the Company and its Subsidiaries as at the dates indicated and the
results of their operations and cash flow for the periods indicated in conformity with
GAAP and (b) that the examination by Company's' Accountants in connection with such
consolidated financial statements has been made in accordance with generally accepted
auditing standards; and (4) copies of the consolidating financial statements of
Borrowers and their Subsidiaries, including (a) consolidating balance sheets of the
Company and its Subsidiaries as at the end of such Fiscal Year showing intercompany
elimination's and (b) related consolidating statements of income of Borrowers and their
Subsidiaries showing intercompany elimination's.

(D)     Compliance
Certificate. Together with the delivery of each set of Financial Statements referenced in subparagraphs
(A), (B),and(C) above, Borrowers will deliver to Administrative Agent and
Holders a Compliance Certificate in substantially the form of Exhibit F, together
with copies of the calculations and work-up employed to determine Borrowers'
compliance or noncompliance with the financial covenants set forth in Section 10.

(E)     Borrowing
Base Certificates, Registers, and Journals. On no less than a weekly basis, Borrowers
shall deliver to Administrative Agent: (1) a Borrowing Base Certificate updated to reflect
the most recent sales and collections of Borrowers and an assignment schedule of all of
accounts created by Borrowers; (2) an invoice register or sales journal describing all
sales of Borrowers, in form and

63

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substance satisfactory to Administrative Agent, and, if Administrative
Agent so requests, copies of invoices evidencing such sales and proofs of delivery
relating thereto; (3) a cash receipts journal; (4) a credit memo journal; and (5) an
adjustment journal, setting forth all adjustments to accounts.

(F)     Reconciliation
Reports, Inventory Reports, and Listings and Agings. On the Closing Date and within twenty
(20) days after the end of each calendar month and, if a Potential Default shall have
occurred and be continuing, from time to time upon the request of Administrative Agent,
Borrowers will deliver to Administrative Agent: (1) an aged trial balance of all then
existing accounts; and (2) an Inventory Report duly executed by an officer of each
Borrower as of the last day of such period. As soon as available and in any event within
five (5) Business Days after both the fifteenth and the last day of each month, and from
time to time upon the request of Administrative Agent, Borrowers will deliver to
Administrative Agent: (1) a Reconciliation Report duly executed by the Financial Officer
and substantially in the form of Exhibit E as at the last day of such period;
(2) an aged trial balance of all then existing accounts payable; and (3) a detailed
inventory listing and cover summary report. All such reports shall be in form and
substance satisfactory to Required Holders.

(G)     Management
Report. Together with each delivery of Financial Statements of Borrowers and their
Subsidiaries pursuant to subparagraph (A) above, Borrowers will deliver to
Administrative Agent and Holders a management report: (1) describing the operations and
financial condition of the Borrowers (by business segment) for the month then ended and
the portion of the current Fiscal Year then elapsed; (2) setting forth in comparative form
the corresponding figures for the corresponding periods of the previous Fiscal Year and
the corresponding figures from the most recent Projections for the current Fiscal Year
delivered to Administrative Agent and Holders pursuant to subparagraph (L) below;
and (3) discussing the reasons for any significant variations. The information above
shall be presented in reasonable detail and shall be certified by the chief financial
officer of the Company to the effect that such information fairly presents the results of
operations and financial condition of Borrowers and their Subsidiaries as at the dates and
for the periods indicated.

(H)     Appraisals.
From time to time, upon the request of Administrative Agent, Borrowers will obtain and
deliver to Administrative Agent, at Borrowers' expense, appraisal reports in form and
substance and from appraisers satisfactory to Administrative Agent, stating the then
current fair market and orderly liquidation values of all or any portion of the
Collateral; provided, however, so long as no Default or Potential Default is
continuing, Administrative Agent shall not request an appraisal as to any particular
category of Collateral to be performed more than once every 12 months at Borrowers'
expense.

(I)     Government
Notices. Borrowers will deliver to Administrative Agent no later than five (5) Business
Days following receipt copies of all notices, requests, subpoenas, inquiries, or other
writings received from any Governmental Authority concerning the violation or alleged
violation of ERISA, the violation or alleged violation of any Environmental Laws, or the
violation or alleged violation of the Fair Labor Standards Act. Borrowers shall deliver to
Collateral Agent an update to Schedule 8.7 no less frequently than on a
quarterly basis.

(J)     Notice
of Default, etc. Promptly upon a Borrower obtaining knowledge of any of the following
events or conditions, such Borrower shall deliver to Administrative Agent a certificate of
such Borrower's chief executive officer or a financial officer specifying the nature and
period of existence of such condition or event and what action such Borrower has taken, is
taking, and proposes to take with respect thereto: (1) any condition or event that
constitutes a Default or Potential Default; (2) any notice of default that any Person
has given to such Borrower or any of its Subsidiaries, which default if unremedied could
reasonably be expected to result in a Material Adverse Event; or (3) the occurrence
of any Material Adverse Event.

64

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(K)     Projections.
As soon as available and in any event no later than sixty (60) days after the end of each
Fiscal Year of the Company, Borrowers, will deliver to Administrative Agent and Holders
consolidated Projections of Borrowers and their Subsidiaries for the forthcoming three
Fiscal Years, year by year, and for the forthcoming Fiscal Year, month by month.

(L)     Other
Information. With reasonable promptness, Borrowers will deliver such other information and
data as Administrative Agent or any Holder may reasonably request from time to time.

(M)     Opening
Balance Sheet. As soon as available and in any event within ninety (90) days after the
Closing Date, Borrowers will deliver to Administrative Agent and Holders a consolidated
Closing Date balance sheet reviewed and reported on by the Company's Accountants.

65

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EXECUTED to be effective as of the date first written above.





U.S. BANK NATIONAL ASSOCIATION, as Administrative
    Agent, Lender,andPurchaserBy:/s/ Jason
    NadlerJason Nadler, Assistant Vice President






Signature Page to Term Loan Note

---

EXECUTED to be effective as of the date first written above.

|BORROWERS                                                                                                                                           |                                                                                             
|--------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------
|                                                                                                                                                    |                                                                                             
|SUN HEALTHCARE GROUP, INC.                                                                                                                          | ACCELERATED CARE PLUS, L.L.C.                                                               
|                                                                                                                                                    |                                                                                             
|                                                                                                                                                    | By:  Cal-Med, Inc.,
           Member of Accelerated Care Plus, L.L.C.                      
|                                                                                                                                                    |                                                                                             
|By: /s/ Robert K. Schneider      Robert K. Schneider, Vice President and
          Treasurer                                                        | By: /s/ Robert K. Schneider      Robert K. Schneider, Vice President and
          Treasurer
|                                                                                                                                                    |                                                                                             
|                                                                                                                                                    |                                                                                             
|                                                                                                                                                    | By:  HC, Inc.,  Member of Accelerated Care
            Plus, L.L.C.                         
|                                                                                                                                                    |                                                                                             
|                                                                                                                                                    | By: /s/ Robert K. Schneider      Robert K. Schneider, Vice President and
          Treasurer
|                                                                                                                                                    |                                                                                             
|                                                                                                                                                    |                                                                                             
|SUNDANCE REHABILITATION TEXAS,
    LIMITED PARTNERSHIP                                                                                              | WEST JERSEY/MEDIPLEX REHABILI-TATION LIMITED PARTNERSHIP                                    
|                                                                                                                                                    |                                                                                             
|By:  SRT, Inc., its general partner                                                                                                                 | By:  Mediplex of New Jersey, Inc.,
           its general partner                           
|                                                                                                                                                    |                                                                                             
|By: /s/ Robert K. Schneider      Robert K. Schneider, Vice President and
          Treasurer                                                        | By: /s/ Robert K. Schneider      Robert K. Schneider, Vice President and
          Treasurer
|                                                                                                                                                    |                                                                                             
|                                                                                                                                                    |                                                                                             
|EACH ADDITIONAL BORROWER LISTED ON THE ANNEX ATTACHED TO
    AND INCORPORATED INTO THIS SIGNATURE PAGE                                              |                                                                                             
|                                                                                                                                                    |                                                                                             
|                                                                                                                                                    |                                                                                             
|By: /s/ Robert K. Schneider      Robert K. Schneider, Vice President and
          Treasurer of the entities listed on the
          attached Annex |                                                                                             



Signature Page to Term Loan Note

---

|Advantage Health Services, Inc.       | Heritage Rehabilitation Center                                        | Regency Rehab Hospitals, Inc.               
|------------------------------------- | --------------------------------------------------------------------- | --------------------------------------------
|Americare Health Services Corp.       | HoMed Convalescent Equipment, Inc.                                    | Regency-North Carolina, Inc.                
|Americare of West Virginia, Inc.      | HTA of New York, Inc.                                                 | Regency-Tennessee, Inc.                     
|Atlantic Medical Supply Company, Inc. | Huntington Beach Convalescent Hospital                                | Retirement Care Associates, Inc.            
|Beckley Health Care Corp.             | Jeff Davis Healthcare, Inc.                                           | Rose Rehabilitation Center                  
|Bergen Eldercare, Inc.                | Lake Forest Healthcare Center, Inc.                                   | Salem Health Care Corp.                     
|Bibb Health & Rehabilitation, Inc.    | Libbie Rehabilitation Center, Inc.                                    | San Bernardino Rehabilitation Hospital, Inc.
|BioPath Clinical Laboratories, Inc.   | Manatee Springs Nursing Center, Inc.                                  | San Joaquin G.P. Corporation                
|Braswell Enterprises, Inc.            | Maplewood Health Care Center of Jackson,
    Tennessee, Inc.          | Shandin Hills Rehabilitation Center         
|Brent-Lox Hall Nursing Home, Inc.     | Marion Health Care Corp.                                              | Southside Health Care Center, Inc.          
|Brittany Rehabilitation Center, Inc.  | Masthead Corporation                                                  | Spofford Land, Inc.                         
|Cal-Med, Inc.                         | Meadowbrook Rehabilitation Center                                     | SRT, Inc.                                   
|Care Enterprises West                 | Mediplex Management of Palm Beach County, Inc.                        | Statesboro Healthcare Center, Inc.          
|Care Enterprises, Inc.                | Mediplex Management, Inc.
    Mediplex of Concord, Inc.               | Stockton Rehabilitation Center, Inc.        
|Care Home Health Services             | Mediplex of Connecticut, Inc.                                         | Summers Landing, Inc.                       
|CareerStaff Management, Inc.          | Mediplex of Kentucky, Inc.                                            | Sun Lane Purchase Corporation               
|CareerStaff Services Corporation      | Mediplex of Maryland, Inc.                                            | SunAlliance Healthcare Services, Inc.       
|CareerStaff Unlimited, Inc.           | Mediplex of Massachusetts, Inc.                                       | SunBridge G.P. Corporation                  
|Carmichael Rehabilitation Center      | Mediplex of New Hampshire, Inc.                                       | SunBridge Healthcare Corporation            
|Charlton Healthcare, Inc.             | Mediplex of New Jersey, Inc.                                          | SunBridge Healthcare of Colorado, 
    Inc. 
|Circleville Health Care Corp.         | Mediplex Rehabilitation of Massachusetts, Inc.                        | SunBridge Rehab of Colorado, Inc.           
|Clipper Home of North Conway, Inc.    | Mid-Florida, Inc.                                                     | SunBridge, Inc.                             
|Clipper Home of Portsmouth, Inc.      | Mountain Care Management, Inc.                                        | SunCare Respiratory Services, Inc.          
|Clipper Home of Rochester, Inc.       | New Bedford Nursing Center, Inc.                                      | SunCare Services Corporation                
|Clipper Home of Wolfeboro, Inc.       | Newport Beach Rehabilitation Center                                   | SunChoice Medical Supply, Inc.              
|Coalinga Rehabilitation Center        | Nursing Home, Inc.                                                    | SunDance Rehabilitation Corporation         
|Contour Medical, Inc.                 | Orange Rehabilitation Hospital, Inc.                                  | SunDance Services Corporation               
|Correctional Care Corp.               | P.M.N.F. Management, Inc.                                             | SunFactors, Inc.                            
|Covina Rehabilitation Center          | Pacific Health Care, Inc.                                             | SunHealth Specialty Services, Inc.          
|Dunbar Health Care Corp.              | Paradise Rehabilitation Center, Inc.                                  | SunMark Nevada, Inc.                        
|Duval Healthcare Center, Inc.         | Pharmacy Factors of California, Inc.                                  | SunMark of New Mexico, Inc.                 
|Executive Pharmacy Services, Inc.     | Pharmacy Factors of Florida, Inc. Pharmacy
    Factors of Texas, Inc. | SunPlus Home Health Services, Inc.          
|Facility Supply, Inc.                 | PRI, Inc.                                                             | SunScript Pharmacy Corporation              
|Fairfield Rehabilitation Center       | Putnam Health Care Corp.                                              | SunSolution, Inc.                           
|First Class Pharmacy, Inc.            | Quality Care Holding Corporation                                      | The Mediplex Group, Inc.                    
|Fullerton Rehabilitation Center       | Quality Nursing Care of Massachusetts, Inc.                           | U.S. Laboratory Corp.                       
|Gainesville Healthcare Center, Inc.   | Regency Health Services, Inc.                                         | Vista Knoll Rehabilitation Center, Inc.     
|Gardendale Health Care Center, Inc.   | Regency High School, Inc.                                             | West Tennessee, Inc.                        
|Glendora Rehabilitation Center        |                                                                       | Willow Way, Inc.                            
|Glenville Health Care Inc.            |                                                                       | Worcester Nursing Center, Inc.              
|Goodwin Nursing Home, Inc.            |                                                                       |                                             
|Grand Terrace Rehabilitation Center   |                                                                       |                                             
|Hallmark Health Services, Inc.        |                                                                       |                                             
|Harbor View Rehabilitation Center     |                                                                       |                                             
|HC, Inc.                              |                                                                      

---

TWO-PAGE ANNEX TO SIGNATURE PAGE(Attached to and incorporate by reference into the Term Loan Note)



U.S. Laboratory
Corp.                       
West Tennessee, Inc.     Worcester Nursing Center, Inc.
Vista Knoll Rehabilitation Center,     Willow Way, Inc.
Inc.



HSR Partners, L.P.
          Therapists Unlimited -
Baltimore/Washington,
             D.C., L.P.
          Therapists Unlimited - Chicago
II, L.P.
          Therapists Unlimited - Detroit
II, L.P.
          Therapists Unlimited - Fresno,
L.P.
          Therapists Unlimited -
Indianapolis, L.P.
          Therapists Unlimited -
Seattle, L.P.

By:     CareerStaff Management, Inc.
          its general partner
          By:     /s/ Robert K. Schneider
                    Robert
K. Schneider, Vice President
                    and
Treasurer