Document:

exv10w20

 

Exhibit 10.20

	 	 	 
	 	 	
Employee’s Copy
	 	 	
Partnership’s Copy

CAPITAL AUTOMOTIVE L.P.

EMPLOYMENT AGREEMENT

To Lisa M. Clements:

     This Agreement establishes the terms of your employment with Capital
Automotive L.P., a Delaware limited partnership (the “Partnership”). It
replaces any prior employment agreement or change of control agreement with
Capital Automotive REIT, a Maryland real estate investment trust (the
“Company”), or the Partnership. You remain an
employee of the Company, but
your primary responsibility is as an employee of the Partnership.

	 	 	 
	Employment and Duties	 	
You and the Partnership agree to your employment with the
Partnership and to your services as Chief Accounting Officer on
the terms contained herein. In such position, you will report
directly to the Company’s Chief Financial Officer. You agree to
perform whatever duties the Partnership may assign you from time
to time, consistent with your position as an executive officer.
During your employment, you agree to devote your full business
time, attention, and energies to performing those duties (except
as the Partnership otherwise agrees from time to time). You
agree to faithfully serve the Partnership, to conform to and
comply with the lawful and good faith directions and
instructions given you by the Partnership, and to use your best
efforts to promote and serve the interests of the Partnership,
You agree to comply with the non-competition, secrecy, and other
provisions of Exhibit A to this Agreement.
	 	 	 
	Term	 	
Your employment under this Agreement begins as of October 15,
2003 (the “Effective Date”) and ends on January 1, 2007, unless
it is terminated sooner under this Agreement.
	 	 	 
	 	 	
The period running from the Effective Date to the date that the
Agreement terminates as set forth in the preceding sentence is
the “Term.”
	 	 	 
	 	 	
Termination or expiration of this Agreement ends your employment
but does not end your obligation to comply with Exhibit A.
	 	 	 
	Compensation	 	 

	 	 	 	 	 
	 	 	
Salary and Bonus
	 	The Partnership (or, in its discretion, the Company) will pay
you an annual salary (the “Salary”) for 2003 at the rate of not
less than $116,800 in accordance with its payroll practices.
Your target bonus for calendar year 2003 will be $68,000. Each
calendar year thereafter while you are employed under this
Agreement, the Partnership or its Compensation Committee will
review your Salary and target bonus and consider you for
increases from the Partnership.
	 	 	 	 	 
	 	 	
Employee Benefits
	 	While you are employed under this Agreement, the Partnership
will provide you with the same benefits, including medical
insurance coverage, as the Partnership makes generally available
from time to time to the Partnership’s employees, as those
benefits are amended or terminated from time to time. Your
participation in the Partnership’s benefit plans will be subject
to the terms of the applicable plan documents and the
Partnership’s generally applied policies, and the Partnership in
its sole discretion may from time to time adopt, modify,
interpret, or discontinue such plans or policies.

 

 

	 	 	 
	Place of Employment 	 	
Your principal place of employment will be at the Partnership’s
headquarters in the Washington metropolitan area (or such other
offices as the Partnership may establish from time to time and
to which it assigns you in its sole discretion). You understand
and agree that you must travel from time to time for business
reasons.
	 
	Indemnification	 	
The Partnership will indemnify you to the fullest extent
authorized by law if you are made a party to any action, suit,
or proceeding, whether criminal, civil, administrative, or
investigative, because you are or were a manager, officer, or
employee of the Partnership or serve or served any other entity
as a director, officer, or employee at the Partnership’s
request; provided, however, that you must repay the Partnership
for any indemnification if the final determination of an
arbitrator or a court of competent jurisdiction declares, after
the expiration of the time within which judicial review (if
permitted) of such determination may be perfected, that
indemnification by the Partnership is not permissible under
applicable law.
	 	 	 
	Expenses	 	
The Partnership will reimburse you for reasonable and necessary
travel and other business-related expenses you incur for the
Partnership in performing your duties under this Agreement. You
must itemize and substantiate all requests for reimbursements.
You must submit requests for reimbursement in accordance with
the policies and practices of the Partnership and within 60 days
after incurring the expense.
	 	 	 
	No Other Employment	 	
For so long as you are employed by the Partnership, you agree
that you will not, directly or indirectly, provide services to
any person or organization for which you receive compensation or
otherwise engage in activities that would conflict or interfere
significantly with the faithful performance of your duties to
the Partnership without the Partnership’s prior written consent.
(This prohibition excludes any work performed at the
Partnership’s direction including any work for the Company.)
You may manage your personal investments, as long as the
management takes only minimal amounts of time and is consistent
with the provisions of the No Competition Section in Exhibit A
and is otherwise consistent with the policies and practices of
the Partnership.
	 	 	 
	 	 	
You represent to the Partnership that you are not subject to any
agreement, commitment, or policy of any third party that would
prevent you from entering into or performing your duties under
this Agreement, and you agree that you will not enter into any
agreement or commitment or agree to any policy that would
prevent or hinder your performance of duties and obligations
under this Agreement, including Exhibit A.
	 	 	 
	No Conflicts of Interest	 	
You confirm that you have fully disclosed to the Partnership and
the Company, to the best of your knowledge, all circumstances
under which you, your spouse, and your relatives (including
their spouses, children, and relatives) have or may have a
conflict of interest with the Company or the Partnership. You
further agree to fully disclose to the Partnership any such
circumstances that might arise during the Term. You agree to
fully comply with the Partnership’s policy and practices
relating to conflicts of interest.
	 	 	 
	No Payments to Governmental
Officials	 	You will neither pay nor permit payment of any remuneration to
or on behalf of any governmental official other than payments
required or permitted by applicable law.

2

 

	 	 	 
	Termination	 	
Subject to the provisions of this section, the Partnership may
terminate your employment, or you may resign, except that, if
you voluntarily resign, you must provide the Partnership with 45
days’ prior written notice (unless the Partnership has
previously waived such notice in writing or authorized a shorter
notice period).

	 	 	 	 	 
	 	 	
For Cause
	 	The Partnership may terminate your employment for “Cause” if you:

	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	(i) engage in dishonesty that relates materially to the
performance of services or any obligations under this Agreement,
including Exhibit A;
	 	 	 	 	 
	 	 	 	 	(ii) are convicted of, or plead guilty or no contest to, any
misdemeanor (other than for minor infractions) involving fraud,
breach of trust, misappropriation, or other similar activity or
any felony;
	 	 	 	 	 
	 	 	 	 	(iii) perform your duties under this Agreement in a grossly
negligent manner; or
	 	 	 	 	 
	 	 	 	 	(iv) willfully breach this Agreement, including Exhibit A, in a
manner materially injurious to the Partnership. An act or
omission is only “willful” if you acted in bad faith or without
any reasonable belief that the action or omission was in the
interests of the Partnership and consistent with your duties and
obligations under this Agreement.

	 	 	 
	 	 	
Your termination for Cause under (i) and (ii) will be effective
immediately upon the Partnership’s mailing or transmission of
such notice. Before terminating your employment for Cause under
(iii) or (iv), the Partnership will specify in writing to you
the nature of the act, omission, refusal, or failure that it
deems to constitute Cause. The Partnership will give you the
opportunity to correct the situation (and thus avoid termination
for Cause under (iii) or (iv)). You must complete the
correction within a reasonable period of time after the written
notice to you, and the Partnership agrees to provide you no less
than 15 days for such correction.

	 	 	 	 	 
	 	 	
Without Cause
	 	Subject to the provisions below under Payments on Termination,
the Partnership may terminate your employment under this
Agreement before the end of the Term without Cause.
	 	 	 	 	 
	 	 	
Good Reason
	 	You may resign for Good Reason with 45 days’ advance written
notice as provided below. “Good Reason” means the occurrence,
without your written consent, of any of the following
circumstances:

	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	the Partnership’s failure to perform or observe any of the
material terms or provisions of this Agreement,

the assignment to you of any duties inconsistent with, or any
substantial diminution in, your employment status or
responsibilities as in effect on the date of this Agreement,

the Partnership’s relocation of its headquarters to a location
that would increase your commuting distance by more than 50
miles, based on your residence when this Agreement is executed,
or

3

 

	 	 	 
	 	
a Change of Control, consisting of any one or more of the
following events:
	 	 	 
	 	 	
a person, entity, or group (other than the Company, the
Partnership, any subsidiary of either, any Company
Group benefit
plan, or any underwriter temporarily holding securities for an
offering of such securities) acquires ownership of more than 40%
of the undiluted total voting power of the Company’s
then-outstanding securities eligible to vote to elect members of
the Board of Trustees (“Board”) (“Company Voting Securities”);
	 	 	 
	 	 	
consummation of a merger or consolidation of the Company into
any other entity — unless the holders of the Company Voting
Securities outstanding immediately before such consummation,
together with any trustee or other fiduciary holding securities
under a Company Group benefit plan, hold securities that
represent immediately after such merger or consolidation more
than 60% of the combined voting power of the then outstanding
voting securities of either the Company or the other surviving
entity or its parent; or
	 	 	 
	 	 	
the stockholders of the Company approve (i) a plan of complete
liquidation or dissolution of the Company or (ii) an agreement
for the Company’s sale or disposition of all or substantially
all the Company’s assets, and such liquidation, dissolution,
sale, or disposition is consummated.
	 	 	 
	 	
Even if other tests are met, a Change of Control has not
occurred under any circumstance in which the Company files for
bankruptcy protection or is reorganized following a bankruptcy
filing.
	 	 
	 	
You must give notice to the Partnership of your intention to
resign for Good Reason within 30 days after the occurrence of
the condition or event (within 24 months if the condition or
event is a Change of Control) that you assert entitles you to
resign for Good Reason. In that notice, you must specify the
condition or event that you consider provides you with Good
Reason and (except if the condition or event is a Change of
Control) must give the Partnership an opportunity to cure the
condition or event within 30 days after your notice. If the
Partnership fails to cure the condition, your resignation will
be effective on the 45th day after your notice (unless the Board
has previously waived such notice period in writing or agreed to
a shorter notice period).
	 	 	 
	 	
You will not be treated as resigning for Good Reason if the
Partnership had Cause to terminate your employment as of the
date of your notice of resignation.
	 	 	 
	Disability	
If you become “disabled” (as defined below), the Partnership may
terminate your employment. If the Partnership terminates your
employment because you become disabled or employment terminates
because of your death, any unvested restricted shares and any
phantom shares previously granted to you shall become Pro Rata
Vested (as defined below). You are “disabled” if you are unable,
despite whatever reasonable accommodations the law requires, to
render services to the Partnership for more than 90 consecutive
days because of physical or mental disability,

4

 

	 	 	 
	 	
incapacity, or
illness. You are also disabled if you are deemed to be disabled
within the meaning of the Partnership’s long-term disability
policy as then in effect.
	 	 	 
	Death	
If you die during the Term, the Term will end as of the date of
your death.
	 	 	 
	Payments on

Termination	
If the Partnership terminates your employment for or without
Cause or because of disability or death or you resign, the
Partnership will pay you any unpaid portion of your Salary
pro-rated through the date of actual termination and any annual
bonuses already determined by such date but not yet paid,
reimburse any substantiated but unreimbursed business expenses,
pay any accrued and unused vacation time (to the extent
consistent with the Partnership’s policies), and provide such
other benefits as applicable laws or the terms of the benefits
require. Except to the extent the law requires otherwise or as
provided in the Vesting and Other Benefits section below or in
your option agreement, restricted share agreement or phantom
share agreement(s), neither you nor your beneficiary or estate
will have any rights or claims under this Agreement or otherwise
to receive severance or any other compensation, or to
participate in any other plan, arrangement, or benefit, after
such termination.
	 	 	 
	Vesting and
Other Benefits
on Termination
or Change of
Control	
In addition to the foregoing payments, if a Change of Control
occurs, the Partnership terminates your employment without
Cause, or you resign for Good Reason before the end of the Term:
	 	 	 
	 	I.  	
 all of the stock options and restricted shares held by you
before your termination of employment or the Change of Control
(whichever is applicable) will become fully vested; and
	 	 	 
	 	II.  	
 all of the phantom shares credited to you before your
termination of employment or the Change of Control (whichever is
applicable) shall be deemed to have been credited for three (3)
years for purposes of Section 6.3 of the Capital Automotive
Group Phantom Share Purchase Program; and
	 	 	 
	 	III.  	
 in the case of termination without Cause or resignation
for Good Reason or Change of Control, the Partnership will pay
you an amount equal to 1 time your annual Salary, as then in
effect, in a single lump sum as soon as practicable, but in any
event no more than 10 days after the Change of Control or 90
days after termination, as applicable; and
	 	 	 
	 	IV.  	
the Partnership will pay the premium cost for you to receive
any group health coverage the Partnership must offer you under
Section 4980B of the Internal Revenue Code of 1986 (the “Code”)
for one (1) year; and
	 	 	 
	 	V.   	
the Partnership will pay you, at the time the Partnership
would otherwise pay your annual bonus, your pro rata share of
the bonus for the year of your termination (or Change of
Control), where the pro rata factor is based on days elapsed in
such year until the date of termination (or

5

 

	 	 	 
	 	 	
Change of Control) over 365, less any portion of the bonus for
such year already paid.
	 	 	 
	 	
You are not required to mitigate amounts payable under the
Vesting and Other Benefits paragraphs by seeking other
employment or otherwise; however, of the foregoing benefits, an
amount equal to one hundred percent of your annual Salary is
being provided as consideration for your compliance with the
requirements of Exhibit A. Consequently, you agree to return
such amount if you fail to comply with Exhibit A.
	 	 	 
	 	
Expiration of this Agreement, whether because of notice of
non-renewal or otherwise, does not constitute termination
without Cause nor is it grounds for resignation with Good
Reason.
	 	 	 
	 	
In addition to the foregoing, if this Employment Agreement is
not renewed by the Partnership on or before January 1, 2007, and
the Partnership at any time thereafter terminates your
employment without Cause or you resign for Good Reason, (i) any
unvested restricted shares granted prior to or during the Term
and held by you before your termination of employment will
become vested to the extent of the ratio of the number of days
that you have been employed by the Partnership or the Company
since the date they were granted and the total number of days of
employment otherwise required for them to fully vest (determined
separately for each grant), and (ii) all of the phantom shares
granted prior to or during the Term and credited to you before
your termination of employment will be deemed to have been
credited for three (3) years for the purposes of Section 6.3 of
the Capital Automotive Group Phantom Share Purchase Program to
the extent of the ratio of the number of days that you have been
employed by the Partnership or the Company since the date they
were granted and the three (3) years of employment otherwise
required for them to fully vest for purposes of that section
(determined separately for each grant). The pro rata vesting
and crediting referenced in (i) and (ii) in the foregoing
sentence are referred to herein as “Pro Rata Vested.”
	 	 	 
	          Internal Revenue

          Code Section

          280G	
If you become entitled to any benefits under this Agreement (the
“Agreement Benefits”), and any of those benefits will be subject
to the tax (the “Excise Tax”) imposed by Section 4999 of the
Code (or any similar tax that may hereafter be imposed), the
Partnership will pay to you an additional amount (the “Gross-up
Payment”) such that the net amount retained by you, after
deduction of any Excise Tax on the total benefits received by
you and any federal, state and local income tax and Excise Tax
on the Gross-up Payment provided for by this section, but before
deduction for any federal, state or local income tax on the
Agreement Benefits, will be equal to the total benefits that you
would have received had the Excise Tax not been applicable and
the Gross-up Payment not paid. Notwithstanding the foregoing,
you and the Partnership agree to in good faith take any
reasonable actions, at no cost to either party, to minimize or
avoid application of the Excise Tax.
	 	 	 
	Assignment	
The Partnership may assign or otherwise transfer this Agreement
and any and all of its rights, duties, obligations, or interests
under it to:
	 	 	 
	 	 	
the Company or any of the affiliates or subsidiaries of the
Company or

6

 

	 	 	 
	 	 	
the Partnership or to any business entity that at any time by
merger, consolidation, or otherwise acquires all or
substantially all of the Company’s stock or assets or the
partnership units or assets of the Partnership or to which the
Company or the Partnership transfers all or substantially all of
its assets.
	 	 	 
	 	
Upon such assignment or transfer, any such business entity will
be deemed to be substituted for the Partnership for all
purposes. Assignment or transfer does not constitute
termination without Cause nor is it grounds for resignation with
Good Reason absent the occurrence of a
Change of Control. This
Agreement binds the Partnership, its successors or assigns, and
your heirs and the personal representatives of your estate.
Without the Partnership’s prior written consent, you may not
assign or delegate
this Agreement or any or all rights, duties, obligations, or
interests under it.
	 	 	 
	Severability	
If the final determination of an arbitrator or a court of
competent jurisdiction declares, after the expiration of the
time within which judicial review (if permitted) of such
determination may be perfected, that any term or provision of
this Agreement, including any provision of Exhibit A, is invalid
or unenforceable, the remaining terms and provisions will be
unimpaired, and the invalid or unenforceable term or provision
will be deemed replaced by a term or provision that is valid and
enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term or provision.
	 	 	 
	Amendment; Waiver	
Neither you nor the Partnership may modify, amend, or waive the
terms of this Agreement other than by a written instrument
signed by you and a duly authorized representative of the
General Partner of the Partnership. Either party’s waiver of
the other party’s compliance with any provision of this
Agreement is not a waiver of any other provision of this
Agreement or of any subsequent breach by such party of a
provision of this Agreement.
	 	 	 
	Withholding	
The Partnership will reduce its compensatory payments to you for
withholding and FICA taxes, and any other withholdings and
contributions required by law.
	 	 	 
	Third Party Beneficiary	
You understand and agree that the Company is a third party
beneficiary of this Agreement.
	 	 	 
	Governing Law	
The laws of the Commonwealth of Virginia (other than its
conflict of laws provisions) govern this Agreement.
	 	 	 
	Notices	
Notices must be given in writing by personal delivery, by
certified mail, return receipt requested, by telecopy, or by
overnight delivery. You should send or deliver your notices to
the Partnership’s headquarters. The Partnership will send or
deliver any notice given to you at your address as reflected on
the Partnership’s personnel records. You and the Partnership
may change the address for notice by like notice to the others.
You and the Partnership agree that notice is received on the
date it is personally delivered, the date it is received by
certified mail, the date of guaranteed delivery by the overnight
service, or the date the fax machine confirms receipt.
	 	 	 
	Payments and Benefits Upon
Death	
If, at the time of your death, the Partnership owes you any
payments or other benefits as a result of termination of your
employment, resignation, a Change of Control, or your
Disability, all of those payments and

7

 

	 	 	 
	 	
benefits shall become due
and payable to your estate to the same extent, at the same
times, and subject to the same terms as they would have been due
and payable to you but for your death. Further, any payments or
other benefits that become due on account of your death shall be
paid to your estate.
	 	 	 
	Legal Fees	
If a claim is asserted for breach of any provision of this
Agreement, you will be entitled to recover your reasonable
attorney’s fees and expenses if you prevail.
	 	 	 
	Arbitration	
Any disputes between the Partnership and you in any way
concerning your employment, the termination of your employment,
this Agreement or its enforcement shall be submitted at the
initiative of either party to binding arbitration in the
Washington Metropolitan area before a single arbitrator pursuant
to the Rules for Resolution of Employment Disputes of the
American Arbitration Association, or its successor, then in
effect. The decision of the arbitrator shall be rendered in
writing, shall be final, and may be entered as a judgment in any
court in the Commonwealth of Virginia. The Partnership and you
each irrevocably consents to the jurisdiction of the federal and
state courts located in Virginia for this purpose. Each party
shall be responsible for its or his own costs incurred in such
arbitration and in enforcing any arbitration award, including
attorney’s fees, provided, however, that you will be entitled to
recover your reasonable attorney’s fees and expenses if you
prevail. Notwithstanding the foregoing, the Partnership, in its
sole discretion, may bring an action in any court of competent
jurisdiction to seek injunctive relief and such other relief as
it shall elect to enforce your obligations in Exhibit A.
	 	 	 
	Superseding Effect	
This Agreement supersedes any prior oral or written employment
or severance agreements between you and the Company or the
Partnership. This Agreement supersedes all prior or
contemporaneous negotiations, commitments, agreements, and
writings with respect to the subject matter of this Agreement.
All such other negotiations, commitments, agreements, and
writings will have no further force or effect; and the parties
to any such other negotiation, commitment, agreement, or writing
will have no further rights or obligations thereunder.

8

 

If you accept the terms of this Agreement, please sign in the space indicated
below. We encourage you to consult with any advisors of your choosing.

	 	 	 
	 	 	
CAPITAL AUTOMOTIVE L.P.
	 	 	 
	 	 	
General Partner:
	 	 	 
	 	 	
CAPITAL AUTOMOTIVE REIT, a Maryland real estate investment trust

	 	 	 	 	 
	 	 	By:	 	
/s/ Thomas D. Eckert
	 	 	 	 	

	 
	 	 	Its:	 	
President and Chief Executive Officer

	 	 	 
	 	 	
SEEN & AGREED TO:
	 	 	 
	 	 	
CAPITAL AUTOMOTIVE REIT

	 	 	 	 	 
	 	 	By:	 	
/s/ Thomas D. Eckert
	 	 	 	 	

	 
	 	 	Its:	 	
President and Chief Executive Officer

I accept and agree to the terms of employment set forth in this Agreement:

	 
	/s/ Lisa M. Clements

Lisa M. Clements
	Dated: 10/15/03

9

 

Exhibit A

	 	 	 
	No Competition	
In consideration of your employment by the Partnership and
salary and benefits under this Agreement, during the term
of your employment, and except as set forth below, until
the date two years after your employment with the Company,
the Partnership, or their successors, assigns, affiliates,
or subsidiaries (collectively, the “Company Group”) ends
for any reason (the “Restricted Period”), you agree as
follows:
	 	 	 
	 	
The Company is a real estate investment trust formed to
acquire real properties owned by automobile dealerships and
other automotive-related businesses and lease the
properties to such businesses. You will not, directly or
indirectly, promote, be employed by, lend money to, invest
in, or engage in any Competing Business within the Market
Area. That prohibition includes, but is not limited to,
acting, either singly or jointly or as agent for, or as an
employee of or consultant to, any one or more persons,
firms, entities, or corporations directly or indirectly (as
a director, independent contractor, representative,
consultant, member, or otherwise) that constitutes such a
Competing Business. You may own up to 3% of the
outstanding capital stock of any corporation that is
actively publicly traded without violating this No
Competition covenant. This covenant does not preclude you
from being employed by any non-public automobile dealership
or dealership group or other non-public automotive-related
business that is a lessee or prospective lessee of
properties the Company or the Partnership holds or is
actively considering acquiring.
	 	 	 
	 	
If, during the Restricted Period, you are offered and want
to accept employment with a business that engages in
activities similar to the Company’s or the
Partnership’s,
you will inform the Partnership in writing of the identity
of the business, your proposed duties with that business,
and the proposed starting date of that employment. You
will also inform that business of the terms of this Exhibit
A. The Partnership will analyze the proposed employment
and make a good faith determination as to whether it would
threaten the Partnership’s legitimate competitive
interests. If the Partnership determines that the proposed
employment would not pose an unacceptable threat to its
interests, the Partnership will notify you that it does not
object to the employment.
	 	 	 
	 	
You acknowledge that, during the portion of the Restricted
Period that follows your employment, you may engage in any
business activity or gainful employment of any type and in
any place except as described above. You acknowledge that
you will be reasonably able to earn a livelihood without
violating the terms of this Agreement.
	 	 	 
	 	
You understand and agree that the rights and obligations
set forth in this No Competition Section will continue for
two years from the date of termination of this Agreement
and your employment with the Partnership or the Company
Group.

10

 

	 	 	 
	Definitions	 	 
	 
	          Competing

          Business	
Competing Business means any service or
financial product of any person or
organization other than the Company Group, in
existence or then under development, that
competes or could potentially compete,
directly or indirectly, with any service or
financial product of the Company Group upon
which or with which you have worked for the
Partnership or the Company Group or about
which you acquire knowledge while working for
the Partnership or the Company Group.
Competing Business includes any enterprise
engaged in the formation or operation of real
estate investment trusts or other entities
that invest primarily in automobile
dealership or automotive-related properties
or provide real estate financing to
automobile dealerships or automotive-related
businesses, provided that Competing Business
excludes banks, finance companies, and other
financial institutions that are not primarily
involved in real estate financing so long as
your employment or other involvement is also
not primarily involved in real estate
financing. Competing Business also includes
any public company the primary business of
which is to retail and/or service motor
vehicles. Competing Business excludes real
estate investment trusts and similar entities
that do not engage in activities related to
automotive dealerships or automotive-related
businesses.
	 	 	 
	          Market Area	
The Market Area consists of the United States.
	 	 	 
	No Interference; 
No Solicitation	
During the Restricted Period, you agree that
you will not, directly or indirectly, whether
for yourself or for any other individual or
entity (other than the Partnership or its
affiliates or subsidiaries), intentionally
solicit or endeavor to entice away from the
Company Group:
	 	 	 
	 	 	
any person whom the Company Group employs
(other than as your personal secretary) or
otherwise engages to perform services as a
consultant or sales representatives; or

	 	 	 
	 	 	
any person or entity who is, or was, within
the Restricted Period, a contractor or
subcontractor of the Company Group known to
you or a lessee or prospective lessee of
properties the Company Group holds or is
actively considering acquiring.
	 	 	 
	Secrecy	 	 
	 	 	 
	          Preserving Company

          Confidences	
Your employment with the Partnership under
and, if applicable, before this Agreement has
given and will give you Confidential
Information (as defined below). You
acknowledge and agree that using, disclosing,
or publishing any Confidential Information in
an unauthorized or improper manner could
cause the Partnership or Company Group
substantial loss and damages that could not
be readily calculated and for which no remedy
at law would be adequate. Accordingly, you
agree with the Partnership that you will not
at any time, except in performing your
employment duties to the Partnership or the
Company Group under this Agreement (or with
the Partnership’s prior written consent),
directly or indirectly, use, disclose, or
publish, or permit others not so authorized
to use, disclose, or publish any Confidential
Information that you may learn or become
aware of, or may have learned or become aware
of, because of your prior or continuing
employment, ownership, or association with
the Partnership or

11

 

	 	 	 
	 	
the Company Group or any of their
predecessors, or use any such information in
a manner detrimental to the interests of the
Partnership or the Company Group.
	 	 	 
	          Preserving Others’
Confidences	
You agree not to use in working for the
Company Group and not to disclose to the
Company Group any trade secrets or other
information you do not have the right to use
or disclose and that the Company Group is not
free to use without liability of any kind.
You agree to promptly inform the Partnership
in writing of any patents, copyrights,
trademarks, or other proprietary rights known
to you that the Partnership or the Company
Group might violate because of information
you provide.
	 	 	 
	          Confidential Information	
“Confidential Information” includes, without
limitation, information the Partnership or
the Company Group has not previously
disclosed to the public or to the trade with
respect to the Partnership’s or the Company
Group’s present or future business,
operations, services, products, research,
inventions, discoveries, drawings, designs,
plans, processes, models, technical
information, facilities, methods, trade
secrets, copyrights, software, source code,
systems, patents, procedures, manuals,
specifications, any other intellectual
property, confidential reports, price lists,
pricing formulas, customer lists, financial
information (including the revenues, costs,
or profits associated with any of the
Partnership’s or the Company Group’s products
or services), business plans, lease
structure, projections, prospects,
opportunities or strategies, acquisitions or
mergers, advertising or promotions, personnel
matters, legal matters, any other
confidential and proprietary information, and
any other information not generally known
outside the Partnership or the Company Group
that may be of value to the Partnership or
the Company Group but excludes any
information already properly in the public
domain. “Confidential Information” also
includes confidential and proprietary
information and trade secrets that third
parties entrust to the Partnership or the
Company Group in confidence.
	 	 	 
	Exclusive Property	
You understand and agree that the rights and
obligations set forth in this Secrecy Section
will continue indefinitely and will survive
termination of this Agreement and your
employment with the Partnership or the
Company Group.
	 
	 	You confirm that all Confidential Information
is and must remain the exclusive property of
the Partnership or the relevant member of the
Company Group. All business records,
business papers, and business documents you
keep or make in the course of your employment
by the Partnership relating to the
Partnership or any member of the Company
Group must be and remain the property of the
Partnership or the relevant member of the
Company Group. Upon the termination of this
Agreement with the Partnership or upon the
Partnership’s request at any time, you must
promptly deliver to the Partnership or to the
relevant member of the Company Group any
Confidential Information or other materials
(written or otherwise) not available to the
public or made available to the public in a
manner you know or reasonably should
recognize the Partnership did not authorize,
and any copies, excerpts, summaries,
compilations, records and documents you made
or that came into your possession during your
employment. You agree that you will not,
without the Partnership’s consent, retain
copies, excerpts, summaries or compilations
of the foregoing information and materials.
You understand and agree that the

12

 

	 	 	 
	 	
rights and obligations set forth in this
Exclusive Property Section will continue
indefinitely and will survive termination of
this Agreement and your employment with the
Company Group.
	 	 	 
	Maximum Limits	
If any of the provisions of Exhibit A are
ever deemed to exceed the time, geographic
area, or activity limitations the law
permits, you and the Partnership agree to
reduce the limitations to the maximum
permissible limitation, and you and the
Partnership authorize a court or arbitrator
having jurisdiction to reform the provisions
to the maximum time, geographic area, and
activity limitations the law permits.
	 	 	 
	Injunctive Relief	
Without limiting the remedies available to
the Partnership, you acknowledge:
	 	 	 
	 	 	
that a breach of any of the covenants in this
Exhibit A may result in material irreparable
injury to the Partnership and Company Group
for which there is no adequate remedy at law;
and
	 	 	 
	 	 	
that it will not be possible to measure
damages for such injuries precisely.
	 	 	 
	 	
You agree that, if there is a breach or
threatened breach, the Partnership or any
member of the Company Group will be entitled
to obtain a temporary restraining order
and/or a preliminary or permanent injunction
restraining you from engaging in activities
prohibited by any provisions of this Exhibit
A or such other relief as may be required to
specifically enforce any of the covenants in
this Exhibit A.

13exv10w1

 

EXHIBIT 10.1

CREDIT AGREEMENT

$200,000,000 Revolving Credit Facility

Dated as of September 23, 2003

among

SUNRISE SENIOR LIVING, INC.

as the Borrower,

THE SUBSIDIARIES OF THE BORROWER

IDENTIFIED HEREIN, as the Guarantors

BANK OF AMERICA, N.A.,

as Administrative Agent, Swing Line Lender

and

L/C Issuer,

FLEET NATIONAL BANK,

as Syndication Agent

and

The Other Lenders Party Hereto

BANC OF AMERICA SECURITIES LLC,

and FLEET SECURITIES, INC.

as

Joint Lead Arranger and Joint Book Manager

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	Article I DEFINITIONS AND ACCOUNTING TERMS
	 	 	1	 
	Section 1.1 Defined Terms
	 	 	1	 
	Section 1.2 Other Interpretive Provisions
	 	 	17	 
	Section 1.3 Accounting Terms
	 	 	18	 
	Section 1.4 Rounding
	 	 	18	 
	Section 1.5 References to Agreements and Laws
	 	 	19	 
	Section 1.6 Times of Day
	 	 	19	 
	Section 1.7 Letter of Credit Amounts
	 	 	19	 
	Article II THE COMMITMENTS AND CREDIT EXTENSIONS
	 	 	19	 
	Section 2.1 Committed Loans
	 	 	19	 
	Section 2.2 Borrowings, Conversions and Continuations of Committed Loans
	 	 	19	 
	Section 2.3 Letters of Credit
	 	 	21	 
	Section 2.4 Swing Line Loans
	 	 	29	 
	Section 2.5 Prepayments
	 	 	32	 
	Section 2.6 Termination or Reduction of Commitments
	 	 	32	 
	Section 2.7 Repayment of Loans
	 	 	33	 
	Section 2.8 Interest
	 	 	33	 
	Section 2.9 Fees
	 	 	34	 
	Section 2.10 Computation of Interest and Fees
	 	 	34	 
	Section 2.11 Evidence of Debt
	 	 	34	 
	Section 2.12 Payments Generally
	 	 	35	 
	Section 2.13 Sharing of Payments
	 	 	37	 
	Section 2.14 Extension of Maturity Date
	 	 	37	 
	Section 2.15 Increase in Commitments
	 	 	38	 
	Section 2.16 Collateral
	 	 	39	 
	Article III TAXES, YIELD PROTECTION AND ILLEGALITY
	 	 	39	 
	Section 3.1 Taxes
	 	 	39	 
	Section 3.2 Illegality
	 	 	40	 
	Section 3.3 Inability to Determine Rates
	 	 	41	 
	Section 3.4 Increased Cost and Reduced Return; Capital Adequacy; Reserves on
Eurodollar Rate Loans
	 	 	41	 
	Section 3.5 Funding Losses
	 	 	42	 
	Section 3.6 Matters Applicable to all Requests for Compensation
	 	 	42	 
	Section 3.7 Survival
	 	 	43	 
	Article IV GUARANTY
	 	 	43	 
	Section 4.1 The Guaranty
	 	 	43	 
	Section 4.2 Obligations Unconditional
	 	 	43	 
	Section 4.3 Reinstatement
	 	 	44	 
	Section 4.4 Certain Additional Waivers
	 	 	45	 
	Section 4.5 Remedies
	 	 	45	 

i

 

	 	 	 	 	 
	Section 4.6 Rights of Contribution
	 	 	45	 
	Section 4.7 Guarantee of Payment; Continuing Guarantee
	 	 	46	 
	Article V CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
	 	 	46	 
	Section 5.1 Conditions of Initial Credit Extension
	 	 	46	 
	Section 5.2 Conditions to all Credit Extensions
	 	 	49	 
	Article VI REPRESENTATIONS AND WARRANTIES
	 	 	49	 
	Section 6.1 Existence, Qualification and Power; Compliance with Laws
	 	 	49	 
	Section 6.2 Authorization; No Contravention
	 	 	50	 
	Section 6.3 Governmental Authorization; Other Consents
	 	 	50	 
	Section 6.4 Binding Effect
	 	 	50	 
	Section 6.5 Financial Statements; No Material Adverse Effect
	 	 	50	 
	Section 6.6 Litigation
	 	 	51	 
	Section 6.7 No Default
	 	 	51	 
	Section 6.8 Ownership of Property; Liens
	 	 	51	 
	Section 6.9 Environmental Compliance
	 	 	51	 
	Section 6.10 Insurance
	 	 	51	 
	Section 6.11 Taxes
	 	 	52	 
	Section 6.12 ERISA Compliance
	 	 	52	 
	Section 6.13 Subsidiaries and Material Subsidiaries
	 	 	52	 
	Section 6.14 Margin Regulations; Investment Company Act; Public Utility Holding
Company Act
	 	 	53	 
	Section 6.15 Disclosure
	 	 	53	 
	Section 6.16 Tax Shelter Regulations
	 	 	53	 
	Section 6.17 Compliance with Laws
	 	 	54	 
	Section 6.18 Intellectual Property; Licenses, Etc.
	 	 	54	 
	Section 6.19 Pro forma Financial Statements
	 	 	54	 
	Section 6.20 Employee Relations
	 	 	54	 
	Section 6.21 Management Agreements
	 	 	55	 
	Article VII AFFIRMATIVE COVENANTS
	 	 	55	 
	Section 7.1 Financial Statements
	 	 	55	 
	Section 7.2 Certificates; Other Information
	 	 	56	 
	Section 7.3 Notices
	 	 	57	 
	Section 7.4 Payment of Obligations
	 	 	58	 
	Section 7.5 Preservation of Existence, Etc.
	 	 	58	 
	Section 7.6 Maintenance of Properties
	 	 	58	 
	Section 7.7 Maintenance of Insurance
	 	 	59	 
	Section 7.8 Compliance with Laws
	 	 	59	 
	Section 7.9 Books and Records
	 	 	59	 
	Section 7.10 Inspection Rights
	 	 	59	 
	Section 7.11 Use of Proceeds
	 	 	60	 
	Section 7.12 Conduct of Business and Compliance with Laws; Licensure
	 	 	60	 
	Section 7.13 Additional Guarantors
	 	 	61	 
	Section 7.14 Financial Covenants
	 	 	61	 

ii

 

	 	 	 	 	 
	Article VIII NEGATIVE COVENANTS
	 	 	63	 
	Section 8.1 Liens
	 	 	63	 
	Section 8.2 Certain Investments
	 	 	63	 
	Section 8.3 Indebtedness
	 	 	64	 
	Section 8.4 Fundamental Changes
	 	 	64	 
	Section 8.5 Dispositions
	 	 	64	 
	Section 8.6 Restricted Payments
	 	 	65	 
	Section 8.7 Change in Nature of Business
	 	 	66	 
	Section 8.8 Transactions with Affiliates
	 	 	66	 
	Section 8.9 Burdensome Agreements
	 	 	66	 
	Section 8.10 Use of Proceeds
	 	 	66	 
	Article IX EVENTS OF DEFAULT AND REMEDIES
	 	 	66	 
	Section 9.1 Events of Default
	 	 	66	 
	Section 9.2 Remedies Upon Event of Default
	 	 	69	 
	Section 9.3 Application of Funds
	 	 	69	 
	Article X ADMINISTRATIVE AGENT
	 	 	70	 
	Section 10.1 Appointment and Authorization of Administrative Agent
	 	 	70	 
	Section 10.2 Delegation of Duties
	 	 	71	 
	Section 10.3 Liability of Administrative Agent
	 	 	71	 
	Section 10.4 Reliance by Administrative Agent
	 	 	72	 
	Section 10.5 Notice of Default
	 	 	72	 
	Section 10.6 Credit Decision; Disclosure of Information by Administrative Agent
	 	 	72	 
	Section 10.7 Indemnification of Administrative Agent
	 	 	73	 
	Section 10.8 Administrative Agent in its Individual Capacity
	 	 	73	 
	Section 10.9 Successor Administrative Agent
	 	 	74	 
	Section 10.10 Administrative Agent May File Proofs of Claim
	 	 	75	 
	Section 10.11 Collateral and Guaranty Matters
	 	 	75	 
	Section 10.12 Other Agents; Arrangers and Managers
	 	 	76	 
	Article XI MISCELLANEOUS
	 	 	76	 
	Section 11.1 Amendments, Etc.
	 	 	76	 
	Section 11.2 Notices and Other Communications; Facsimile Copies
	 	 	77	 
	Section 11.3 No Waiver; Cumulative Remedies
	 	 	78	 
	Section 11.4 Attorney Costs, Expenses and Taxes
	 	 	79	 
	Section 11.5 Indemnification by the Borrower
	 	 	79	 
	Section 11.6 Payments Set Aside
	 	 	80	 
	Section 11.7 Successors and Assigns
	 	 	80	 
	Section 11.8 Confidentiality
	 	 	84	 
	Section 11.9 Set-off
	 	 	84	 
	Section 11.10 Interest Rate Limitation
	 	 	85	 
	Section 11.11 Counterparts
	 	 	85	 
	Section 11.12 Integration
	 	 	85	 
	Section 11.13 Survival of Representations and Warranties
	 	 	86	 
	Section 11.14 Severability
	 	 	86	 
	Section 11.15 Tax Forms
	 	 	86	 

iii

 

	 	 	 	 	 
	Section 11.16 Governing Law
	 	 	88	 
	Section 11.17 Arbitration
	 	 	88	 
	Section 11.18 Waiver of Right to Trial by Jury
	 	 	89	 
	Section 11.19 Time of the Essence
	 	 	90	 
	    SIGNATURES
	 	 	S-1	 

iv

 

	
 	 	 
	SCHEDULES*	 	 
	 
	1.1
	 	
Existing Letters of Credit
		 	 
	2.1
	 	
Commitments and Pro Rata Shares
		 	 
	6.5
	 	
Existing Indebtedness
		 	 
	6.6
	 	
Litigation
		 	 
	6.9
	 	
Environmental Matters
		 	 
	6.13
	 	
Subsidiaries and Other Equity Investments
		 	 
	6.18
	 	
Intellectual Property Matters
		 	 
	6.20
	 	
Labor Matters
		 	 
	8.1
	 	
Existing Liens
		 	 
	8.4
	 	
Project “Nova” Asset Dispositions
		 	 
	11.2
	 	
Administrative Agent’s Office, Certain Addresses for Notices

	 	 	 
	EXHIBITS*	 	
 
	 	 	
Form of
	 	 	
 
	A
	 	
Committed Loan Notice
		 	 
	B
	 	
Swing Line Loan Notice
		 	 
	D
	 	
Note
		 	 
	E
	 	
Compliance Certificate
		 	 
	F
	 	
Assignment and Assumption
		 	 
	G
	 	
Opinion Matters

*     The registrant agrees to furnish, supplementally, a copy of omitted Schedules
and Exhibits A through G to the S.E.C., upon request.

v

 

CREDIT AGREEMENT

     This CREDIT AGREEMENT (“Agreement”) is entered into as of September 23,
2003, among SUNRISE SENIOR LIVING, INC., a Delaware corporation, formerly known
as Sunrise Assisted Living, Inc. (the “Borrower”), the Guarantors (defined
herein) each lender from time to time party hereto (collectively, the “Lenders”
and individually, a “Lender”), and BANK OF
AMERICA, N.A., as Administrative
Agent, Swing Line Lender and L/C Issuer.

     The Borrower has requested that the Lenders provide a revolving credit
facility, and the Lenders are willing to do so on the terms and conditions set
forth herein.

     In consideration of the mutual covenants and agreements herein contained,
the parties hereto covenant and agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

     Section 1.1 Defined Terms.

     As used in this Agreement, the following terms shall have the meanings set
forth below:

     “Administrative Agent” means Bank of America in its capacity as
administrative agent under any of the Loan Documents, or any successor
administrative agent.

     “Administrative Agent’s Office” means the Administrative Agent’s address
and, as appropriate, account as set forth on Schedule 11.2, or such other
address or account as the Administrative Agent may from time to time notify the
Borrower and the Lenders.

     “Administrative Questionnaire” means an Administrative Questionnaire in a
form supplied by the Administrative Agent.

     “Affiliate” means, with respect to any designated Person, any other
Person, (a) directly or indirectly owning or holding forty-one percent (41%) or
more of any equity interest in such designated Person, or (c) forty-one percent
(41%) or more of whose stock or other equity interest is directly or indirectly
owned or held by such designated Person.

     “Agent-Related Persons” means the Administrative Agent, together with its
Affiliates (including, in the case of Bank of America in its capacity as the
Administrative Agent, the Arranger), and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.

     “Aggregate Commitments” means the Commitments of all the Lenders.

     “Agreement” means this Credit Agreement.

     “Applicable Rate” means the following percentages per annum, based upon the
Consolidated Leverage Ratio as set forth in the most recent Compliance
Certificate received by the Administrative Agent pursuant to
Section 7.2(a):

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Applicable Rate
	 
	Pricing	 	Consolidated Adjusted	 	Unused Fee	 	Eurodollar	 	Base Rate
	Level	 	Leverage Ratio	 	(bps)	 	Rate +	 	+ bps
	
	 	
	 	
	 	
	 	

	1
	 	 	< 1.75:1	 	 	 	25	 	 	 	175	 	 	 	25	 
	2
	 	31.75:1 but < 2.50:1	 	 	25	 	 	 	200	 	 	 	50	 
	3
	 	32.50:1 but < 3.25:1	 	 	37.5	 	 	 	225	 	 	 	75	 
	4
	 	33.25:1 but < 4.00:1	 	 	37.5	 	 	 	250	 	 	 	100	 
	5
	 	 	3 4.00:1	 	 	 	45	 	 	 	300	 	 	 	150	 

     Any increase or decrease in the Applicable Rate resulting from a change in the
Consolidated Adjusted Leverage Ratio shall become effective as of the first
Business Day immediately following the date a Compliance Certificate is
delivered pursuant to Section 7.2(a); provided, however, that if a Compliance
Certificate is not delivered when due in accordance with such Section, then
Pricing Level 5 shall apply as of the first Business Day after the date on
which such Compliance Certificate was required to have been delivered. The
Applicable Rate in effect from the Closing Date through September 30, 2003
shall be determined based upon Pricing Level 5.

     “Arranger” means, collectively, BAS and Fleet Securities, Inc., in their
capacity as joint lead arranger and joint book manager.

     “Assignment and Assumption” means an Assignment and Assumption
substantially in the form of Exhibit F.

     “Attorney Costs” means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel.

     “Audited Financial Statements” means the audited consolidated balance
sheet of the Borrower and its Subsidiaries for the fiscal year ended December
31, 2002, and the related consolidated statements of income or operations,
shareholders’ equity and cash flows for such fiscal year of the Borrower and
its Subsidiaries, including the notes thereto.

     “Availability Period” means the period from and including the Closing Date
to the earliest of (a) the Maturity Date, (b) the date of termination of the
Aggregate Commitments pursuant to Section 2.6, and (c) the date of termination
of the commitment of each Lender to make Loans and of the obligation of the L/C
Issuer to make L/C Credit Extensions pursuant to Section 9.2.

     “Bank of America” means Bank of America, N.A. and its successors.

     “BAS” means Banc of America Securities LLC and its successors.

     “Base Rate” means for any day a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of
interest in effect for such day as publicly announced from time to time by Bank
of America as its “prime rate.” The “prime rate” is a rate set by Bank of
America based upon various factors including Bank of America’s costs and
desired return, general economic conditions and other factors, and is used as a
reference point for

2

 

pricing some loans, which may be priced at, above, or below
such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening
of business on the day specified in the public announcement of such change.

     “Base Rate Committed Loan” means a Committed Loan that is a Base Rate
Loan.

     “Base Rate Loan” means a Loan that bears interest based on the Base Rate.

     “Borrower” has the meaning specified in the introductory paragraph hereto.

     “Borrowing” means a Committed Borrowing, or a Swing Line Borrowing, as the
context may require.

     “Business Day” means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized to close under the Laws of, or are in
fact closed in, the state where the Administrative Agent’s Office is located
and, if such day relates to any Eurodollar Rate Loan, means any such day on
which dealings in Dollar deposits are conducted by and between banks in the
London interbank eurodollar market.

     “Cash Collateralize” has the meaning specified in Section 2.3(g).

     “Change of Control” means, with respect to any Person, an event or series
of events by which any “person” or “group” (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any
employee benefit plan of such person or its subsidiaries, and any person or
entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan) becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a
person or group shall be deemed to have “beneficial ownership” of all
securities that such person or group has the right to acquire (such right, an
“option right”), whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of 30% or more of the equity
securities of such Person entitled to vote for members of the board of
directors or equivalent governing body of such Person on a fully-diluted basis
(and taking into account all such securities that such person or group has the
right to acquire pursuant to any option right.

     “Closing Date” means the first date all the conditions precedent in
Section 5.1 are satisfied or waived in accordance with
Section 5.1 (or, in the
case of Section 5.1(b), waived by the Person entitled to receive the applicable
payment).

     “Code” means the Internal Revenue Code of 1986.

     “Collateral” means the Collateral as defined in the Security Agreements.

     “Commitment” means, as to each Lender, its obligation to (a) make
Committed Loans to the Borrower pursuant to Section 2.1, (b) purchase
participations in L/C Obligations, and (c) purchase participations in Swing
Line Loans, in an aggregate principal amount at any one time outstanding not to
exceed the amount set forth opposite such Lender’s name on Schedule 2.1 or in
the Assignment and Assumption pursuant to which such Lender becomes a party
hereto, as

3

 

applicable, as such amount may be adjusted from time to time in
accordance with this Agreement.

     “Committed Borrowing” means a borrowing consisting of simultaneous
Committed Loans of the same Type and, in the case of Eurodollar Rate Committed
Loans, having the same Interest Period made by each of the Lenders pursuant to
Section 2.1.

     “Committed Loan” has the meaning specified in Section 2.1.

     “Committed Loan Notice” means a notice of (a) a Committed Borrowing, (b) a
conversion of Committed Loans from one Type to the other, or (c) a continuation
of Eurodollar Rate Committed Loans, pursuant to Section 2.2(a), which, if in
writing, shall be substantially in the form of Exhibit A.

     “Compliance Certificate” means a certificate substantially in the form of
Exhibit E.

     “Consolidated EBITDA” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the sum of: (a) (i) net income; (ii)
Consolidated Interest Expense; (iii) income taxes; (iv) depreciation and
amortization; (v) the non-cash component of any unusual or non-recurring item
of loss or expense which was deducted in determining net income, and (vi)
minority interest (assuming it was deducted in the calculation of net income)
in each case for the Borrower and its Subsidiaries on a consolidated basis (in
accordance with GAAP) minus (b) any gains included in determining net income
(including gains on property sales).

     “Consolidated EBITDAR” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the sum of: (a) Consolidated EBITDA plus
(b) rent paid or payable under all operating leases as determined in accordance
with GAAP.

     “Consolidated Interest Expense” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, total interest expense (whether paid,
accrued or capitalized), including the amortization of debt discounts and
premiums as well as the interest component under capital leases, on a
consolidated basis in accordance with GAAP. However, Consolidated Interest
Expense will specifically exclude unamortized loan fees arising from the
Existing SEAL Credit Facility and the Existing Marriott Credit Facility.
Furthermore, capitalized interest will only include capitalized interest on
construction or development loans.

     “Consolidated Net Worth” means, for any period, for the Borrower and its
Subsidiaries, on a consolidated basis, shareholders’ equity of the Borrower and
its Subsidiaries on a consolidated basis in accordance with GAAP.

     “Continuing Care Retirement Community” means a Senior Living Facility which
provides or arranges housing and health-related services that are effective for
the life of the resident or for an extended, specified period in excess of one
year, including mutually terminable contracts, in consideration for the payment
of an entrance fee, which services are provided on a comprehensive continuum of
care basis which includes a skilled nursing facility.

4

 

     “Contractual Obligation” means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.

     “Control” has the meaning specified in the definition of “Affiliate.”

     “Convertible Debt” means $125,000,000 convertible subordinated notes of
the Borrower due February 1, 2009.

     “Credit Extension” means each of the following: (a) a Borrowing and (b) an
L/C Credit Extension.

     “Credit Facility” means collectively, revolving credit facility, the Swing
Line and the Letter of Credit facility.

     “Debtor Relief Laws” means the Bankruptcy Code of the United States, and
all other liquidation, conservatorship, bankruptcy, assignment for the benefit
of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights
of creditors generally.

     “Default” means any event or condition that constitutes an Event of
Default or that, with the giving of any notice, the passage of time, or both,
would be an Event of Default.

     “Default Rate” means an interest rate equal to (a) the Base Rate plus (b)
the Applicable Rate, if any, applicable to Base Rate Loans plus (c) 3% per
annum; to the fullest extent permitted by applicable Laws.

     “Defaulting Lender” means any Lender that (a) has failed to fund any
portion of the Committed Loans, participations in L/C Obligations or
participations in Swing Line Loans required to be funded by it hereunder within
one Business Day of the date required to be funded by it hereunder, (b) has
otherwise failed to pay over to the Administrative Agent or any other Lender
any other amount required to be paid by it hereunder within one Business Day of
the date when due, unless the subject of a good faith dispute, or (c) has been
deemed insolvent or taken advantage of any Debtor Relief Laws.

     “Development Joint Venture Investments” means (a) Investments which are
(i) less than 50% owned and unconsolidated by any of the Loan Parties and (ii)
have a ratio of EBITDAR to Fixed Obligations of less than 1.20 to 1.0 for any
fiscal quarter plus (b) any amounts funded by any of the Loan Parties under
operating deficit guaranties or construction completion guaranties.

     “Disposition” or “Dispose” means the sale, transfer, license, lease or
other disposition (including any sale and leaseback transaction) of any
property by any Person, including any sale, assignment, transfer or other
disposal, with or without recourse, of any notes or accounts receivable or any
rights and claims associated therewith.

     “Dollar” and “$” mean lawful money of the United States.

5

 

     “Domestic Subsidiary” means any Subsidiary that is organized under the
laws of any political subdivision of the United States.

     “Eligible Assignee” has the meaning specified in Section 11.7(g).

     “Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.

     “Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation,
fines, penalties or indemnities), of the Borrower, any other Loan Party or any
of their respective Subsidiaries directly or indirectly resulting from or based
upon (a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or other consensual
arrangement pursuant to which liability is assumed or imposed with respect to
any of the foregoing.

     “ERISA” means the Employee Retirement Income Security Act of 1974.

     “ERISA Affiliate” means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).

     “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan
is in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower
or any ERISA Affiliate.

     “Eurodollar Rate” means for any Interest Period with respect to any
Eurodollar Rate Loan:

		
	 	     (a) the rate per annum equal to the rate determined by the
Administrative Agent to be the offered rate that appears on the
page of the

6

 

		
	 	Telerate screen (or any successor thereto) that
displays an average British Bankers Association Interest
Settlement Rate for deposits in Dollars (for delivery on the first
day of such Interest Period) with a term equivalent to such
Interest Period, determined as of approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest
Period, or

		
	 	     (b) if the rate referenced in the preceding clause (a) does not
appear on such page or service or such page or service shall not be
available, the rate per annum equal to the rate determined by the
Administrative Agent to be the offered rate on such other page or
other service that displays an average British Bankers Association
Interest Settlement Rate for deposits in Dollars (for delivery on
the first day of such Interest Period) with a term equivalent to
such Interest Period, determined as of approximately 11:00 a.m.
(London time) two (2) Business Days prior to the first day of such
Interest Period, or

		
	 	     (c) if the rates referenced in the preceding clauses (a) and
(b) are not available, the rate per annum determined by the
Administrative Agent as the rate of interest at which deposits in
Dollars for delivery on the first day of such Interest Period in
same day funds in the approximate amount of the Eurodollar Rate Loan
being made, continued or converted by Bank of America and with a
term equivalent to such Interest Period would be offered by Bank of
America’s London Branch to major banks in the London interbank eurodollar market
at their request at approximately 4:00 p.m. (London time) two (2)
Business Days prior to the first day of such Interest Period.

     “Eurodollar Rate Committed Loan” means a Committed Loan that bears
interest at a rate based on the Eurodollar Rate.

     “Eurodollar Rate Loan” means a Eurodollar Rate Committed Loan.

     “Event of Default” has the meaning specified in Section 9.1.

     “Existing Credit Agreements” means collectively, the Existing SEAL Credit
Agreement and the Existing Marriott Credit Agreement.

     “Existing Letters of Credit” means the Letters of Credit listed on
Schedule 1.1.

     “Existing Marriott Credit Agreement” means that certain Financing
Agreement dated as of March 24, 2003 as amended by that certain First Amendment
to Financing Agreement dated as of March 31, 2003 by and between the Borrower
and Bank of America, N.A.

     “Existing SEAL Credit Agreement” means that certain Fourth Amended and
Restated Financing and Security Agreement dated as of June 13, 2001 as amended
by that certain First Amendment to Fourth Amended and Restated Financing and
Security Agreement dated December 19, 2002 among Sunrise East Assisted Living
Limited Partnership and certain wholly owned Subsidiaries of the Borrower, Bank
of America, N.A., as agent for a syndicate of lenders.

7

 

     “Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of
America on such day on such transactions as determined by the Administrative
Agent.

     “Fee Letter” means the letter agreement, dated May 20, 2003 as amended,
among the Borrower, the Administrative Agent and BAS.

     “Fixed Charges” means, for any period, for the Borrower and its Subsidiaries on
a consolidated basis, the sum of: (a) Consolidated Interest Expense, (b)
scheduled payments of principal on Total Funded Indebtedness (excluding balloon
payments), (c) rent payable under all operating leases (other than capital
leases) as determined in accordance with GAAP, and (d) dividends payable on
preferred stock (if any).

     “Fixed Obligations” means during any period, the sum of rent, management
fees, debt service and taxes due.

     “Foreign Lender” has the meaning specified in Section 11.15(i).

     “FRB” means the Board of Governors of the Federal Reserve System of the
United States.

     “GAAP” means generally accepted accounting principles in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

     “Governmental Authority” means any nation or government, any international
organization, any state or other political subdivision thereof, any agency,
authority, instrumentality, regulatory body, court, administrative tribunal,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

     “Guarantee” means, as to any Person, any (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the

8

 

purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person. The amount of any Guarantee shall be
deemed to be an amount equal to the stated or determinable amount of the
related primary obligation, or portion thereof, in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the guaranteeing
Person in good faith. The term “Guarantee” as a verb has a corresponding
meaning. The term “Guarantee” shall not include agreements to complete
construction or agreements to loan or advance funds to cover operating
deficits.

     “Guarantors” means, collectively, Sunrise Senior Living Management, Inc.
(f/k/a Sunrise Assisted Living Management, Inc.), a Virginia corporation,
Sunrise Senior Living Investments, Inc. (f/k/a Sunrise Assisted Living
Investments, Inc.), a Virginia corporation, Sunrise Development, Inc., a
Virginia corporation and Sunrise Senior Living Services, Inc. (f/k/a Marriott
Senior Living Services, Inc.), a Delaware corporation and such other Material
Subsidiaries of the Borrower as may be added as Guarantors from time to time in
compliance with the covenants set forth in Section 6.13 hereof.

     “Guaranty” means the Guaranty made by the Guarantors in favor of the
Administrative Agent on behalf of the Lenders, pursuant to Article IV hereof.

     “Hazardous Materials” means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos-containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any
nature regulated pursuant to any Environmental Law.

     “Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

		
	 	     (a) obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes,
loan agreements or other similar instruments;

		
	 	     (b) all direct or contingent obligations of such Person
arising under letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds and similar
instruments;

		
	 	     (c) indebtedness (excluding prepaid interest thereon) secured
by a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or other
title retention agreements),

9

 

		
	 	whether or not such indebtedness shall
have been assumed by such Person or is limited in recourse;
	 
	 	     (d) capital leases and Synthetic Lease Obligations; and
	 
	 	     (e) all Guarantees of such Person which can be quantified
under GAAP in respect of any of the foregoing.

     “Indemnified
Liabilities” has the meaning set forth in Section 11.5.

     “Indemnitees”
has the meaning set forth in  Section 11.5.

     “Interest Payment Date” means, (a) as to any Loan other than a Base Rate
Loan, the last day of each Interest Period applicable to such Loan and the
Maturity Date; provided, however, that if any Interest Period for a Eurodollar
Rate Loan exceeds three months, the respective dates that fall every three
months after the beginning of such Interest Period shall also be Interest
Payment Dates; and (b) as to any Base Rate Loan (including a Swing Line Loan),
the last Business Day of each March, June, September and December and the
Maturity Date.

     “Interest Period” means as to each Eurodollar Rate Loan, the period
commencing on the date such Eurodollar Rate Loan is disbursed or (in the case
of any Eurodollar Rate Committed Loan) converted to or continued as a
Eurodollar Rate Loan and ending on the date one, two, three or six months
thereafter, as selected by the Borrower in its Committed Loan Notice
provided
that:

		
	 	     (i) any Interest Period that would otherwise end on a day
that is not a Business Day shall be extended to the next
succeeding Business Day unless, in the case of a Eurodollar Rate
Loan, such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business
Day;

		
	 	     (ii) any Interest Period pertaining to a Eurodollar Rate Loan
that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last Business Day of
the calendar month at the end of such Interest Period; and

		
	 	     (iii) no Interest Period shall extend beyond the Maturity
Date.

     “Investment” means, as to any Person, any direct or indirect acquisition
or investment by such Person, whether by means of (a) the purchase or other
acquisition of capital stock or other securities of another Person, (b) a loan,
advance or capital contribution to, Guarantee or assumption of debt of, or
purchase or other acquisition of any other debt or equity participation or
interest in, another Person, including any partnership or joint venture
interest in such other Person, or (c) the purchase or other acquisition (in one
transaction or a series of transactions) of assets of another Person that
constitute a business unit. For purposes of covenant compliance,

10

 

the amount of
any Investment shall be the carrying value of such Investment determined in
accordance with GAAP.

     “IP Rights” has the meaning set forth in Section 6.18.

     “IRS” means the United States Internal Revenue Service.

     “Laws” means, collectively, all international, foreign, Federal, state and
local statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

     “L/C Advance” means, with respect to each Lender, such Lender’s funding of
its participation in any L/C Borrowing in accordance with its Pro Rata Share.

     “L/C Borrowing” means an extension of credit resulting from a drawing
under any Letter of Credit which has not been reimbursed on the date when made
or refinanced as a Committed Borrowing.

     “L/C Credit Extension” means, with respect to any Letter of Credit, the
issuance thereof or extension of the expiry date thereof, or the renewal or
increase of the amount thereof.

     “L/C Issuer” means Bank of America in its capacity as issuer of Letters of
Credit hereunder, or any successor issuer of Letters of Credit hereunder.

     “L/C Obligations” means, as at any date of determination, the aggregate
undrawn amount of all outstanding Letters of Credit plus the aggregate of all
Unreimbursed Amounts, including all L/C Borrowings.

     “Lender” has the meaning specified in the introductory paragraph hereto
and, as the context requires, includes the L/C Issuer and the Swing Line
Lender.

     “Lending Office” means, as to any Lender, the office or offices of such
Lender described as such in such Lender’s Administrative Questionnaire, or such
other office or offices as a Lender may from time to time notify the Borrower
and the Administrative Agent.

     “Letter of Credit” means any standby letter of credit issued hereunder and
shall include the Existing Letters of Credit.

     “Letter of Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in
use by the L/C Issuer.

     “Letter of Credit Expiration Date” means the day that is thirty-seven (37)
days prior to the Maturity Date then in effect (or, if such day is not a
Business Day, the next preceding Business Day).

11

 

     “Letter of Credit Sublimit” means an amount equal to $75,000,000. The
Letter of Credit Sublimit is part of, and not in addition to, the Aggregate
Commitments.

     “Licenses” means any and all licenses, certificates of need, operating
permits, franchises, and other licenses, authorizations, certifications,
permits, or approvals, other than local zoning, development, subdivision, site
plan and similar construction permits, issued by, or on behalf of, any
Governmental Authority now existing or at any time hereafter issued, with
respect to the acquisition, construction, renovation, expansion, leasing,
management, ownership and/or operation of any and all Senior Living Facilities,
accreditation of any Senior Living Facility, and/or the participation or
eligibility for participation in any third party payment or reimbursement
programs to the extent any of the Borrowers are participating in such programs
(but specifically excluding any and all Participation Agreements to the extent
required by law), any and all operating licenses issued by any state
Governmental Authority, any and all pharmaceutical licenses and other licenses
related to the purchase, dispensing, storage, prescription or use of drugs,
medications, and other “controlled substances,” any and all licenses relating
to the operation of food or beverage facilities or amenities, if any, and any
and all certifications and eligibility for participation in Medicare, Medicaid,
Blue Cross and/or Blue Shield, or any of the Managed Care Plans, private
insurer, employee assistance programs or other third party payment or
reimbursement programs as the same may from time to time be amended, renewed,
restated, reissued, restricted, supplemented or otherwise modified.

     “Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, and any financing lease having substantially the same economic
effect as any of the foregoing).

     “Lifecare Bond” means a surety bond, irrevocable letter of credit or other
financial assurance required by a Governmental Authority as evidence of the
financial responsibility of the owner or operator of a Continuing Care
Retirement Community.

     “Loan” means an extension of credit by a Lender to the Borrower under
Article II in the form of a Committed Loan or a Swing Line Loan.

     “Loan Documents” means this Agreement, each Note, the Fee Letter, and the
Guaranty.

     “Loan Parties” means, collectively, the Borrower and each Guarantor.

     “Material Adverse Effect” means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, liabilities
(actual or contingent), condition (financial or otherwise) or prospects of the
Borrower or the Borrower and its Subsidiaries taken as a whole; (b) a material
impairment of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse
effect upon the legality, validity, binding effect or enforceability against
any Loan Party of any Loan Document to which it is a party.

12

 

     “Material Subsidiary” means any direct or indirect domestic Subsidiary of
the Borrower which earns 10% or more of the Consolidated EBITDA or consolidated
assets of the Borrower.

     “Maturity Date” means the later of (a) three (3) years from the date
hereof and (b) if maturity is extended pursuant to Section 2.14, such extended
maturity date as determined pursuant to such Section.

     “Multiemployer Plan” means any employee benefit plan of the type described
in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate
makes or is obligated to make contributions, or during the preceding five plan
years, has made or been obligated to make contributions.

     “Note” means a promissory note made by the Borrower in favor of a Lender
evidencing Loans made by such Lender, substantially in the form of Exhibit D.

     “Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan, Letter of Credit or Swap Contract, whether
direct or indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter arising and
including interest and fees that accrue after the commencement by or against
any Loan Party or any Affiliate thereof of any proceeding under any Debtor
Relief Laws naming such Person as the debtor in such proceeding, regardless of
whether such interest and fees are allowed claims in such proceeding.

     “Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

     “Outstanding Amount” means (i) with respect to Committed Loans and Swing
Line Loans on any date, the aggregate outstanding principal amount thereof
after giving effect to any borrowings and prepayments or repayments of
Committed Loans and Swing Line Loans, as the case may be, occurring on such
date; and (ii) with respect to any L/C Obligations on any date, the amount of
such L/C Obligations on such date after giving effect to any L/C Credit
Extension occurring on such date and any other changes in the aggregate amount
of the L/C Obligations as of such date, including as a result of any
reimbursements of outstanding unpaid drawings under any Letters of Credit or
any reductions in the maximum amount available for drawing under Letters of
Credit taking effect on such date.

     “Participant” has the meaning specified in Section 11.7(d).

13

 

     “Participation Agreements” means any and all third party payor
participation or reimbursement agreements now or at any time hereafter existing
for the benefit of any of the Loan Parties relating to rights to payment or
reimbursement from, and claims against, private insurers, managed care plans,
material employee assistance programs, Blue Cross and/or Blue Shield, federal,
state and local Governmental Authorities, including without limitation,
Medicare and Medicaid, and other third party payors, as the same may from time
to time be amended, restated, extended, supplemented or modified.

     “PBGC” means the Pension Benefit Guaranty Corporation.

     “Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Borrower or
any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer or
other plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.

     “Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

     “Plan” means any “employee benefit plan” (as such term is defined in
Section 3(3) of ERISA) established by the Borrower or, with respect to any such
plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.

     “Pro Rata Share” means, with respect to each Lender at any time, a
fraction (expressed as a percentage, carried out to the ninth decimal place),
the numerator of which is the amount of the Commitment of such Lender at such
time and the denominator of which is the amount of the Aggregate Commitments at
such time; provided that if the commitment of each Lender to make Loans and the
obligation of the L/C Issuer to make L/C Credit Extensions have been terminated
pursuant to Section 9.2, then the Pro Rata Share of each Lender shall be
determined based on the Pro Rata Share of such Lender immediately prior to such
termination and after giving effect to any subsequent assignments made pursuant
to the terms hereof. The initial Pro Rata Share of each Lender is set forth
opposite the name of such Lender on Schedule 2.1 or in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable.

     “Register” has the meaning set forth in Section 11.7(c).

     “Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.

     “Request for Credit Extension” means (a) with respect to a Borrowing,
conversion or continuation of Committed Loans, a Committed Loan Notice, (b)
with respect to an L/C Credit Extension, a Letter of Credit Application, and
(c) with respect to a Swing Line Loan, a Swing Line Loan Notice.

     “Required Lenders” means, as of any date of determination, Lenders having
more than 50% of the Aggregate Commitments or, if the commitment of each Lender
to make Loans and

14

 

the obligation of the L/C Issuer to make L/C Credit Extensions have been
terminated pursuant to Section 9.2, Lenders holding in the
aggregate more than 50% of the Total Outstandings (with the aggregate amount of
each Lender’s risk participation and funded participation in L/C Obligations
and Swing Line Loans being deemed “held” by such Lender for purposes of this
definition); provided that the Commitment of, and the
portion of the Total Outstandings held or deemed held by, any Defaulting Lender
shall be excluded for purposes of making a determination of Required Lenders.

     “Responsible Officer” means the chief executive
officer, president, chief financial officer, senior vice president, treasurer
or assistant treasurer of a Loan Party. Any document delivered hereunder that
is signed by a Responsible Officer of a Loan Party shall be conclusively
presumed to have been authorized by all necessary corporate, partnership and/or
other action on the part of such Loan Party and such Responsible Officer shall
be conclusively presumed to have acted on behalf of such Loan Party.

     “Restricted Payment” means any dividend or other
distribution (whether in cash, securities or other property) with respect to
any capital stock or other equity interest of the Borrower or any Subsidiary,
or any payment (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any such capital stock
or other equity interest or of any option, warrant or other right to acquire
any such capital stock or other equity interest.

     “SEAL Credit Facility” means the credit facility made
available to certain Subsidiaries of that Borrower pursuant to the Existing
SEAL Credit Agreement.

     “SEC” means the Securities and Exchange Commission, or
any Governmental Authority succeeding to any of its principal functions.

     “Security Agreements” means, the Pledge, Assignment and
Security Agreement of even date herewith by and between the Borrower and the
Administrative Agent on behalf of the Lenders and any other assignment, pledge
agreement, security agreement, mortgage, deed of trust, leasehold mortgage,
leasehold deed of trust, deed to secure debt, financing statement, initial
transaction statement and any similar instrument, document or agreement under
or pursuant to which a Lien is now or hereafter granted to, or for the benefit
of, the Lenders on any collateral to secure the Obligations, as the same may
from time to time be amended, restated, supplemented or otherwise modified.

     “Senior Living Facility” and “Senior Living
Facilities” means individually or collectively an assisted living
facility, an independent living facility, a dementia care facility for persons
with Alzheimer’s disease and other forms of memory impairment, a skilled
nursing facility containing residential units and common facilities or a
Continuing Care Retirement Community, which is managed by a Loan Party pursuant
to a Management Agreement.

     “Shareholders’ Equity” means, as of any date of
determination, consolidated shareholders’ equity of the Borrower and its
Subsidiaries as of that date determined in accordance with GAAP.

15

 

     “Subsidiary” of a Person means a corporation,
partnership, joint venture, limited liability company or other business entity
of which a majority of the shares of securities or other interests having
ordinary voting power for the election of directors or other governing body
(other than securities or interests having such power only by reason of the
happening of a contingency) are at the time beneficially owned, or the
management of which is otherwise controlled, directly, or indirectly through
one or more intermediaries, or both, by such Person. Unless otherwise
specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall
refer to a Subsidiary or Subsidiaries of the Borrower.

     “Swap Contract” means (a) any and all rate swap
transactions, basis swaps, credit derivative transactions, forward rate
transactions, commodity swaps, commodity options, forward commodity contracts,
equity or equity index swaps or options, bond or bond price or bond index swaps
or options or forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange transactions, cap
transactions, floor transactions, collar transactions, currency swap
transactions, cross-currency rate swap transactions, currency options, spot
contracts, or any other similar transactions or any combination of any of the
foregoing (including any options to enter into any of the foregoing), whether
or not any such transaction is governed by or subject to any master agreement,
and (b) any and all transactions of any kind, and the related confirmations,
which are subject to the terms and conditions of, or governed by, any form of
master agreement published by the International Swaps and Derivatives
Association, Inc., any International Foreign Exchange Master Agreement, or any
other master agreement (any such master agreement, together with any related
schedules, a “Master Agreement”), including any such
obligations or liabilities under any Master Agreement.

     “Swap Termination Value” means, in respect of any one
or more Swap Contracts, after taking into account the effect of any legally
enforceable netting agreement relating to such Swap Contracts, (a) for any date
on or after the date such Swap Contracts have been closed out and termination
value(s) determined in accordance therewith, such termination value(s), and (b)
for any date prior to the date referenced in clause (a), the amount(s)
determined as the mark-to-market value(s) for such Swap Contracts, as
determined based upon one or more mid-market or other readily available
quotations provided by any recognized dealer in such Swap Contracts (which may
include a Lender or any Affiliate of a Lender).

     “Swing Line” means the revolving credit facility made
available by the Swing Line Lender pursuant to Section 2.4.

     “Swing Line Borrowing” means a borrowing of a Swing
Line Loan pursuant to Section 2.4.

     “Swing Line Lender” means Bank of America in its
capacity as provider of Swing Line Loans, or any successor swing line lender
hereunder.

     “Swing Line Loan” has the meaning specified in
Section 2.4(a).

     “Swing Line Loan Notice” means a notice of a Swing Line
Borrowing pursuant to Section 2.4(b), which, if in writing,
shall be substantially in the form of Exhibit B.

16

 

     “Swing Line Sublimit” means an amount equal to ten
percent (10%) of the Aggregate Commitments. The Swing Line Sublimit is part
of, and not in addition to, the Aggregate Commitments.

     “Threshold Amount” means $2,000,000.

     “Total Funded Indebtedness” means, for any period, for the
Borrower and its Subsidiaries on a consolidated basis, all Indebtedness and
Guarantees, but excluding all development completion guarantees and operating
deficit guarantees (which will be captured in the limitation on Development
Joint Venture Investments), purchase obligations treated as liabilities per
GAAP, subordinated debt, unfunded obligations (including total Lifecare Bond
obligations at GAAP book value) (all as defined in accordance with GAAP).
Total Funded Indebtedness shall not include security deposits, accounts
payable, accrued liabilities and prepaid rent. However, Total Funded
Indebtedness will be reduced by unrestricted cash balances in excess of
$50,000,000.

     “Total Outstandings” means the aggregate Outstanding
Amount of all Loans and all L/C Obligations.

     “Type” means with respect to a Committed Loan, its
character as a Base Rate Loan or a Eurodollar Rate Loan.

     “Unfunded Pension Liability” means the excess of a
Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the
current value of that Pension Plan’s assets, determined in accordance with the
assumptions used for funding the Pension Plan pursuant to Section 412 of the
Code for the applicable plan year.

     “United States” and “U.S.” mean the
United States of America.

     “Unreimbursed Amount” has the meaning set forth in
Section 2.3(c)(i).

     Section 1.2 Other Interpretive Provisions.

     With reference to this Agreement and each other Loan Document,
unless otherwise specified herein or in such other Loan Document:

          (a) The meanings of defined terms are equally applicable to the singular
and plural forms of the defined terms.

          (b) (i) The words “herein,”
“hereto,” “hereof” and
“hereunder” and words of similar import when used in any
Loan Document shall refer to such Loan Document as a whole and not to any
particular provision thereof.

		
	 	         (ii) Article, Section, Exhibit and Schedule references are to the
Loan Document in which such reference appears.
	 
	 	         (iii) The term “including” is by way of example
and not limitation.

17

 

		
	 	     (iv) The term “documents” includes any and all
instruments, documents, agreements, certificates, notices, reports,
financial statements and other writings, however evidenced, whether in
physical or electronic form.

          (c) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and
including;” the words “to” and
“until” each mean “to but excluding;” and
the word “through” means “to and
including.”

          (d) Section headings herein and in the other Loan Documents are included
for convenience of reference only and shall not affect the interpretation of
this Agreement or any other Loan Document.

     Section 1.3 Accounting Terms.

          (a) All accounting terms not specifically or completely defined
herein shall be construed in conformity with, and all financial data (including
financial ratios and other financial calculations) required to be submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP applied
on a consistent basis, as in effect from time to time, applied in a manner
consistent with that used in preparing the Audited Financial Statements,
except as otherwise specifically prescribed herein.

          (b) If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Loan Document, and either the
Borrower or the Required Lenders shall so request, the Administrative Agent,
the Lenders and the Borrower shall negotiate in good faith to amend such ratio
or requirement to preserve the original intent thereof in light of such change
in GAAP (subject to the approval of the Required Lenders);
provided that, until so amended, (i) such
ratio or requirement shall continue to be computed in accordance with GAAP
prior to such change therein and (ii) the Borrower shall provide to the
Administrative Agent and the Lenders financial statements and other documents
required under this Agreement or as reasonably requested hereunder setting
forth a reconciliation between calculations of such ratio or requirement made
before and after giving effect to such change in GAAP.

     Section 1.4 Rounding.

     Any financial ratios required to be maintained by the Borrower
pursuant to this Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than
the number of places by which such ratio is expressed herein and rounding the
result up or down to the nearest number (with a rounding-up if there is no
nearest number).

18

 

     Section 1.5 References to Agreements and Laws.

     Unless otherwise expressly provided herein, (a) references to
Organization Documents, agreements (including the Loan Documents) and other
contractual instruments shall be deemed to include all subsequent amendments,
restatements, extensions, supplements and other modifications thereto, but only
to the extent that such amendments, restatements, extensions, supplements and
other modifications are not prohibited by any Loan Document; and (b) references
to any Law shall include all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting such Law.

     Section 1.6 Times of Day.

     Unless otherwise specified, all references herein to times of
day shall be references to Eastern time (daylight or standard, as applicable).

     Section 1.7 Letter of Credit Amounts.

     Unless otherwise specified, all references herein to the amount of a
Letter of Credit at any time shall be deemed to mean the maximum face amount of
such Letter of Credit after giving effect to all increases thereof contemplated
by such Letter of Credit or the Letter of Credit Application therefor, whether
or not such maximum face amount is in effect at such time.

ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

     Section 2.1 Committed Loans.

     Subject to the terms and conditions set forth herein, each
Lender severally agrees to make loans (each such loan, a “Committed
Loan”) to the Borrower from time to time, on any Business Day during
the Availability Period, in an aggregate amount not to exceed at any time
outstanding the amount of such Lender’s Commitment;
provided, however, that after giving
effect to any Committed Borrowing, (i) the Total Outstandings shall not exceed
the Aggregate Commitments, and (ii) the aggregate Outstanding Amount of the
Committed Loans of any Lender, plus such Lender’s Pro Rata
Share of the Outstanding Amount of all L/C Obligations, plus
such Lender’s Pro Rata Share of the Outstanding Amount of all Swing Line Loans
shall not exceed such Lender’s Commitment. Within the limits of each Lender’s
Commitment, and subject to the other terms and conditions hereof, the Borrower
may borrow under this Section 2.1, prepay under
Section 2.5, and reborrow under this Section
2.1. Committed Loans may be Base Rate Loans or Eurodollar Rate
Loans, as further provided herein.

     Section 2.2 Borrowings, Conversions and Continuations of
Committed Loans.

          (a) Each Committed Borrowing, each conversion of Committed Loans
from one Type to the other, and each continuation of Eurodollar Rate Committed
Loans shall be made upon the Borrower’s irrevocable notice to the
Administrative Agent, which may be given by telephone. Each such notice must
be received by the Administrative Agent not later than 11:00 a.m. (i) three (3)
Business Days prior to the requested date of any Borrowing of, conversion to or
continuation of Eurodollar Rate Committed Loans or of any conversion of
Eurodollar Rate Committed Loans to Base Rate Committed Loans, and (ii) on the
requested date of any

19

 

Borrowing of Base Rate Committed Loans. Each telephonic
notice by the Borrower
pursuant to this Section 2.2(b) must be confirmed
promptly by delivery to the Administrative Agent of a written Committed Loan
Notice, appropriately completed and signed by a Responsible Officer of the
Borrower. Each Borrowing of, conversion to or continuation of Eurodollar Rate
Committed Loans shall be in a principal amount of $1,000,000 or a whole
multiple of $1,000,000 in excess thereof. Except as provided in
Section 2.3(c) and Section 2.4(c), each
Borrowing of or conversion to Base Rate Committed Loans shall be in a principal
amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each
Committed Loan Notice (whether telephonic or written) shall specify (i) whether
the Borrower is requesting a Committed Borrowing, a conversion of Committed
Loans from one Type to the other, or a continuation of Eurodollar Rate
Committed Loans, (ii) the requested date of the Borrowing, conversion or
continuation, as the case may be (which shall be a Business Day), (iii) the
principal amount of Committed Loans to be borrowed, converted or continued,
(iv) the Type of Committed Loans to be borrowed or to which existing Committed
Loans are to be converted, and (v) if applicable, the duration of the Interest
Period with respect thereto. If the Borrower fails to specify a Type of
Committed Loan in a Committed Loan Notice or if the Borrower fails to give a
timely notice requesting a conversion or continuation, then the applicable
Committed Loans shall be made as, or converted to, Base Rate Loans. Any such
automatic conversion to Base Rate Loans shall be effective as of the last day
of the Interest Period then in effect with respect to the applicable Eurodollar
Rate Committed Loans. If the Borrower requests a Borrowing of, conversion to,
or continuation of Eurodollar Rate Committed Loans in any such Committed Loan
Notice, but fails to specify an Interest Period, it will be deemed to have
specified an Interest Period of one month.

          (b) Following receipt of a Committed Loan Notice, the Administrative Agent
shall promptly notify each Lender of the amount of its Pro Rata Share of the
applicable Committed Loans, and if no timely notice of a conversion or
continuation is provided by the Borrower, the Administrative Agent shall notify
each Lender of the details of any automatic conversion to Base Rate Loans
described in the preceding subsection. In the case of a Committed Borrowing,
each Lender shall make the amount of its Committed Loan available to the
Administrative Agent in immediately available funds at the Administrative
Agent’s Office not later than 1:00 p.m. on the Business Day specified in the
applicable Committed Loan Notice. Upon satisfaction of the applicable
conditions set forth in Section 5.1(e) (and, if such
Borrowing is the initial Credit Extension, Section 5.1), the
Administrative Agent shall make all funds so received available to the Borrower
in like funds as received by the Administrative Agent either by (i) crediting
the account of the Borrower on the books of Bank of America with the amount of
such funds or (ii) wire transfer of such funds, in each case in accordance with
instructions provided to (and reasonably acceptable to) the Administrative
Agent by the Borrower; provided, however,
that if, on the date the Committed Loan Notice with respect to such Borrowing
is given by the Borrower, there are Swing Line Loans or L/C Borrowings
outstanding, then the proceeds of such Borrowing shall be applied,
first, to the payment in full of any such L/C Borrowings,
second, to the payment in full of any such Swing Line Loans,
and third, to the Borrower as provided above.

          (c) Except as otherwise provided herein, a Eurodollar Rate Committed Loan
may be continued or converted only on the last day of an Interest Period for
such Eurodollar Rate

20

 

Committed Loan. During the existence of a Default, no Loans may be
requested as, converted to or continued as Eurodollar Rate Committed Loans
without the consent of the Required Lenders.

          (d) The Administrative Agent shall promptly notify the Borrower and the
Lenders of the interest rate applicable to any Interest Period for Eurodollar
Rate Committed Loans upon determination of such interest rate. The
determination of the Eurodollar Rate by the Administrative Agent shall be
conclusive in the absence of manifest error. At any time that Base Rate Loans
are outstanding, the Administrative Agent shall notify the Borrower and the
Lenders of any change in Bank of America’s prime rate used in determining the
Base Rate promptly following the public announcement of such change.

          (e) After giving effect to all Committed Borrowings, all conversions of
Committed Loans from one Type to the other, and all continuations of Committed
Loans as the same Type, there shall not be more than five (5) Interest Periods
in effect with respect to Committed Loans.

     Section 2.3 Letters of Credit.

          (a) The Letter of Credit Commitment.

		
	 	     (i)     Subject to the terms and conditions set forth herein, (A)
the L/C Issuer agrees, in reliance upon the agreements of the
other Lenders set forth in this Section 2.3,
(1) from time to time on any Business Day during the period from
the Closing Date until the Letter of Credit Expiration Date, to
issue Letters of Credit for the account of the Borrower, and to
amend or renew Letters of Credit previously issued by it, in
accordance with subsection (b) below, and (2) to honor drafts
under the Letters of Credit; and (B) the Lenders severally agree
to participate in Letters of Credit issued for the account of the
Borrower; provided that the L/C Issuer shall
not be obligated to make any L/C Credit Extension with respect to
any Letter of Credit, and no Lender shall be obligated to
participate in any Letter of Credit if as of the date of such L/C
Credit Extension, (x) the Total Outstandings would exceed the
Aggregate Commitments, (y) the aggregate Outstanding Amount of the
Committed Loans of any Lender, plus such
Lender’s Pro Rata Share of the Outstanding Amount of all L/C
Obligations, plus such Lender’s Pro Rata Share
of the Outstanding Amount of all Swing Line Loans would exceed
such Lender’s Commitment, or (z) the Outstanding Amount of the L/C
Obligations would exceed the Letter of Credit Sublimit. Within
the foregoing limits, and subject to the terms and conditions
hereof, the Borrower’s ability to obtain Letters of Credit shall
be fully revolving, and accordingly the Borrower may, during the
foregoing period, obtain Letters of Credit to replace Letters of
Credit that have expired or that have been drawn upon and
reimbursed. All Existing Letters of Credit shall be deemed to
have been issued pursuant hereto, and from and after the Closing
Date shall be subject to and governed by the terms and conditions
hereof.

		
	 	     (ii)     The L/C Issuer shall be under no obligation to issue any
Letter of Credit if:

21

 

		
	 	     (A)     any order, judgment or decree of any
Governmental Authority or arbitrator shall by its
terms purport to enjoin or restrain the L/C Issuer
from issuing such Letter of Credit, or any Law
applicable to the L/C Issuer or any request or
directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over
the L/C Issuer shall prohibit, or request that the L/C
Issuer refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or
shall impose upon the L/C Issuer with respect to such
Letter of Credit any restriction, reserve or capital
requirement (for which the L/C Issuer is not otherwise
compensated hereunder) not in effect on the Closing
Date, or shall impose upon the L/C Issuer any
unreimbursed loss, cost or expense which was not
applicable on the Closing Date and which in any such
case the L/C Issuer in good faith deems material to
it;

		
	 	     (B)     subject to Section
2.3(b)(iii), the expiry date of such
requested Letter of Credit would occur more than
twelve months after the date of issuance or last
renewal, unless the Required Lenders have approved
such expiry date;

		
	 	     (C)     the expiry date of such requested Letter of
Credit would occur after the Letter of Credit
Expiration Date, unless all the Lenders have approved
such expiry date;

		
	 	     (D)     the issuance of such Letter of Credit would
violate one or more policies of the L/C Issuer; or

		
	 	     (E)     such Letter of Credit is denominated in a
currency other than Dollars; or

		
	 	     (F)     the L/C Issuer has not approved the purposes
for which the Letter of Credit is to be issued.

		
	 	     (iii)     The L/C Issuer shall be under no obligation to amend
any Letter of Credit if (A) the L/C Issuer would have no
obligation at such time to issue such Letter of Credit in its
amended form under the terms hereof, or (B) the beneficiary of
such Letter of Credit does not accept the proposed amendment to
such Letter of Credit.

          (b) Procedures for Issuance and Amendment of Letters of Credit;
Auto-Renewal Letters of Credit.

		
	 	     (i)     Each Letter of Credit shall be issued or amended, as the
case may be, upon the request of the Borrower delivered to the L/C
Issuer (with a copy to the Administrative Agent) in the form of a
Letter of Credit Application, appropriately completed and signed
by a Responsible Officer of the Borrower. Such Letter of Credit
Application must be received by the L/C Issuer and the
Administrative Agent not later than 11:00 a.m. at least two
Business Days (or such later date and time as the L/C Issuer may
agree in a particular instance in its

22

 

		
	 	sole discretion) prior to
the proposed issuance date or date of amendment, as the
case may be. In the case of a request for an initial
issuance of a Letter of Credit, such Letter of Credit Application
shall specify in form and detail satisfactory to the L/C Issuer:
(A) the proposed issuance date of the requested Letter of Credit
(which shall be a Business Day); (B) the amount thereof; (C) the
expiry date thereof; (D) the name and address of the beneficiary
thereof; (E) the documents to be presented by such beneficiary in
case of any drawing thereunder; (F) the full text of any
certificate to be presented by such beneficiary in case of any
drawing thereunder; and (G) such other matters as the L/C Issuer
may require. In the case of a request for an amendment of any
outstanding Letter of Credit, such Letter of Credit Application
shall specify in form and detail satisfactory to the L/C Issuer
(A) the Letter of Credit to be amended; (B) the proposed date of
amendment thereof (which shall be a Business Day); (C) the nature
of the proposed amendment; and (D) such other matters as the L/C
Issuer may require.

		
	 	     (ii)     Promptly after receipt of any Letter of Credit
Application, the L/C Issuer will confirm with the Administrative
Agent (by telephone or in writing) that the Administrative Agent
has received a copy of such Letter of Credit Application from the
Borrower and, if not, the L/C Issuer will provide the
Administrative Agent with a copy thereof. Upon receipt by the L/C
Issuer of confirmation from the Administrative Agent that the
requested issuance or amendment is permitted in accordance with
the terms hereof, then, subject to the terms and conditions
hereof, the L/C Issuer shall, on the requested date, issue a
Letter of Credit for the account of the Borrower or enter into the
applicable amendment, as the case may be, in each case in
accordance with the L/C Issuer’s usual and customary business
practices. Immediately upon the issuance of each Letter of
Credit, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the L/C Issuer a risk
participation in such Letter of Credit in an amount equal to the
product of such Lender’s Pro Rata Share times
the amount of such Letter of Credit.

		
	 	     (iii)     If the Borrower so requests in any applicable Letter of
Credit Application, the L/C Issuer may, in its sole and absolute
discretion, agree to issue a Letter of Credit that has automatic
renewal provisions (each, an “Auto-Renewal Letter of
Credit”); provided that any such
Auto-Renewal Letter of Credit must permit the L/C Issuer to
prevent any such renewal at least once in each twelve-month period
(commencing with the date of issuance of such Letter of Credit) by
giving prior notice to the beneficiary thereof not later than a
day (the “Non-renewal Notice Date”) in each
such twelve-month period to be agreed upon at the time such Letter
of Credit is issued. Unless otherwise directed by the L/C Issuer,
the Borrower shall not be required to make a specific request to
the L/C Issuer for any such renewal. Once an Auto-Renewal Letter
of Credit has been issued, the Lenders shall be deemed to have
authorized (but may not require) the L/C Issuer to permit the
renewal of such Letter of Credit at any time to an expiry date not
later than the Letter of Credit Expiration Date;
provided, however, that the
L/C Issuer shall not permit any such renewal if (A) the L/C Issuer
has

23

 

		
	 	determined that it would
have no obligation at such time to issue such Letter of
Credit in its renewed form under the terms hereof (by reason of
the provisions of Section 2.3(a)(ii) or
otherwise), or (B) it has received notice (which may be by
telephone or in writing) on or before the day that is five
Business Days before the Non-renewal Notice Date (1) from the
Administrative Agent that the Required Lenders have elected not to
permit such renewal or (2) from the Administrative Agent, any
Lender or the Borrower that one or more of the applicable
conditions specified in Section 5.1(e) is not
then satisfied.

		
	 	     (iv)     Promptly after its delivery of any Letter of Credit or
any amendment to a Letter of Credit to an advising bank with
respect thereto or to the beneficiary thereof, the L/C Issuer will
also deliver to the Borrower and the Administrative Agent a true
and complete copy of such Letter of Credit or amendment.

          (c) Drawings and Reimbursements; Funding of
Participations.

		
	 	     (i)     Upon receipt from the beneficiary of any Letter of Credit
of any notice of a drawing under such Letter of Credit, the L/C
Issuer shall notify the Borrower and the Administrative Agent
thereof. Not later than 11:00 a.m. on the date of any payment by
the L/C Issuer under a Letter of Credit (each such date, an
“Honor Date”), the Borrower shall reimburse the
L/C Issuer through the Administrative Agent in an amount equal to
the amount of such drawing. If the Borrower fails to so reimburse
the L/C Issuer by such time, the Administrative Agent shall
promptly notify each Lender of the Honor Date, the amount of the
unreimbursed drawing (the “Unreimbursed
Amount”), and the amount of such Lender’s Pro Rata Share
thereof. In such event, the Borrower shall be deemed to have
requested a Committed Borrowing of Base Rate Loans to be disbursed
on the Honor Date in an amount equal to the Unreimbursed Amount,
without regard to the minimum and multiples specified in
Section 2.2 for the principal amount of Base
Rate Loans, but subject to the amount of the unutilized portion of
the Aggregate Commitments and the conditions set forth in
Section 5.1(e) (other than the delivery of a
Committed Loan Notice). Any notice given by the L/C Issuer or the
Administrative Agent pursuant to this Section
2.3(c)(i) may be given by telephone if immediately
confirmed in writing; provided that the lack of
such an immediate confirmation shall not affect the conclusiveness
or binding effect of such notice.

		
	 	     (ii)     Each Lender (including the Lender acting as L/C Issuer)
shall upon any notice pursuant to Section
2.3(c)(i) make funds available to the Administrative
Agent for the account of the L/C Issuer at the Administrative
Agent’s Office in an amount equal to its Pro Rata Share of the
Unreimbursed Amount not later than 1:00 p.m. on the Business Day
specified in such notice by the Administrative Agent, whereupon,
subject to the provisions of Section
2.3(c)(iii), each Lender that so makes funds available
shall be deemed to have

24

 

		
	 	made a Base Rate Committed Loan to the
Borrower in such
amount. The Administrative Agent shall remit the funds so
received to the L/C Issuer.

		
	 	     (iii)     With respect to any Unreimbursed Amount that is not
fully refinanced by a Committed Borrowing of Base Rate Loans
because the conditions set forth in Section
5.1(e) cannot be satisfied or for any other reason, the
Borrower shall be deemed to have incurred from the L/C Issuer an
L/C Borrowing in the amount of the Unreimbursed Amount that is not
so refinanced, which L/C Borrowing shall be due and payable on
demand (together with interest) and shall bear interest at the
Default Rate. In such event, each Lender’s payment to the
Administrative Agent for the account of the L/C Issuer pursuant to
Section 2.3(c)(ii) shall be deemed payment in
respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Lender in satisfaction of its
participation obligation under this Section
2.3.

		
	 	     (iv)     Until each Lender funds its Committed Loan or L/C
Advance pursuant to this Section 2.3(c) to
reimburse the L/C Issuer for any amount drawn under any Letter of
Credit, interest in respect of such Lender’s Pro Rata Share of
such amount shall be solely for the account of the L/C Issuer.

		
	 	     (v)     Each Lender’s obligation to make Committed Loans or L/C
Advances to reimburse the L/C Issuer for amounts drawn under
Letters of Credit, as contemplated by this Section
2.3(c), shall be absolute and unconditional and shall
not be affected by any circumstance, including (A) any set-off,
counterclaim, recoupment, defense or other right which such Lender
may have against the L/C Issuer, the Borrower or any other Person
for any reason whatsoever; (B) the occurrence or continuance of a
Default, or (C) any other occurrence, event or condition, whether
or not similar to any of the foregoing;
provided, however, that each
Lender’s obligation to make Committed Loans pursuant to this
Section 2.3(c) is subject to the conditions set
forth in Section 5.1(e) (other than delivery by
the Borrower of a Committed Loan Notice). No such making of an
L/C Advance shall relieve or otherwise impair the obligation of
the Borrower to reimburse the L/C Issuer for the amount of any
payment made by the L/C Issuer under any Letter of Credit,
together with interest as provided herein.

		
	 	     (vi)     If any Lender fails to make available to the
Administrative Agent for the account of the L/C Issuer any amount
required to be paid by such Lender pursuant to the foregoing
provisions of this Section 2.3(c) by the time
specified in Section 2.3(c)(ii), the L/C Issuer
shall be entitled to recover from such Lender (acting through the
Administrative Agent), on demand, such amount with interest
thereon for the period from the date such payment is required to
the date on which such payment is immediately available to the L/C
Issuer at a rate per annum equal to the Federal Funds Rate from
time to time in effect. A certificate of the L/C Issuer submitted
to any Lender (through the
Administrative Agent) with respect to any amounts owing under
this clause (vi) shall be conclusive absent manifest error.

25

 

          (d) Repayment of Participations.

		
	 	     (i)     At any time after the L/C Issuer has made a payment under
any Letter of Credit and has received from any Lender such
Lender’s L/C Advance in respect of such payment in accordance with
Section 2.3(c), if the Administrative Agent
receives for the account of the L/C Issuer any payment in respect
of the related Unreimbursed Amount or interest thereon (whether
directly from the Borrower or otherwise, including proceeds of
Cash Collateral applied thereto by the Administrative Agent), the
Administrative Agent will distribute to such Lender its Pro Rata
Share thereof (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Lender’s
L/C Advance was outstanding) in the same funds as those received
by the Administrative Agent.

		
	 	     (ii)     If any payment received by the Administrative Agent for
the account of the L/C Issuer pursuant to Section
2.3(c)(i) is required to be returned under any of the
circumstances described in Section 11.6
(including pursuant to any settlement entered into by the L/C
Issuer in its discretion), each Lender shall pay to the
Administrative Agent for the account of the L/C Issuer its Pro
Rata Share thereof on demand of the Administrative Agent, plus
interest thereon from the date of such demand to the date such
amount is returned by such Lender, at a rate per annum equal to
the Federal Funds Rate from time to time in effect.

          (e) Obligations Absolute. The obligation of the
Borrower to reimburse the L/C Issuer for each drawing under each Letter of
Credit and to repay each L/C Borrowing shall be absolute, unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including the following:

		
	 	     (i)     any lack of validity or enforceability of such Letter of
Credit, this Agreement, or any other agreement or instrument
relating thereto;

		
	 	     (ii)     the existence of any claim, counterclaim, set-off,
defense or other right that the Borrower may have at any time
against any beneficiary or any transferee of such Letter of Credit
(or any Person for whom any such beneficiary or any such
transferee may be acting), the L/C Issuer or any other Person,
whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement
or instrument relating thereto, or any unrelated transaction;

		
	 	     (iii)     any draft, demand, certificate or other document
presented under such Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; or
any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under such Letter of Credit;

26

 

		
	 	     (iv)     any payment by the L/C Issuer under such Letter of
Credit against presentation of a draft or certificate that does
not strictly comply with the terms of such Letter of Credit; or
any payment made by the L/C Issuer under such Letter of Credit to
any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to
any beneficiary or any transferee of such Letter of Credit,
including any arising in connection with any proceeding under any
Debtor Relief Law; or
	 
	 	     (v)     any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, including any other
circumstance that might otherwise constitute a defense available
to, or a discharge of, the Borrower.

     The Borrower shall promptly examine a copy of each Letter of Credit and
each amendment thereto that is delivered to it and, in the event of any claim
of noncompliance with the Borrower’s instructions or other irregularity, the
Borrower will within five (5) business days of receipt thereof notify the L/C
Issuer. The Borrower shall be conclusively deemed to have waived any such
claim against the L/C Issuer and its correspondents unless such notice is given
as aforesaid.

          (f) Role of L/C Issuer. Each Lender and the Borrower
agree that, in paying any drawing under a Letter of Credit, the L/C Issuer
shall not have any responsibility to obtain any document (other than any sight
draft, certificates and documents expressly required by the Letter of Credit)
or to ascertain or inquire as to the validity or accuracy of any such document
or the authority of the Person executing or delivering any such document. None
of the L/C Issuer, any Agent-Related Person nor any of the respective
correspondents, participants or assignees of the L/C Issuer shall be liable to
any Lender for (i) any action taken or omitted in connection herewith at the
request or with the approval of the Lenders or the Required Lenders, as
applicable; (ii) any action taken or omitted in the absence of gross negligence
or willful misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any document or instrument related to any Letter of Credit or
Letter of Credit Application. The Borrower hereby assumes all risks of the
acts or omissions of any beneficiary or transferee with respect to its use of
any Letter of Credit; provided, however,
that this assumption is not intended to, and shall not, preclude the Borrower’s
pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. None of the L/C Issuer, any
Agent-Related Person, nor any of the respective correspondents, participants or
assignees of the L/C Issuer, shall be liable or responsible for any of the
matters described in clauses (i) through (v) of Section 2.3 above(e)
above; provided, however, that
anything in such clauses to the contrary notwithstanding, the Borrower may have
a claim against the L/C Issuer, and the L/C Issuer may be liable to the
Borrower, to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by the Borrower which the Borrower
proves were caused by the L/C Issuer’s willful misconduct or gross negligence
or the L/C Issuer’s willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of a Letter of Credit. In
furtherance and not in limitation of the foregoing, the L/C Issuer may accept
documents that appear on their face to be in order, without responsibility for
further

27

 

investigation, regardless of any notice or information
to the contrary, and the L/C Issuer shall not be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.

          (g) Cash Collateral. Upon the request of the
Administrative Agent, (i) if the L/C Issuer has honored any full or partial
drawing request under any Letter of Credit and such drawing has resulted in an
L/C Borrowing, or (ii) if, as of the Letter of Credit Expiration Date, any
Letter of Credit may for any reason remain outstanding and partially or wholly
undrawn, the Borrower shall immediately Cash Collateralize the then Outstanding
Amount of all L/C Obligations (in an amount equal to such Outstanding Amount
determined as of the date of such L/C Borrowing or the Letter of Credit
Expiration Date, as the case may be). For purposes hereof, “Cash
Collateralize” means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the L/C Issuer and the Lenders, as
collateral for the L/C Obligations, cash or deposit account balances pursuant
to documentation in form and substance satisfactory to the Administrative Agent
and the L/C Issuer (which documents are hereby consented to by the Lenders).
Derivatives of such term have corresponding meanings. The Borrower hereby
grants to the Administrative Agent, for the benefit of the L/C Issuer and the
Lenders, a security interest in all such cash, deposit accounts and all
balances therein and all proceeds of the foregoing. Cash collateral shall be
maintained in blocked, non-interest bearing deposit accounts at Bank of
America.

          (h) Applicability of ISP98 and UCP. Unless otherwise
expressly agreed by the L/C Issuer and the Borrower when a Letter of Credit is
issued (including any such agreement applicable to an Existing Letter of
Credit), (i) the rules of the “International Standby Practices 1998” published
by the Institute of International Banking Law & Practice (or such later version
thereof as may be in effect at the time of issuance) shall apply to each
standby Letter of Credit, and (ii) the rules of the Uniform Customs and
Practice for Documentary Credits, as most recently published by the
International Chamber of Commerce (the “ICC”) at the time of
issuance (including the ICC decision published by the Commission on Banking
Technique and Practice on April 6, 1998 regarding the European single currency
(euro)) shall apply to each commercial Letter of Credit.

          (i) Letter of Credit Fees. The Borrower shall pay to
the Administrative Agent for the account of each Lender in accordance with its
Pro Rata Share a Letter of Credit fee for each standby Letter of Credit equal
to 200 basis points per annum times the daily maximum amount
available to be drawn under such Letter of Credit (whether or not such maximum
amount is then in effect under such Letter of Credit). Such letter of credit
fees shall be computed on a quarterly basis in advance. Such letter of credit
fees shall be due and payable on the date of issuance of such Letter of Credit
prorated for the number of days remaining in the current calendar quarter and,
thereafter, on the first Business Day after the end of each March, June,
September and December, commencing with the first such date to occur after the
issuance of such Letter of Credit and on the Letter of Credit Expiration Date
and thereafter on demand. If there is any change in the Applicable Rate during
any quarter, the daily maximum amount of each standby Letter of Credit shall be
computed and multiplied by the Applicable Rate separately for each period
during such quarter that such Applicable Rate was in effect

28

 

          (j) Fronting Fee and Documentary and Processing Charges Payable
to L/C Issuer. The Borrower shall pay directly to the L/C Issuer for
its own account a fronting fee with respect to each Letter of Credit in the
amount of $1500. In addition, the Borrower shall pay directly to the L/C
Issuer for its own account the customary issuance, presentation, amendment and
other processing fees, and other standard costs and charges, of the L/C Issuer
relating to letters of credit as from time to time in effect. Such customary
fees and standard costs and charges are due and payable on demand and are
nonrefundable.

          (k) Conflict with Letter of Credit Application. In the
event of any conflict between the terms hereof and the terms of any Letter of
Credit Application, the terms hereof shall control.

     Section 2.4 Swing Line Loans.

          (a) The Swing Line. Subject to the terms and
conditions set forth herein, the Swing Line Lender agrees to make loans (each
such loan, a “Swing Line Loan”) to the Borrower from time to
time on any Business Day during the Availability Period in an aggregate amount
not to exceed at any time outstanding the amount of the Swing Line Sublimit,
notwithstanding the fact that such Swing Line Loans, when aggregated with the
Pro Rata Share of the Outstanding Amount of Committed Loans and L/C Obligations
of the Lender acting as Swing Line Lender, may exceed the amount of such
Lender’s Commitment; provided, however,
that after giving effect to any Swing Line Loan, (i) the Total Outstandings
shall not exceed the Aggregate Commitments, and (ii) the aggregate Outstanding
Amount of the Committed Loans of any Lender, plus such
Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations,
plus such Lender’s Pro Rata Share of the Outstanding Amount
of all Swing Line Loans shall not exceed such Lender’s Commitment, and
provided, further, that the Borrower
shall not use the proceeds of any Swing Line Loan to refinance any outstanding
Swing Line Loan. Within the foregoing limits, and subject to the other terms
and conditions hereof, the Borrower may borrow under this Section
2.4 above, prepay under Section 2.5, and reborrow
under this Section 2.4 above. Each Swing Line Loan shall be
a Base Rate Loan. Immediately upon the making of a Swing Line Loan, each
Lender shall be deemed to, and hereby irrevocably and unconditionally agrees
to, purchase from the Swing Line Lender a risk participation in such Swing Line
Loan in an amount equal to the product of such Lender’s Pro Rata Share
times the amount of such Swing Line Loan.

          (b) Borrowing Procedures. Each Swing Line Borrowing
shall be made upon the Borrower’s irrevocable notice to the Swing Line Lender
and the Administrative Agent, which may be given by telephone. Each such notice
must be received by the Swing Line Lender and the Administrative Agent not
later than 1:00 p.m. on the requested borrowing date, and shall specify (i) the
amount to be borrowed, which shall be a minimum of $100,000, and (ii) the
requested borrowing date, which shall be a Business Day. Each such telephonic
notice must be confirmed promptly by delivery to the Swing Line Lender and the
Administrative Agent of a written Swing Line Loan Notice, appropriately
completed and signed by a Responsible Officer of the Borrower. Promptly after
receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the
Swing Line Lender will confirm with the Administrative Agent (by telephone or
in writing) that the Administrative Agent has also received such Swing Line
Loan Notice and, if not, the Swing Line Lender will notify the Administrative
Agent (by telephone or in writing)
of the contents

29

 

thereof. Unless the Swing Line Lender has received notice
(by telephone or in writing) from the Administrative Agent (including at the
request of any Lender) prior to 2:00 p.m. on the date of the proposed Swing
Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line
Loan as a result of the limitations set forth in the proviso to the first
sentence of Section 2.4(a), or (B) that one or more of the
applicable conditions specified in Article V is not then
satisfied, then, subject to the terms and conditions hereof, the Swing Line
Lender will, not later than 3:00 p.m. on the borrowing date specified in such
Swing Line Loan Notice, make the amount of its Swing Line Loan available to the
Borrower at its office by crediting the account of the Borrower on the books of
the Swing Line Lender in immediately available funds.

          (c) Refinancing of Swing Line Loans.

		
	 	     (i)     The Swing Line Lender within three (3) Business Days
shall request, on behalf of the Borrower (which hereby irrevocably
authorizes the Swing Line Lender to so request on its behalf),
that each Lender make a Base Rate Committed Loan in an amount
equal to such Lender’s Pro Rata Share of the amount of Swing Line
Loans then outstanding. Such request shall be made in writing
(which written request shall be deemed to be a Committed Loan
Notice for purposes hereof) and in accordance with the
requirements of Section 2.2, without regard to
the minimum and multiples specified therein for the principal
amount of Base Rate Loans, but subject to the unutilized portion
of the Aggregate Commitments and the conditions set forth in
Section 5.1(e). The Swing Line Lender shall
furnish the Borrower with a copy of the applicable Committed Loan
Notice promptly after delivering such notice to the Administrative
Agent. Each Lender shall make an amount equal to its Pro Rata
Share of the amount specified in such Committed Loan Notice
available to the Administrative Agent in immediately available
funds for the account of the Swing Line Lender at the
Administrative Agent’s Office not later than 1:00 p.m. on the day
specified in such Committed Loan Notice, whereupon, subject to
Section 2.4(c)(ii), each Lender that so makes
funds available shall be deemed to have made a Base Rate Committed
Loan to the Borrower in such amount. The Administrative Agent
shall remit the funds so received to the Swing Line Lender.

		
	 	     (ii)     If for any reason any Swing Line Loan cannot be
refinanced by such a Committed Borrowing in accordance with
Section 2.4(c)(i), the request for Base Rate
Committed Loans submitted by the Swing Line Lender as set forth
herein shall be deemed to be a request by the Swing Line Lender
that each of the Lenders fund its risk participation in the
relevant Swing Line Loan and each Lender’s payment to the
Administrative Agent for the account of the Swing Line Lender
pursuant to Section 2.4(c)(i) shall be deemed
payment in respect of such participation.

		
	 	     (iii)     If any Lender fails to make available to the
Administrative Agent for the account of the Swing Line Lender any
amount required to be paid by such Lender pursuant to the
foregoing provisions of this Section 2.4(c) by
the time specified in Section 2.4(c)(i), the
Swing Line
Lender shall be entitled to recover from such Lender (acting
through the Administrative Agent), on demand,

30

 

		
	 	such amount with
interest thereon for the period from the date such payment is
required to the date on which such payment is immediately
available to the Swing Line Lender at a rate per annum equal to
the Federal Funds Rate from time to time in effect. A certificate
of the Swing Line Lender submitted to any Lender (through the
Administrative Agent) with respect to any amounts owing under this
clause (iii) shall be conclusive absent manifest error.

		
	 	     (iv)     Each Lender’s obligation to make Committed Loans or to
purchase and fund risk participations in Swing Line Loans pursuant
to this Section 2.4(c) shall be absolute and
unconditional and shall not be affected by any circumstance,
including (A) any set-off, counterclaim, recoupment, defense or
other right which such Lender may have against the Swing Line
Lender, the Borrower or any other Person for any reason
whatsoever, (B) the occurrence or continuance of a Default, or (C)
any other occurrence, event or condition, whether or not similar
to any of the foregoing; provided,
however, that each Lender’s obligation to make
Committed Loans pursuant to this Section 2.4(c)
is subject to the conditions set forth in Section
5.1(e). No such funding of risk participations shall
relieve or otherwise impair the obligation of the Borrower to
repay Swing Line Loans, together with interest as provided herein.

          (d) Repayment of Participations.

		
	 	     (i)     At any time after any Lender has purchased and funded a
risk participation in a Swing Line Loan, if the Swing Line Lender
receives any payment on account of such Swing Line Loan, the Swing
Line Lender will distribute to such Lender its Pro Rata Share of
such payment (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Lender’s
risk participation was funded) in the same funds as those received
by the Swing Line Lender.

		
	 	     (ii)     If any payment received by the Swing Line Lender in
respect of principal or interest on any Swing Line Loan is
required to be returned by the Swing Line Lender under any of the
circumstances described in Section 11.6
(including pursuant to any settlement entered into by the Swing
Line Lender in its discretion), each Lender shall pay to the Swing
Line Lender its Pro Rata Share thereof on demand of the
Administrative Agent, plus interest thereon from the date of such
demand to the date such amount is returned, at a rate per annum
equal to the Federal Funds Rate. The Administrative Agent will
make such demand upon the request of the Swing Line Lender.

          (e) Interest for Account of Swing Line Lender. The
Swing Line Lender shall be responsible for invoicing the Borrower for interest
on the Swing Line Loans. Until each Lender funds its Base Rate Committed Loan
or risk participation pursuant to this Section 2.4 to
refinance such Lender’s Pro Rata Share of any Swing Line Loan,
interest in respect of such Pro Rata Share shall be solely for the account
of the Swing Line Lender.

31

 

          (f) Payments Directly to Swing Line Lender. The
Borrower shall make all payments of principal and interest in respect of the
Swing Line Loans directly to the Swing Line Lender.

     Section 2.5 Prepayments.

          (a) The Borrower may, upon notice to the Administrative Agent, at any time
or from time to time voluntarily prepay Committed Loans in whole or in part
without premium or penalty; provided that (i) such notice
must be received by the Administrative Agent not later than 11:00 a.m. (A)
three Business Days prior to any date of prepayment of Eurodollar Rate
Committed Loans and (B) on the date of prepayment of Base Rate Committed Loans;
(ii) any prepayment of Eurodollar Rate Committed Loans shall be in a principal
amount of $1,000,000 or a whole multiple of $1,000,000 in excess thereof; and
(iii) any prepayment of Base Rate Committed Loans shall be in a principal
amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in
each case, if less, the entire principal amount thereof then outstanding. Each
such notice shall specify the date and amount of such prepayment and the
Type(s) of Committed Loans to be prepaid. The Administrative Agent will
promptly notify each Lender of its receipt of each such notice, and of the
amount of such Lender’s Pro Rata Share of such prepayment. If such notice is
given by the Borrower, the Borrower shall make such prepayment and the payment
amount specified in such notice shall be due and payable on the date specified
therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all
accrued interest thereon, together with any additional amounts required
pursuant to Section 3.5. Each such prepayment shall be
applied to the Committed Loans of the Lenders in accordance with their
respective Pro Rata Shares.

          (b) The Borrower may, upon notice to the Swing Line Lender (with a copy to
the Administrative Agent), at any time or from time to time, voluntarily prepay
Swing Line Loans in whole or in part without premium or penalty;
provided that (i) such notice must be received by the Swing
Line Lender and the Administrative Agent not later than 1:00 p.m. on the date
of the prepayment, and (ii) any such prepayment shall be in a minimum principal
amount of $100,000. Each such notice shall specify the date and amount of such
prepayment. If such notice is given by the Borrower, the Borrower shall make
such prepayment and the payment amount specified in such notice shall be due
and payable on the date specified therein.

          (c) If for any reason the Total Outstandings at any time exceed the
Aggregate Commitments then in effect, the Borrower shall immediately prepay
Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount
equal to such excess; provided, however,
that the Borrower shall not be required to Cash Collateralize the L/C
Obligations pursuant to this Section 2.5(c) unless after the
prepayment in full of the Committed Loans and Swing Line Loans the Total
Outstandings exceed the Aggregate Commitments then in effect.

		
	 	 Section 2.6 Termination or Reduction of Commitments.

          (a) The Borrower may, upon notice to the Administrative Agent,
terminate the Aggregate Commitments, or from time to time permanently reduce
the Aggregate
Commitments; provided that (i) any such notice shall be
received by the Administrative Agent not later than 11:00 a.m. five Business
Days prior to the date of termination or reduction, (ii) any such partial

32

 

reduction shall be in an aggregate amount of $10,000,000 or any whole multiple
of $5,000,000 in excess thereof, (iii) the Borrower shall not terminate or
reduce the Aggregate Commitments if, after giving effect thereto and to any
concurrent prepayments hereunder, the Total Outstandings would exceed the
Aggregate Commitments, and (iv) if, after giving effect to any reduction of the
Aggregate Commitments the Letter of Credit Sublimit or the Swing Line Sublimit
exceeds the amount of the Aggregate Commitments, such Sublimit shall be
automatically reduced by the amount of such excess. The Administrative Agent
will promptly notify the Lenders of any such notice of termination or reduction
of the Aggregate Commitments. Any reduction of the Aggregate Commitments shall
be applied to the Commitment of each Lender according to its Pro Rata Share.
All Unused Fees accrued until the effective date of any termination of the
Aggregate Commitments shall be paid on the effective date of such termination.

     Section 2.7 Repayment of Loans.

          (a) The Borrower shall repay to the Lenders on the Maturity Date the
aggregate principal amount of Committed Loans outstanding on such date.

          (b) The Borrower shall repay each Swing Line Loan on the earlier to occur
of (i) the date five Business Days after such Loan is made and (ii) the
Maturity Date.

     Section 2.8 Interest.

          (a) Subject to the provisions of subsection (b) below, (i) each Eurodollar
Rate Committed Loan shall bear interest on the outstanding principal amount
thereof for each Interest Period at a rate per annum equal to the Eurodollar
Rate for such Interest Period plus the Applicable Rate; (ii)
each Base Rate Committed Loan shall bear interest on the outstanding principal
amount thereof from the applicable borrowing date at a rate per annum equal to
the Base Rate plus the Applicable Rate; and (iii) each Swing
Line Loan shall bear interest on the outstanding principal amount thereof from
the applicable borrowing date at a rate per annum equal to the Base Rate
plus the Applicable Rate.

          (b) If any amount payable by the Borrower under any Loan Document is not
paid within three (3) business days after notice (without regard to any
applicable grace periods), whether at stated maturity, by acceleration or
otherwise, such amount shall thereafter bear interest at a fluctuating interest
rate per annum at all times equal to the Default Rate to the fullest extent
permitted by applicable Laws. Furthermore, while any Event of Default exists,
the Borrower shall pay interest on the principal amount of all outstanding
Obligations hereunder at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Laws.
Accrued and unpaid interest on past due amounts (including interest on past due
interest) shall be due and payable upon demand.

          (c) Interest on each Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance
with the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.

33

 

     Section 2.9 Fees.

     In addition to certain fees described in subsections (i) and (j)
of Section 2.3:

          (a) Unused Fee. The Borrower shall pay to the
Administrative Agent for the account of each Lender in accordance with its Pro
Rata Share, an unused fee equal to the Applicable Rate times
the average actual daily amount by which the Aggregate Commitments exceed the
sum of (i) the Outstanding Amount of Committed Loans and (ii) the Outstanding
Amount of L/C Obligations during [any fiscal quarter]. The unused fee shall
accrue at all times during the Availability Period, including at any time
during which one or more of the conditions in Article V is
not met, and shall be due and payable quarterly in arrears on the last Business
Day of each March, June, September and December, commencing with the first such
date to occur after the Closing Date, and on the Maturity Date. The unused fee
shall be calculated quarterly in arrears, and if there is any change in the
Applicable Rate during any quarter, the actual daily amount shall be computed
and multiplied by the Applicable Rate separately for each period during such
quarter that such Applicable Rate was in effect. Swing Line Loans outstanding
from time to time shall be considered as Outstanding Amounts of Committed Loans
in calculating the unused fee.

          (b) Other Fees.

		
	 	     (i)     The Borrower shall pay to the Arranger and the
Administrative Agent for their own respective accounts fees in the
amounts and at the times specified in the Fee Letter. Such fees
shall be fully earned when paid and shall not be refundable for
any reason whatsoever.

          (ii)     The Borrower shall pay to the Lenders such fees as shall
have been separately agreed upon in writing in the amounts and at
the times so specified. Such fees shall be fully earned when paid
and shall not be refundable for any reason whatsoever.

     Section 2.10 Computation of Interest and Fees.

     All computations of interest for Base Rate Loans when the Base Rate is
determined by Bank of America’s “prime rate” shall be made on the basis of a
year of 365 or 366 days, as the case may be, and actual days elapsed. All
other computations of fees and interest shall be made on the basis of a 360-day
year and actual days elapsed. Interest shall accrue on each Loan for the day
on which the Loan is made, and shall not accrue on a Loan, or any portion
thereof, for the day on which the Loan or such portion is paid,
provided that any Loan that is repaid on the same day on
which it is made shall, subject to Section 2.12(a), bear
interest for one day.

     Section 2.11 Evidence of Debt.

          (a) The Credit Extensions made by each Lender shall be evidenced by one or
more accounts or records maintained by such Lender and by the Administrative
Agent in the ordinary course of business. The accounts or records maintained
by the Administrative Agent and each Lender shall be conclusive absent manifest
error of the amount of the Credit Extensions made by the Lenders to the
Borrower and the interest and payments thereon. Any failure to so

34

 

record or any error in doing so shall not, however, limit or otherwise
affect the obligation of the Borrower hereunder to pay any amount owing with
respect to the Obligations. In the event of any conflict between the accounts
and records maintained by any Lender and the accounts and records of the
Administrative Agent in respect of such matters, the accounts and records of
the Administrative Agent shall control in the absence of manifest error. Upon
the request of any Lender made through the Administrative Agent, the Borrower
shall execute and deliver to such Lender (through the Administrative Agent) a
Note, which shall evidence such Lender’s Loans in addition to such accounts or
records. Each Lender may attach schedules to its Note and endorse thereon the
date, Type (if applicable), amount and maturity of its Loans and payments with
respect thereto.

          (b) In addition to the accounts and records referred to in subsection (a),
each Lender and the Administrative Agent shall maintain in accordance with its
usual practice accounts or records evidencing the purchases and sales by such
Lender of participations in Letters of Credit and Swing Line Loans. In the
event of any conflict between the accounts and records maintained by the
Administrative Agent and the accounts and records of any Lender in respect of
such matters, the accounts and records of the Administrative Agent shall
control in the absence of manifest error.

     Section 2.12 Payments Generally.

          (a) All payments to be made by the Borrower shall be made without
condition or deduction for any counterclaim, defense, recoupment or setoff.
Except as otherwise expressly provided herein, all payments by the Borrower
hereunder shall be made to the Administrative Agent, for the account of the
respective Lenders to which such payment is owed, at the Administrative Agent’s
Office in Dollars and in immediately available funds not later than 2:00 p.m.
on the date specified herein. The Administrative Agent will promptly
distribute to each Lender its Pro Rata Share (or other applicable share as
provided herein) of such payment in like funds as received by wire transfer to
such Lender’s Lending Office. All payments received by the Administrative
Agent after 2:00 p.m. shall be deemed received on the next succeeding Business
Day and any applicable interest or fee shall continue to accrue.

          (b) If any payment to be made by the Borrower shall come due on a day
other than a Business Day, payment shall be made on the next following Business
Day, and such extension of time shall be reflected in computing interest or
fees, as the case may be.

          (c) Unless the Borrower or any Lender has notified the Administrative
Agent, prior to the date any payment is required to be made by it to the
Administrative Agent hereunder, that the Borrower or such Lender, as the case
may be, will not make such payment, the Administrative Agent may assume that
the Borrower or such Lender, as the case may be, has timely made such payment
and may (but shall not be so required to), in reliance thereon, make available
a corresponding amount to the Person entitled thereto. If and to the extent
that such payment was not in fact made to the Administrative Agent in
immediately available funds, then:

		
	 	     (i)     if the Borrower failed to make such payment, each Lender
shall forthwith on demand repay to the Administrative Agent the
portion of such assumed payment that was made available to such
Lender in immediately available funds, together with interest
thereon in respect of each day from and

35

 

		
	 	including the date such
amount was made available by the Administrative Agent
to such Lender to the date such amount is repaid to the
Administrative Agent in immediately available funds at the Federal
Funds Rate from time to time in effect; and

		
	 	     (ii)     if any Lender failed to make such payment, such Lender
shall forthwith on demand pay to the Administrative Agent the
amount thereof in immediately available funds, together with
interest thereon for the period from the date such amount was made
available by the Administrative Agent to the Borrower to the date
such amount is recovered by the Administrative Agent (the
“Compensation Period”) at a rate per annum
equal to the Federal Funds Rate from time to time in effect. If
such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender’s Committed Loan included
in the applicable Borrowing. If such Lender does not pay such
amount forthwith upon the Administrative Agent’s demand therefor,
the Administrative Agent may make a demand therefor upon the
Borrower, and the Borrower shall pay such amount to the
Administrative Agent, together with interest thereon for the
Compensation Period at a rate per annum equal to the rate of
interest applicable to the applicable Borrowing. Nothing herein
shall be deemed to relieve any Lender from its obligation to
fulfill its Commitment or to prejudice any rights which the
Administrative Agent or the Borrower may have against any Lender
as a result of any default by such Lender hereunder.

         A notice of the Administrative Agent to any Lender or the Borrower with
respect to any amount owing under this subsection (c) shall be conclusive,
absent manifest error.

          (d) If any Lender makes available to the Administrative Agent funds for
any Loan to be made by such Lender as provided in the foregoing provisions of
this Article II, and such funds are not made available to
the Borrower by the Administrative Agent because the conditions to the
applicable Credit Extension set forth in Article V are not
satisfied or waived in accordance with the terms hereof, the Administrative
Agent shall return such funds (in like funds as received from such Lender) to
such Lender, without interest.

          (e) The obligations of the Lenders hereunder to make Committed Loans and
to fund participations in Letters of Credit and Swing Line Loans are several
and not joint. The failure of any Lender to make any Committed Loan or to fund
any such participation on any date required hereunder shall not relieve any
other Lender of its corresponding obligation to do so on such date, and no
Lender shall be responsible for the failure of any other Lender to so make its
Committed Loan or purchase its participation.

          (f) Nothing herein shall be deemed to obligate any Lender to obtain the
funds for any Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.

36

 

     Section 2.13 Sharing of Payments.

     If, other than as expressly provided elsewhere herein, any Lender shall
obtain on account of the Committed Loans made by it, or the participations in
L/C Obligations or in Swing Line Loans held by it, any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its ratable share (or other share contemplated
hereunder)
thereof, such Lender shall immediately (a) notify the Administrative Agent
of such fact, and (b) purchase from the other Lenders such participations in
the Committed Loans made by them and/or such subparticipations in the
participations in L/C Obligations or Swing Line Loans held by them, as the case
may be, as shall be necessary to cause such purchasing Lender to share the
excess payment in respect of such Committed Loans or such participations, as
the case may be, pro rata with each of them; provided,
however, that if all or any portion of such excess payment
is thereafter recovered from the purchasing Lender under any of the
circumstances described in Section 11.6 (including pursuant
to any settlement entered into by the purchasing Lender in its discretion),
such purchase shall to that extent be rescinded and each other Lender shall
repay to the purchasing Lender the purchase price paid therefor, together with
an amount equal to such paying Lender’s ratable share (according to the
proportion of (i) the amount of such paying Lender’s required repayment to (ii)
the total amount so recovered from the purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered, without further interest thereon. The Borrower agrees
that any Lender so purchasing a participation from another Lender may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off, but subject to Section 11.9) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation. The
Administrative Agent will keep records (which shall be conclusive and binding
in the absence of manifest error) of participations purchased under this
Section and will in each case notify the Lenders following any such purchases
or repayments. Each Lender that purchases a participation pursuant to this
Section shall from and after such purchase have the right to give all notices,
requests, demands, directions and other communications under this Agreement
with respect to the portion of the Obligations purchased to the same extent as
though the purchasing Lender were the original owner of the Obligations
purchased.

     Section 2.14 Extension of Maturity Date.

          (a) Not earlier than 90 days prior to, nor later than 30 days prior to,
the Maturity Date set forth herein, the Borrower may, upon notice to the
Administrative Agent (which shall promptly notify the Lenders), request a
one-year extension of the Maturity Date then in effect.

          (b) The Maturity Date shall be extended only if no Default has occurred
and is continuing under the Loan Documents. If so extended, the Maturity Date
shall be extended to the same date in the following year effective as of the
Maturity Date then in effect (such existing Maturity Date being the
“Extension Effective Date”). The Administrative Agent and
the Borrower shall promptly confirm to the Lenders such extension and the
Extension Effective Date. As a condition precedent to such extension, the
Borrower shall deliver to the Administrative Agent a certificate of each Loan
Party dated as of the Extension Effective Date (in sufficient copies for each
Lender) signed by a Responsible Officer of such Loan Party (i)

37

 

certifying and
attaching the resolutions adopted by such Loan Party approving or consenting to
such extension and (ii) in the case of the Borrower, certifying that, before
and after giving effect to such extension, (A) the representations and
warranties contained in Article VI and the other Loan
Documents are true and correct on and as of the Extension Effective Date,
except to the extent that such representations and warranties specifically
refer to an earlier date, in which case they are true and correct as of such
earlier date, and except that for purposes of this Section
2.14, the representations and warranties contained in subsections (a)
and (b) of
Section 6.5 shall be deemed to refer to the most recent
statements furnished pursuant to subsections (a) and (b), respectively, of
Section 7.1, and (B) no Default exists.

          (c) As an additional condition precedent to the extension of the Maturity
Date, the Borrower shall pay to the Administrative Agent for the benefit of the
Lenders an extension fee of 25 basis points on the then applicable Aggregate
Commitments.

          (d) This Section shall supersede any provisions in Section
2.13 or Section 11.1 to the contrary.

     Section 2.15 Increase in Commitments.

          (a) Provided there exists no Default, upon notice to the Administrative
Agent (which shall promptly notify the Lenders), the Borrower may up to three
(3) times within two (2) years from the date of this Agreement, request an
increase in the Aggregate Commitments in a minimum of $5,000,000 and in
multiples of $5,000,000 for each increase and by an amount not exceeding
$100,000,000 in the aggregate. At the time of sending such a notice, the
Borrower (in consultation with the Administrative Agent) shall specify the time
period within which each Lender is requested to respond (which shall in no
event be less than ten Business Days from the date of delivery of such notice
to the Lenders). Each Lender shall notify the Administrative Agent within such
time period whether or not it agrees to increase its Commitment and, if so,
whether by an amount equal to, greater than, or less than its Pro Rata Share of
such requested increase. Any Lender not responding within such time period
shall be deemed to have declined to increase its Commitment. The
Administrative Agent shall notify the Borrower and each Lender of the Lenders’
responses to each request made hereunder. To achieve the full amount of a
requested increase, the Borrower may also invite additional Eligible Assignees
to become Lenders pursuant to a joinder agreement in form and substance
satisfactory to the Administrative Agent and its counsel.

          (b) If the Aggregate Commitments are increased in accordance with this
Section, the Administrative Agent and the Borrower shall determine the
effective date (the “Increase Effective Date”) and the final
allocation of such increase. The Administrative Agent shall promptly notify
the Borrower and the Lenders of the final allocation of such increase and the
Increase Effective Date. As a condition precedent to such increase, the
Borrower shall deliver to the Administrative Agent a certificate of each Loan
Party dated as of the Increase Effective Date (in sufficient copies for each
Lender) signed by a Responsible Officer of such Loan Party (i) certifying and
attaching the resolutions adopted by such Loan Party approving or consenting to
such increase, and (ii) in the case of the Borrower, certifying that, before
and after giving effect to such increase, (A) the representations and
warranties contained in Article VI and the other Loan
Documents are true and correct on and as of the Extension Effective Date,
except

38

 

to the extent that such representations and warranties specifically
refer to an earlier date, in which case they are true and correct as of such
earlier date, and except that for purposes of this Section
2.15, the representations and warranties contained in subsections (a)
and (b) of Section 6.5 shall be deemed to refer to the most
recent statements furnished pursuant to subsections (a) and (b), respectively,
of Section 7.1, and (B) no Default exists. The Borrower
shall prepay any Committed Loans outstanding on the Increase Effective Date
(and pay any additional amounts required pursuant to Section
3.5) to the extent necessary to keep the outstanding Committed Loans
ratable
with any revised Pro Rata Shares arising from any nonratable increase in
the Commitments under this Section.

          (c) This Section shall supersede any provisions in Section
2.13 or Section 11.1 to the contrary.

     Section 2.16 Collateral.

          As security for the payment of any and all of the Obligations and for the
Borrower’s performance of, and compliance with, all of the terms, covenants,
conditions, stipulations and agreements contained in the Loan Documents, the
Borrower and the other Loan parties hereby assign, grant and convey to the
Lenders, and agree that the Lenders shall have, to the extent permitted by law
a perfected, continuing security interest in, all of the Collateral pursuant to
the Security Agreements. The Borrower and the other Loan Parties further agree
that the Lenders shall have in respect of the Collateral all of the rights and
remedies of a secured party under the Virginia Uniform Commercial Code and
under other applicable Laws as well as those rights and provided in this
Agreement and the other Loan Documents. The Borrower covenants and agrees to
execute and deliver or to cause the other Loan Parties to execute and deliver
such financing statements and other instruments and filings as are necessary in
the opinion of the Administrative Agent to perfect such security interest.
Notwithstanding the fact that the proceeds of the Collateral constitute a part
of the Collateral, the Loan parties may not dispose of the Collateral, or any
part thereof, other than in the ordinary course of their business or as
otherwise may be permitted by this Agreement or other Security Agreements. The
Borrower and the other Loan Parties will supplement the Security Agreements at
any time the Loan Parties create any new Material Subsidiary, pledging to the
Lenders their ownership interests.

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY

     Section 3.1 Taxes.

          (a) Any and all payments by the Borrower to or for the account of the
Administrative Agent or any Lender under any Loan Document shall be made free
and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and all liabilities with respect thereto,
excluding, in the case of the Administrative Agent and each
Lender, taxes imposed on or measured by its overall net income, and franchise
taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any
political subdivision thereof) under the Laws of which the Administrative Agent
or such Lender, as the case may be, is organized or maintains a lending

39

 

office
(all such non-excluded taxes, duties, levies, imposts, deductions, assessments,
fees, withholdings or similar charges, and liabilities being hereinafter
referred to as “Taxes”). If the Borrower shall be required
by any Laws to deduct any Taxes from or in respect of any sum payable under any
Loan Document to the Administrative Agent or any Lender, (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section), each of the Administrative Agent and such Lender receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other
authority in accordance with applicable Laws, and (iv) within 30 days
after the date of such payment, the Borrower shall furnish to the
Administrative Agent (which shall forward the same to such Lender) the original
or a certified copy of a receipt evidencing payment thereof.

          (b) In addition, the Borrower agrees to pay any and all present or future
stamp, court or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under any Loan
Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Loan Document (hereinafter
referred to as “Other Taxes”).

          (c) If the Borrower shall be required to deduct or pay any Taxes or Other
Taxes from or in respect of any sum payable under any Loan Document to the
Administrative Agent or any Lender, the Borrower shall also pay to the
Administrative Agent or to such Lender, as the case may be, at the time
interest is paid, such additional amount that the Administrative Agent or such
Lender specifies is necessary to preserve the after-tax yield (after factoring
in all taxes, including taxes imposed on or measured by net income) that the
Administrative Agent or such Lender would have received if such Taxes or Other
Taxes had not been imposed.

          (d) The Borrower agrees to indemnify the Administrative Agent and each
Lender for (i) the full amount of Taxes and Other Taxes (including any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section) paid by the Administrative Agent and such Lender, (ii) amounts
payable under Section 3.1(c) and (iii) any liability
(including additions to tax, penalties, interest and expenses) arising
therefrom or with respect thereto, in each case whether or not such Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. Payment under this subsection (d) shall be made within
30 days after the date the Lender or the Administrative Agent makes a demand
therefor.

     Section 3.2 Illegality.

     If any Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or its
applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or
to determine or charge interest rates based upon the Eurodollar Rate, then, on
notice thereof by such Lender to the Borrower through the Administrative Agent,
any obligation of such Lender to make or continue Eurodollar Rate Loans or to
convert Base Rate Committed Loans to Eurodollar Rate Committed Loans shall be
suspended until such Lender notifies the Administrative Agent and the Borrower
that the circumstances giving rise to such determination no longer exist. Upon
receipt of such notice, the

40

 

Borrower shall, upon demand from such Lender (with
a copy to the Administrative Agent), prepay or, if applicable, convert all
Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day
of the Interest Period therefor, if such Lender may lawfully continue to
maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender
may not lawfully continue to maintain such Eurodollar Rate Loans. Upon any
such prepayment or conversion, the Borrower shall also pay accrued interest on
the amount so prepaid or converted. Each Lender agrees to designate a
different Lending Office if such designation will avoid the need for such
notice and will not, in the good faith judgment of such Lender, otherwise be
materially disadvantageous to such Lender.

     Section 3.3 Inability to Determine Rates.

     If the Required Lenders determine that for any reason adequate and
reasonable means do not exist for determining the Eurodollar Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Committed
Loan, or that the Eurodollar Rate for any requested Interest Period with
respect to a proposed Eurodollar Rate Committed Loan does not adequately and
fairly reflect the cost to such Lenders of funding such Loan, the
Administrative Agent will promptly so notify the Borrower and each Lender.
Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate
Loans shall be suspended until the Administrative Agent (upon the instruction
of the Required Lenders) revokes such notice. Upon receipt of such notice, the
Borrower may revoke any pending request for a Borrowing of, conversion to or
continuation of Eurodollar Rate Committed Loans or, failing that, will be
deemed to have converted such request into a request for a Committed Borrowing
of Base Rate Loans in the amount specified therein.

     Section 3.4 Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate Loans.

          (a) If any Lender determines that as a result of the
introduction of or any change in or in the interpretation of any Law, or such
Lender’s compliance therewith, there shall be any increase in the cost to such
Lender of agreeing to make or making, funding or maintaining Eurodollar Rate
Loans or (as the case may be) issuing or participating in Letters of Credit, or
a reduction in the amount received or receivable by such Lender in connection
with any of the foregoing (excluding for purposes of this subsection (a) any
such increased costs or reduction in amount resulting from (i) Taxes or Other
Taxes (as to which Section 3.1 shall govern), (ii) changes
in the basis of taxation of overall net income or overall gross income by the
United States or any foreign jurisdiction or any political subdivision of
either thereof under the Laws of which such Lender is organized or has its
Lending Office, and (iii) reserve requirements contemplated by Section
3.4 utilized, as to Eurodollar Rate Committed Loans, in the
determination of the Eurodollar Rate), then from time to time upon demand of
such Lender (with a copy of such demand to the Administrative Agent), the
Borrower shall pay to such Lender such additional amounts as will compensate
such Lender for such increased cost or reduction.

          (b) If any Lender determines that the introduction of any Law regarding
capital adequacy or any change therein or in the interpretation thereof, or
compliance by such Lender (or its Lending Office) therewith, has the effect of
reducing the rate of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of such

41

 

Lender’s obligations hereunder
(taking into consideration its policies with respect to capital adequacy and
such Lender’s desired return on capital), then from time to time upon demand of
such Lender (with a copy of such demand to the Administrative Agent), the
Borrower shall pay to such Lender such additional amounts as will compensate
such Lender for such reduction.

          (c) The Borrower shall pay to each Lender, as long as such Lender shall be
required to maintain reserves with respect to liabilities or assets consisting
of or including Eurocurrency funds or deposits (currently known as
“Eurocurrency liabilities”), additional interest on the unpaid principal amount
of each Eurodollar Rate Loan equal to the actual costs of such reserves
allocated to such Loan by such Lender (as determined by such Lender in good
faith, which determination shall be conclusive), which shall be due and payable
on each date on which interest is payable on such Loan,
provided the Borrower shall have received at
least 15 days’ prior notice (with a copy to the Administrative Agent) of
such additional interest from such Lender. If a Lender fails to give notice 15
days prior to the relevant Interest Payment Date, such additional interest
shall be due and payable 15 days from receipt of such notice.

     Section 3.5 Funding Losses.

     Upon demand of any Lender (with a copy to the Administrative Agent) from
time to time, the Borrower shall promptly compensate such Lender for and hold
such Lender harmless from any loss, cost or expense incurred by it as a result
of:

          (a) any continuation, conversion, payment or prepayment of any Loan other
than a Base Rate Loan on a day other than the last day of the Interest Period
for such Loan (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise); or

          (b) any failure by the Borrower (for a reason other than the failure of
such Lender to make a Loan) to prepay, borrow, continue or convert any Loan
other than a Base Rate Loan on the date or in the amount notified by the
Borrower;

including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan
or from fees payable to terminate the deposits from which such funds were
obtained. The Borrower shall also pay any customary administrative fees
charged by such Lender in connection with the foregoing.

     For purposes of calculating amounts payable by the Borrower to the Lenders
under this Section 3.5, each Lender shall be deemed to have
funded each Eurodollar Rate Committed Loan made by it at the Eurodollar Rate
used in determining the Eurodollar Rate for such Loan by a matching deposit or
other borrowing in the London interbank eurodollar market for a comparable
amount and for a comparable period, whether or not such Eurodollar Rate
Committed Loan was in fact so funded.

     Section 3.6 Matters Applicable to all Requests for
Compensation.

     A certificate of the Administrative Agent or any Lender claiming
compensation under this Article III and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, the Administrative
Agent or such Lender may use any reasonable averaging and attribution methods.

42

 

     Section 3.7 Survival.

     All of the Borrower’s obligations under this Article
III shall survive termination of the Aggregate Commitments and
repayment of all other Obligations hereunder.

ARTICLE IV

GUARANTY

     Section 4.1 The Guaranty.

     Each of the Guarantors hereby jointly and severally guarantees
to each Lender, each Affiliate of a Lender that enters into a Swap Contract,
and the Administrative Agent as hereinafter provided, as primary obligor and
not as surety, the prompt payment of the Obligations in full when due (whether
at stated maturity, as a mandatory prepayment, by acceleration, as a mandatory
cash collateralization or otherwise) strictly in accordance with the terms
thereof. The Guarantors hereby further agree that if any of the Obligations
are not paid in full when due (whether at stated maturity,
as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise), the Guarantors will, jointly and severally,
promptly pay the same, without any demand or notice whatsoever, and that in the
case of any extension of time of payment or renewal of any of the Obligations,
the same will be promptly paid in full when due (whether at extended maturity,
as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise) in accordance with the terms of such extension
or renewal.

     Notwithstanding any provision to the contrary contained herein or in any other
of the Loan Documents or Swap Contracts, the obligations of each Guarantor
under this Agreement and the other Loan Documents shall be limited to an
aggregate amount equal to the largest amount that would not render such
obligations subject to avoidance under the Debtor Relief Laws or any comparable
provisions of any applicable state law.

     Section 4.2 Obligations Unconditional.

     The obligations of the Guarantors under Section
4.1 are joint and several, absolute and unconditional, irrespective
of the value, genuineness, validity, regularity or enforceability of any of the
Loan Documents or Swap Contracts, or any other agreement or instrument referred
to therein, or any substitution, release, impairment or exchange of any other
guarantee of or security for any of the Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this Section 4.2
that the obligations of the Guarantors hereunder shall be absolute and
unconditional under any and all circumstances. Each Guarantor agrees that such
Guarantor shall have no right of subrogation, indemnity, reimbursement or
contribution against the Borrower or any other Guarantor for amounts paid under
this Article IV until such time as the Obligations have been
paid in full and the Commitment have expired or terminated. Without limiting
the generality of the foregoing, it is agreed that, to the fullest extent
permitted by law, the occurrence of any one or more of the following shall not
alter or impair the liability of any Guarantor hereunder, which shall remain
absolute and unconditional as described above:

43

 

		
	 	     (a)     at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of the
Obligations shall be extended, or such performance or compliance shall be
waived;

		
	 	     (b)     any of the acts mentioned in any of the provisions of any of the
Loan Documents, any Swap Contract between any Loan Party and any Lender,
or any Affiliate of a Lender, or any other agreement or instrument
referred to in the Loan Documents or such Swap Contracts shall be done or
omitted;

		
	 	     (c)     the maturity of any of the Obligations shall be accelerated, or
any of the Obligations shall be modified, supplemented or amended in any
respect, or any right under any of the Loan Documents, any Swap Contract
between any Loan Party and any Lender, or any Affiliate of a Lender, or
any other agreement or instrument referred to in the Loan Documents or
such Swap Contracts shall be waived or any other guarantee of any of the
Obligations or any security therefor shall be released, impaired or
exchanged in whole or in part or otherwise dealt with;
	 
	 	     (d)     any Lien granted to, or in favor of, the Administrative Agent or
any Lender or Lenders as security for any of the Obligations shall fail
to attach or be perfected; or

		
	 	     (e)     any of the Obligations shall be determined to be void or
voidable (including, without limitation, for the benefit of any creditor
of any Guarantor) or shall be subordinated to the claims of any Person
(including, without limitation, any creditor of any Guarantor).

     With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Administrative Agent or any Lender
exhaust any right, power or remedy or proceed against any Person under any of
the Loan Documents, any Swap Contract between any Loan Party and any Lender, or
any Affiliate of a Lender, or any other agreement or instrument referred to in
the Loan Documents or such Swap Contracts, or against any other Person under
any other guarantee of, or security for, any of the Obligations.

     Section 4.3 Reinstatement.

     The obligations of the Guarantors under this Article
IV shall be automatically reinstated if and to the extent that for
any reason any payment by or on behalf of any Person in respect of the
Obligations is rescinded or must be otherwise restored by any holder of any of
the Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Administrative Agent and each Lender on demand for all reasonable costs and
expenses (including, without limitation, fees and expenses of counsel) incurred
by the Administrative Agent or such Lender in connection with such rescission
or restoration, including any such costs and expenses incurred in defending
against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.

44

 

     Section 4.4 Certain Additional Waivers.

     Each Guarantor hereby further agrees that such Guarantor shall
have no right of recourse to security for the Obligations, except through the
exercise of rights of subrogation pursuant to Section 4.2
and through the exercise of rights of contribution pursuant to Section
4.6.

     Section 4.5 Remedies.

     The Guarantors agree that, to the fullest extent permitted by
law, as between the Guarantors, on the one hand, and the Administrative Agent
and the Lenders, on the other hand, the Obligations may be declared to be
forthwith due and payable as provided in Section 9.2 (and
shall be deemed to have become automatically due and payable in the
circumstances provided in said Section 9.2) for purposes of
Section 4.1 notwithstanding any stay, injunction or other
prohibition preventing such declaration (or preventing the Obligations from
becoming automatically due and payable) as against any other Person and that,
in the event of such declaration (or the Obligations being deemed to have
become automatically due and payable), the Obligations (whether or not due and
payable by any other Person) shall forthwith become due and payable by the
Guarantors for purposes of Section 4.1. The Guarantors
acknowledge and agree that their obligations hereunder are secured in
accordance with the terms of the Collateral
Documents and that the Lenders may exercise their remedies thereunder in
accordance with the terms thereof.

     Section 4.6 Rights of Contribution.

     The Guarantors hereby agree as among themselves that, if any
Guarantor shall make an Excess Payment (as defined below), such Guarantor shall
have a right of contribution from each other Guarantor in an amount equal to
such other Guarantor’s Contribution Share (as defined below) of such Excess
Payment. The payment obligations of any Guarantor under this Section
4.6 shall be subordinate and subject in right of payment to the
Obligations until such time as the Obligations have been paid in full and the
Commitments have expired or terminated, and none of the Guarantors shall
exercise any right or remedy under this Section 4.6against
any other Guarantor until such Obligations have been paid in full and the
Commitments have expired or terminated. For purposes of this Section
4.6, (a) “Excess Payment” shall mean the amount paid by any Guarantor
in excess of its Ratable Share of any Guaranteed Obligations; (b) “Ratable
Share” shall mean, for any Guarantor in respect of any payment of Obligations,
the ratio (expressed as a percentage) as of the date of such payment of
Guaranteed Obligations of (i) the amount by which the
aggregate present fair
salable value of all of its assets and properties exceeds the amount of all
debts and liabilities of such Guarantor (including contingent, subordinated,
unmatured, and unliquidated liabilities, but excluding the obligations of such
Guarantor hereunder) to (ii) the amount by which the aggregate present fair
salable value of all assets and other properties of all of the Loan Parties
exceeds the amount of all of the debts and liabilities (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding the
obligations of the Loan Parties hereunder) of the Loan Parties;
provided, however, that, for purposes of
calculating the Ratable Shares of the Guarantors in respect of any payment of
Obligations, any Guarantor that became a Guarantor subsequent to the date of
any such payment shall be deemed to have been a Guarantor on the date of such
payment and the financial information for such Guarantor as of the date such
Guarantor became a Guarantor shall be utilized for such Guarantor in connection
with such payment; (c) “Contribution Share” shall mean, for any Guarantor in
respect of any Excess Payment made by any other Guarantor, the ratio (expressed
as a percentage) as of the date of such Excess Payment of (i) the amount by
which the

45

 

aggregate present
fair salable value of all of its assets and
properties exceeds the amount of all debts and liabilities of such Guarantor
(including contingent, subordinated, unmatured, and unliquidated liabilities,
but excluding the obligations of such Guarantor hereunder) to (ii) the amount
by which the
aggregate present
fair salable value of all assets and other
properties of the Loan Parties other than the maker of such Excess Payment
exceeds the amount of all of the debts and liabilities (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding the
obligations of the Loan Parties) of the Loan Parties other than the maker of
such Excess Payment; provided, however,
that, for purposes of calculating the Contribution Shares of the Guarantors in
respect of any Excess Payment, any Guarantor that became a Guarantor subsequent
to the date of any such Excess Payment shall be deemed to have been a Guarantor
on the date of such Excess Payment and the financial information for such
Guarantor as of the date such Guarantor became a Guarantor shall be utilized
for such Guarantor in connection with such Excess Payment; and (d) “Guaranteed
Obligations” shall mean the Obligations guaranteed by the Guarantors pursuant
to this Article IV. This Section 4.6
shall not be deemed to affect any right of subrogation, indemnity,
reimbursement or contribution that any Guarantor may have under Law against the
Borrower in respect of any payment of Guaranteed Obligations. Notwithstanding
the foregoing, all
rights of contribution against any Guarantor shall terminate from and
after such time, if ever, that such Guarantor shall be relieved of its
obligations in accordance with Section 10.11.

     Section 4.7 Guarantee of Payment; Continuing Guarantee.

     The guarantee in this Article IV is a
guaranty of payment and not of collection, is a continuing guarantee, and shall
apply to all Obligations whenever arising.

ARTICLE V

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

     Section 5.1 Conditions of Initial Credit Extension.

     The obligation of each Lender to make its initial Credit Extension
hereunder is subject to satisfaction of the following conditions precedent:

          (a) The Administrative Agent’s receipt of the following, each of which
shall be originals or facsimiles (followed promptly by originals) unless
otherwise specified, each properly executed by a Responsible Officer of the
signing Loan Party, each dated the Closing Date (or, in the case of
certificates of governmental officials, a recent date before the Closing Date)
and each in form and substance satisfactory to the Administrative Agent and its
legal counsel:

		
	 	     (i) executed counterparts of this Agreement, the Guaranty and
the other Loan Documents, sufficient in number for distribution to
the Administrative Agent, each Lender and the Borrower;

		
	 	     (ii) a Note executed by the Borrower in favor of each Lender
requesting a Note;

46

 

		
	 	     (iii) such certificates of resolutions or other action,
incumbency certificates and/or other certificates of Responsible
Officers of each Loan Party as the Administrative Agent may
require evidencing the identity, authority and capacity of each
Responsible Officer thereof authorized to act as a Responsible
Officer in connection with this Agreement and the other Loan
Documents to which such Loan Party is a party;

		
	 	     (iv) such documents and certifications as the Administrative
Agent may reasonably require to evidence that each Loan Party is
duly organized or formed, and that each of the Borrower and the
Guarantors is validly existing, in good standing and qualified to
engage in business in each jurisdiction where its ownership, lease
or operation of properties or the conduct of its business requires
such qualification.

		
	 	     (v) a favorable opinion of Watt, Tieder, Fitzgerald & Hoffar,
counsel to the Loan Parties, addressed to the Administrative Agent
and each Lender, as to the matters set forth in Exhibit
G and such other matters concerning the Loan Parties and
the Loan Documents as the Required Lenders may reasonably request;
	 
	 	     (vi) a certificate of a Responsible Officer of each Loan
Party either (A) attaching copies of all consents, licenses and
approvals required in connection with the execution, delivery and
performance by such Loan Party and the validity against such Loan
Party of the Loan Documents to which it is a party, and such
consents, licenses and approvals shall be in full force and
effect, or (B) stating that no such consents, licenses or
approvals are so required;

		
	 	     (vii) a certificate signed by a Responsible Officer of the
Borrower certifying (A) that the conditions specified in
Section 5.2(a) and Section
5.2(b) have been satisfied (B) that there has been no
event or circumstance since the date of the Audited Financial
Statements that has had or could be reasonably expected to have,
either individually or in the aggregate, a Material Adverse
Effect; and (C) a calculation of the Consolidated Net Worth, the
ratio of Total Funded Indebtedness to Consolidated EBITDA and the
ratio of Consolidated EBITDAR to Fixed Charges Leverage Ratio as
of the last day of the fiscal quarter of the Borrower most
recently ended prior to the Closing Date;

		
	 	     (viii) evidence that all insurance required to be maintained
pursuant to the Loan Documents has been obtained and is in effect;

		
	 	     (ix) evidence that the Existing Credit Agreements have been
or concurrently with the Closing Date are being terminated and all
obligations thereunder paid in full and all Liens securing
obligations under the Existing SEAL Credit Agreement have been or
concurrently with the Closing Date are being released or assigned
to a Subsidiary or Affiliate of Borrower; and

47

 

		
	 	     (x) all existing original stock certificates and four (4)
stock powers executed in blank for each share of stock pledged to
the Lender’ as part of the Collateral and copies of any
shareholders agreements related to such stock;

		
	 	     (xi) a list of all management agreements to which Sunrise
Senior Living Management, Inc., Sunrise Senior Living Services,
Inc. or any other Loan Party is a party as manager or operator of
any Senior Living Facility and a written certification by the
Borrower stating which management agreements are currently
assigned to a lender or prohibit assignment to a lender by their
terms (the Borrower agrees that it will provide copies of any
management agreements requested by the Administrative Agent); and

		
	 	     (xii) such other assurances, certificates, documents,
consents or opinions as the Administrative Agent, the L/C Issuer,
the Swing Line Lender or the Required Lenders reasonably may
require.

          (b) Any fees required to be paid on or before the Closing Date shall have
been paid.

          (c) Unless waived by the Administrative Agent, the Borrower shall have
paid all Attorney Costs of the Administrative Agent to the extent invoiced
prior to or on the Closing
Date, plus such additional amounts of Attorney Costs as shall constitute
its reasonable estimate of Attorney Costs incurred or to be incurred by it
through the closing proceedings (provided that such estimate shall not
thereafter preclude a final settling of accounts between the Borrower and the
Administrative Agent).

          (d) The Closing Date shall have occurred on or before September 19, 2003.

          (e) There shall not have occurred any material disruption of or material
adverse change in conditions in the financial banking or capital markets which
the Administrative Agent and BAS, in their sole discretion, deem material in
connection with syndication of the Credit Facility.

          (f) There shall not have occurred a Material Adverse Effect on the
business, assets, operations, condition (financial or otherwise) of the
Borrower or any other Loan Party or their respective Affiliates or Subsidiaries
or in the statements or information provided to the Administrative Agent
regarding such entities.

          (g) There shall not have occurred any action, suit, investigation or
proceeding, pending or threatened, in any court or before any arbitrator or
governmental authority that purports to affect the Borrower, the other Loan
Parties or their respective Affiliates or Subsidiaries in a materially adverse
manner or any transaction contemplated hereby, or that could reasonably be
expected to have a Material Adverse Effect on the Borrower, the other Loan
Parties or their respective affiliates or subsidiaries or any transaction
contemplated hereby or on the ability of the Borrower, the other Loan Parties
or their respective Affiliates or Subsidiaries to

48

 

perform their obligations
under the documents to be executed in connection with the Credit Facility.

     Section 5.2 Conditions to all Credit Extensions.

     The obligation of each Lender to honor any Request for Credit Extension
(other than a Committed Loan Notice requesting only a conversion of Committed
Loans to the other Type, or a continuation of Eurodollar Rate Committed Loans)
is subject to the following conditions precedent:

          (a) The representations and warranties of the Borrower and each other Loan
Party contained in Article VI or any other Loan Document, or
which are contained in any document furnished at any time under or in
connection herewith or therewith, shall be true and correct on and as of the
date of such Credit Extension, except to the extent that such representations
and warranties specifically refer to an earlier date, in which case they shall
be true and correct as of such earlier date, and except that for purposes of
this (a), the representations and warranties contained in
subsections (a) and (b) of Section 6.5 shall be deemed to
refer to the most recent statements furnished pursuant to clauses (a) and (b),
respectively, of Section 7.1.

          (b) No Default shall exist, or would result from such proposed Credit
Extension.

          (c) The Administrative Agent and, if applicable, the L/C Issuer or the
Swing Line Lender shall have received a Request for Credit Extension in
accordance with the requirements hereof.

     Each Request for Credit Extension (other than a Committed Loan Notice
requesting only a conversion of Committed Loans to the other Type or a
continuation of Eurodollar Rate Committed Loans) submitted by the Borrower
shall be deemed to be a representation and warranty that the conditions
specified in (a) and (b) have been
satisfied on and as of the date of the applicable Credit Extension.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

     The Borrower represents and warrants to the Administrative Agent
and the Lenders that:

     Section 6.1 Existence, Qualification and Power; Compliance with
Laws.

     Each Loan Party (a) is a corporation, duly organized or formed, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and authority and
all requisite governmental licenses, authorizations, consents and approvals to
(i) own its assets and carry on its business and (ii) execute, deliver and
perform its obligations under the Loan Documents to which it is a party, (c) is
duly qualified and is licensed and in good standing under the Laws of each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license, and (d) is in
compliance with all Laws; except in each case referred to in clause (b)(i), (c)
or (d), to

49

 

the extent that failure to do so could not reasonably be expected to
have a Material Adverse Effect.

     Section 6.2 Authorization; No Contravention.

     The execution, delivery and performance by each Loan Party of each Loan
Document to which such Person is party, have been duly authorized by all
necessary corporate or other organizational action, and do not and will not (a)
contravene the terms of any of such Person’s Organization Documents; (b)
conflict with or result in any breach or contravention of, or the creation of
any Lien under, (i) any Contractual Obligation to which such Person is a party
or (ii) any order, injunction, writ or decree of any Governmental Authority or
any arbitral award to which such Person or its property is subject; or (c)
violate any Law.

     Section 6.3 Governmental Authorization; Other Consents.

     No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority or any other Person is
necessary or required in connection with the execution, delivery or performance
by, or enforcement against, any Loan Party of this Agreement or any other Loan
Document.

     Section 6.4 Binding Effect.

     This Agreement has been, and each other Loan Document, when delivered
hereunder, will have been, duly executed and delivered by each Loan Party that
is party thereto. This Agreement constitutes, and each other Loan Document
when so delivered will constitute, a legal, valid and binding obligation of
such Loan Party, enforceable against each Loan Party that is party thereto in
accordance with its terms.

     Section 6.5 Financial Statements; No Material Adverse
Effect.

          (a) The Audited Financial Statements (i) were prepared in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) fairly present the financial condition
of the Borrower and its Subsidiaries as of the date thereof and their results
of operations for the period covered thereby in accordance with GAAP
consistently applied throughout the period covered thereby, and (iii) show all
material indebtedness and other liabilities, direct or contingent, of the
Borrower and its Subsidiaries as of the date thereof, including liabilities for
taxes, material commitments and Indebtedness.

          (b) The unaudited consolidated financial statements of the Borrower and
its Subsidiaries dated June 30, 2003 and the related consolidated statements of
income or operations, shareholders’ equity and cash flows for the fiscal
quarter ended on that date (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby and (ii) fairly
present the financial condition of the Borrower and its Subsidiaries as of the
date thereof and their results of operations for the period covered thereby,
subject, in the case of clauses (i) and (ii), to the absence of footnotes and
to normal year-end audit adjustments. Schedule 6.5 sets
forth all material indebtedness and other liabilities, direct or contingent, of
the Borrower and its consolidated Subsidiaries as of the date of such financial
statements, including liabilities for taxes, material commitments and
Indebtedness.

50

 

          (c) Since the date of the Audited Financial Statements, there has been no
event or circumstance, either individually or in the aggregate, that has had or
could reasonably be expected to have a Material Adverse Effect.

     Section 6.6 Litigation.

     Except as specifically disclosed in Schedule
6.6, there are no actions, suits, proceedings, claims or disputes
pending or, to the knowledge of the Borrower after due and diligent
investigation, threatened or contemplated, at law, in equity, in arbitration or
before any Governmental Authority, by or against the Borrower or any of its
Subsidiaries or against any of their properties or revenues that (a) purport to
affect or pertain to this Agreement or any other Loan Document, or any of the
transactions contemplated hereby, or (b) either individually or in the
aggregate, if determined adversely, could reasonably be expected to have a
Material Adverse Effect.

     Section 6.7 No Default.

     Neither the Borrower nor any Subsidiary is in default under or with
respect to any Contractual Obligation that could, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. No
Default has occurred and is continuing or would result from the consummation of
the transactions contemplated by this Agreement or any other Loan Document.

     Section 6.8 Ownership of Property; Liens.

     The Borrower and each Subsidiary has good record and marketable title in
fee simple to, or valid leasehold interests in, all real property necessary or
used in the ordinary conduct of its business, except for such defects in title
as could not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect. The property of the Borrower and its Subsidiaries
is subject to no Liens, other than Liens permitted by Section
8.1.

     Section 6.9 Environmental Compliance.

     The Borrower and its Subsidiaries conduct in the ordinary course of
business a review of the effect of existing Environmental Laws and claims
alleging potential liability or responsibility for violation of any
Environmental Law on their respective businesses, operations and properties,
and as a result thereof the Borrower has reasonably concluded that, except as
specifically disclosed in Schedule 6.9, such Environmental
Laws and claims could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

     Section 6.10 Insurance.

     The properties of the Borrower and its Subsidiaries are insured with
companies having an A.M. Best Rating of at least A- not Affiliates of the
Borrower, in such amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Borrower or the applicable
Subsidiary operates. Without limiting the generality of the foregoing, such
insurance shall include coverage for acts of terrorism.

51

 

     Section 6.11 Taxes.

     The Borrower and its Subsidiaries have filed all Federal, state and other
material tax returns and reports required to be filed, and have paid all
Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in
good faith by appropriate proceedings diligently conducted and for which
adequate reserves have been provided in accordance with GAAP. There is no
proposed tax assessment against the Borrower or any Subsidiary that would, if
made, have a Material Adverse Effect.

     Section 6.12 ERISA Compliance.

          (a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state Laws. Each
Plan that is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS or an application for such a
letter is currently being processed by the IRS with respect thereto and, to the
best knowledge of the Borrower, nothing has occurred which would prevent, or
cause the loss of, such qualification. The Borrower and each ERISA Affiliate
have made all required contributions to each Plan subject to Section 412 of the
Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan.

          (b) There are no pending or, to the knowledge of the Borrower, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that could be reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.

          (c) (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA with respect to any Pension Plan (other
than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
the Borrower nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving
of notice under Section 4219 of ERISA, would result in such liability) under
Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v)
neither the Borrower nor any ERISA Affiliate has engaged in a transaction that
could be subject to Sections 4069 or 4212(c) of ERISA.

     Section 6.13 Subsidiaries and Material Subsidiaries.

     As of the Closing Date, the Borrower has no Subsidiaries other than those
specifically disclosed in Part (a) of Schedule 6.13 and has
no equity investments in any other corporation or entity other than those
specifically disclosed in Part (b) of Schedule 6.13. As of
the Closing Date, the existing Guarantors are the only Material Subsidiaries of
the Loan Parties. The number of shares of stock issued to the owner of each
Material Subsidiary is fully and accurately listed on Schedule
6.13.

52

 

     Section 6.14 Margin Regulations; Investment Company Act; Public Utility
Holding Company Act.

          (a) The Borrower is not engaged and will not engage, principally or as one
of its important activities, in the business of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the FRB), or extending
credit for the purpose of purchasing or carrying margin stock.

          (b) None of the Borrower, any Person Controlling the Borrower, or any
Subsidiary (i) is a “holding company,” or a “subsidiary company” of a “holding
company,” or an “affiliate” of a “holding company” or of a “subsidiary company”
of a “holding company,” within the meaning of the Public Utility Holding
Company Act of 1935, or (ii) is or is required to be registered as an
“investment company” under the Investment Company Act of 1940.

     Section 6.15 Disclosure.

     The Borrower has disclosed to the Administrative Agent and the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. No report, financial statement, certificate or other
information furnished (whether in writing or orally) by or on behalf of any
Loan Party to the Administrative Agent or any Lender in connection with the
transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder (as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.

     Section 6.16 Tax Shelter Regulations.

          The Borrower does not intend to treat the Loans and/or Letters of Credit
and related transactions as being a “reportable transaction” (within the
meaning of Treasury Regulation Section 1.6011-4). In the event the Borrower
determines to take any action inconsistent with such intention, it will
promptly notify Administrative Agent thereof. If Borrower so notifies
Administrative Agent, Borrower acknowledges that one or more of the Lenders may
treat its Committed Loans and/or its interest in Swing Line Loans and/or
Letters of
Credit as part of a transaction that is subject to Treasury Regulation
Section 301.6112-1, and such Lender or Lenders, as applicable, will maintain
the lists and other records required by such Treasury Regulation.

53

 

     Section 6.17 Compliance with Laws.

     Each of the Borrower and each Subsidiary is in compliance in all material
respects with the requirements of all Laws and all orders, writs, injunctions
and decrees applicable to it or to its properties, except in such instances in
which (a) such requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted or (b)
the failure to comply therewith, either individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.

     Section 6.18 Intellectual Property; Licenses, Etc.

     The Borrower and its Subsidiaries own, or possess the right to use, all of
the trademarks, service marks, trade names, copyrights, patents, patent rights,
franchises, licenses and other intellectual property rights (collectively,
“IP Rights”) that are reasonably necessary for the operation
of their respective businesses, without conflict with the rights of any other
Person. To the best knowledge of the Borrower, no slogan or other advertising
device, product, process, method, substance, part or other material now
employed, or now contemplated to be employed, by the Borrower or any Subsidiary
infringes upon any rights held by any other Person. Except as specifically
disclosed in Schedule 6.18, no claim or litigation regarding
any of the foregoing is pending or, to the best knowledge of the Borrower,
threatened, which, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

     Section 6.19 Pro forma Financial Statements.

     The Borrower has furnished to the Lender a Pro forma combined balance
sheet of the Borrower and its Subsidiaries for the period ending September 30,
2003 together with Pro forma financial projections for the period through 2005
subsequent to consummation of certain property divestitures which have been
publicly disclosed by the Borrower (the “Pro forma Financial Projections”).
The Pro forma Balance Sheet is correct and complete, represents management’s
best estimate of the consolidated financial condition of the Borrower and its
Subsidiaries as of immediately after consummation of the contemplated property
divestitures and the transactions incident thereto. The Pro forma Financial
Projections are based upon available information and assumptions that
management of the Borrower believes are reasonable.

     Section 6.20 Employee Relations.

     Except as disclosed on Schedule 6.20 attached hereto
and made a part hereof, (a) neither the Borrower nor any Subsidiary thereof nor
any of the Borrower’s or Subsidiary’s employees is subject to any collective
bargaining agreement, (b) no petition for certification or union election is
pending with respect to the employees of the Borrower or any Subsidiary and no
union or collective bargaining unit has sought such certification or
recognition with respect to the employees of the Borrower, (c) there are no
strikes, slowdowns, work stoppages or controversies pending or, to the best
knowledge of the Borrower after due inquiry, threatened between the Borrower
and its employees, and (d) neither the Borrower nor any of its Subsidiaries is
subject to an employment contract, severance agreement, commission contract,
consulting agreement or bonus agreement. Hours worked and payments made to the
employees of the
Borrower have not been in violation of the Fair Labor Standards Act or any
other applicable law dealing with such matters. All payments due from the
Borrower or for which any claim may be made against the Borrower, on account of
wages and employee and retiree health and welfare insurance and other

54

 

benefits
have been paid or accrued as a liability on its books. The consummation of the
transactions contemplated by this Agreement or any of the other Financing
Documents will not give rise to a right of termination or right of
re-negotiation on the part of any union under any collective bargaining
agreement to which the Borrower is a party or by which it is bound.

     Section 6.21 Management Agreements.

     All of the existing agreements for management or operation of a Senior
Living Facility by any Loan Party or any of their Subsidiaries, is listed on a
list provided to the Administrative Agent. Except as disclosed to the
Administrative Agent, the Assignment to the Administrative Agent on behalf of
the Lenders of such management agreements is not prohibited by any financing
arrangements or by the terms of the management agreements themselves.

ARTICLE VII

AFFIRMATIVE COVENANTS

     So long as any Lender shall have any Commitment hereunder, any
Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any
Letter of Credit shall remain outstanding, the Borrower shall, and shall
(except in the case of the covenants set forth in Section
7.1, Section 7.2, Section 7.3,
and Section 7.11) cause each Subsidiary to:

     Section 7.1 Financial Statements.

     Deliver to the Administrative Agent and each Lender, in form and detail
satisfactory to the Administrative Agent and the Required Lenders:

          (a) within ten (10) Business Days after the same are available, but in any
event within 91 days after the end of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its Subsidiaries as at the end
of such fiscal year, and the related consolidated statements of income or
operations, shareholders’ equity and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal
year, all in reasonable detail and prepared in accordance with GAAP, audited
and accompanied by a report and opinion of an independent certified public
accountant of nationally recognized standing reasonably acceptable to the
Required Lenders, which report and opinion shall be prepared in accordance with
generally accepted auditing standards and shall not be subject to any “going
concern” or like qualification or exception or any qualification or exception
as to the scope of such audit; and

          (b) within ten (10) Business Days after the same are available, but in any
event within 46 days after the end of each of the first three fiscal quarters
of each fiscal year of the Borrower, a consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal quarter, and the
related consolidated statements of income or operations, shareholders’ equity
and cash flows for such fiscal quarter and for the portion of the Borrower’s
fiscal year then ended, setting forth in each case in comparative form the
figures for the corresponding fiscal quarter of the previous fiscal year and
the corresponding portion of the
previous fiscal year, all in reasonable detail and certified by a
Responsible Officer of the Borrower as fairly presenting the financial
condition, results of operations, shareholders’ equity

55

 

and cash flows of the
Borrower and its Subsidiaries in accordance with GAAP, subject only to normal
year-end audit adjustments and the absence of footnotes.

As to any information contained in materials furnished pursuant to
Section 7.2(c), the Borrower shall not be separately
required to furnish such information under clause (a) or (b) above, but the
foregoing shall not be in derogation of the obligation of the Borrower to
furnish the information and materials described in subsections (a) and (b)
above at the times specified therein.

     Section 7.2 Certificates; Other Information.

     Deliver to the Administrative Agent and each Lender, in form and detail
satisfactory to the Administrative Agent and the Required Lenders:

          (a) concurrently with the delivery of the financial statements referred to
in Section 7.1(a) and Section 7.1(b), a
duly completed Compliance Certificate signed by a Responsible Officer of the
Borrower;

          (b) promptly after any request by the Administrative Agent or any Lender,
copies of any detailed audit reports, management letters or recommendations
submitted to the board of directors (or the audit committee of the board of
directors) of the Borrower by independent accountants in connection with the
accounts or books of the Borrower or any Subsidiary, or any audit of any of
them;

          (c) promptly after the same are available, copies of each annual report,
proxy or financial statement or other report or communication sent to the
stockholders of the Borrower, and copies of all annual, regular, periodic and
special reports and registration statements which the Borrower may file or be
required to file with the SEC under Section 13 or 15(d) of the Securities
Exchange Act of 1934, and not otherwise required to be delivered to the
Administrative Agent pursuant hereto; and

          (d) promptly after the same are available but in any event by January 15
of each year, a copy of an annual business plan for the current fiscal year in
form and content acceptable to the Administrative Agent.

          (e) promptly, such additional information regarding the business,
financial or corporate affairs of the Borrower or any Subsidiary, or compliance
with the terms of the Loan Documents, as the Administrative Agent or any Lender
may from time to time reasonably request.

     Documents required to be delivered pursuant to Section
7.1(a) or Section 7.1(b) or Section
7.2(c) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which the
Borrower posts such documents, or provides a link thereto on the Borrower’s
website on the Internet at the website address listed on Schedule
11.2; or (ii) on which such documents are posted on the Borrower’s
behalf on IntraLinks/IntraAgency or another relevant website, if any, to which
each Lender and the Administrative Agent have access (whether a commercial,
third-party website or whether sponsored by the Administrative Agent);

56

 

provided that: (i) the Borrower shall deliver
paper copies of such documents to the Administrative Agent or any Lender
that requests the Borrower to deliver such paper copies until a written request
to cease delivering paper copies is given by the Administrative Agent or such
Lender and (ii) the Borrower shall notify (which may be by facsimile or
electronic mail) the Administrative Agent and each Lender of the posting of any
such documents and provide to the Administrative Agent by electronic mail
electronic versions (i.e., soft copies) of such documents.
Notwithstanding anything contained herein, in every instance the Borrower shall
be required to provide paper copies of the Compliance Certificates required by
Section 7.2(b) to the Administrative Agent and each of the
Lenders. Except for such Compliance Certificates, the Administrative Agent
shall have no obligation to request the delivery or to maintain copies of the
documents referred to above, and in any event shall have no responsibility to
monitor compliance by the Borrower with any such request for delivery, and each
Lender shall be solely responsible for requesting delivery to it or maintaining
its copies of such documents.

     Section 7.3 Notices.

     Promptly notify the Administrative Agent who will thereafter forward a
copy of such notice to each Lender:

          (a) of the occurrence of any Default;

          (b) of any matter that has resulted or could reasonably be expected to
result in a Material Adverse Effect, including (i) breach or non-performance
of, or any default under, a Contractual Obligation of the Borrower or any
Subsidiary; (ii) any dispute, litigation, investigation, proceeding or
suspension between the Borrower or any Subsidiary and any Governmental
Authority; or (iii) the commencement of, or any material development in, any
litigation or proceeding affecting the Borrower or any Subsidiary, including
pursuant to any applicable Environmental Laws;

          (c) of the occurrence of any ERISA Event;

          (d) of any material change in accounting policies or financial reporting
practices by the Borrower or any Subsidiary.

          (e) of any judicial, administrative or arbitral proceeding pending
against any of the Borrowers or any judicial or administrative proceeding
known by the Borrowers to have been threatened against any of them in a
written communication which threatened proceeding, if adversely decided,
could cause a Material Adverse Effect in the Loan Parties taken in the
aggregate; and

          (f) of the revocation, suspension, probation, restriction,
limitation or refusal to renew, or any administrative procedure then in
process for the revocation, suspension, probation, restriction,
limitation, or refusal to renew, of any License, or the decertification,
revocation, suspension, probation, restriction, limitation, or refusal to
renew, or the pending, decertification, revocation, suspension,
probation, restriction, limitation, or refusal to renew or any
administrative procedure then in process for any participation or
eligibility in any third party payor program in which the Borrower or any

57

 

of its subsidiaries elects to participate, including, without limitation,
Medicare, Medicaid or other private insurer programs or any accreditation
of the Borrower or any of its subsidiaries, or the issuance or pending
issuance of any License for a period of less than
twelve (12) months, as a consequence of sanctions imposed by any
Governmental Authority, or the assessment or pending assessment, of any
civil or criminal penalties by any Government Authority, any third party
payor or any accreditation organization or Person, which in any such case
would cause a Materially Adverse Effect on the financial condition or
operations of the Borrower or any of its Subsidiaries or an Affiliate as
determined by the Administrative Agent, in its sole but reasonable
discretion.

     Each notice pursuant to this Section shall be accompanied by a statement
of a Responsible Officer of the Borrower setting forth details of the
occurrence referred to therein and stating what action the Borrower has taken
and proposes to take with respect thereto. Each notice pursuant to
Section 7.3(a) shall describe with particularity any and all
provisions of this Agreement and any other Loan Document that have been
breached.

          (g) Promptly after the Borrower has notified Administrative Agent of any
intention by the Borrower to treat Loans and/or Letters of Credit and related
transactions as being a “reportable transaction” (within the meaning of
Treasury Regulation Section 1.6011-4), a duly completed copy of IRS Form 8886
or any successor form.

     Section 7.4 Payment of Obligations.

     Pay and discharge as the same shall become due and payable, all its
obligations and liabilities, including (a) all tax liabilities, assessments and
governmental charges or levies upon it or its properties or assets, unless the
same are being contested in good faith by appropriate proceedings diligently
conducted and adequate reserves in accordance with GAAP are being maintained by
the Borrower or such Subsidiary; (b) all lawful claims which, if unpaid, would
by law become a Lien upon its property; and (c) all Indebtedness, as and when
due and payable, but subject to any subordination provisions contained in any
instrument or agreement evidencing such Indebtedness.

     Section 7.5 Preservation of Existence, Etc.

          (a) Preserve, renew and maintain in full force and effect its legal
existence and good standing under the Laws of the jurisdiction of its
organization except in a transaction permitted by Section
8.4, or Section 8.5; (b) take all reasonable
action to maintain all rights, privileges, permits, licenses and franchises
necessary or desirable in the normal conduct of its business, except to the
extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (c) preserve or renew all of its registered
patents, trademarks, trade names and service marks, the non-preservation of
which could reasonably be expected to have a Material Adverse Effect.

     Section 7.6 Maintenance of Properties.

          (a) Maintain, preserve and protect all of its material properties and
equipment necessary in the operation of its business in good working order and
condition, ordinary wear and tear excepted; (b) make all necessary repairs
thereto and renewals and replacements thereof

58

 

except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect; and (c) use
the standard of care typical in the industry in the operation and maintenance
of its facilities.

     Section 7.7 Maintenance of Insurance.

     Maintain with companies having an A.M. Best Rating of at least A- which
are not Affiliates of the Borrower, insurance with respect to its properties
and business against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business, of such types and in such
amounts as are customarily carried under similar circumstances by such other
Persons and providing that the insurer will endeavor to give not less than 30
days’ prior notice to the Administrative Agent of termination, lapse or
cancellation of such insurance. Without limiting the generality of the
foregoing, such insurance shall include coverage for acts of terrorism.

     Section 7.8 Compliance with Laws.

     Comply in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to it or to its business or
property, except in such instances in which (a) such requirement of Law or
order, write, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted; or (b) the failure to comply
therewith could not reasonably be expected to have a Material Adverse Effect on
the Loan Parties taken on the aggregate.

     Section 7.9 Books and Records.

          (a) Maintain proper books of record and account, in which full, true and
correct entries in conformity with GAAP consistently applied shall be made of
all financial transactions and matters involving the assets and business of the
Borrower or such Subsidiary, as the case may be; and (b) maintain such books of
record and account in material conformity with all applicable requirements of
any Governmental Authority having regulatory jurisdiction over the Borrower or
such Subsidiary, as the case may be.

     Section 7.10 Inspection Rights.

     Permit representatives and independent contractors of the Administrative
Agent and each Lender to visit and inspect any of its properties or any Senior
Living Facility managed by a Loan Party accompanied by a representative of the
Borrower or other Loan Party or the owner of the Senior Living Facility, to
examine its corporate, financial and operating records, and make copies thereof
or abstracts therefrom, and to discuss its affairs, finances and accounts with
its directors, officers, and independent public accountants, all at the expense
of the Borrower and all at such reasonable times during normal business hours
and as often as may be reasonably desired, upon reasonable advance notice to
the Borrower sufficient, in the case of a visit to a Senior Living Facility to
coordinate such visit with a representative (which coordination will not be
unreasonably delayed or denied); provided,
however, that when an Event of Default exists the
Administrative Agent or any Lender (or any of their respective representatives
or independent contractors) may do any of the foregoing at the expense of the
Borrower at any time during normal business hours and without advance notice.

59

 

     Section 7.11 Use of Proceeds.

     Use the proceeds of the Credit Extensions for general corporate purposes
not in contravention of any Law or of any Loan Document.

     Section 7.12 Conduct of Business and Compliance with Laws;
Licensure.

     Do or cause to be done all things necessary to obtain, enter
into, preserve and to keep in full force and effect its Licenses, Participation
Agreements, and operating agreements and management contracts which are
necessary for the operation of the Senior Living Facilities as contemplated by
the Loan Parties, engage in and continue to engage substantially only in the
business of owning and operating Senior Living Facilities and related services
in compliance with all applicable laws of the state in which the applicable
Senior Living Facility is located or any other Governmental Authority having
jurisdiction over such Senior Living Facility, and comply with all applicable
Laws, including, without limitation, regulations issued under the Omnibus
Budget Reconciliation Act of 1987 (OBRA’87) (Pub.L.No. 100-203), as amended,
and observe the valid requirements of Governmental Authorities, and perform the
terms of all Participation Agreements to which it is a party, the noncompliance
with or the nonobservance of which might materially interfere with the
performance of its Obligations or the proper or prudent conduct of its business
or the applicable Property. In addition, the Borrowers covenant and agree that
it will:

		
	 	     (a) obtain and maintain in full force and effect all Licenses
necessary to the acquisition and/or ownership and/or operation of the
Senior Living Facilities including, without limitation, Licenses and
other approvals related to the storage, dispensation, use, prescription
and disposal of drugs, medications and other “controlled substances”
and, to the extent offered by the Borrower or its subsidiaries, the
maintenance of cafeteria and other food and beverage facilities or
services, the failure to so obtain and maintain would result in a
Material Adverse Effect on the Borrower, its Subsidiaries or Affiliates,
in the aggregate;

		
	 	     (b) administer, maintain and operate (or cause to be administered,
maintained and operated) each Senior Living Facility as a
revenue-producing facility;

		
	 	     (c) to the extent the Borrower or its Subsidiaries participate in
any such programs, maintain and operate each Senior Living Facility to
meet the standards and requirements and to provide healthcare of such
quality and in such manner as would enable the Borrower or its
Subsidiaries to participate in, and provide services in connection with,
recognized medical and healthcare insurance programs;

		
	 	     (d) obtain, maintain and comply with all conditions for the
continuance of, all Licenses, including without limitation, Licenses
which may at any time be required by the state in which the applicable
Senior Living Facility is located or other appropriate governmental
entity, necessary or desirable for the operation of each Senior Living
Facility as contemplated by the Loan Parties, the failure to so obtain
or maintain which would result in a Material Adverse Effect on the
Borrower, its Subsidiaries or Affiliates, in the aggregate; and

60

 

		
	 	     (e) to the extent the Borrower or its Subsidiaries presently
participate or in the future will participate in such programs, obtain,
maintain and comply with all conditions for the continuance of
certification from each applicable Governmental Authority that the
Borrower or its Subsidiaries meet all conditions for participation in
the Medicare and Medicaid programs.

     Section 7.13 Additional Guarantors.

     Notify the Administrative Agent at the time that any Person becomes a
Material Subsidiary, and promptly thereafter (and in any event within 30 days),
cause such Person to (a) become a Guarantor by executing and delivering to the
Administrative Agent a counterpart of the Guaranty or such other document as
the Administrative Agent shall deem appropriate for such purpose, and (b)
deliver to the Administrative Agent documents of the types referred to in
clauses (iii) and (iv) of Section 5.1(a) and favorable
opinions of counsel to such Person (which shall cover, among other things, the
legality, validity, binding effect and enforceability of the documentation
referred to in clause (a)), all in form, content and scope reasonably
satisfactory to the Administrative Agent. The foregoing notwithstanding, if
the Administrative Agent confirms in its sole discretion that a Material
Subsidiary is prohibited from guarantying the Credit Facility pursuant to the
terms of other financing arrangements, no such Guaranty shall be required by
the Lenders.

     Section 7.14 Financial Covenants.

     Each of the following financial covenants will be measured as of the
periods ending on the dates indicated below using the method of calculation set
forth below:

	 	 	 
	Reporting Period	 	Methodology
	
	 	

	9/30/03	 	
Most recent fiscal quarter, annualized
	12/31/03	 	
2 most recent fiscal quarters, annualized
	3/31/04	 	
3 most recent fiscal quarters, annualized
	6/30/04 and as of each fiscal
quarter end thereafter	 	
4 most recent fiscal quarters

          (a) Consolidated Net Worth. The Borrower will at all
times maintain, tested as of the end of each of the Borrower’s fiscal quarters
beginning with the quarter ending September 30, 2003, a Consolidated Net Worth
of not less than the sum of $387,493, plus 50% of the Borrower’s net income (if
positive) for each subsequent quarter, plus 85% of the net proceeds to the
Borrower of any equity capital transaction received during any subsequent
quarter.

          (b) Leverage Ratio. The Borrower will maintain, tested
as of the end of each of the Borrower’s fiscal quarters beginning with the
quarter ending September 30, 2003, a ratio of Total Funded Indebtedness to
Consolidated EBITDA so that it is not more than the following:

61

 

	 	 	 	 	 
	Measurement Period	 	Ratio
	
	 	

	As of Closing through September 30, 2003
	 	5.25 to 1.0
	As of October 1, 2003 through March 31, 2004
	 	4.50 to 1.0
	As of April 1, 2004 through March 31, 2005
	 	4.00 to 1.0
	As of April 1, 2005 and at all times thereafter
	 	3.75 to 1.0

     The foregoing notwithstanding, transition expenses associated with the
acquisition by the Borrower of Marriott Senior Living Services, Inc. will not
be annualized when calculating
Consolidated EBITDA for purposes of calculating the foregoing covenant;
instead such actual expenses will be deducted from earnings only for the period
in which such expenses are incurred and after the other components of
Consolidated EBITDA for the period of measurement are annualized.

     Furthermore, for purposes of measuring the leverage ratio only, the
Borrower shall include in its reporting of Total Funded Indebtedness and
Consolidated EBITDA the pro forma effect of any future material asset
acquisition or asset Disposition which has occurred during the reporting period
but shall exclude the pro forma effect of any transaction in which all or a
majority of the Borrower’s ownership interests in a Senior Living Facility are
sold to a party other than a Subsidiary of the Borrower but which is managed by
Loan Party.

          (c) Fixed Charge Coverage Ratio.
The Borrower will maintain, tested as of the end of each of the Borrower’s
fiscal quarters beginning with the quarter ending September 30, 2003, a ratio
of Consolidated EBITDAR to Fixed Charges of not less than the following:

	 	 	 	 	 
	Measurement Period	 	Ratio
	
	 	

	As of Closing through December 31, 2003
	 	1.25 to 1.0
	As of January 1, 2004 through September 30, 2004
	 	1.50 to 1.0
	As of October 1, 2004 and thereafter
	 	1.75 to 1.0

     The foregoing notwithstanding, transition expenses associated with the
acquisition by the Borrower of Marriott Senior Living Services, Inc. will not
be annualized when calculating Consolidated EBITDA for purposes of calculating
the foregoing covenant; instead such actual expenses will be deducted from
earnings only for the period in which such expenses are incurred and after the
other components of Consolidated EBITDA for the period of measurement are
annualized.

62

 

ARTICLE VIII

NEGATIVE COVENANTS

     So long as any Lender shall have any Commitment hereunder, any
Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any
Letter of Credit shall remain outstanding, the Borrower shall not, nor shall it
permit any Subsidiary to, directly or indirectly:

     Section 8.1 Liens.

     Create, incur, assume or suffer to exist any Lien upon any asset of the
Loan Parties, any Subsidiary, Affiliate or entity which is the subject of a
Development Joint Venture Investment except for the following permitted Liens.

          (a) Liens pursuant to any Loan Document;

          (b) Liens for taxes not yet due or which are being contested in good faith
and by appropriate proceedings diligently conducted, if adequate reserves with
respect thereto are maintained on the books of the applicable Person in
accordance with GAAP;

          (c) Liens securing judgments for the payment of money not constituting an
Event of Default under Section 9.1(h) or securing appeal or
other surety bonds related to such judgments;

          (d) Liens on real property and improvements constituting Senior Living
Facilities arising from the financing of such Senior Living Facility or
Facilities in the ordinary course of business including but not limited to
financing of construction or development which do not result in a default under
any financial covenant of the Borrower; and

          (e) Liens listed on Schedule 8.1 attached hereto.

     Section 8.2 Certain Investments.

     Make any of the following Investments:

          (a) Investments held by the Borrower or any Subsidiary consisting of
unimproved land held on its balance sheet for a period in excess of twelve (12)
months which exceed 10% of the Borrower’s consolidated total assets as
determined under GAAP;

          (b) Investments held by the Borrower or any Subsidiary consisting of
Senior Living Facilities held on its balance sheet that are under construction
or for which a certificate of occupancy has not been issued or operations have
not commenced for a period in excess of fifteen (15) months if they exceed 15%
of the Borrower’s consolidated total assets as determined under GAAP;

          (c) Development Joint Venture Investments which exceed 25% of the
Borrower’s consolidated total assets as determined under GAAP;

63

 

          (d) The aggregate of the investments described in Section
8.2(a), Section 8.2(b) and Section
8.2(c) which exceed 40% of the Borrower’s consolidated total assets
as determined under GAAP; and

          (e) Investments in Continuing Care Retirement Communities by the Borrower
or any Subsidiary which exceed 10% of the Borrower’s consolidated total assets
as determined under GAAP.

     Section 8.3 Indebtedness.

     Create, incur, assume or suffer to exist any unsecured Indebtedness other
than trade payables in the ordinary course of business.

     Section 8.4 Fundamental Changes.

     Merge, dissolve, liquidate, consolidate with or into another Person, or
Dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except that, so long as no Default exists or would
result therefrom:

          (a) any Subsidiary may merge with (i) the Borrower,
provided that the Borrower shall be the continuing or
surviving Person, or (ii) any one or more other Subsidiaries,
provided that when any Guarantor is merging with another
Subsidiary, the Guarantor shall be the continuing or surviving Person; and

          (b) any Subsidiary may Dispose of all or substantially all of its assets
(upon voluntary liquidation or otherwise) to the Borrower or to another
Subsidiary; provided that if the transferor in such a
transaction is a Guarantor, then the transferee must either be the Borrower or
a Guarantor; and

          (c) the Borrower may Dispose of the assets described on Schedule
8.4.

     Section 8.5 Dispositions.

     Make any Disposition or enter into any agreement to make any Disposition,
except:

          (a) Dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the ordinary course of business;

          (b) Dispositions of inventory in the ordinary course of business;

          (c) Dispositions of equipment or real property to the extent that (i) such
property is exchanged for credit against the purchase price of similar
replacement property or (ii) the proceeds of such Disposition are reasonably
promptly applied to the purchase price of such replacement property;

          (d) Dispositions of property by any Subsidiary to the Borrower or to a
wholly-owned Subsidiary; provided that if the transferor of
such property is a Guarantor, the transferee thereof must either be the
Borrower or a Guarantor;

64

 

          (e) Dispositions permitted by Section 8.4;

          (f) non-exclusive licenses of IP Rights in the ordinary course of business
and substantially consistent with past practice for terms not exceeding five
years; and

          (g) Dispositions by the Borrower and its Subsidiaries not otherwise
permitted under this Section 8.5;
provided that (i) at the time of such Disposition, no
Default shall exist or would result from such Disposition and (ii) the
aggregate book value of all property Disposed of in reliance on this clause (h)
in any fiscal year shall not exceed $1,000,000; and

     provided, however, that any
Disposition pursuant to clauses (a) through (g) shall be for fair market value.

     Section 8.6 Restricted Payments.

     Declare or make, directly or indirectly, any Restricted Payment, or incur
any obligation (contingent or otherwise) to do so, except that:

          (a) each Subsidiary may make Restricted Payments to the Borrower and to
wholly-owned Subsidiaries (and, in the case of a Restricted Payment by a
non-wholly-owned Subsidiary, to the Borrower and any Subsidiary and to each
other owner of capital stock or other equity interests of such Subsidiary on a
pro rata basis based on their relative ownership interests);

          (b) the Borrower and each Subsidiary may declare and make dividend
payments or other distributions payable solely in the common stock or other
common equity interests of such Person;

          (c) the Borrower and each Subsidiary may purchase, redeem or otherwise
acquire shares of its common stock or other common equity interests or warrants
or options to acquire any such shares with the proceeds received from the
substantially concurrent issue of new shares of its common stock or other
common equity interests;

          (d) the Borrower may declare or pay cash dividends to its stockholders
provided such dividends and redemptions do not exceed
$20,000,000 in the aggregate in any twelve-month period and purchase, redeem or
otherwise acquire shares of its capital stock or warrants, rights or options to
acquire any such shares for cash and provided that
immediately after giving effect to such proposed action, no Default would exist
and provided that the Borrower may redeem, retire, issue a
tender offer for or otherwise acquire any or all of its Convertible Debt so
long as immediately after giving effect to such proposed action, no Default
would exist.

65

 

     Section 8.7 Change in Nature of Business.

     Engage in any material line of business substantially different from those
lines of business conducted by the Borrower and its Subsidiaries on the date
hereof or any business substantially related or incidental thereto.

     Section 8.8 Transactions with Affiliates.

     Enter into any transaction of any kind with any Affiliate of the Borrower,
whether or not in the ordinary course of business, other than on fair and
reasonable terms substantially as favorable to the Borrower or such Subsidiary
as would be obtainable by the Borrower or such Subsidiary at the time in a
comparable arm’s length transaction with a Person other than an Affiliate,
provided that the foregoing restriction shall not apply to transactions between
or among the Borrower and any of its wholly-owned Subsidiaries or between and
among any wholly-owned Subsidiaries.

     Section 8.9 Burdensome Agreements.

     Enter into any Contractual Obligation (other than this Agreement or any
other Loan Document) that (a) limits the ability (i) of any Subsidiary to make
Restricted Payments to the Borrower or any Guarantor or to otherwise transfer
property to the Borrower or any Guarantor, (ii) of any Subsidiary to Guarantee
the Indebtedness of the Borrower or (iii) of the Borrower or any Subsidiary to
create, incur, assume or suffer to exist Liens on property of such Person; or
(b) requires the grant of a Lien to secure an obligation of such Person if a
Lien is granted to secure another obligation of such Person.

     Section 8.10 Use of Proceeds.

     Use the proceeds of any Credit Extension, whether directly or indirectly,
and whether immediately, incidentally or ultimately, to purchase or carry
margin stock (within the meaning of Regulation U of the FRB) or to extend
credit to others for the purpose of purchasing or carrying margin stock or to
refund indebtedness originally incurred for such purpose.

ARTICLE IX

EVENTS OF DEFAULT AND REMEDIES

     Section 9.1 Events of Default.

     Any of the following shall constitute an Event of Default:

          (a) Non-Payment. The Borrower or any other Loan Party
fails to pay (i) when and as required to be paid herein, any amount of
principal of any Loan or any L/C Obligation, or (ii) within three days after
written notice that the same has becomes due, any
interest on any Loan or on any L/C Obligation, or any Unused Fee, L/C Fee
or other fee due hereunder, or (iii) within five days after written notice that
the same has become due, any other amount payable hereunder or under any other
Loan Document; or

          (b) Specific Covenants. The Borrower fails to perform
or observe any term, covenant or agreement contained in any of Section
7.1, Section 7.2, Section 7.3,
Section 7.5,

66

 

Section 7.10,
Section 7.11, Section 7.12 or
Section 7.14or Article VIII and such
failure continues for 30 days after written notice thereof; or

          (c) Other Defaults. Any Loan Party fails to perform or
observe any other covenant or agreement (not specified in subsection (a) or (b)
above) contained in any Loan Document on its part to be performed or observed
and such failure continues for 30 days after written notice thereof; or

          (d) Representations and Warranties. Any
representation, warranty, certification or statement of fact made or deemed
made by or on behalf of the Borrower or any other Loan Party herein, in any
other Loan Document, or in any document delivered in connection herewith or
therewith shall be incorrect or misleading when made or deemed made; or

          (e) Cross-Default. (i) The Borrower or any Subsidiary
(A) fails to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness
or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap
Contracts) having an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than the Threshold Amount,
or (B) fails to observe or perform any other agreement or condition relating to
any such Indebtedness or Guarantee or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event occurs, the effect
of which default or other event is to cause, or to permit the holder or holders
of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or
a trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to be demanded or to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), or an offer to repurchase,
prepay, defease or redeem such Indebtedness to be made, prior to its stated
maturity, or such Guarantee to become payable or cash collateral in respect
thereof to be demanded; or (ii) there occurs under any Swap Contract an Early
Termination Date (as defined in such Swap Contract) resulting from (A) any
event of default under such Swap Contract as to which the Borrower or any
Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B)
any Termination Event (as so defined) under such Swap Contract as to which the
Borrower or any Subsidiary is an Affected Party (as so defined) and, in either
event, the Swap Termination Value owed by the Borrower or such Subsidiary as a
result thereof is greater than the Threshold Amount; or

          (f) Insolvency Proceedings, Etc. Any Loan Party or any
of its Subsidiaries institutes or consents to the institution of any proceeding
under any Debtor Relief Law, or makes an assignment for the benefit of
creditors; or applies for or consents to the appointment of any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer
for it or for all or any material part of its property; or any receiver,
trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed
without the application or consent of such Person and the appointment continues
undischarged or unstayed for 60 calendar days; or any proceeding under any
Debtor Relief Law relating to any such Person or to all or any material part of
its

67

 

property is instituted without the consent of such Person and continues
undismissed or unstayed for 60 calendar days, or an order for relief is entered
in any such proceeding; or

          (g) Inability to Pay Debts; Attachment. (i) The
Borrower or any Subsidiary becomes unable or admits in writing its inability or
fails generally to pay its debts as they become due, or (ii) any writ or
warrant of attachment or execution or similar process is issued or levied
against all or any material part of the property of any such Person and is not
released, vacated or fully bonded within 45 days after its issue or levy; or

          (h) Judgments. There is entered against the Borrower
or any Subsidiary (i) a final judgment or order for the payment of money in an
aggregate amount exceeding the Threshold Amount (to the extent not covered by
independent third-party insurance as to which the insurer does not dispute
coverage), or (ii) any one or more non-monetary final judgments that have, or
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect and, in either case, (A) enforcement proceedings are
commenced by any creditor upon such judgment or order, or (B) there is a period
of 10 consecutive days during which a stay of enforcement of such judgment, by
reason of a pending appeal or otherwise, is not in effect; or

          (i) ERISA. (i) An ERISA Event occurs with respect to a
Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of the Borrower under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess
of the Threshold Amount, or (ii) the Borrower or any ERISA Affiliate fails to
pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan in an aggregate amount in excess of the
Threshold Amount; or

          (j) Invalidity of Loan Documents. Any Loan Document,
at any time after its execution and delivery and for any reason other than as
expressly permitted hereunder or satisfaction in full of all the Obligations,
ceases to be in full force and effect; or any Loan Party or any other Person
contests in any manner the validity or enforceability of any Loan Document; or
any Loan Party denies that it has any or further liability or obligation under
any Loan Document, or purports to revoke, terminate or rescind any Loan
Document; or

          (k) Change of Control. There occurs any Change of
Control with respect to the Borrower.

          (l) Licenses. There occurs any (a) involuntary,
imposed or required revocation, suspension, probation, restriction, limitation
or refusal to renew, or the pending revocation, suspension, probation,
restriction, limitation, of, or refusal to renew, of any license required for
the operation; other than in the ordinary course of business or to the extent
that the Loan Parties deem such action to be, in the exercise of prudent
business judgment, in the best interest of if any of the occurrences described
in (a), (b) or (c) would have a Material Adverse Effect on the business or
financial condition of any of the Loan Parties, any (b) decertification,
revocation, suspension, probation, restriction, limitation, or refusal to
renew, or the pending
decertification, revocation, suspension, probation, restriction,
limitation, or refusal to renew any participation or eligibility in any third
party payor program in which the Loan Parties elect to participate, including,
without limitation, the Medicaid or Medicare programs; or (c) any

68

 

issuance or
pending issuance of any such license for a period of less than twelve (12)
months as a consequence of any sanctions imposed by any Governmental Authority;
or the assessment or pending assessment, of any civil or criminal penalties by
any Governmental Authority, any third party payor or any accreditation
organization or person if any such occurrence will result in a Material Adverse
Effect on the Borrower, its Subsidiaries or Affiliates, in the aggregate.
Without limiting the generality of the foregoing, the failure of the Borrowers
to obtain an operating license for any Facility within sixty (60) days of the
issuance of the certificate of occupancy for such Senior Living Facility if
such failure would have a Material Adverse Effect on the business or financial
condition of any of the Loan Parties.

     Section 9.2 Remedies Upon Event of Default.

     If any Event of Default occurs and is continuing, the Administrative Agent
shall, at the request of, or may, with the consent of, the Required Lenders,
take any or all of the following actions:

          (a) declare the commitment of each Lender to make Loans and any obligation
of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon
such commitments and obligation shall be terminated;

          (b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower;

          (c) require that the Borrower Cash Collateralize the L/C Obligations (in
an amount equal to the then Outstanding Amount thereof); and

          (d) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents or applicable law;

     provided, however, that upon the
occurrence of an actual or deemed entry of an order for relief with respect to
the Borrower under the Bankruptcy Code of the United States, the obligation of
each Lender to make Loans and any obligation of the L/C Issuer to make L/C
Credit Extensions shall automatically terminate, the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable, and the obligation of the Borrower to
Cash Collateralize the L/C Obligations as aforesaid shall automatically become
effective, in each case without further act of the Administrative Agent or any
Lender.

     Section 9.3 Application of Funds.

     After the exercise of remedies provided for in Section
9.2 (or after the Loans have automatically become immediately due and
payable and the L/C Obligations have automatically been required to be Cash
Collateralized as set forth in the proviso to Section 9.2),
any amounts received on account of the Obligations or the Swap Contracts shall
be applied by the Administrative Agent in the following order:

69

 

     First, to payment of that portion of the Obligations
constituting fees, indemnities, expenses and other amounts (including Attorney
Costs and amounts payable under Article III) payable to the
Administrative Agent in its capacity as such;

     Second, to payment of that portion of the Obligations
constituting fees, indemnities and other amounts (other than principal and
interest) payable to the Lenders (including Attorney Costs and amounts payable
under Article III), ratably among them in proportion to the
amounts described in this clause Second payable to them;

     Third, to payment of that portion of the Obligations
constituting accrued and unpaid interest on the Loans and L/C Borrowings,
ratably among the Lenders in proportion to the respective amounts described in
this clause Third payable to them;

     Fourth, to payment of that portion of the Obligations
constituting unpaid principal of the Loans and L/C Borrowings, ratably among
the Lenders in proportion to the respective amounts described in this clause
Fourth held by them;

     Fifth, to the Administrative Agent for the account of
the L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised
of the aggregate undrawn amount of Letters of Credit;

     Sixth, to the Administrative Agent for the Account of
the Lender providing the Swap Transaction to reimburse such Lender for any Swap
Termination Value or to cash collateralize any potential Swap Termination
Value; and

     Last, the balance, if any, after all of the Obligations
have been indefeasibly paid in full, to the Borrower or as otherwise required
by Law.

     Subject to Section 2.3(c), amounts used to Cash
Collateralize the aggregate undrawn amount of Letters of Credit pursuant to
clause Fifth above shall be applied to satisfy drawings
under such Letters of Credit as they occur. If any amount remains on deposit
as Cash Collateral after all Letters of Credit have either been fully drawn or
expired, such remaining amount shall be applied to the other Obligations, if
any, in the order set forth above.

ARTICLE X

ADMINISTRATIVE AGENT

     Section 10.1 Appointment and Authorization of Administrative
Agent.

          (a) Each Lender hereby irrevocably appoints, designates and authorizes the
Administrative Agent to take such action on its behalf under the provisions of
this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere herein or in any other Loan Document, the Administrative
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, nor shall the Administrative Agent have or be deemed to have any
fiduciary relationship with any Lender or participant, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities

70

 

shall be read into this Agreement or any other Loan Document or otherwise exist
against the Administrative Agent. Without limiting the generality of the
foregoing sentence, the use of the term “agent” herein and in the other Loan
Documents with reference to the Administrative Agent
is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable Law. Instead, such
term is used merely as a matter of market custom, and is intended to create or
reflect only an administrative relationship between independent contracting
parties.

          (b) The L/C Issuer shall act on behalf of the Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith, and the
L/C Issuer shall have all of the benefits and immunities (i) provided to the
Administrative Agent in this Article X with respect to any
acts taken or omissions suffered by the L/C Issuer in connection with Letters
of Credit issued by it or proposed to be issued by it and the applications and
agreements for letters of credit pertaining to such Letters of Credit as fully
as if the term “Administrative Agent” as used in this Article
X and in the definition of “Agent-Related Person” included the L/C
Issuer with respect to such acts or omissions, and (ii) as additionally
provided herein with respect to the L/C Issuer.

     Section 10.2 Delegation of Duties.

     The Administrative Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or misconduct
of any agent or attorney-in-fact that it selects in the absence of gross
negligence or willful misconduct.

     Section 10.3 Liability of Administrative Agent.

     No Agent-Related Person shall (a) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Agreement
or any other Loan Document or the transactions contemplated hereby (except for
its own gross negligence or willful misconduct in connection with its duties
expressly set forth herein), or (b) be responsible in any manner to any Lender
or participant for any recital, statement, representation or warranty made by
any Loan Party or any officer thereof, contained herein or in any other Loan
Document, or in any certificate, report, statement or other document referred
to or provided for in, or received by the Administrative Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of any Loan Party or any other
party to any Loan Document to perform its obligations hereunder or thereunder.
No Agent-Related Person shall be under any obligation to any Lender or
participant to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the properties, books or records of any Loan
Party or any Affiliate thereof.

71

 

     Section 10.4 Reliance by Administrative Agent.

          (a) The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, communication, signature, resolution,
representation, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, electronic mail message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to any Loan Party),
independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take
any action under any Loan Document unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Required Lenders (or such greater number of Lenders as may be
expressly required hereby in any instance) and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Lenders.

          (b) For purposes of determining compliance with the conditions specified
in Section 5.1(a), each Lender that has signed this
Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to a Lender unless
the Administrative Agent shall have received notice from such Lender prior to
the proposed Closing Date specifying its objection thereto.

     Section 10.5 Notice of Default.

     The Administrative Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default, except with respect to defaults in the
payment of principal, interest and fees required to be paid to the
Administrative Agent for the account of the Lenders, unless the Administrative
Agent shall have received written notice from a Lender or the Borrower
referring to this Agreement, describing such Default and stating that such
notice is a “notice of default.” The Administrative Agent will notify the
Lenders of its receipt of any such notice. The Administrative Agent shall take
such action with respect to such Default as may be directed by the Required
Lenders in accordance with Article IX;
provided, however, that unless and until
the Administrative Agent has received any such direction, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default as it shall deem advisable or
in the best interest of the Lenders.

     Section 10.6 Credit Decision; Disclosure of Information by
Administrative Agent.

     Each Lender acknowledges that no Agent-Related Person has made
any representation or warranty to it, and that no act by the Administrative
Agent hereafter taken, including any consent to and acceptance of any
assignment or review of the affairs of any Loan Party or any Affiliate thereof,
shall be deemed to constitute any representation or warranty by any
Agent-Related Person to any Lender as to any matter, including whether
Agent-Related Persons have disclosed material information in their possession.
Each Lender represents to the Administrative Agent

72

 

that it has, independently
and without reliance upon any Agent-Related Person and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Loan Parties and their respective
Subsidiaries, and all applicable bank or other regulatory Laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Borrower and the other Loan Parties
hereunder. Each Lender also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information
as it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under this
Agreement and the other Loan Documents, and to make such investigations as it
deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrower
and the other Loan Parties. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Administrative Agent
herein, the Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the
business, prospects, operations, property, financial and other condition or
creditworthiness of any of the Loan Parties or any of their respective
Affiliates which may come into the possession of any Agent-Related Person.

     Section 10.7 Indemnification of Administrative Agent.

     Whether or not the transactions contemplated hereby are consummated, the
Lenders shall indemnify upon demand each Agent-Related Person (to the extent
not reimbursed by or on behalf of any Loan Party and without limiting the
obligation of any Loan Party to do so), pro rata, and hold harmless each
Agent-Related Person from and against any and all Indemnified Liabilities
incurred by it; provided, however, that
no Lender shall be liable for the payment to any Agent-Related Person of any
portion of such Indemnified Liabilities to the extent determined in a final,
nonappealable judgment by a court of competent jurisdiction to have resulted
from such Agent-Related Person’s own gross negligence or willful misconduct;
provided, however, that no action taken
in accordance with the directions of the Required Lenders shall be deemed to
constitute gross negligence or willful misconduct for purposes of this Section.
Without limitation of the foregoing, each Lender shall reimburse the
Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the
Administrative Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that the
Administrative Agent is not reimbursed for such expenses by or on behalf of the
Borrower. The undertaking in this Section shall survive termination of the
Aggregate Commitments, the payment of all other Obligations and the resignation
of the Administrative Agent.

     Section 10.8 Administrative Agent in its Individual
Capacity.

     Bank of America and its Affiliates may make loans to, issue letters of
credit for the account of, accept deposits from, acquire equity interests in
and generally engage in any kind of banking, trust, financial advisory,
underwriting or other business with each of the Loan Parties

73

 

and their
respective Affiliates as though Bank of America were not the Administrative
Agent or the L/C Issuer hereunder and without notice to or consent of the
Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of
America or its Affiliates may receive information regarding any Loan Party or
its Affiliates (including information that may be subject to confidentiality
obligations in favor of such Loan Party or such Affiliate) and acknowledge that
the Administrative Agent shall be under no obligation to provide such
information to them. With respect to its Loans, Bank of America shall have the
same rights and powers under this Agreement as any other Lender and may
exercise such rights and powers as though it were not
the Administrative Agent or the L/C Issuer, and the terms “Lender” and
“Lenders” include Bank of America in its individual capacity.

     Section 10.9 Successor Administrative Agent.

     The Administrative Agent may resign as Administrative Agent upon 30 days’
notice to the Lenders; provided that any such resignation by Bank of America
shall also constitute its resignation as L/C Issuer and Swing Line Lender. If
the Administrative Agent resigns under this Agreement, the Required Lenders
shall appoint from among the Lenders a successor administrative agent for the
Lenders, which successor administrative agent shall be consented to by the
Borrower at all times other than during the existence of an Event of Default
(which consent of the Borrower shall not be unreasonably withheld or delayed).
If no successor administrative agent is appointed prior to the effective date
of the resignation of the Administrative Agent, the Administrative Agent may
appoint, after consulting with the Lenders and the Borrower, a successor
administrative agent from among the Lenders. Upon the acceptance of its
appointment as successor administrative agent hereunder, the Person acting as
such successor administrative agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent, L/C Issuer and Swing Line Lender
and the respective terms “Administrative Agent,” “L/C Issuer” and “Swing Line
Lender” shall mean such successor administrative agent, Letter of Credit issuer
and swing line lender, and the retiring Administrative Agent’s appointment,
powers and duties as Administrative Agent shall be terminated and the retiring
L/C Issuer’s and Swing Line Lender’s rights, powers and duties as such shall be
terminated, without any other or further act or deed on the part of such
retiring L/C Issuer or Swing Line Lender or any other Lender, other than the
obligation of the successor L/C Issuer to issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession or to make other arrangements satisfactory to the retiring L/C
Issuer to effectively assume the obligations of the retiring L/C Issuer with
respect to such Letters of Credit. After any retiring Administrative Agent’s
resignation hereunder as Administrative Agent, the provisions of this
Article X and Section 11.4 and
Section 11.5 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent under this
Agreement. If no successor administrative agent has accepted appointment as
Administrative Agent by the date which is 30 days following a retiring
Administrative Agent’s notice of resignation, the retiring Administrative
Agent’s resignation shall nevertheless thereupon become effective and the
Lenders shall perform all of the duties of the Administrative Agent hereunder
until such time, if any, as the Required Lenders appoint a successor agent as
provided for above.

74

 

     Section 10.10 Administrative Agent May File Proofs of Claim.

     In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition
or other judicial proceeding relative to any Loan Party, the Administrative
Agent (irrespective of whether the principal of any Loan or L/C Obligation
shall then be due and payable as herein expressed or by declaration or
otherwise and irrespective of whether the Administrative Agent shall have made
any demand on the Borrower) shall be entitled and empowered, by intervention in
such proceeding or otherwise

		
	 	     (a) to file and prove a claim for the whole amount of the
principal and interest owing and unpaid in respect of the Loans,
L/C Obligations and all other Obligations that are owing and unpaid
and to file such other documents as may be
necessary or advisable in order to have the claims of the
Lenders and the Administrative Agent (including any claim for the
reasonable compensation, expenses, disbursements and advances of
the Lenders and the Administrative Agent and their respective
agents and counsel and all other amounts due the Lenders and the
Administrative Agent under Section 2.3(i),
Section 2.3(j), Section 2.9 and Section
11.4) allowed in such judicial proceeding; and

		
	 	     (b) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the
same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 2.9 and Section
11.4.

     Nothing contained herein shall be deemed to authorize the Administrative
Agent to authorize or consent to or accept or adopt on behalf of any Lender any
plan of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.

     Section 10.11 Collateral and Guaranty Matters.

     The Lenders irrevocably authorize the Administrative Agent, at its option
and in its discretion,

          (a) to release any Lien on any property granted to or held by the
Administrative Agent under any Loan Document (i) upon termination of the
Aggregate Commitments and payment in full of all Obligations (other than
contingent indemnification obligations) and the expiration or termination of
all Letters of Credit, and (ii) that is sold or to be sold as part of or in
connection with any sale permitted hereunder or under any other Loan Document.

75

 

     (b)  to release any Guarantor from its obligations under the Guaranty if
such Person ceases to be a Subsidiary as a result of a transaction permitted
hereunder.

     Upon request by the Administrative Agent at any time, the Required Lenders
will confirm in writing the Administrative Agent’s authority to release or
subordinate its interest in particular types or items of property, or to
release any Guarantor from its obligations under the Guaranty pursuant to this
Section 10.11.

     Section 10.12 Other Agents; Arrangers and Managers.

     None of the Lenders or other Persons identified on the facing page or
signature pages of this Agreement as a “syndication agent,” “documentation
agent,” “co-agent,” “book manager,” “lead manager,” “arranger,” “lead arranger”
or “co-arranger” shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than, in the case of such
Lenders, those applicable to all Lenders as such. Without limiting the
foregoing, none of the
Lenders or other Persons so identified shall have or be deemed to have any
fiduciary relationship with any Lender. Each Lender acknowledges that it has
not relied, and will not rely, on any of the Lenders or other Persons so
identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.

ARTICLE XI

MISCELLANEOUS

     Section 11.1 Amendments, Etc.

     No amendment or waiver of any provision of this Agreement or any other
Loan Document, no consent to any departure by the Borrower or any other Loan
Party therefrom, no release of Collateral or subordination of Liens thereon and
no consent to Liens on assets of a Loan Party or as otherwise restricted by the
provisions of Section 8.1 hereof shall be effective unless
in writing signed by the Required Lenders and the Borrower or the applicable
Loan Party, as the case may be, and acknowledged by the Administrative Agent,
and each such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given;
provided, however, that no such
amendment, waiver or consent shall:

          (a) waive any condition set forth in Section 5.1(a)
without the written consent of each Lender;

          (b) extend or increase the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 9.2) without the
written consent of such Lender;

          (c) postpone any date fixed by this Agreement or any other Loan Document
for any payment of principal, interest, fees or other amounts due to the
Lenders (or any of them) hereunder or under any other Loan Document without the
written consent of each Lender directly affected thereby;

          (d) reduce the principal of, or the rate of interest specified herein on,
any Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso to
this Section 11.1) any fees or other amounts payable
hereunder or under any other Loan Document without the written

76

 

consent of each
Lender directly affected thereby; provided,
however, that only the consent of the Required Lenders shall
be necessary (i) to amend the definition of “Default Rate” or to waive any
obligation of the Borrower to pay interest at the Default Rate or (ii) to amend
any financial covenant hereunder (or any defined term used therein) or the
method of computation of any financial ratio even if the effect of such
amendment would be to reduce the rate of interest on any Loan or L/C Borrowing
or to reduce any fee payable hereunder.

          (e) change Section 2.13 or Section
9.3 in a manner that would alter the pro rata sharing of payments
required thereby without the written consent of each Lender;

          (f) change any provision of this Section or the definition of “Required
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender;

          (g) release any Guarantor from the Guaranty without the written consent of
each Lender;

and, provided further, that (i) no
amendment, waiver or consent shall, unless in writing and signed by the L/C
Issuer in addition to the Lenders required above, affect the rights or duties
of the L/C Issuer under this Agreement or any Letter of Credit Application
relating to any Letter of Credit issued or to be issued by it; (ii) no
amendment, waiver or consent shall, unless in writing and signed by the Swing
Line Lender in addition to the Lenders required above, affect the rights or
duties of the Swing Line Lender under this Agreement; (iii) no amendment,
waiver or consent shall, unless in writing and signed by the Administrative
Agent in addition to the Lenders required above, affect the rights or duties of
the Administrative Agent under this Agreement or any other Loan Document; and
(iv) the Fee Letter may be amended, or rights or privileges thereunder waived,
in a writing executed only by the parties thereto. Notwithstanding anything to
the contrary herein, no Defaulting Lender shall have any right to approve or
disapprove any amendment, waiver or consent hereunder, except that the
Commitment of such Lender may not be increased or extended without the consent
of such Lender.

     Section 11.2 Notices and Other Communications; Facsimile
Copies.

          (a) General. Unless otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including by facsimile transmission). All such written notices shall be
mailed, faxed or delivered to the applicable address, facsimile number or
(subject to subsection (c) below) electronic mail address, and all notices and
other communications expressly permitted hereunder to be given by telephone
shall be made to the applicable telephone number, as follows:

		
	 	          (i) if to the Borrower, a Guarantor, the Administrative
Agent, the L/C Issuer or the Swing Line Lender, to the address,
facsimile number, electronic mail address or telephone number
specified for such Person on Schedule 11.2 or
to such other address, facsimile number, electronic mail address
or telephone number as shall be designated by such party in a
notice to the other parties; and

77

 

		
	 	          (ii) if to any other Lender, to the address, facsimile
number, electronic mail address or telephone number specified in
its Administrative Questionnaire or to such other address,
facsimile number, electronic mail address or telephone number as
shall be designated by such party in a notice to the Borrower, the
Administrative Agent, the L/C Issuer and the Swing Line Lender.

All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto
and (ii) (A) if delivered by hand or by courier, when signed for by or on
behalf of the relevant party hereto; (B) if delivered by mail, four Business
Days after deposit in the mails, postage prepaid; (C) if delivered by
facsimile, when sent and receipt has been confirmed by telephone; and (D) if
delivered by electronic mail (which form of delivery is subject to the
provisions of subsection (c) below), when delivered;
provided, however, that notices and other
communications to the Administrative Agent, the L/C Issuer and the Swing Line
Lender pursuant to Article II
shall not be effective until actually received by such Person. In no event
shall a voicemail message be effective as a notice, communication or
confirmation hereunder.

          (b) Effectiveness of Facsimile Documents and
Signatures. Loan Documents may be transmitted and/or signed by
facsimile. The effectiveness of any such documents and signatures shall,
subject to applicable Law, have the same force and effect as manually-signed
originals and shall be binding on all Loan Parties, the Administrative Agent
and the Lenders. The Administrative Agent may also require that any such
documents and signatures be confirmed by a manually-signed original thereof;
provided, however, that the failure to
request or deliver the same shall not limit the effectiveness of any facsimile
document or signature.

          (c) Limited Use of Electronic Mail. Electronic mail
and Internet and intranet websites may be used only to distribute routine
communications, such as financial statements and other information as provided
in Section 7.2, and to distribute Loan Documents for
execution by the parties thereto, and may not be used for any other purpose.

          (d) Reliance by Administrative Agent and Lenders. The
Administrative Agent and the Lenders shall be entitled to rely and act upon any
notices (including telephonic Committed Loan Notices and Swing Line Loan
Notices) purportedly given by or on behalf of the Borrower even if (i) such
notices were not made in a manner specified herein, were incomplete or were not
preceded or followed by any other form of notice specified herein, or (ii) the
terms thereof, as understood by the recipient, varied from any confirmation
thereof. The Borrower shall indemnify each Agent-Related Person and each
Lender from all losses, costs, expenses and liabilities resulting from the
reliance by such Person on each notice purportedly given by or on behalf of the
Borrower. All telephonic notices to and other communications with the
Administrative Agent may be recorded by the Administrative Agent, and each of
the parties hereto hereby consents to such recording.

     Section 11.3 No Waiver; Cumulative Remedies.

     No failure by any Lender or the Administrative Agent to exercise, and no
delay by any such Person in exercising, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege

78

 

hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power
or privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

     Section 11.4 Attorney Costs, Expenses and Taxes.

     The Borrower agrees (a) to pay or reimburse the Administrative Agent for
all costs and expenses incurred in connection with the development,
preparation, negotiation and execution of this Agreement and the other Loan
Documents and any amendment, waiver, consent or other modification of the
provisions hereof and thereof (whether or not the transactions contemplated
hereby or thereby are consummated), and the consummation and administration of
the transactions contemplated hereby and thereby, including all Attorney Costs,
and (b) to pay or reimburse the Administrative Agent and each Lender for all
costs and expenses incurred in connection with the enforcement, attempted
enforcement, or preservation of any rights or remedies under this Agreement or
the other Loan Documents (including all such costs and expenses incurred during
any “workout” or restructuring in respect of the Obligations and during
any legal proceeding, including any proceeding under any Debtor Relief
Law), including all Attorney Costs. The foregoing costs and expenses shall
include all search, filing, recording, title insurance and appraisal charges
and fees and taxes related thereto, and other out-of-pocket expenses incurred
by the Administrative Agent and the cost of independent public accountants and
other outside experts retained by the Administrative Agent or any Lender. All
amounts due under this Section 11.4 shall be payable within
ten Business Days after demand therefor. The agreements in this Section shall
survive the termination of the Aggregate Commitments and repayment of all other
Obligations.

     Section 11.5 Indemnification by the Borrower.

     Whether or not the transactions contemplated hereby are consummated, the
Borrower shall indemnify and hold harmless each Agent-Related Person, each
Lender and their respective Affiliates, directors, officers, employees,
counsel, agents and attorneys-in-fact (collectively the
“Indemnitees”) from and against any and all liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, expenses and disbursements (including Attorney Costs) of any kind
or nature whatsoever which may at any time be imposed on, incurred by or
asserted against any such Indemnitee in any way relating to or arising out of
or in connection with (a) the execution, delivery, enforcement, performance or
administration of any Loan Document or any other agreement, letter or
instrument delivered in connection with the transactions contemplated thereby
or the consummation of the transactions contemplated thereby, (b) any
Commitment, Loan or Letter of Credit or the use or proposed use of the proceeds
therefrom (including any refusal by the L/C Issuer to honor a demand for
payment under a Letter of Credit if the documents presented in connection with
such demand do not strictly comply with the terms of such Letter of Credit),
(c) any actual or alleged presence or release of Hazardous Materials on or from
any property currently or formerly owned or operated by the Borrower, any
Subsidiary or any other Loan Party, or any Environmental Liability related in
any way to the Borrower, any Subsidiary or any other Loan Party, or (d) any
actual or prospective claim, litigation, investigation or proceeding relating
to any of the foregoing, whether based on contract, tort or any other theory
(including any investigation of, preparation for, or defense of any pending or
threatened claim, investigation, litigation or proceeding) and

79

 

regardless of
whether any Indemnitee is a party thereto (all the foregoing, collectively, the
“Indemnified Liabilities; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such liabilities, obligations, losses, damages, penalties, claims, demands,
actions, judgments, suits, costs, expenses or disbursements are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee.
No Indemnitee shall be liable for any damages arising from the use by others of
any information or other materials obtained through IntraLinks or other similar
information transmission systems in connection with this Agreement, nor shall
any Indemnitee have any liability for any indirect or consequential damages
relating to this Agreement or any other Loan Document or arising out of its
activities in connection herewith or therewith (whether before or after the
Closing Date). All amounts due under this Section 11.5
shall be payable within ten Business Days after demand therefor. The
agreements in this Section shall survive the resignation of the Administrative
Agent, the replacement of any Lender, the termination of the Aggregate
Commitments and the repayment, satisfaction or discharge of all the other
Obligations.

     Section 11.6 Payments Set Aside.

     To the extent that any payment by or on behalf of the Borrower
is made to the Administrative Agent or any Lender, or the Administrative Agent
or any Lender exercises its right of set-off, and such payment or the proceeds
of such set-off or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent or such Lender in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under any Debtor Relief Law or otherwise, then
(a) to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such set-off
had not occurred, and (b) each Lender severally agrees to pay to the
Administrative Agent upon demand its applicable share of any amount so
recovered from or repaid by the Administrative Agent, plus interest thereon
from the date of such demand to the date such payment is made at a rate per
annum equal to the Federal Funds Rate from time to time in effect.

     Section 11.7 Successors and Assigns.

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

80

 

          (b) Any Lender may at any time assign to one or more Eligible Assignees
all or a portion of its rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans (including for purposes of
this subsection (b), participations in L/C Obligations and in Swing Line Loans)
at the time owing to it); provided that (i) except in the
case of an assignment of the entire remaining amount of the assigning Lender’s
Commitment and the Loans at the time owing to it or in the case of an
assignment to a Lender or an Affiliate of a Lender or an Approved Fund (as
defined in subsection (g) of this Section) with respect to a Lender, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) subject to each such assignment, determined as of the
date the Assignment and Assumption with respect to such assignment is delivered
to the Administrative Agent or, if “Trade Date” is specified in the Assignment
and Assumption, as of the Trade Date, shall not be less than $5,000,000 unless
each of the Administrative Agent and, so long as no Event of Default has
occurred and is continuing, the Borrower otherwise consents (each such consent
not to be unreasonably withheld or delayed); (ii) each partial assignment shall
be made as an assignment of a proportionate part of all the assigning Lender’s
rights and obligations under this Agreement with respect to the Loans or the
Commitment assigned, except that this clause (ii) shall not apply to rights in
respect of Swing Line Loans; (iii) any assignment of a Commitment must be
approved by the Administrative Agent in the exercise of its reasonable
discretion, the L/C Issuer and the Swing Line Lender unless the Person that is
the proposed assignee is itself a Lender (whether or not the proposed assignee
would otherwise qualify as an Eligible Assignee); and (iv) the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Assumption, together with a processing and recordation fee of $3,500.
Subject to acceptance and recording thereof by the Administrative Agent
pursuant to subsection (c) of this Section, from and after the effective date
specified in each Assignment and Assumption, the Eligible Assignee thereunder
shall be a party to this Agreement and, to the extent of the interest
assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of
Section 3.1, Section 3.4,
Section 3.5, Section 11.4 and
Section 11.5 with respect to facts and circumstances
occurring prior to the effective date of such assignment). Upon request, the
Borrower (at its expense) shall execute and deliver a Note to the assignee
Lender. Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this subsection shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with subsection (d) of this Section.

          (c) The Administrative Agent, acting solely for this purpose as an agent
of the Borrower, shall maintain at the Administrative Agent’s Office a copy of
each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amounts of the Loans and L/C Obligations owing to, each Lender
pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the

81

 

contrary. The Register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.

          (d) Any Lender may at any time, without the consent of, or notice to, the
Borrower or the Administrative Agent, sell participations to any Person (other
than a natural person or the Borrower or any of the Borrower’s Affiliates or
Subsidiaries) (each, a “Participant”) in all or a portion of
such Lender’s rights and/or obligations under this Agreement (including all or
a portion of its Commitment and/or the Loans (including such Lender’s
participations in L/C Obligations and/or Swing Line Loans) owing to it);
provided that (i) such Lender’s obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement. Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant,
agree to any amendment, waiver or other modification described in the first
proviso to Section 11.1 that directly affects such
Participant. Subject to subsection (e) of this Section, the Borrower agrees
that each Participant shall be entitled to the benefits of Section
3.1, Section 3.4 and Section
3.5 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to subsection (b) of this Section. To the
extent permitted by law, each Participant also shall be entitled to the
benefits of Section 11.9 as though it were a
Lender, provided such Participant agrees to be subject
to Section 2.13 as though it were a Lender.

          (e) A Participant shall not be entitled to receive any greater payment
under Section 3.1 or Section 3.4 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 3.1 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section
11.15 as though it were a Lender.

          (f) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement (including under its Note, if
any) to secure obligations of such Lender, including any pledge or assignment
to secure obligations to a Federal Reserve Bank; provided
that no such pledge or assignment shall release such Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.

          (g) Notwithstanding anything to the contrary contained herein, assignments
by any Lender to another Lender or to any Affiliate of a Lender or a Related
Fund is permitted without the consent of the Borrower or the Administrative
Agent. Only one assignment fee is due to the Administrative Agent in
connection with multiple, contemporaneous transfers to or from “Related Funds:”
There shall also be no minimum assignment amount or minimum hold amount in
connection with the assignments described in subsection (g) of this Section.

82

 

          (h) As used herein, the following terms have the following meanings:

		
	 	     "Eligible Assignee” means (a) a Lender; (b) an
Affiliate of a Lender; (c) an Approved Fund; and (d) any other Person
(other than a natural person) approved by (i) the Administrative Agent,
the L/C Issuer and the Swing Line Lender, and (ii) unless an Event of
Default has occurred and is continuing, the Borrower (each such approval
not to be unreasonably withheld or delayed); provided
that notwithstanding the foregoing, “Eligible Assignee” shall not include
the Borrower or any of the Borrower’s Affiliates or Subsidiaries.
	 
	 	     "Fund” means any Person (other than a natural person)
that is (or will be) engaged in making, purchasing, holding or otherwise
investing in commercial loans and similar extensions of credit in the
ordinary course of its business.
	 
	 	     “Approved Fund” means any Fund that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or
an Affiliate of an entity that administers or manages a Lender.

	 
	 	     
“Affiliate of a Lender” means another entity that
directly, or indirectly through one more intermediaries, Controls or is
Controlled by or is under common Control with such Lender. “Control”
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.
	 
	 	     "Related Fund” means with respect to any Approved Fund
that is a Lender that invests in bank loans, any other fund which invests
in bank loans and is managed by the same investment advisor as such
Lender or an affiliate of such investment advisor.

          (i) Notwithstanding anything to the contrary contained herein, if at any
time Bank of America assigns all of its Commitment and Loans pursuant to
subsection (b) above, Bank of America may, (i) upon 30 days’ notice to the
Borrower and the Lenders, resign as L/C Issuer and/or (ii) upon 30 days’ notice
to the Borrower, resign as Swing Line Lender. In the event of any such
resignation as L/C Issuer or Swing Line Lender, the Borrower shall be entitled
to appoint from among the Lenders a successor L/C Issuer or Swing Line Lender
hereunder; provided, however, that no
failure by the Borrower to appoint any such successor shall affect the
resignation of Bank of America as L/C Issuer or Swing Line Lender, as the case
may be. If Bank of America resigns as L/C Issuer, it shall retain all the
rights and obligations of the L/C Issuer hereunder with respect to all Letters
of Credit outstanding as of the effective date of its resignation as L/C Issuer
and all L/C Obligations with respect thereto (including the right to require
the Lenders to make Base Rate Committed Loans or fund risk participations in
Unreimbursed Amounts pursuant to Section 2.3(c)). If Bank
of America resigns as Swing Line Lender, it shall retain all the rights of the
Swing Line Lender provided for hereunder with respect to Swing Line Loans made
by it and outstanding as of the effective date of such resignation, including
the right to require the Lenders to make Base Rate Committed Loans or fund risk
participations in outstanding Swing Line Loans pursuant to Section
2.4(c).

83

 

     Section 11.8 Confidentiality.

     Each of the Administrative Agent and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates’ directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential); (b) to the extent requested by any regulatory
authority; (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process; (d) to any other party to this
Agreement; (e) in connection with the exercise of any remedies hereunder or any
suit, action or proceeding relating to this Agreement or the enforcement of
rights hereunder; (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any Eligible Assignee
of or Participant in, or any prospective Eligible Assignee of or Participant
in, any of its rights or obligations under this Agreement or (ii) any direct or
indirect contractual counterparty or prospective counterparty (or such
contractual counterparty’s or prospective counterparty’s professional advisor)
to any credit derivative transaction relating to obligations of the Loan
Parties; (g) with the consent of the Borrower; (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach
of this Section or (ii) becomes available to the Administrative Agent or any
Lender on a nonconfidential basis from a source other than the Borrower; or (i)
to the National Association of Insurance Commissioners or any other similar
organization. In addition, the Administrative Agent and the Lenders may
disclose the existence of this Agreement and information about this Agreement
to market data collectors, similar service providers to the lending industry,
and service providers to the Administrative Agent and the Lenders in connection
with the administration and management of this Agreement, the other Loan
Documents, the Commitments, and the Credit
Extensions. For the purposes of this Section,
“Information” means all information received from any Loan
Party relating to any Loan Party or its business, other than any such
information that is available to the Administrative Agent or any Lender on a
nonconfidential basis prior to disclosure by any Loan Party;
provided that, in the case of information received from a
Loan Party after the date hereof, such information is clearly identified in
writing at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
Notwithstanding anything herein to the contrary, “Information” shall not
include, and Administrative Agent and each Lender may disclose to any and all
Persons, without limitation of any kind, any information with respect to the
“tax treatment” and “tax structure” (in each case, within the meaning of
Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby
and all materials of any kind (including opinions or other tax analyses) that
are provided to Administrative Agent or such Lender relating to such tax
treatment and tax structure; provided that with respect to
any document or similar item that in either case contains information
concerning the tax treatment or tax structure of the transaction as well as
other information, this sentence shall only apply to such portions of the
document or similar item that relate to the tax treatment or tax structure of
the Loans, Letters of Credit and transactions contemplated hereby.

     Section 11.9 Set-off.

84

 

     In addition to any rights and remedies of the Lenders provided
by law, upon the occurrence and during the continuance of any Event of Default,
each Lender is authorized at any time and from time to time, without prior
notice to the Borrower or any other Loan Party, any such notice being waived by
the Borrower (on its own behalf and on behalf of each Loan Party) to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Lender to or for the credit
or the account of the respective Loan Parties against any and all Obligations
owing to such Lender hereunder or under any other Loan Document, now or
hereafter existing, irrespective of whether or not the Administrative Agent or
such Lender shall have made demand under this Agreement or any other Loan
Document and although such Obligations may be contingent or unmatured or
denominated in a currency different from that of the applicable deposit or
indebtedness. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such set-off and application made by such
Lender; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and
application.

     Section 11.10 Interest Rate Limitation.

     Notwithstanding anything to the contrary contained in any Loan Document,
the interest paid or agreed to be paid under the Loan Documents shall not
exceed the maximum rate of non-usurious interest permitted by applicable Law
(the “Maximum Rate”). If the Administrative Agent or any
Lender shall receive interest in an amount that exceeds the Maximum Rate, the
excess interest shall be applied to the principal of the Loans or, if it
exceeds such unpaid principal, refunded to the Borrower. In determining
whether the interest contracted for, charged, or received by the Administrative
Agent or a Lender exceeds the Maximum Rate,
such Person may, to the extent permitted by applicable Law, (a)
characterize any payment that is not principal as an expense, fee, or premium
rather than interest, (b) exclude voluntary prepayments and the effects
thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal
parts the total amount of interest throughout the contemplated term of the
Obligations hereunder.

     Section 11.11 Counterparts.

     This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

     Section 11.12 Integration.

     This Agreement, together with the other Loan Documents, comprises the
complete and integrated agreement of the parties on the subject matter hereof
and thereof and supersedes all prior agreements, written or oral, on such
subject matter. In the event of any conflict between the provisions of this
Agreement and those of any other Loan Document, the provisions of this
Agreement shall control; provided that the inclusion of
supplemental rights or remedies in favor of the Administrative Agent or the
Lenders in any other Loan Document shall not be deemed a conflict with this
Agreement. Each Loan Document was drafted with the joint participation of the
respective parties thereto and shall be construed neither against nor in favor
of any party, but rather in accordance with the fair meaning thereof.

85

 

     Section 11.13 Survival of Representations and
Warranties.

     All representations and warranties made hereunder and in any other Loan
Document or other document delivered pursuant hereto or thereto or in
connection herewith or therewith shall survive the execution and delivery
hereof and thereof. Such representations and warranties have been or will be
relied upon by the Administrative Agent and each Lender, regardless of any
investigation made by the Administrative Agent or any Lender or on their behalf
and notwithstanding that the Administrative Agent or any Lender may have had
notice or knowledge of any Default at the time of any Credit Extension, and
shall continue in full force and effect as long as any Loan or any other
Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit
shall remain outstanding.

     Section 11.14 Severability.

     If any provision of this Agreement or the other Loan Documents is held to
be illegal, invalid or unenforceable, (a) the legality, validity and
enforceability of the remaining provisions of this Agreement and the other Loan
Documents shall not be affected or impaired thereby and (b) the parties shall
endeavor in good faith negotiations to replace the illegal, invalid or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable
provisions. The invalidity of a provision in a particular jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.

     Section 11.15 Tax Forms.

		
	 	          (i) Each Lender that is not a “United States person” within
the meaning of Section 7701(a)(30) of the Code (a
“Foreign Lender”) shall deliver to the
Administrative Agent, prior to receipt of any payment subject to
withholding under the Code (or upon accepting an assignment of an
interest
herein), two duly signed completed copies of either IRS Form
W-8BEN or any successor thereto (relating to such Foreign Lender
and entitling it to an exemption from, or reduction of,
withholding tax on all payments to be made to such Foreign Lender
by the Borrower pursuant to this Agreement) or IRS Form W-8ECI or
any successor thereto (relating to all payments to be made to such
Foreign Lender by the Borrower pursuant to this Agreement) or such
other evidence satisfactory to the Borrower and the Administrative
Agent that such Foreign Lender is entitled to an exemption from,
or reduction of, U.S. withholding tax, including any exemption
pursuant to Section 881(c) of the Code. Thereafter and from time
to time, each such Foreign Lender shall (A) promptly submit to the
Administrative Agent such additional duly completed and signed
copies of one of such forms (or such successor forms as shall be
adopted from time to time by the relevant United States taxing
authorities) as may then be available under then current United
States laws and regulations to avoid, or such evidence as is
satisfactory to the Borrower and the Administrative Agent of any
available exemption from or reduction of, United States
withholding taxes in respect of all payments to be made to such
Foreign Lender by the Borrower pursuant to this Agreement, (B)
promptly notify the Administrative Agent of any change in
circumstances which would modify or render invalid any claimed
exemption or reduction, and (C) take

86

 

		
	 	such steps as shall not be
materially disadvantageous to it, in the reasonable judgment of
such Lender, and as may be reasonably necessary (including the
re-designation of its Lending Office) to avoid any requirement of
applicable Laws that the Borrower make any deduction or
withholding for taxes from amounts payable to such Foreign Lender.

		
	 	          (ii) Each Foreign Lender, to the extent it does not act or
ceases to act for its own account with respect to any portion of
any sums paid or payable to such Lender under any of the Loan
Documents (for example, in the case of a typical participation by
such Lender), shall deliver to the Administrative Agent on the
date when such Foreign Lender ceases to act for its own account
with respect to any portion of any such sums paid or payable, and
at such other times as may be necessary in the determination of
the Administrative Agent (in the reasonable exercise of its
discretion), (A) two duly signed completed copies of the forms or
statements required to be provided by such Lender as set forth
above, to establish the portion of any such sums paid or payable
with respect to which such Lender acts for its own account that is
not subject to U.S. withholding tax, and (B) two duly signed
completed copies of IRS Form W-8IMY (or any successor thereto),
together with any information such Lender chooses to transmit with
such form, and any other certificate or statement of exemption
required under the Code, to establish that such Lender is not
acting for its own account with respect to a portion of any such
sums payable to such Lender.
	 
	 	          (iii) The Borrower shall not be required to pay any
additional amount to any Foreign Lender under Section
3.1 (A) with respect to any Taxes required to be
deducted or withheld on the basis of the information, certificates
or statements of exemption such Lender transmits with an IRS Form
W-8IMY pursuant to this Section 11.15(i)
or (B) if such Lender shall have failed to satisfy the foregoing
provisions of this Section 11.15(i);
provided that if such Lender shall have
satisfied the requirement of this Section
11.15(i) on the date such Lender became a Lender or
ceased to act for its own account with respect to any payment
under any of the Loan Documents, nothing in this Section
11.15(i) shall relieve the Borrower of its obligation to
pay any amounts pursuant to Section 3.1 in the
event that, as a result of any change in any applicable law,
treaty or governmental rule, regulation or order, or any change in
the interpretation, administration or application thereof, such
Lender is no longer properly entitled to deliver forms,
certificates or other evidence at a subsequent date establishing
the fact that such Lender or other Person for the account of which
such Lender receives any sums payable under any of the Loan
Documents is not subject to withholding or is subject to
withholding at a reduced rate.
	 
	 	          (iv) The Administrative Agent may, without reduction,
withhold any Taxes required to be deducted and withheld from any
payment under any of the Loan Documents with respect to which the
Borrower is not required to pay additional amounts under this
Section 11.15(i).

87

 

          (a) Upon the request of the Administrative Agent, each Lender that is a
“United States person” within the meaning of Section 7701(a)(30) of the Code
shall deliver to the Administrative Agent two duly signed completed copies of
IRS Form W-9. If such Lender fails to deliver such forms, then the
Administrative Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable back-up withholding tax imposed by the
Code, without reduction.

          (b) If any Governmental Authority asserts that the Administrative Agent
did not properly withhold or backup withhold, as the case may be, any tax or
other amount from payments made to or for the account of any Lender, such
Lender shall indemnify the Administrative Agent therefor, including all
penalties and interest, any taxes imposed by any jurisdiction on the amounts
payable to the Administrative Agent under this Section, and costs and expenses
(including Attorney Costs) of the Administrative Agent. The obligation of the
Lenders under this Section shall survive the termination of the Aggregate
Commitments, repayment of all other Obligations hereunder and the resignation
of the Administrative Agent.

     Section 11.16 Governing Law.

          (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE COMMONWEALTH OF VIRGINIA APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE
ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.

          (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
VIRGINIA SITTING IN FAIRFAX COUNTY OR OF THE UNITED STATES FOR THE EASTERN
DISTRICT OF SUCH STATE, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER, THE
ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER, THE
ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR
OTHER DOCUMENT RELATED THERETO. THE BORROWER, THE ADMINISTRATIVE AGENT AND
EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

     Section 11.17 Arbitration

          (a) This paragraph concerns the resolution of any controversies
or claims between the Borrower and the Lenders, whether arising in contract,
tort or by statute, including but not limited to controversies or claims that
arise out of or relate to: (i) this Agreement or any Note (including any
renewals, extensions or modifications); or (ii) any document related to this
Agreement; (collectively a “Claim”).

88

 

          (b) At the request of the Borrower or the Administrative Agent, any Claim
shall be resolved by binding arbitration in accordance with the Federal
Arbitration Act (Title 9, U. S. Code) (the “Act”). The Act will apply even
though this Agreement provides that it is governed by the law of a specified
state.

          (c) Arbitration proceedings will be determined in accordance with the Act,
the rules and procedures for the arbitration of financial services disputes of
JAMS/Endispute or any successor thereof (“JAMS”), and the terms of this
paragraph. In the event of any inconsistency, the terms of this paragraph
shall control.

          (d) The arbitration shall be administered by JAMS and conducted in any U.
S. state where real or tangible personal property collateral for this credit is
located or if there is no such collateral, in the Commonwealth of Virginia.
All Claims shall be determined by one arbitrator; however, if Claims exceed
$5,000,000, upon the request of any party, the Claims shall be decided by three
arbitrators. All arbitration hearings shall commence within ninety (90) days
of the demand for arbitration and close within ninety (90) days of commencement
and the award of the arbitrator(s) shall be issued within thirty (30) days of
the close of the hearing. However, the arbitrator(s), upon a showing of good
cause, may extend the commencement of the hearing for up to an additional sixty
(60) days. The arbitrator(s) shall provide a concise written statement of
reasons for the award. The arbitration award may be submitted to any court
having jurisdiction to be confirmed and enforced.

          (e) The arbitrator(s) will have the authority to decide whether any Claim
is barred by the statute of limitations and, if so, to dismiss the arbitration
on that basis. For purposes of the application of the statute of limitations,
the service on JAMS under applicable JAMS rules of a notice of Claim is the
equivalent of the filing of a lawsuit. Any dispute concerning this arbitration
provision or whether a Claim is arbitrable shall be determined by the
arbitrator(s). The arbitrator(s) shall have the power to award legal fees
pursuant to the terms of this Agreement.

          (f) This paragraph does not limit the right of the Borrower or the Lenders
to: (i) exercise self-help remedies, such as but not limited to, setoff; (ii)
initiate judicial or non-judicial foreclosure against any real or personal
property collateral; (iii) exercise any judicial or power of sale rights, or
(iv) act in a court of law to obtain an interim remedy, such as but not limited
to, injunctive relief, writ of possession or appointment of a receiver, or
additional or supplementary remedies.

     Section 11.18 Waiver of Right to Trial by Jury.

     EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN
DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND THAT ANY
PARTY TO THIS AGREEMENT MAY FILE AN

89

 

ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES
HERETO TO ARBITRATION AND TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

     Section 11.19 Time of the Essence.

     Time is of the essence of the Loan Documents.

[SIGNATURE PAGES FOLLOW]

90

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered under seal by their duly authorized representatives
as of the date and year first written above.

	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 	 	SUNRISE SENIOR LIVING, INC.	 	 
	 	 	 	 	 	 	 
	 	 	
By:
	 	/s/ Thomas B. Newell	 	 
	 	 	 	 	

	 	(Seal)
	 	 	 	 	Name: Thomas B. Newell	 	 
	 	 	 	 	Title: President	 	 
	 	 	 	 	 	 	 
	 	 	GUARANTORS:	 	 
	 	 	 	 	 	 	 
	 	 	SUNRISE SENIOR LIVING MANAGEMENT, INC.	 	 
	 	 	(f/k/a) Sunrise Assisted Living Management, Inc.	 	 
	 	 	 	 	 	 	 
	 	 	
By:
	 	/s/ James S. Pope	 	 
	 	 	 	 	

	 	(Seal)
	 	 	 	 	Name: James S. Pope	 	 
	 	 	 	 	Title: Senior Vice President	 	 
	 	 	 	 	 	 	 
	 	 	SUNRISE SENIOR LIVING INVESTMENTS, INC.	 	 
	 	 	(f/k/a) Sunrise Assisted Living Investments, Inc.	 	 
	 	 	 	 	 	 	 
	 	 	
By:
	 	/s/ James S. Pope	 	 
	 	 	 	 	

	 	(Seal)
	 	 	 	 	Name: James S. Pope	 	 
	 	 	 	 	Title: Senior Vice President	 	 
	 	 	 	 	 	 	 
	 	 	SUNRISE DEVELOPMENT, INC.	 	 
	 	 	 	 	 	 	 
	 	 	
By:
	 	/s/ James S. Pope	 	 
	 	 	 	 	

	 	(Seal)
	 	 	 	 	Name: James S. Pope	 	 
	 	 	 	 	Title: Senior Vice President	 	 
	 	 	 	 	 	 	 
	 	 	SUNRISE SENIOR LIVING SERVICES, INC.	 	 
	 	 	(f/k/a) Marriott Senior Living Services, Inc.	 	 
	 	 	 	 	 	 	 
	 	 	
By:
	 	/s/ James S. Pope	 	 
	 	 	 	 	

	 	(Seal)
	 	 	 	 	Name: James S. Pope	 	 
	 	 	 	 	Title: Senior Vice President	 	 

S-1

 

	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as	 	 
	 	 	Administrative Agent	 	 
	 	 	 	 	 	 	 
	 	 	
By:
	 	/s/ Michael Brashle	 	 
	 	 	 	 	

	 	(Seal)
	 	 	 	 	Name: Michael Brashle	 	 
	 	 	 	 	Title: Vice President	 	 

S-2

 

	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as a Lender, L/C Issuer and	 	 
	 	 	Swing Line Lender	 	 
	 	 	 	 	 	 	 
	 	 	
By:
	 	/s/ Michael J. Landini	 	 
	 	 	 	 	

	 	(Seal)
	 	 	 	 	Name: Michael J. Landini	 	 
	 	 	 	 	Title: Senior Vice President	 	 

S-3

 

	 	 	 	 	 	 	 
	 	 	OTHER LENDERS:	 	 
	 	 	 	 	 	 	 
	 	 	FLEET NATIONAL BANK	 	 
	 	 	 	 	 	 	 
	 	 	
By:
	 	/s/ Patricia Marinilli	 	 
	 	 	 	 	

	 	(Seal)
	 	 	 	 	Patricia Marinilli	 	 
	 	 	 	 	Vice President	 	 

S-1

 

	 	 	 	 	 	 	 
	 	 	MANUFACTURERS AND TRADERS TRUST	 	 
	 	 	COMPANY	 	 
	 	 	 	 	 	 	 
	 	 	
By:
	 	/s/ Sterling B. Pierce III	 	 
	 	 	 	 	

	 	(Seal)
	 	 	 	 	Sterling B. Pierce III	 	 
	 	 	 	 	Vice President	 	 

S-2

 

	 	 	 	 	 	 	 
	 	 	CHEVY CHASE BANK	 	 
	 	 	 	 	 	 	 
	 	 	
By:
	 	/s/ Carlos L. Heard	 	 
	 	 	 	 	

	 	(Seal)
	 	 	 	 	Carlos L. Heard	 	 
	 	 	 	 	Assistant Vice President	 	 

S-3

 

	 	 	 	 	 	 	 
	 	 	LASALLE BANK NATIONAL ASSOCIATION	 	 
	 	 	 	 	 	 	 
	 	 	
By:
	 	/s/ Ann B. O’Shaughnessy	 	 
	 	 	 	 	

	 	(Seal)
	 	 	 	 	Ann B. O’Shaughnessy	 	 
	 	 	 	 	First Vice President	 	 

S-4

 

	 	 	 	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION	 	 
	 	 	 	 	 	 	 
	 	 	
By:
	 	/s/ Frank S. Kaulback III	 	 
	 	 	 	 	

	 	(Seal)
	 	 	 	 	Frank S. Kaulback III	 	 
	 	 	 	 	Senior Vice President	 	 

S-5

 

	 	 	 	 	 	 	 
	 	 	HIBERNIA NATIONAL BANK	 	 
	 	 	 	 	 	 	 
	 	 	
By:
	 	/s/ Matthew Brodnax	 	 
	 	 	 	 	

	 	(Seal)
	 	 	 	 	Matthew Brodnax	 	 
	 	 	 	 	Assistant Vice President	 	 

S-6

 

	 	 	 	 	 	 
	 	 	FARMERS & MECHANICS BANK	 
	 	 	 	 	 	 
	 	 	
By:
	 	/s/ Michael Rose

	(Seal)
	 	 	 	 	Michael Rose	 
	 	 	 	 	Senior Vice President	 

S-7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00058-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00058-of-00352.parquet"}]]