AMENDED AND RESTATED   REVOLVING LOAN AND SECURITY AGREEMENT
 dated as of February 28, 2011
 by and among
 DIVERSICARE MANAGEMENT SERVICES CO., a Tennessee corporation,
as a Borrower
 and
 those certain additional Borrowers set forth on Schedule 1 hereto,
 and
 THE PRIVATEBANK AND TRUST COMPANY,
as Administrative Agent for the Lenders
 and
 The Financial Institutions Parties Hereto as the Lenders




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AMENDED AND RESTATED REVOLVING LOAN AND SECURITY AGREEMENT
 AMENDED AND RESTATED REVOLVING LOAN AND SECURITY AGREEMENT Agreement DIVERSICARE MANAGEMENT SERVICES CO. Schedule 1 Borrower THE
PRIVATEBANK AND TRUST COMPANY PrivateBank Lenders THE PRIVATEBANK AND TRUST COMPANY Administrative Agent
 RECITALS
 WHEREAS Parent
 WHEREAS Original Loan Agreement
 WHEREAS Term Loan Agreement
 WHEREAS
 NOW, THEREFORE
 DEFINITIONS
 General Terms
 Account Debtor
 - 1 -




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Accounts
 ACH Transactions
 Adjusted EBITDA
 Adjusted EBITDAR plus
 Administrative Agent
 Affiliate
 Affiliated Term Borrowers
 - 2 -




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Affiliate Term Loan Financing Agreement
 Affiliate Term Loan Liabilities
 Agreement
 Allocable Amount Section
12.21(g)
 Applicable Base Rate Margin
 Applicable Libor Margin
 Assignment Agreement Section
12.15
 Bank Product Section 8.9
 Bank Product Agreements
 Bank Product Obligations
 Base Rate
 Base Rate Loan
 - 3 -




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Base Rent
 Blocked Account Agreement
 Blocked Persons List Section
7.29
 Borrower Agent
 Borrower Cash Management Program
 Borrowing Base
 Borrowing Date
 Borrowing Notice Section
2.12
 Business Day
 Capital Expenditures
 - 4 -




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Capitalized Lease Obligations
 Capmark
 Cash Collateral Account Section
4.3
 Cash Cost of Self-Insured Professional and General Liability
 CERCLA
 Certificates Section 5.2
 CHAMPUS
 Closing Date
 Closing Fee Section 2.16
 CMS
 Collateral Section 6.1
 Commercial Blocked Account Section 4.3
 - 5 -




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Commercial Leases
 Commitment
 Compliance Certificate Section
8.1(c)
 CON Section 10.2
 Credit Party
 Credit Termination Date Section 11.2
 Default
 Default Rate Section 2.7(a)
 Defaulting Lender
 Demand Deposit Account Section
4.3
 Deposit Accounts
 Duly Authorized Officer
 EBITDA
 - 6 -




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EBITDAR
 Eligible Accounts
        provided however
 - 7 -




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provided further provided further
 Environmental Laws
 - 8 -




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Environmental Notice
 Equipment
 ERISA
 ERISA Affiliate
 Event of Default Section
11.1
 Facility Facilities Schedule 1.1(a)
 Fee Letter
 - 9 -




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Financing Agreements
 Fiscal Quarter
 Fiscal Year
 Fixed Charge Coverage Ratio
 Fixed Charges
 GAAP
 - 10 -




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General Intangibles
 Governing Documents Section
9.14
 Government Accounts
 Governmental Approvals
 Governmental Authority
 Government Blocked Account Section 4.3
 Guarantor
 Guaranty
 Hazardous Substances
 - 11 -




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Healthcare Laws
 Hedging Agreement
 HHS
 HIPAA
 HUD Financing
 Indebtedness
 - 12 -




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Indemnified Parties Section
12.16
 Insurer
 Intellectual Property
 Intercreditor Agreement
 Inventory
 Issuing Lender provided however
 Joint Liability Payment Section
12.21(g)
 - 13 -




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Laws
 L/C Disbursement
 L/C Fee Section 2.18
 Leased Real Property
 Leases
 Lender Parties Section 12.24
 Letter of Credit
 Letter of Credit Documents
 Letter of Credit Obligations plus
 Liabilities
 - 14 -




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Libor Base Rate Bloomberg Financial Markets
 Libor Interest Period provided however provided further
 Libor Loan
 - 15 -




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Libor Rate
 Libor Rollover
 Licenses Section 10.2
 Lien
 Loan Account Section 2.5
 Loans
 Location Locations Schedule 1.1(a)
 Manage Management
 Management Agreements
 Master Letter of Credit Agreement Section 2.1B
 Material Adverse Change Material Adverse Effect
 - 16 -




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Maximum Revolving Facility
 Medicaid Certification
 Medicaid Provider Agreement
 Medicaid Regulations Medicaid
 Medical Services
 - 17 -




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Medicare Certification
 Medicare Provider Agreement
 Medicare Regulations Medicare
 Multiemployer Plan Section
7.19
 Net Capital Expenditures Schedule 1.1(d)
 Non-U.S. Participant Section
3.3
 OFAC Lists
 Omega
 Omega Debt Documents
 - 18 -




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Section 9.16
 Omega Letter of Credit
 Omega Master Lease Agreement DLC
 Omega Security Interests
 Omega Senior Leases Schedule 1.1(e)
 Omega Senior Lessor
 Operating Lease
 Operators Operator
 Original Closing Date
 Parent Recitals
 Participant Section 12.15(d)
 - 19 -




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Patient
 Patriot Act Section 8.16
 PBGC Section 7.19
 Permitted Liens Section 9.1
 Person
 Plan Section 7.19
 Pledge Agreements
 Pledgor
 Preferred Stock
 Preferred Stock Certificate of Designation
 Private Insurance/Managed Care Account
 - 20 -




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Private Insurance/Managed Care Contracts
 Private Pay Accounts
 Pro Rata Share
 Prohibited Transaction
 Property
 Rate Option
 Real Property Asset
 Register Section 12.15(d)
 Release
 Released Parties Section
12.24
 Releasing Parties Section
12.24
 Required Dividends and Redemption Amounts
 - 21 -




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Required Lenders
 Respond Response
 Restricted Agreements
 Restrictions Section 10.3
 Restructuring Stock Issuance and Subscription Agreement
 Revolving Credit Note(s) Section
2.1
 Revolving Loan Commitment Section 2.1
 Revolving Loan Commitment Percentage Annex A
 Revolving Loans Section 2.1
 Rose Terrace Lease
 Schedule of Accounts Section 8.1(d)
 - 22 -




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Service Fee Section 8.9
 Solvent
 Stated Maturity Date
 Stock
 Subordinated Debt
 Subordination Agreement
 Subsidiary
 - 23 -




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Tax Code Section 7.19
 Taxes Section 3.3
 Tenant
 Term Loan
 Term Loan Agreement
 TRICARE
 Uniform Commercial Code UCC Code provided further
 Unused Line Fee
 Withholding Certificate Section
3.3
 Interpretation
 All accounting terms used in this Agreement or the other Financing Agreements shall
have, unless otherwise specifically provided herein or therein, the
 - 24 -




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meaning customarily given such
term in accordance with GAAP, and all financial computations thereunder shall be computed, unless
otherwise specifically provided therein, in accordance with GAAP consistently applied; provided,
however, that all financial covenants and calculations in the Financing Agreements shall be made in
accordance with GAAP as in effect on the Closing Date unless Borrower and Administrative Agent
shall otherwise specifically agree in writing. That certain items or computations are explicitly
modified by the phrase in accordance with GAAP shall in no way be construed to limit the
foregoing. Unless otherwise specified, references in this Agreement or any of the attachments
hereto or appendices hereof to a Section, subsection or clause refer to such Section, subsection or
clause as contained in this Agreement. The words herein, hereof and hereunder and other
words of similar import refer to this Agreement as a whole, including all annexes, exhibits and
schedules attached hereto, as the same may from time to time be amended, restated, modified or
supplemented, and not to any particular section, subsection or clause contained in this Agreement
or any such annex, exhibit or schedule.
 Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and the plural, and pronouns stated in the masculine,
feminine or neuter gender shall include the masculine, feminine and neuter genders. The words
including, includes and include shall be deemed to be followed by the words without
limitation; the word or is not exclusive; references to Persons include their respective
successors and assigns (to the extent and only to the extent permitted by the Financing Agreements)
or, in the case of governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include any amendments of the
same and any successor statutes and regulations. Whenever any provision in any Financing Agreement
refers to the knowledge (or an analogous phrase) of Borrower, except as otherwise expressly
provided for herein, such words are intended to signify that a Duly Authorized Officer of Borrower
has actual knowledge or awareness of a particular fact or circumstance or that a prudent individual
in the position of such Duly Authorized Officer of Borrower, would reasonably be expected to have
known or been aware of such fact or circumstance in the course of performing his or her duties.
 COMMITMENT; INTEREST; FEES
 Revolving Loans Revolving Loans Revolving Loan Section 2.1(b) Section 2.1(b) Section 3.4 provided however Reborrowing Date Section 5.1
 - 25 -




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Revolving Loan Commitment Section 12.21
 Each advance to the Borrower under this Section 2.1 shall be in integral multiples of
Ten Thousand Dollars ($10,000) and shall, on the day of such advance, be deposited, in immediately
available funds, in the Borrowers demand deposit account with the Administrative Agent, or in such
other account as the Borrower Agent may, from time to time, designate in writing with the
Administrative Agents approval.
 The Borrower acknowledges and agrees that the Administrative Agent may from time to
time (i) upon five (5) calendar days notice, increase or decrease the advance rates with respect to
Eligible Accounts in the Administrative Agents reasonable discretion (provided, prior to a
Default, the Administrative Agent will not reduce any such advance rate by more than ten percent
(10%), but after the occurrence and during the period of any Default, the Administrative Agent may
reduce any such advance rate in any amount in its reasonable discretion), and/or (ii) establish
reserves against the Borrowing Base, the Eligible Accounts in the Administrative Agents reasonable
discretion.
 The Revolving Loans shall be evidenced by a separate promissory note or amended and
restated promissory note (hereinafter, as the same may be amended, restated, modified or
supplemented from time to time, and together with any renewals or extensions thereof or exchanges
or substitutions therefor, called the Revolving Credit Note(s)), duly executed and delivered by
the Borrower, substantially in the form set forth in Exhibit A attached hereto, with appropriate
insertions, dated the Closing Date, jointly and severally payable to the order of each Lender,
respectively, in the principal amount equal to such Lenders Pro Rata Share of the Maximum
Revolving Facility. THE PROVISIONS OF THE REVOLVING CREDIT NOTES NOTWITHSTANDING, THE REVOLVING
LOANS THEN OUTSTANDING SHALL BECOME IMMEDIATELY DUE AND PAYABLE ON A JOINT AND SEVERAL BASIS UPON
THE EARLIEST TO OCCUR OF (X) STATED MATURITY DATE; (Y) THE ACCELERATION OF THE LIABILITIES PURSUANT
TO SECTION 11.2 HEREOF; AND (Z) TERMINATION OF THIS AGREEMENT (WHETHER BY PREPAYMENT OR OTHERWISE)
IN ACCORDANCE WITH ITS TERMS.
 Accrued interest on the Revolving Loans shall be due and payable and shall be made by
the Borrower to the Administrative Agent in accordance with Section 2.7 hereof. Monthly interest
payments on the Revolving Loans shall be computed using the interest rate then in effect and based
on the outstanding principal balance of the Revolving Loans. Upon maturity, the outstanding
principal balance of the Revolving Loans shall be immediately due and payable, together with any
remaining accrued interest thereon.
 - 26 -




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Letters of Credit
 Master Letter of Credit Agreement Section 2.1(c) provided further Section 2.18 provided however
  - 27 -




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- 28 -




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- 29 -




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- 30 -




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[Intentionally Omitted.]
 Reduction of Revolving Loan Commitment by the Borrower
 Principal Balance of Liabilities Not to Exceed the Maximum Revolving Facility
 The Borrowers Loan Account Loan Account
 Statements
 - 31 -




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Interest provided however Default Rate
  Method for Making Payments provided however Section 3
 Term of this Agreement Section 2.10 provided however Section 6.1
 - 32 -




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Section
11.2
 Optional Prepayment of Loans Section 3.4
 Limitation on Charges
 Method of Selecting Rate Options; Additional Provisions Regarding Libor Loans Section
2.12 provided however Exhibit B Borrowing Notice
 The Borrowing Date, which shall be a Business Day, of such Loan;
 The type and aggregate amount of such Loan;
 The Rate Option selected for such Loan; and
 - 33 -




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The Libor Interest Period applicable thereto.
  Setoff
 Section 2.13(a)
 Section 2.13
 Section 3.8 12.15 Sections 3.2,
3.6 and 3.7
 - 34 -




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Termination of Commitment Section 11.2
 Unused Line Fee.
 Closing Fee Closing Fee
 Late Charge
 L/C Fees L/C Fee provided
 CHANGE IN CIRCUMSTANCES
 Yield Protection
 - 35 -




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##### 



subjects any Lender to any tax, duty, charge or withholding on or from payments due
from the Borrower (excluding taxation of the overall net income or receipts of such Lender or any
branch profits taxes), or changes the basis of taxation of payments to such Lender in respect of
its Loans or other amounts due it hereunder, or
 imposes, modifies, or increases or deems applicable any reserve, assessment, insurance
charge, special deposit or similar requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender (other than reserves and assessments taken into account in
determining the interest rate applicable to Libor Loans), or
 imposes any other condition the result of which is to increase the cost to any Lender
of making, funding or maintaining advances or reduces any amount receivable by such Lender in
connection with advances, or requires any Lender to make any payment calculated by reference to the
amount of advances held or interest received by it, by an amount deemed material by such Lender,
or
 affects the amount of capital required or expected to be maintained by any Lender or
any corporation controlling such Lender and such Lender determines the amount of capital required
is increased by or based upon the existence of this Agreement or its obligation to make Loans
hereunder or of commitments of this type,
  Availability of Rate Options Section 3.4 Section 3.1 clause (ii)
 - 36 -




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Taxes Taxes
 pay directly to the relevant authority the full amount required to be so withheld or
deducted;
 promptly forward to the Administrative Agent an official receipt or other
documentation satisfactory to the Administrative Agent evidencing such payment to such authority;
and
 pay to the Lenders such additional amount or amounts as is necessary to ensure that
the net amount actually received by the Lenders will equal the full amount the Lenders would have
received had no such withholding or deduction been required.
  Non-U.S. Participant Withholding Certificate
 - 37 -




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Section 3.3
 Funding Indemnification
 Lender Statements Sections 3.1 3.3 3.4
 Basis for Determining Interest Rate Inadequate or Unfair
 - 38 -




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Illegality
 Right of Lenders to Fund through Other Offices
 Discretion of Lenders as to Manner of Funding
 ELIGIBILITY REQUIREMENTS; CASH COLLATERAL ACCOUNT; ATTORNEY-IN-FACT
 Account Warranties; Schedule of Accounts
 - 39 -




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Section 8.1
 Verification of Accounts
 Account Covenants
 Collection of Accounts and Payments Commercial Blocked
Account Government Blocked Account Demand Deposit Account
 - 40 -




---



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Cash Collateral Account
 - 41 -




---



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Appointment of the Administrative Agent as the Borrowers Attorney-in-Fact Section 4.4
 - 42 -




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Notice to Account Debtors Section 4.5
 Equipment Warranties
 Equipment Records
 CONDITIONS OF LOANS
 Conditions to all Loans
 The Borrowers Request. The Administrative Agent shall have received, (i) with
respect to a request by Borrower for a Base Rate Loan, by no later than 11:00 a.m. (Chicago time)
on the day on which such Loan is requested to be made hereunder, a telephonic request from any
Person who the Administrative Agent reasonably believes is authorized by Borrower to make a
borrowing request on behalf of Borrower, for a Loan in a specific amount, and (ii) with respect to
a request by Borrower for a Libor Loan, by no later than 1:00 p.m. (Chicago time) two (2) Business
Days prior to the day on which a Libor Loan is requested, the Borrowing Notice required under
Section 2.12 hereof. In addition, each request for a Loan shall be accompanied or preceded by all
other documents not previously delivered as required to be delivered
to the Administrative Agent
under Section 5.2 hereof, and a request for any Revolving Loan shall be accompanied or preceded by
a borrowing base certificate from the Borrower, signed by a Duly Authorized Officer, in form and
substance satisfactory to the
 - 43 -




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Administrative Agent. The Administrative Agent shall have no
liability to the Borrower or any other Person as a result of acting on any telephonic request that
the Administrative Agent believes in good faith to have been made by any Person authorized by
Borrower to make a borrowing request on behalf of Borrower. Promptly upon receipt of such
borrowing request, Administrative Agent will advise each Lender thereof. Not later than 1:00 p.m.
(Chicago time), on the date of a proposed borrowing of a Loan, each Lender shall provide
Administrative Agent at the office specified by Administrative Agent with immediately available
funds covering such Lenders Pro Rata Share of such borrowing and, so long as Administrative Agent
has not received written notice that the conditions precedent set forth in Section 5 with respect
to such borrowing have not been satisfied, Administrative Agent shall pay over the funds received
by Administrative Agent to Borrower on the requested borrowing date.
 Financial Condition. No Material Adverse Change (or material adverse change, as
determined by the Administrative Agent in its reasonable good faith discretion, in the prospects of
Borrower) shall have occurred at any time or times subsequent to the most recent request for any
Loan under this Agreement.
 No Default. Neither a Default nor an Event of Default shall have occurred and be
continuing.
 Other Requirements. The Administrative Agent shall have received, in form and
substance reasonably satisfactory to the Administrative Agent, all certificates, orders,
authorities, consents, affidavits, schedules, instruments, agreements, financing statements, and
other documents which are provided for hereunder or under or in connection with any Financing
Agreement, or which the Administrative Agent may at any time reasonably request.
 Representations and Warranties. All of the representations and warranties contained
in the Financing Agreements to which the Borrower is a party and in this Agreement (including,
without limitation, those set forth in Section 7 hereof), shall be true and correct in all material
respects (without duplication of materiality) as of the date the request for the Loan is made, as though made on and as of such date (unless expressly stated to
relate to an earlier date, in which case such representations and warranties shall be true and
correct as of such earlier date).
 Letter of Credit Prohibition. As to requested Letters of Credit, no order, judgment
or decree of any governmental authority will, or will purport to, enjoin or restrain any Issuing
Lender from issuing the requested Letter of Credit nor will any law or governmental rule,
regulation, policy, guideline or directive (whether or not having the force of law) from any
governmental authority with jurisdiction over any Issuing Lender prohibit or request that such
Issuing Lender refrain from the issuance of Letters of Credit in particular or impose upon such
Issuing Lender with respect to any Letter of Credit any restrictive or reserve requirement (for
which such Issuing Lender is not otherwise compensated) or any uncovered loss, cost or expense
which was not in effect as of the Closing Date.
 Initial Loans
 - 44 -




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Section
5.1
 Fees and Expenses. The Borrower shall have paid all fees owed to the Administrative
Agent and Lenders and reimbursed Administrative Agent and the Lenders for all costs, disbursements,
fees and expenses due and payable hereunder on or before the Closing Date, including, without
limitation, all fees and costs identified in Section 12.2(a) hereof.
 Documents. The Administrative Agent shall have received all of the following, each
duly executed and delivered and dated the Closing Date, or such earlier date as shall be
satisfactory to the Administrative Agent, each in form and substance reasonably satisfactory to the
Administrative Agent in its sole determination:
 Financing Agreements
 Resolutions; Incumbency and Signatures
 Consents
 Opinion of Counsel
 Certain Restricted Agreements
 - 45 -




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[Intentionally Omitted.]
 Governing Documents and Good Standings Certificates
 Term Loan Agreement and Affiliate Term Loan Financing Agreements
 UCC Financing Statements; Termination Statements; UCC Searches
 Insurance Certificates
 - 46 -




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Pay Off Letter
 Capmark Terminations
 Omega Debt Documents
 Operating Agreement Amendments
 First Amendment to Intercreditor Agreement; etc.
 Other
 Field Examinations. At the Administrative Agents sole option, the Administrative
Agent shall have completed its field examinations of the Borrowers books and records, assets, and
operations which examinations will be satisfactory to the Administrative Agent in its sole and
absolute discretion; provided, the Administrative Agent acknowledges that these items were
previously satisfied.
 Certificate. The Administrative Agent shall have received a certificate signed on
behalf of the Borrower by a Duly Authorized Officer and dated the Closing Date certifying
satisfaction of the conditions specified in Sections 5.1 and 5.2 hereof.
 Closing Fee. The Borrower shall have paid the Administrative Agent the Closing
Fee.
 Omega Letter of Credit. The Omega Letter of Credit shall have been issued to Omega on
terms and conditions satisfactory to the Administrative Agent in its sole and absolute discretion;
provided, the Administrative Agent acknowledges that this item was previously satisfied.
 - 47 -




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Bank Meetings. Borrowers senior management shall have made themselves and
Borrowers facilities reasonably available (through scheduled bank meetings, company visits, or
other venues) to Administrative Agent and Lenders and their representatives.
 Term Loan Agreement. Satisfaction of each of the conditions precedent contained in
the Term Loan Agreement, as determined by the Administrative Agent.
 COLLATERAL.
 Security Interest Collateral
  - 48 -




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provided however
 Preservation of Collateral and Perfection of Security Interests Therein
 Loss of Value of Collateral
 Right to File Financing Statements provided however
 Third Party Agreements
 - 49 -




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All Loans One Obligation
 Commercial Tort Claim
 Cash Collateral Section 11.2 Section 2.10
 - 50 -




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Section 6.8 Section 6.8
 REPRESENTATIONS AND WARRANTIES.
  Existence
 Corporate Authority
 - 51 -




---



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Binding Effect
 Financial Data.
 All income statements, balance sheets, cash flow statements, statements of operations,
and other financial data which have been or shall hereafter be furnished to the Administrative
Agent and Lenders for the purposes of or in connection with this Agreement do and will present
fairly in all material respects in accordance with GAAP, consistently applied, the financial
condition of the Borrower as of the dates thereof and the results of its operations for the
period(s) covered thereby. The foregoing notwithstanding all unaudited financial statements
furnished or to be furnished to the Administrative Agent and Lenders by or on behalf of Borrower
are not and will not be prepared in accordance with GAAP to the extent that such financial
statements (a) are subject to cost report and other year-end audit adjustments, (b) do not contain
footnotes, (c) were prepared without physical inventories, (d) are not restated for subsequent
events, (e) may not contain a statement of construction in process, and (f) may not fully reflect
the following liabilities: (i) vacation, holiday and similar accruals, (ii) liabilities payable in
connection with workers compensation claims, (iii) liabilities payable to any employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA) maintained by Borrower or its affiliates
on account of Borrowers employees, (iv) federal, state and local income or franchise taxes and (v)
bonuses payable to certain employees (collectively, the GAAP Exceptions).
 Since December 31, 2009, there has been no Material Adverse Change with respect to
Borrower.
 Collateral Schedule
1
 - 52 -




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Solvency
 Principal Place of Business; State of Organization Schedule 1
 Other Names Schedule 7.8
 Tax Liabilities
 Loans Section 9.2
 Margin Securities
 Organizational Chart Schedule 7.12
 Litigation and Proceedings Section 11.1 Schedule 7.13 Section
8.1(e)
 - 53 -




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##### 



Other Agreements
 Compliance with Laws and Regulations
 Intellectual Property
 Environmental Matters Schedule 7.17
 Disclosure
 - 54 -




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##### 



Pension Related Matters Multiemployer Plan Plan Tax Code PBGC
 Perfected Security Interests Section 6.1
 [Intentionally Omitted.]
 Brokers Fees
 Investment Company Act
 [Intentionally Omitted.]
 [Intentionally Omitted.]
 - 55 -




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Offenses and Penalties Under the Medicare/Medicaid Programs Schedule 7.26 Schedule 7.26
 Medicaid/Medicare and Private Insurance/Managed Care Contracts
 The Borrower has:
   There are no proceedings pending, or, to the best knowledge of the Borrower, after due
inquiry, threatened by any governmental authority seeking to modify, revoke or suspend, to the
extent required for reimbursement, any Medicaid Provider Agreement, Medicare Provider Agreement,
Medicare Certification or Medicaid Certification. Since the date of the most recent Medicare
Certification and Medicaid Certification, the Borrower has not taken any action that would have a
material adverse effect on the Certification or the Medicare Provider Agreement or Medicaid
Provider Agreement.
 Neither the Borrower nor any Affiliate of the Borrower nor any current officer or
director of the foregoing has engaged in any of the following: (i) knowingly and willfully making
or causing to be made a false statement or representation of a material fact in any application for
any benefit or payment under Medicare or Medicaid; (ii) knowingly and willfully making or causing
to be made any false statement or representation of a
 - 56 -




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material fact for use in determining rights
to any benefit or payment under Medicare or Medicaid; (iii) failing to disclose knowledge by a
claimant of the occurrence of any event affecting the initial or continued right to any benefit or
payment under Medicare or Medicaid on its own behalf or on behalf of another, with intent to secure
such benefit or payment fraudulently; or (iv) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or
covertly, in cash or in kind or offering to pay such remuneration: (A) in return for referring any
individual to a Person for the furnishing or arranging for the furnishing of any item or service
for which payment may be made in whole or in party by Medicare or Medicaid; or (B) in return for
purchasing, leasing or ordering or arranging for or recommending the purchasing, leasing or
ordering of any good, facility, service or item for which payment may be made in whole in part by
Medicare or Medicaid.
 The Borrower is not out of material compliance with any applicable conditions of
participation of the Medicare or Medicaid programs nor with any Private Insurance/Managed Care
Contracts, nor does any condition exist or has any event occurred which, in itself, or with the
giving of notice or lapse of time, or both, would reasonably be expected to result in the
suspension, revocation, impairment, forfeiture or non-renewal of (i) any contract of the Borrower
in connection with the Medicare or Medicaid programs or (ii) any Private Insurance/Managed Care
Contracts.
 Consideration
 USA Patriot Act Blocked Persons Lists
 Absence of Foreign or Enemy Status et seq.
 - 57 -




---



##### 



HIPAA Compliance
 Labor Matters Schedule 7.32 Schedule 7.32
 Capitalization Schedule 7.33
 Government Contracts
 OFAC
 Commercial Leases Schedule 7.36
 - 58 -




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AFFIRMATIVE COVENANTS.
  Reports, Certificates and Other Information
 Financial Statements.
  Section 8.1(a)(1)
 Borrower Base Certificates. On or before the thirtieth (30th) day after the end of
each calendar month, a borrowing base certificate (in form and substance satisfactory to the
Administrative Agent), signed on behalf of the Borrower by a Duly Authorized Officer.
 Compliance Certificates. Contemporaneously with the furnishing of each quarterly
financial statements, a duly completed compliance certificate with appropriate insertions, in form
and substance satisfactory to the Administrative Agent (a Compliance Certificate), dated the date
of such annual financial statement or such calendar month and signed on behalf of the Borrower by a
Duly Authorized Officer, which Compliance Certificate shall state that no Default or Event of
Default has occurred and is continuing, or, if there is any such event, describes it and the steps,
if any, being taken to cure it. Each Compliance Certificate shall contain a computation of, and
show compliance with, each of the financial ratios and restrictions set forth in Section 9.12
hereof (each such computation and calculation to be in form and substance acceptable to the
Administrative Agent).
 Schedule of Accounts. On or before the tenth (10th) day of each calendar month, a
Schedule of Accounts, as of the last day of the immediately preceding calendar month and in form
and substance reasonably satisfactory to the Administrative Agent.
 - 59 -




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Notice of Default, Regulatory Matters, Litigation Matters or Adverse Change in
Business. Forthwith upon learning of the occurrence of any of the following, written notice
thereof which describes the same and the steps being taken by the Borrower with respect thereto:
(i) the occurrence of a Default or an Event of Default; (ii) the institution or threatened
institution of, or any adverse determination in, any litigation (other than a personal injury tort
claim), arbitration proceeding or governmental proceeding in which any injunctive relief or money
damages is sought which if adversely determined could have a Material Adverse Effect; (iii) the
receipt of any notice from any governmental agency concerning any violation or potential violation
of any regulations, rules or laws applicable to Borrower which could have a Material Adverse
Effect; or (iv) any Material Adverse Change. With regard to personal injury tort claims, upon
request by Administrative Agent, Borrower shall review with Administrative Agent the occurrence of
any personal injury or other action which could reasonably give rise to a personal injury tort
claim against the Borrower as to which (i) litigation has been instituted and is pending or (ii) a
request for medical records has been made upon Borrower by an attorney for the claimant on or after
January 1, 2009.
 Insurance Reports. (i) At any time after a Default and upon the request of the
Administrative Agent, a certificate signed by a Duly Authorized Officer that summarizes the
property, casualty, liability and malpractice insurance policies carried by the Borrower, and (ii)
written notification of any material change in any such insurance by the Borrower within five (5)
Business Days after receipt of any notice (whether formal or informal) of such change by any of its
insurers.
 Annual Projections. Upon the Administrative Agents reasonable request from time to
time, an annual projection for the current Fiscal Year showing Borrowers projected operating plan,
revenues and expenses on a monthly basis and a balance
sheet and cash flow statement for the Borrower, in form and substance reasonably
satisfactory to Administrative Agent.
 Affiliate Transactions. Upon the Administrative Agents reasonable request from time
to time, a reasonably detailed description of each of the material transactions between the
Borrower and any of its Affiliates during the time period reasonably requested by the
Administrative Agent, which shall include, without limitation, the amount of money either paid or
received, as applicable, by the Borrower in such transactions.
 Health Care. Furnish to the Administrative Agent each of the following, to the
extent applicable: (i) upon Administrative Agents request, a copy of any healthcare related
licensure and annual or biannual certification survey report and any statement of deficiencies and
any survey (other than the annual or biannual survey) indicating a violation or deficiency, and
within the time period required by the particular agency for submission, a copy of the plan of
correction with respect thereof if such Plan of Correction is required by such agency issuing the
statement of deficiency or notice of violation, and correct or cause to be corrected any deficiency
or violation within the time period required for cure by such agency, subject to such agencys
normal appeal process, if such deficiency or violation could adversely affect either the right to
continue participation in Medicare, Medicaid or other reimbursement programs for existing patients
or the right to admit new Medicare patients, Medicaid patients or other reimbursement program
patients or result in the loss or suspension of Borrowers licenses
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and permits to operate
Borrowers business; (ii) within five (5) Business Days of the receipt by the Borrower, any and all
notices disclosing an adverse finding from any licensing, certifying and/or reimbursement agencies
that Borrowers license, Medicare or Medicaid certification or entitlement to payments pursuant to
any reimbursement contract or program of Borrower is being downgraded to a substandard category,
revoked, or suspended, or that action is pending or being considered to downgrade to a substandard
category, revoke, or suspend any rights pursuant to the Borrowers license, certification or
reimbursement contract or program; and (iii) upon request of Administrative Agent, a complete and
accurate copy of the annual Medicaid, Medicare and other cost reports for Borrower.
 Interim Reports. Promptly upon receipt thereof, copies of any reports submitted to
Parent or Borrower by the independent accountants in connection with any interim audit of the books
of any such Person and copies of each management control letter provided to Parent or Borrower by
independent accountants.
 Reports to the SEC. Upon the Administrative Agents reasonable request from time to
time, copies of any and all regular, annual, periodic or special reports of Parent, any Borrower or
any Affiliate thereof filed with the Securities and Exchange Commission (SEC); copies of any and
all registration statements of Parent, any Borrower or any Affiliate thereof filed with the SEC;
and copies of any and all proxy statements or other written communications made to security holders
generally.
 Other Information. Such other information, certificates, schedules, exhibits or
documents (financial or otherwise) concerning the Borrower and its operations, business,
properties, condition or otherwise as the Administrative Agent or any Lender may reasonably request
from time to time.
 Inspection; Audit Fees
 Conduct of Business
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Claims and Taxes
 State of Incorporation or Formation Schedule 1
 Liability and Malpractice Insurance
 - 62 -




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Section 8.6 Section 8.7
 Property and Other Insurance
   - 63 -




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Environmental
 Banking Relationship Service Fee Section 8.9 Schedule 8.9 Section 8.9 Schedule 8.9 Section 8.9 provided however
 Intellectual Property
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Change of Location; Etc
 Health Care Related Matters
 US Patriot Act Section 7.29
 - 65 -




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Government Accounts
 Further Assurances
 Compliance with Anti-Terrorism Orders Patriot Act
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nolo contendere
 Blocked Account Agreements and Account Debtors
 The Borrower shall have entered into the Blocked Account Agreement.
 The Borrower shall instruct and direct each Account Debtor to send all payments with
respect to each Account to the Commercial Blocked Account and the Government Blocked Account, as
the case may be, for deposit established pursuant to this Agreement.
 NEGATIVE COVENANTS
  Encumbrances Permitted Liens
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Section 6.8
 Indebtedness; Capital Expenditures Section 6.8 Section 9.1 Section 9.4
 Consolidations, Mergers or Transactions provided Schedule 9.3 Inactive Subsidiary
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Investments or Loans Section 9.8
 Guarantees Section 9.2 Section 9.2
 Disposal of Property Disposition Schedule 9.6
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Section 9.12
    Section 9.6
 Use of Proceeds
 Loans to Officers; Consulting and Management Fees provided however Section
9.8
 Dividends and Stock Redemptions provided Section 9.12(a)
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Section
9.9
 Payments in Respect of Subordinated Debt
 The Borrower shall not make any payment, directly or indirectly, to Omega (or any
Affiliate or Subsidiary thereof) in contravention of the Intercreditor Agreement.
 The Borrower shall not make any payment in respect of any Indebtedness for borrowed
money that is subordinated to the Liabilities (including, without limitation, the Subordinated
Debt); provided, however, the Borrower shall be permitted to make solely those payments expressly
permitted pursuant to the terms of the Subordination Agreements, in each case, as long as the
Borrower is in compliance with Section 9.12 hereof both immediately before and after any such
contemplated or actual payment, provided, further, that both immediately before any such
contemplated payment or after giving effect to any such payments no Default or Event of Default
shall exist or have occurred or result therefrom, unless otherwise permitted expressly under the
terms of the Subordinations Agreements.
 Transactions with Affiliates provided however
 Financial Ratios
 Minimum Fixed Charge Coverage Ratio
 Minimum Adjusted EBITDA
 Parents Cash Balance provided
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Cash Balances
 Section 8.1(e)
 Change in Nature of Business provided however
 Other Agreements Governing Document
 Blocked Accounts and Lock Box Accounts
 Amendments to Restricted Agreements
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State of Incorporation or Formation Schedule 1
 Environmental
 Fiscal Year
 Restrictions on Fundamental Changes
 except as expressly permitted in accordance with Section 9.3 hereof, liquidate,
wind-up or dissolve itself (or suffer any liquidation or dissolution);
 except as required upon the termination of a Commercial Lease, transfer, assign,
convey or grant to any other Person, other than another Borrower, the right to operate or control
any Location, whether by lease, sublease, management agreement, joint venture agreement or
otherwise;
 without providing Administrative Agent with thirty (30) days prior written notice,
change its legal name (and Borrower shall provide Administrative Agent with, at Borrowers sole
cost and expense, such amendment and financing statements and other documents as Administrative
Agent shall reasonably request in connection with such contemplated change);
 except as expressly permitted in accordance with Section 9.3 hereof, suffer or permit
to occur any change in the legal or beneficial ownership of the capital stock, partnership
interests or membership interests, or in the capital structure, or any material change in the
organizational documents or governing documents, of Borrower;
 change the licensed operator, manager or property manager for any Property; or
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consent to or acknowledge any of the foregoing.
 Margin Stock
 Truth of Statements and Certificates
 Article 9 Article 9
 HEALTH CARE MATTERS
 Article 7 Articles 8 9
 Funds from Restricted Grants et seq
 Certificate of Need CON Licenses
 Licenses Restrictions
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Section 6.8
 Rescind, withdraw, revoke, amend, modify, supplement, or otherwise alter the nature,
tenor or scope of the Licenses for any Property without Administrative Agents prior written
consent;
 Amend or otherwise change any Propertys licensed beds capacity and/or the number of
beds approved by the State Regulator without Administrative Agents prior written consent; or
 Replace, assign or transfer all or any part of any Propertys beds to another site or
location (other than to any other Property) without Administrative Agents prior written
consent.
 DEFAULT, RIGHTS AND REMEDIES OF THE ADMINISTRATIVE AGENT
 Event of Default
 the Borrower fails to pay (i) any principal or interest payable hereunder or under the
Revolving Credit Note on the date due, declared due or demanded (including, without limitation, any
amount due under Section 2.15); or (ii) any other amount payable to the Administrative Agent or any
Lender or Issuing Lender under this Agreement or under any other Financing Agreement to which the
Borrower is a party (including, without limitation, the Revolving Credit Note) within five (5)
calendar days after the date when any such payment is due and, with respect to clause (ii) only,
such failure is not cured within five (5) calendar days after notice to Borrower by Administrative
Agent;
 the Borrower fails or neglects to perform, keep or observe any of the covenants,
conditions or agreements set forth in (i) Sections 2.4, 4.3, 8.5, 8.6, 8.9, 8.11, or Section 8.12
hereof, (ii) any Section of Article 9 hereof (other than Section 9.18 hereof), or (iii) any Section
of Article 10 hereof and, with respect to such Sections in Article 10 only, such failure or neglect
shall continue for a period of five (5) calendar days after the earlier of (1) the date the
Borrower actually knew of such failure or neglect and (2) notice to the Borrower by the
Administrative Agent.
 the Borrower fails or neglects to perform, keep or observe any of the covenants,
conditions, promises or agreements contained in this Agreement (which is not otherwise specifically
referenced in this Section 11.1) and such failure or neglect shall continue for a period of thirty
(30) calendar days after the earlier of (i) the date the Borrower actually knew of such failure or
neglect and (ii) notice to the Borrower by the Administrative Agent;
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any representation or warranty heretofore, now or hereafter made by the Borrower in
connection with this Agreement or any of the other Financing Agreements to which Borrower is a party is untrue, misleading or incorrect in any material
respect, or any schedule, certificate, statement, report, financial data, notice, or writing
furnished at any time by the Borrower to the Administrative Agent or any Lender or Issuing Lender
is untrue, misleading or incorrect in any material respect, on the date as of which the facts set
forth therein are stated or certified;
 a judgment, decree or order requiring payment in excess of Two Hundred Fifty Thousand
Dollars ($250,000) shall be rendered against the Borrower and such judgment or order shall remain
unsatisfied or undischarged and in effect for thirty (30) consecutive days without a stay of
enforcement or execution, provided that this clause (e) shall not apply to any judgment, decree or
order for which the Borrower is fully insured and with respect to which the insurer has admitted
liability, or such judgment, decree or order is being contested or appealed by appropriate
proceedings;
 a notice of Lien, levy or assessment is filed or recorded with respect to any of the
assets of the Borrower (including, without limitation, the Collateral), by the United States, or
any department, agency or instrumentality thereof, or by any state, county, municipality or other
governmental agency or any taxes or debts owing at any time or times hereafter to any one or more
of them become a Lien, upon any of the assets of the Borrower (including, without limitation, the
Collateral), provided that this clause (f) shall not apply to any Liens, levies, or assessments
which a Borrower is contesting in good faith (provided the Borrower has complied with the
provisions of clauses (a) and (b) of Section 8.4 hereof) or which relate to current taxes not yet
due and payable;
 any material portion of the Collateral is attached, seized, subjected to a writ or
distress warrant, or is levied upon, or comes within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors;
 a proceeding under any bankruptcy, reorganization, arrangement of debt, insolvency,
readjustment of debt or receivership law or statute is filed against the Borrower or any guarantor
of the Liabilities, including Parent, and any such proceeding is not dismissed within sixty (60)
days of the date of its filing, or a proceeding under any bankruptcy, reorganization, arrangement
of debt, insolvency, readjustment of debt or receivership law or statute is filed by the Borrower
or any guarantor of the Liabilities, including Parent, or the Borrower or any guarantor of the
Liabilities, including Parent, makes an assignment for the benefit of creditors, or the Borrower or
any guarantor of the Liabilities, including Parent, takes any action to authorize any of the
foregoing;
 except as permitted for an Inactive Subsidiary, the Borrower or Parent voluntarily or
involuntarily dissolves or is dissolved, or its existence terminates or is terminated; provided
that in the case of an administrative dissolution or revocation of existence for failure to file
the proper reports or returns with the applicable governmental authorities, no Event of Default
shall be deemed to have occurred if an application for reinstatement is (i) filed promptly (but in
any event, within fifteen (15) calendar days) upon Parent or Borrower receiving notice of such
dissolution or revocation from the applicable
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governmental authority and (ii) diligently pursued to
completion (if reasonably capable of being completed), as determined by the Administrative Agent in
its sole and absolute discretion;
 the Credit Parties, taken as a whole, fail, at any time, to be Solvent;
 the Borrower or any guarantor of the Liabilities, including Parent, is enjoined,
restrained, or in any way prevented by the order of any court or any administrative or regulatory
agency from conducting all or any material part of its business affairs;
 a breach by the Borrower shall occur under any agreement, document or instrument
(other than an agreement, document or instrument evidencing the lending of money), whether
heretofore, now or hereafter existing between the Borrower and any other Person and the effect of
such breach if not cured within any applicable cure period will or is likely to have or create a
Material Adverse Effect;
 the Borrower shall fail to make any payment due on any other obligation for borrowed
money or shall be in breach of any agreement evidencing the lending of money and the effect of such
failure or breach if not cured within any applicable cure period would be to permit the
acceleration of any obligation, liability or indebtedness in excess of Five Hundred Thousand
Dollars ($500,000);
 there shall be instituted in any court criminal proceedings against the Borrower, or
the Borrower shall be indicted for any crime, in either case for which forfeiture of a material
amount of its property is a potential penalty, unless (i) such actions are being contested or
appealed in good faith by appropriate proceedings, (ii) the potential forfeiture has been stayed
during the pendency of such proceedings, and (iii) no Medicare or Medicaid reimbursement
obligations are materially adversely affected by such proceedings;
 Parent shall at any time after the Closing Date have voting power over less than one
hundred percent (100%) of the issued and outstanding Stock of Diversicare Management Services
Co.;
 any Lien securing the Liabilities shall, in whole or in part, cease to be a perfected
first priority Lien (subject only to the Permitted Liens); this Agreement or any of the Financing
Agreements to which the Borrower is a party, shall (except in accordance with its terms), in whole
or in part, terminate, cease to be effective or cease to be the legally valid, binding and
enforceable obligations of the Borrower; or the Borrower shall directly or indirectly, contest in
any manner such effectiveness, validity, binding nature or enforceability;
 any default or event of default shall occur under or pursuant to any Omega Debt
Document, or any breach of, noncompliance with or default under the Intercreditor Agreement, any
Subordination Agreement, or any other Financing Agreement (including, without limitation, the
Guaranty, each Pledge Agreement and the Master Letter of Credit Agreement) by any party thereto
(other than by the Administrative Agent), and the same is not cured or remedied within any
applicable cure period, provided that if such default or event of default, breach, noncompliance or
default, requires the giving of notice by Administrative
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Agent to any party in addition to or other
than Borrower, Administrative Agent shall have
provided Borrower with such notice at the same time as it provides such notice to such
other party;
 if the Borrower fails, within three (3) Business Days of receipt to forward any
collections it receives with respect to any Accounts to the Commercial Blocked Account or the
Government Blocked Account, as the case may be;
 institution by the PBGC, the Borrower or any ERISA Affiliate of steps to terminate
any Plan or to organize, withdraw from or terminate a Multiemployer Plan if as a result of such
reorganization, withdrawal or termination, the Borrower or any ERISA Affiliate could be required to
make a contribution to such Plan or Multiemployer Plan, or could incur a liability or obligation to
such Plan or Multiemployer Plan, in excess of Two Hundred Fifty Thousand Dollars ($250,000), or
(ii) a contribution failure occurs with respect to any Plan sufficient to give rise to a Lien under
ERISA, which Lien is not fully discharged within fifteen (15) days;
 a Material Adverse Change shall occur;
 Borrower or any Affiliate of Borrower, shall challenge or contest, in any action,
suit or proceeding, the validity or enforceability of this Agreement, or any of the other Financing
Agreements, the legality or the enforceability of any of the Liabilities or the perfection or
priority of any Lien granted to the Administrative Agent;
 Parent shall revoke or attempt to revoke, terminate or contest its obligations under
the Guaranty, or the Guaranty or any provision thereof shall cease to be in full force and effect
in accordance with its terms and provisions;
 any Pledgor shall revoke or attempt to revoke, terminate or contest in any way any
Pledge Agreement, or any provision thereof shall cease to be in full force and effect in accordance
with its terms and provisions;
 Borrower shall be prohibited or otherwise restrained from conducting the business
theretofore conducted by it in any manner that has or could reasonably be expected to have or
result in a Material Adverse Effect;
 there shall occur with respect to the Operator of any Location any Medicare or
Medicaid survey deficiencies at Level I, J, K, L or worse (i) which deficiencies are not cured
within the amount of time permitted by the applicable reviewing agency; (ii) which result in the
imposition by any Government Authority or the applicable state survey agency of sanctions in the
form of either a program termination, temporary management, denial of payment for new admission
(which continues for thirty (30) days or more or pertains to more than one Location) or facility
closure and (iii) which sanctions could have a Material Adverse Effect as determined by
Administrative Agent in its reasonable discretion. Upon the occurrence of such event, Borrower
shall submit to Administrative Agent its plan of correction for dealing with such event, and shall
periodically review its progress under the plan of correction with Administrative Agent. Provided
that Administrative Agent remains satisfied
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with the progress under the plan of correction, then
such Event shall not be an Event of Default unless formal notice is given by Administrative Agent
to Borrower;
 a state or federal regulatory agency shall have revoked any license, permit,
certificate or Medicaid or Medicare qualification pertaining to the Real Property or any Location,
regardless of whether such license, permit, certificate or qualification was held by or originally
issued for the benefit of Borrower, a tenant or any other Person, the revocation of which could
reasonably be expected to have a Material Adverse Effect;
 any material default by Borrower under the terms of any material Lease following the
expiration of any applicable notice and cure period (if any);
 William R. Council III or L. Glynn Riddle, Jr. shall not be senior officers of the
Borrower and devote significant time and energy to the business of the Borrower; provided, however,
it shall not constitute an Event of Default if any such individual shall fail for any reason to be
a senior officer of the Borrower or fail to devote significant time and energy to the business of
the Borrower, and such individual shall be promptly replaced by the Borrower, whether on an interim
or permanent basis, with an individual with substantially similar skills and experience (but in no
event later than within 90 calendar days of the former individuals resignation, termination,
permanent disability or death) and otherwise acceptable to the Administrative Agent in its
reasonable and good faith determination;
 any subordination provision in any document or instrument governing Subordinated
Debt, or any subordination provision in any guaranty by any Subsidiary of any Subordinated Debt,
shall cease to be in full force and effect, or any Credit Party or any other Person (including the
holder of any applicable Subordinated Debt) shall contest in any manner the validity, binding
nature or enforceability of any such provision; or
 an Event of Default shall occur under or pursuant to the Term Loan Agreement or any
Affiliate Term Loan Financing Agreement.
  Acceleration Sections
11.1(h) (i) (j)
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Rights and Remedies Generally
 Upon the occurrence of any Event of Default, the Administrative Agent and Lenders
shall have, in addition to any other rights and remedies contained in this Agreement and in any of
the other Financing Agreements, all of the rights and remedies of a secured party under the Code or
other applicable laws, all of which rights and remedies shall be cumulative, and non-exclusive, to
the extent permitted by Laws, including, without limitation, the right of Administrative Agent to
sell, assign, or lease any or all of the Collateral. The exercise of any one right or remedy shall
not be deemed a waiver or release of any other right or remedy, and the Administrative Agent, upon
the occurrence of an Event of Default, may proceed against Borrower, and/or the Collateral, at any
time, under any agreement, with any available remedy and in any order. All sums received from
Borrower and/or the Collateral in respect of the Loans may be applied by the Administrative Agent
to any Liabilities in such order of application and in such amounts as the Administrative Agent
shall deem appropriate in its discretion (subject to Section 12.8). Borrower waives any right it
may have to require the Administrative Agent to pursue any Person for any of the Liabilities.
 Upon notice to Borrower after an Event of Default, Borrower at its own expense shall
assemble all or any part of the Collateral as determined by Administrative Agent and make it
available to Administrative Agent at any location designated by Administrative Agent. In such
event, Borrower shall, at its sole cost and expense, store and keep any Collateral so assembled at
such location pending further action by Administrative Agent and provide such security guards and
maintenance services as shall be necessary to protect and preserve such Collateral. In addition to
all such rights and remedies, the sale, lease or other disposition of the Collateral, or any part
thereof, by the Administrative Agent after an Event of Default may be for cash, credit or any
combination thereof, and the Administrative Agent (on behalf of Lenders and itself) may purchase
all or any part of the Collateral at public or, if permitted by law, private sale, and in lieu of
actual payment of such purchase price, may set-off the amount of such purchase price against the
Liabilities of the Borrower then owing. Any sales of such Collateral may be adjourned from time to
time with or without notice. The Administrative Agent may, in its sole discretion, cause the
Collateral to remain on the Borrowers premises, at the Borrowers expense, pending sale or other
disposition of such Collateral. The Administrative Agent shall have the right after an Event of
Default to conduct such sales on the Borrowers premises, at the Borrowers expense, or elsewhere,
on such occasion or occasions as the Administrative Agent may see fit.
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Entry Upon Premises and Access to Information
 Sale or Other Disposition of Collateral by the Administrative Agent Section 12.12 Sections 8.2 11.2
 Waivers (General)
 Except as otherwise provided for in this Agreement and to the fullest extent permitted
by applicable Law, Borrower hereby waives: (i) presentment, demand and protest, and notice of
presentment, dishonor, intent to accelerate, acceleration,
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protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any or all Financing Agreements, the
Revolving Credit Notes or any other notes, commercial paper, Accounts, contracts, documents,
instruments, chattel paper and guaranties at any time held by Administrative Agent or any Lender on
which Borrower may in any way be liable, and hereby ratifies and confirms whatever Administrative
Agent and Lenders may do in this regard; (ii) all rights to notice and a hearing prior to
Administrative Agents taking possession or control of, or to Administrative Agents replevy,
attachment or levy upon, any Collateral or any bond or security which might be required by any
court prior to allowing Administrative Agent to exercise any of its remedies; and (iii) the benefit
of all valuation, appraisal and exemption Laws. Borrower acknowledges that it has been advised by
counsel of its choice and decision with respect to this Agreement, the other Financing Agreements
and the transactions evidenced hereby and thereby.
 Borrower for itself and all endorsers, guarantors and sureties and their heirs, legal
representatives, successors and assigns, (i) agrees that its liability shall not be in any manner
affected by any indulgence, extension of time, renewal, waiver, or modification granted or
consented to by Administrative Agent; (ii) consents to any indulgences and all extensions of time,
renewals, waivers, or modifications that may be granted by Administrative Agent with respect to the
payment or other provisions of this Agreement, the Revolving Credit Notes, and to any substitution,
exchange or release of the Collateral, or any part thereof, with or without substitution, and
agrees to the addition or release of any Borrower, endorsers, guarantors, or sureties, or whether
primarily or secondarily liable, without notice to Borrower and without affecting its liability
hereunder; (iii) agrees that its liability shall be unconditional and without regard to the
liability of any other tax; and (iv) expressly waives the benefit of any statute or rule of law or
equity now provided, or which may hereafter be provided, which would produce a result contrary to
or in conflict with the foregoing.
 Each and every covenant and condition for the benefit of Administrative Agent and
Lenders contained in this Agreement and the other Financing Agreements may be waived by
Administrative Agent; provided, however, that to the extent that Administrative Agent may have
acquiesced in any noncompliance with any requirements or conditions precedent to the Closing of any
Loan or to any subsequent disbursement of Loan proceeds, such acquiescence shall not be deemed to
constitute a waiver by Administrative Agent of such requirements with respect to any future
disbursements of Loan proceeds and Administrative Agent may at any time after such acquiescence
require Borrower to comply with all such requirements. Any forbearance by Administrative Agent in
exercising any right or remedy under any of the Financing Agreements, or otherwise afforded by
applicable Law, including any failure to accelerate the Stated Maturity Date shall not be a waiver
of or preclude the exercise of any right or remedy nor shall it serve as a novation of the
Revolving Credit Note or as a reinstatement of the Loan or a waiver of such right of acceleration
or the right to insist
upon strict compliance of the terms of the Financing Agreements. Administrative Agents
acceptance of payment of any sum secured by any of the Financing Agreements after the due date of
such payment shall not be a waiver of Administrative Agents right to either require prompt payment
when due of all other sums so secured or to declare a default for failure to make prompt payment.
The procurement of insurance or the payment of taxes or other liens or charges by Administrative
Agent shall not be a waiver of Administrative Agents right to accelerate the maturity of the Loan,
nor shall Administrative Agents receipt of any condemnation awards,
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insurance proceeds, or damages
under this Agreement operate to cure or waive Borrowers or Guarantors default in payment of sums
secured by any of the Financing Agreements.
 Without limiting the generality of anything contained in this Agreement or the other
Financing Agreements, Borrower agrees that if an Event of Default is continuing (i) Administrative
Agent is not subject to any one action or election of remedies law or rule, and (ii) all liens
and other rights, remedies or privileges provided to Administrative Agent shall remain in full
force and effect until Administrative Agent has exhausted all of its remedies against the
Collateral and any other properties owned by Borrower and the Financing Agreements and other
security instruments or agreements securing the Liabilities has been foreclosed, sold and/or
otherwise realized upon in satisfaction of the Liabilities.
 Nothing contained herein or in any other Financing Agreement shall be construed as
requiring Administrative Agent to resort to any part of the Collateral for the satisfaction of any
of Borrowers obligations under the Financing Agreements in preference or priority to any other
Collateral, and Administrative Agent may seek satisfaction out of all of the Collateral or any part
thereof, in its absolute discretion in respect of Borrowers obligations under the Financing
Agreements. In addition, Administrative Agent shall have the right from time to time to partially
foreclose upon any Collateral in any manner and for any amounts secured by the Financing Agreements
then due and payable as determined by Administrative Agent in its sole discretion, including,
without limitation, the following circumstances: (i) if Borrower defaults beyond any applicable
grace period in the payment of one or more scheduled payments of principal and interest,
Administrative Agent may foreclose upon all or any part of the Collateral to recover such
delinquent payments, or (ii) if Administrative Agent elects to accelerate less than the entire
outstanding principal balance of the Revolving Credit Note, Administrative Agent may foreclose all
or any part of the Collateral to recover so much of the principal balance of the Revolving Credit
Note as Administrative Agent may accelerate and such other sums secured by one or more of the
Financing Agreements as Administrative Agent may elect. Notwithstanding one or more partial
foreclosures, any unforeclosed Collateral shall remain subject to the Financing Agreements to
secure payment of sums secured by the Financing Agreements and not previously recovered.
 To the fullest extent permitted by law, Borrower, for itself and its successors and
assigns, waives in the event of foreclosure of any or all of the Collateral any equitable right
otherwise available to Borrower which would require the separate sale of any of the Collateral or
require Administrative Agent to exhaust its remedies against any part of the Collateral before
proceeding against any other part of the Collateral; and further in the event of such foreclosure
Borrower does hereby expressly consent to and authorize, at the option of
Administrative Agent, the foreclosure and sale either separately or together of each part
of the Collateral.
 Waiver of Notice
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##### 



Injunctive Relief
 Marshalling; Recourse to Borrower
 Advice of Counsel
 MISCELLANEOUS
 Waiver; Amendment
 - 84 -




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##### 



Costs and Attorneys Fees
 Borrower agrees to pay jointly and severally on demand all of the costs and expenses
of the Administrative Agent (including, without limitation, the reasonable fees and out-of-pocket
expenses of the Administrative Agents counsel, all UCC tax, lien, judgment, pending suit, and
bankruptcy search fees and costs, UCC filing fee and costs, recording, filing and registration fees
and charges, mortgage or documentary taxes, all costs of Intralinks or other similar transmission
system, if applicable, all corporate search fees and certified documents, all financial and legal
due diligence expenses, all audit, field exam and appraisal costs and fees, costs incurred by
Administrative Agent in connection with travel expenses of its associates, background checks on
members of management of Borrower, and, if applicable, real estate appraisal fees, survey fees,
recording and title insurance costs, and any environmental report or analysis) in connection with
the structuring, preparation, negotiation, execution, delivery and closing of: (i) this Agreement,
the other Financing Agreements and all
 - 85 -




---



##### 



other instruments, agreements, certificates or documents
provided for herein or delivered or to be delivered hereunder, and (ii) any and all amendments,
modifications, supplements and waivers executed and delivered pursuant hereto or any other
Financing Agreement or in connection herewith or therewith. Borrower further agrees that the
Administrative Agent, in its sole discretion, may deduct all such unpaid amounts from the aggregate
proceeds of the Loans or debit such amounts from the operating accounts of Borrower maintained with
the Administrative Agent.
 The costs and expenses that the Administrative Agent and Lenders incur in any manner
or way with respect to the following shall be part of the Liabilities, payable by Borrower jointly
and severally on demand if at any time after the date of this Agreement the Administrative Agent or
any Lender: (i) employs counsel in good faith for advice or other representation, (ii) with respect
to the amendment, modification or enforcement of this Agreement or the other Financing Agreements,
or with respect to any Collateral securing the Liabilities hereunder, (iii) to represent the
Administrative Agent and Lender in any work-out or any type of restructuring of the Liabilities, or
any litigation, contest, dispute, suit or proceeding or to commence, defend or intervene or to take
any other action in or with respect to any litigation, contest, dispute, suit or proceeding
(whether instituted by the Administrative Agent, Lenders, Borrower or any other Person) in any way
or respect relating to this Agreement, the other Financing Agreements, Borrowers affairs or any
Collateral hereunder or (iv) to enforce any of the rights of the Administrative Agent or Lenders
with respect to Borrower provided in this Agreement, under any of the other Financing Agreements,
or otherwise (whether at law or in equity) (including any foreclosure sale, deed in lieu
transaction or costs incurred in connection with any litigation or bankruptcy or administrative
hearing and any appeals therefrom and any post-judgment enforcement action including, without
limitation, supplementary proceedings in connection with the enforcement of this Agreement); (v)
takes any action to protect, preserve, store, ship, appraise, prepare for sale, collect, sell,
liquidate or otherwise dispose of any Collateral hereunder; and/or (vi) seeks to enforce or
enforces any of the rights and remedies of the Administrative Agent or Lenders with respect to
Borrower or any guarantor of the Liabilities. Without limiting the generality of the foregoing,
such expenses, costs, charges and fees include: reasonable fees, costs and expenses of attorneys,
accountants and consultants; court costs and expenses; court reporter fees, costs and expenses;
long distance telephone charges; and courier and telecopier charges.
 Borrower further agrees to pay, and to save the Administrative Agent and Lenders
harmless from all liability for, any documentary stamp tax, intangible tax, or other stamp tax or
taxes of any kind which may be payable in connection with or related to the execution or delivery
of this Agreement, the other Financing Agreements, the borrowing hereunder, the issuance of the
Revolving Credit Note or of any other instruments, agreements, certificates or documents provided
for herein or delivered or to be delivered hereunder or in connection herewith, provided that
Borrower shall not be liable for Administrative Agents or any Lenders income tax liabilities.
 All of the Borrowers obligations provided for in this Section 12.2 shall be
Liabilities secured by the Collateral and shall survive repayment of the Loans or any termination
of this Agreement or any Financing Agreements.
 - 86 -




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Expenditures by the Administrative Agent
 Custody and Preservation of Collateral
 Reliance by the Lenders
 Assignability; Parties Section 12.15
 Severability; Construction
 - 87 -




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##### 



Application of Payments
 First
 Second Second
 Third Third
 Fourth Fourth
 Fifth
 Last
 Fifth
 Payments Set Aside
 - 88 -




---



##### 



Sections and Titles; UCC Termination Statements
 Continuing Effect; Inconsistency Section 2.9
 Notices
 If to the Administrative Agent, at:
 
 - 89 -




---



##### 



If to the Borrower or Borrower Agent, at:
 
  
 Annex A
  Equitable Relief
 Entire Agreement
 - 90 -




---



##### 



Participations and Assignments Assignee Exhibit
C Assignment Agreement Sections 3.1 3.3 Section 12.15
  - 91 -




---



##### 



Section 13.9 Participant Section 12.1 Section 2.13(d) Sections 3.1 3.3 Sections 3.1 3.3 Section 3.3
 Register
 Indemnity
 - 92 -




---



##### 



Indemnified Parties provided Section 12.16
 Representations and Warranties
 Counterparts
 - 93 -




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##### 



Limitation of Liability of Administrative Agent and Lenders
 Administrative Agent and Lenders may conclusively rely and shall be protected in
acting or refraining from acting upon any document, instrument, certificate, instruction or
signature believed to be genuine and may assume and shall be protected in assuming that any Person
purporting to give any notice or instructions in connection with any transaction to which this
Agreement relates has been duly authorized to do so. Administrative Agent and Lenders shall not be
obligated to make any inquiry as to the authority, capacity, existence or identity of any Person
purporting to have executed any such document or instrument or have made any such signature or
purporting to give any such notice or instructions;
 Administrative Agent and Lenders shall not be liable for any acts, omissions, errors
of judgment or mistakes of fact or law, including, without limitation, acts, omissions, errors or
mistakes with respect to the Collateral, except for those arising out of or in connection with
Administrative Agents and Lenders gross negligence, willful misconduct or illegal activity.
Without limiting the generality of the foregoing, Administrative Agent and Lenders shall be under
no obligation to take any steps necessary to preserve rights in the Collateral against any other
parties, but may do so at its option, and all expenses incurred in connection therewith shall be
payable by Borrower; and
 Administrative Agent and Lenders shall not be liable for any action taken in good
faith and believed to be authorized or within the rights or powers conferred by this Agreement and
the other Financing Agreements.
 Borrower Authorizing Accounting Firm
 Joint and Several Liability; Binding Obligations
 Borrower is defined collectively to include all Persons constituting the Borrower;
provided, however, that any references herein to any Borrower, each Borrower or similar
references, shall be construed as a reference to each individual Person comprising the Borrower;
provided, further, in case of any question as to which particular Person is to be deemed a Borrower
in any given context for purposes of any term or provision contained in this Agreement, the Lender
shall make such determination. Each Person comprising Borrower shall be jointly and severally
liable for all of the liabilities and obligations of Borrower under this Agreement, regardless of
which of the Borrowers actually receives the proceeds of the Loans or the benefit of any other
extensions of credit hereunder, or the manner in which the Borrowers, or the Administrative Agent
or Lenders accounts therefor in their respective books and records. In addition, each entity
comprising Borrower hereby
 - 94 -




---



##### 



acknowledges and agrees that all of the representations, warranties,
covenants, obligations, conditions, agreements and other terms contained in this Agreement shall be
applicable to and shall be binding upon and measured and enforceable individually against each
Person comprising Borrower as well as all such Persons when taken together. By way of
illustration, but without limiting the generality of the foregoing, the terms of Article XI of this
Agreement are to be applied to each individual Person comprising the Borrower (as well as to all
such Persons taken as a whole), such that the occurrence of any of the events described in Article
XI of this Agreement as to any Person comprising the Borrower shall constitute an Event of Default
even if such event has not occurred as to any other Persons comprising the Borrower or as to all
such Persons taken as a whole (except as otherwise expressly provided therein by, for example, the
use of the term Material Adverse Effect).
 Each Borrower acknowledges that it will enjoy significant benefits from the business
conducted by the other Borrowers because of, inter alia, their combined ability to bargain with
other Persons including, without limitation, their ability to receive the credit facilities
hereunder and other Financing Agreements which would not have been available to an individual
Borrower acting alone. Each Borrower has determined that it is in its best interest to procure the
Loans with the credit support of the other Borrowers as contemplated by this Agreement and the
other Financing Agreements as well as permit the cross-collateralization and cross-default with the
Affiliate Term Loan Liabilities, Term Loan Agreement and Affiliate Term Loan Financing Agreements
as contemplated hereunder.
 The Administrative Agent and the Lenders have advised the Borrowers that the
Administrative Agent and the Lenders are unwilling to enter into this Agreement and the other
Financing Agreements and make available the Loans extended hereby or thereby to any Borrower unless
each Borrower agrees, among other things, to be jointly and severally liable for the due and proper
payment of the Liabilities of each other Borrower under this Agreement and other Financing
Agreements. Each Borrower has determined that it is in its best interest and in pursuit of its
purposes that it so induce the Lenders to extend credit pursuant to this Agreement and the other
documents executed in connection herewith (i) because of the desirability to each Borrower of the
Loans and the interest rates and the modes of borrowing available hereunder, (ii) because each
Borrower may engage in transactions jointly with other
Borrowers and (iii) because each Borrower may require, from time to time, access to funds
under this Agreement for the purposes herein set forth. Each Borrower, individually, expressly
understands, agrees and acknowledges, that the Loans would not be made available on the terms
herein in the absence of the collective credit of all of the Persons constituting the Borrower, the
joint and several liability of all such Persons, and the cross-collateralization of the collateral
of all such Persons hereunder and under the other Financing Agreements. Accordingly, each
Borrower, individually acknowledges that the benefit to each of the Persons comprising the Borrower
as a whole constitutes reasonably equivalent value, regardless of the amount of the Loans actually
borrowed by, advanced to, or the amount of collateral provided by, any individual Borrower.
 Each Borrower has determined that it has and, after giving effect to the transactions
contemplated by this Agreement and the other Financing Agreements (including, without limitation,
the inter-Borrower arrangement set forth in this Section) will have, assets having a fair saleable
value in excess of the amount required to pay its probable
 - 95 -




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##### 



liability on its existing debts as they
fall due for payment and that the sum of its debts is not and will not then be greater than all of
its property at a fair valuation, that such Borrower has, and will have, access to adequate capital
for the conduct of its business and the ability to pay its debts from time to time incurred in
connection therewith as such debts mature and that the value of the benefits to be derived by such
Borrower from the access to funds under this Agreement (including, without limitation, the
inter-Borrower arrangement set forth in this Section) is reasonably equivalent to the obligations
undertaken pursuant hereto.
 The Borrower Agent (on behalf of each Borrower) shall maintain records specifying (a)
all Liabilities incurred by each Borrower, (b) the date of such incurrence, (c) the date and amount
of any payments made in respect of such Liabilities and (d) all inter-Borrower obligations pursuant
to this Section. The Borrower Agent shall make copies of such records available to the
Administrative Agent, upon request.
 To the extent that applicable Law otherwise would render the full amount of the joint
and several obligations of any Borrower hereunder and under the other Financing Agreements invalid
or unenforceable, such Borrowers obligations hereunder and under the other Financing Agreements
shall be limited to the maximum amount which does not result in such invalidity or
unenforceability, provided, however, that each Borrowers obligations hereunder and under the other
Financing Agreements shall be presumptively valid and enforceable to their fullest extent in
accordance with the terms hereof or thereof, as if this Section were not a part of this
Agreement.
 To the extent that any Borrower shall make a payment under this Section of all or any
of the Liabilities (other than any Loan made to that Borrower for which it is primarily liable) (a
Joint Liability Payment) which, taking into account all other Joint Liability Payments then
previously or concurrently made by any other Borrower, exceeds the amount which such Borrower would
otherwise have paid if each Borrower had paid the aggregate Liabilities satisfied by such Joint
Liability Payments in the same proportion that such Borrowers Allocable Amount (as defined
below) (as determined immediately prior to such Joint Liability Payments) bore to the aggregate
Allocable Amounts of each of the Borrowers as determined immediately prior to the making of such
Joint Liability Payments, then, following
indefeasible payment in full in cash of the Liabilities and termination of the Loans, such
Borrower shall be entitled to receive contribution and indemnification payments from, and be
reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their
respective Allocable Amounts in effect immediately prior to such Joint Liability Payments. As of
any date of determination, the Allocable Amount of any Borrower shall be equal to the maximum
amount of the claim which could then be recovered from such Borrower under this Section without
rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code
or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or
similar statute or common law.
 The term Borrower as used herein shall mean either one or more particular Borrowers
or all of the Borrowers collectively as the Administrative Agent shall determine in its sole and
absolute good faith discretion.
 - 96 -




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##### 



The term Revolving Borrower as used herein shall mean either one or more particular
Revolving Borrowers or all of the Revolving Borrowers collectively as the Administrative Agent
shall determine in its sole and absolute good faith discretion.
 [Intentionally Omitted.]
 Each Borrower hereby agrees that, except as hereinafter provided, its obligations
hereunder shall be unconditional, irrespective of (i) the absence of any attempt to collect the
Liabilities from any obligor or other action to enforce the same; (ii) the waiver or consent by
Administrative Agent with respect to any provision of any instrument evidencing the Liabilities, or
any part thereof, or any other agreement heretofore, now or hereafter executed by a Borrower and
delivered to Administrative Agent or any Lender; (iii) failure by Administrative Agent to take any
steps to perfect and maintain its security interest in, or to preserve its rights to, any security
or collateral for the Liabilities; (iv) the institution of any proceeding under the United States
Bankruptcy Code, or any similar proceeding, by or against a Borrower or Administrative Agents
election in any such proceeding of the application of Section 1111(b)(2) of the United States
Bankruptcy Code; (v) any borrowing or grant of a security interest by a Borrower as
debtor-in-possession, under Section 364 of the United States Bankruptcy Code; (vi) the
disallowance, under Section 502 of the United States Bankruptcy Code, of all or any portion of
Administrative Agents claim(s) for repayment of any of the Liabilities; or (vii) any other
circumstance other than payment in full of the Liabilities which might otherwise constitute a legal
or equitable discharge or defense of a guarantor or surety.
 Until all Liabilities have been paid and satisfied in full, no payment made by or for
the account of a Borrower including, without limitation, (i) a payment made by such Borrower on
behalf of the liabilities of any other Borrower or (ii) a payment made by any other Person under
any guaranty, shall entitle such Borrower, by subrogation or otherwise, to any payment from any
other Borrower or from or out of any other Borrowers property and such Borrower shall not exercise
any right or remedy against any other Borrower or any property of any other Borrower by reason of
any performance of such Borrower of its joint and several obligations hereunder.
 Any notice given by one Borrower hereunder shall constitute and be deemed to be
notice given by all Borrowers, jointly and severally. Notice given by Administrative Agent to any
one Borrower hereunder or pursuant to any Financing Agreements in accordance with the terms hereof
or thereof shall constitute notice to each and every Borrower. The knowledge of one Borrower shall
be imputed to all Borrowers and any consent by one Borrower shall constitute the consent of and
shall bind all Borrowers.
 This Section is intended only to define the relative rights of Borrower and nothing
set forth in this Section is intended to or shall impair the obligations of Borrower, jointly and
severally, to pay any amounts as and when the same shall become due and payable in accordance with
the terms of this Agreement or any other Financing Agreements. Nothing contained in this Section
shall limit the liability of any Borrower to pay the Loans made directly or indirectly to that
Borrower and accrued interest, fees and expenses with respect thereto for which such Borrower shall
be primarily liable.
 - 97 -




---



##### 



The parties hereto acknowledge that the rights of contribution and indemnification
hereunder shall constitute assets of each Borrower to which such contribution and indemnification
is owing. The rights of any indemnifying Borrower against the other Borrowers under this Section
shall be exercisable upon the full and indefeasible payment of the Liabilities and the termination
of the Loans.
 Confidentiality Securities Laws
 Fax Signatures
 Release Releasing Parties Lender Parties Released
Parties
 Time; Reliance
 - 98 -




---



##### 



Relationship
 Borrower Agent
 - 99 -




---



##### 



Acting Through Agents
 Additional Provisions
 Consents. Each Borrower, as joint and several primary obligor of the Liabilities
directly incurred by any other Borrower, authorizes Administrative Agent, without giving notice to
such Borrower or to any other Borrower (to the extent permitted hereunder) or obtaining such
Borrowers consent or any other Borrowers consent (to the extent permitted hereunder) and without
affecting the liability of such Borrower for the Liabilities directly incurred by the other
Borrower, from time to time to:
      Section
12.8
  Waivers. Each Borrower, as a primary, joint and several obligor with respect to the
Liabilities directly incurred by any other Borrower, hereby waives:
 - 100 -




---



##### 



- 101 -




---



##### 



Additional Waivers. Each Borrower authorizes Administrative Agent to exercise, in
its sole discretion, any right, remedy or combination thereof
 - 102 -




---



##### 



which may then be available to
Administrative Agent, since it is such Borrowers intent that the Liabilities be absolute,
independent and unconditional obligations of such Borrower under all circumstances.
Notwithstanding any foreclosure of any Lien with respect to any or all of any property securing the
Liabilities, whether by the exercise of the power of sale contained therein, by an action for
judicial foreclosure or by an acceptance of a deed in lieu of foreclosure, each Borrower shall
remain bound under such Borrowers guaranty of the Liabilities directly incurred by any other
Borrower.
 Primary Obligations. This Agreement is a primary and original obligation of each of
the Borrowers and each of the Borrowers shall be liable for all existing and future Liabilities of
any other Borrower as fully as if such Liabilities were directly incurred by such Borrower.
 Nonliability of Administrative Agent and Lenders
 - 103 -




---



##### 



Amendment and Restatement Restatement Date Restated Notes
 AGENCY
 Section 13.9 Section 13 Section 13
 - 104 -




---



##### 



Section 13 Section 13
 Appointment and Authorization
 Delegation of Duties
 Exculpation of Administrative Agent
 - 105 -




---



##### 



Reliance by Administrative Agent Section 5.2
 Notice of Default Section 11.2
 Credit Decision
 - 106 -




---



##### 



Indemnification
 Administrative Agent in Individual Capacity
 - 107 -




---



##### 



Successor Administrative Agent Section 13 Sections 12.2 12.16
 Collateral Matters Section 13.1 Section
13.10
 - 108 -




---



##### 



Administrative Agent May File Proofs of Claim
     Other Agents; Arrangers and Managers
 - 109 -




---



##### 



Revolving Loan Principal Payment; Return of Payments; Defaulting Lender Section 5.1 Administrative Agent Advances Payment Account
 Settlement Date
 - 110 -




---



##### 



Section 13.13(a) Section 5.1
   - 111 -




---



##### 



Federal Funds Rate
  PrivateBank Credit Hold
 14. JURISDICTION; JURY TRIAL WAIVER
 SUBMISSION TO JURISDICTION; WAIVER OF VENUE
 - 112 -




---



##### 



SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT AND THE OTHER FINANCING AGREEMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE
COURTS OF THE STATE OF ILLINOIS, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE NORTHERN
DISTRICT OF ILLINOIS AND APPELLATE COURTS FROM ANY THEREOF;
 CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES
TO THE FULLEST EXTENT PERMITTED BY LAW IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING (i) ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME, (ii) THE RIGHT TO ASSERT OR IMPOSE ANY
CLAIM, NONCOMPULSORY SET-OFF, COUNTERCLAIM OR CROSS-CLAIM IN RESPECT THEREOF IN SUCH PROCEEDING;
PROVIDED, HOWEVER, THIS WAIVER DOES NOT PRECLUDE THE RIGHT TO ASSERT A DEFENSE IN SUCH ACTION OR
PROCEEDING OR TO ASSERT OR IMPOSE ANY CLAIM, COUNTERCLAIM OR CROSS-CLAIM WHICH THE BORROWER WISHES
TO PURSUE IN A SEPARATE PROCEEDING AT ITS SOLE COST AND EXPENSE, AND (iii) ALL STATUTES OF
LIMITATIONS WHICH MAY BE RELEVANT THERETO; AND
 AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY
MAILING A COPY THEREOF BY CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, RETURN RECEIPT REQUESTED, TO THE BORROWER AT ITS ADDRESS SET FORTH ABOVE OR AT SUCH OTHER
ADDRESS OF WHICH THE LENDER SHALL HAVE BEEN NOTIFIED PURSUANT THERETO. THE BORROWER AGREES THAT
SUCH SERVICE, TO THE FULLEST EXTENT PERMITTED BY LAW (i) SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
SERVICE OF PROCESS UPON THE BORROWER IN ANY SUIT, ACTION OR PROCEEDING, AND (ii) SHALL BE TAKEN AND
HELD TO BE VALID PERSONAL SERVICE UPON AND PERSONAL DELIVERY TO THE BORROWER. SOLELY TO THE EXTENT
PROVIDED BY APPLICABLE LAW, SHOULD THE BORROWER, AFTER BEING SERVED, FAIL TO APPEAR OR ANSWER TO
ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THE NUMBER OF DAYS PRESCRIBED BY LAW
AFTER THE DELIVERY OR MAILING THEREOF, THE BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR
JUDGMENT MAY BE ENTERED BY THE COURT AGAINST THE BORROWER AS DEMANDED OR PRAYED FOR IN SUCH
SUMMONS, COMPLAINT, PROCESS OR PAPERS. NOTHING HEREIN SHALL AFFECT THE ADMINISTRATIVE AGENTS OR
ANY LENDERS RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR LIMIT THE
ADMINISTRATIVE AGENTS OR ANY LENDERS RIGHT TO BRING PROCEEDINGS AGAINST THE BORROWER OR ITS
PROPERTY IN ANY COURT OR ANY OTHER JURISDICTION.
 - 113 -




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##### 



GOVERNING LAW
  14.3 JURY TRIAL THE BORROWER, ADMINISTRATIVE AGENT AND THE LENDERS HEREBY
IRREVOCABLY AND KNOWINGLY WAIVE (TO THE FULLEST EXTENT PERMITTED BY LAW) ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING (INCLUDING, WITHOUT LIMITATION, ANY COUNTERCLAIM) ARISING OUT OF
THIS AGREEMENT, THE FINANCING AGREEMENTS OR ANY OTHER AGREEMENTS OR TRANSACTIONS RELATED HERETO OR
THERETO,
INCLUDING, WITHOUT LIMITATION, ANY ACTION OR PROCEEDING (A) TO ENFORCE OR DEFEND ANY RIGHTS
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR (B) ARISING FROM ANY DISPUTE OR
CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS AGREEMENT AND THE FINANCING AGREEMENTS. THE
ADMINISTRATIVE AGENT, THE LENDERS AND THE BORROWER AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL
BE TRIED BEFORE A COURT AND NOT A JURY.
  - 114 -




---



##### 



IN WITNESS WHEREOF
 BORROWER:DIVERSICARE MANAGEMENT SERVICES CO., a Tennessee
corporation, as Borrower AgentBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:
    Executive Vice President &  Chief Financial
OfficerADVOCAT ANCILLARY SERVICES, INC., a Tennessee
corporationBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:
    Executive Vice President &  Chief Financial
OfficerADVOCAT FINANCE, INC., a Delaware corporationBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:
    Executive Vice President &  Chief Financial
OfficerDIVERSICARE MANAGEMENT SERVICES
CO., a Tennessee corporationBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:
    Executive Vice President &  Chief Financial
OfficerADVOCAT DISTRIBUTION SERVICES, INC., a Tennessee
corporationBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:
    Executive Vice President &  Chief Financial
Officer




---



##### 



DIVERSICARE ASSISTED LIVING SERVICES, INC., a
Tennessee corporationBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:
    Executive Vice President &   Chief Financial
OfficerDIVERSICARE ASSISTED LIVING SERVICES NC, LLC, a
Tennessee limited liability companyBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:
    Executive Vice President &   Chief Financial
OfficerDIVERSICARE LEASING CORP., a Tennessee corporationBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:
    Executive Vice President &   Chief Financial
OfficerSTERLING HEALTH CARE MANAGEMENT,
INC., a Kentucky corporationBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:
    Executive Vice President &   Chief Financial
OfficerSENIOR CARE CEDAR HILLS, LLC, a Delaware
limited liability companyBY:
    SENIOR CARE FLORIDA LEASING, LLC, its sole
member BY:
    DIVERSICARE LEASING CORP., its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:
    Executive Vice President &   Chief Financial
Officer




---



##### 



SENIOR CARE GOLFCREST, LLC, a
Delaware limited liability company
    BY:
    SENIOR CARE FLORIDA LEASING, LLC, its sole
member
    

BY:
    DIVERSICARE LEASING CORP., its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President & Chief Financial
OfficerSENIOR CARE GOLFVIEW, LLC, a Delaware limited
liability company
    BY:
    SENIOR CARE FLORIDA LEASING, LLC, its sole
member
    

BY:
    DIVERSICARE LEASING CORP., its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President & Chief Financial
OfficerSENIOR CARE FLORIDA LEASING, LLC,a Delaware
limited liability companyBY: DIVERSICARE LEASING CORP.,
its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President & Chief Financial
Officer




---



##### 



SENIOR CARE SOUTHERN PINES, LLC, a Delaware limited
liability company
    BY:
    SENIOR CARE FLORIDA LEASING, LLC, its sole
member
    

BY:
    DIVERSICARE LEASING CORP., its sole memberBy:
    /s/Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President & Chief Financial
OfficerDIVERSICARE AFTON OAKS, LLC, a Delaware limited
liability companyBY:
    DIVERSICARE LEASING CORP., its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President & Chief
Financial OfficerDIVERSICARE ASSISTED LIVING
SERVICES NC I, LLC, a Delaware limited liability companyBY:
    DIVERSICARE ASSISTED LIVING SERVICES NC, LLC, its
sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President & Chief
Financial Officer




---



##### 



DIVERSICARE ASSISTED LIVING SERVICES NC II, LLC, a
Delaware limited liability companyBY: DIVERSICARE ASSISTED LIVING SERVICES NC, LLC, its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President &  Chief Financial
OfficerDIVERSICARE BRIARCLIFF, LLC,a Delaware limited
liability companyBY: DIVERSICARE LEASING CORP., its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President &  Chief
Financial OfficerDIVERSICARE CHISOLM, LLC, a Delaware limited
liability companyBY: DIVERSICARE LEASING CORP., its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President &  Chief
Financial OfficerDIVERSICARE HARTFORD, LLC, a Delaware limited
liability companyBY: DIVERSICARE LEASING CORP., its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President &  Chief
Financial Officer




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##### 



DIVERSICARE HILLCREST, LLC, a Delaware limited
liability companyBY: DIVERSICARE LEASING CORP., its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President &  Chief
Financial OfficerDIVERSICARE LAMPASAS, LLC, a Delaware limited
liability companyBY: DIVERSICARE LEASING CORP., its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President &  Chief
Financial OfficerDIVERSICARE PINEDALE, LLC, a Delaware limited
liability companyBY: DIVERSICARE LEASING CORP., its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President &  Chief
Financial OfficerDIVERSICARE WINDSOR HOUSE, LLC, a Delaware limited
liability companyBY: DIVERSICARE LEASING CORP., its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President &  Chief
Financial Officer




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##### 



DIVERSICARE YORKTOWN, LLC, a Delaware limited
liability companyBY: DIVERSICARE LEASING CORP., its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President & Chief
Financial OfficerDIVERSICARE BALLINGER, LLC, a Delaware limited
liability companyBY: DIVERSICARE TEXAS I, LLC, its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President & Chief
Financial OfficerDIVERSICARE DOCTORS, LLC, a Delaware limited
liability companyBY: DIVERSICARE TEXAS I, LLC, its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President & Chief
Financial OfficerDIVERSICARE ESTATES, LLC, a Delaware limited
liability companyBY: DIVERSICARE TEXAS I, LLC, its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President & Chief
Financial Officer




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##### 



DIVERSICARE HUMBLE, LLC, a Delaware limited liability
companyBY: DIVERSICARE TEXAS I, LLC, its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President & Chief
Financial OfficerDIVERSICARE KATY, LLC, a Delaware limited liability
companyBY: DIVERSICARE TEXAS I, LLC, its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President & Chief
Financial OfficerDIVERSICARE NORMANDY TERRACE,
LLC, a Delaware limited liability companyBY: DIVERSICARE TEXAS I, LLC, its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President & Chief
Financial OfficerDIVERSICARE TEXAS I, LLC, a Delaware limited
liability companyBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President & Chief Financial
Officer




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##### 



DIVERSICARE TREEMONT, LLC, a Delaware limited
liability companyBY: DIVERSICARE TEXAS I, LLC, its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President & Chief
Financial OfficerDIVERSICARE ROSE TERRACE, LLC, a Delaware limited
liability companyBY: DIVERSICARE LEASING CORP., its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President & Chief
Financial OfficerDIVERSICARE PARIS, LLC,a Delaware limited liability
companyBY: DIVERSICARE TEXAS I, LLC, its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President & Chief
Financial OfficerDIVERSICARE THERAPY SERVICES, LLC, a Delaware limited
liability company
BY: DIVERSICARE LEASING CORP., its sole memberBy:
    /s/ Glynn RiddleName:
    Glynn RiddleIts:Executive Vice President & Chief
Financial Officer




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##### 



Acknowledged and Agreedsolely for purposes of Sections 8.9 and 9.12 hereof:ADVOCAT INC.By:
    /s/ Matthew J. WeishaarName:
    Matthew J. WeishaarIts:       Asst Secretary




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##### 



ADMINISTRATIVE AGENT:THE PRIVATEBANK AND TRUST COMPANY, in its capacity as
administrative agentBy:
    /s/ Adam D. PanosName:
    Adam D. PanosIts:
    Associate Managing Director




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##### 



LENDER:THE PRIVATEBANK AND TRUST COMPANYBy:
    /s/ Adam D. PanosName:
    Adam D. PanosIts:      Associate Managing Director




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##### 



LENDER:
BANKERS TRUST COMPANYBy:
    /s/ Ron M. DollName:
    Ron M. DollIts:     Vice President




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##### 



SCHEDULES
 Schedule 1
    
    BorrowersSchedule 1.1(a)
    
    FacilitiesSchedule 1.1(b)
    
    Intentionally OmittedSchedule 1.1(d)
    
    Certain Capital ExpendituresSchedule 1.1(e)
    
    Omega LeasesSchedule 7.8
    
    Other NamesSchedule 7.12
    
    Organizational ChartSchedule 7.13
    
    LitigationSchedule 7.17
    
    Environmental MattersSchedule 7.26
    
    Medicare and Medicaid PenaltiesSchedule 7.32
    
    Labor MattersSchedule 7.33
    
    CapitalizationSchedule 7.36
    
    Commercia LeasesSchedule 8.9
    
    Certain Corporate AccountsSchedule 9.3
    
    Requirements for Subsidiary FormationSchedule 9.6
    
    Real Property Assets
 EXHIBITS
 Exhibit A
    
    Form of Revolving Credit NoteExhibit B
    
    Form of Borrowing NoticeExhibit C
    
    Form of Assignment Agreement
 ANNEX
 Annex A
    
    Lenders, Revolving Loan Commitment Percentages, and Notice Information