Document:

exv10w6

 

EXHIBIT 10.6

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the “Agreement”) dated as of October 30, 2006 by and between
Assisted Living Concepts, Inc. a Nevada corporation with its principal place of business at 111
West Michigan, Milwaukee, WI 53203, (the “Company”) and Eric Fonstad, Corporate Secretary, General
Counsel, and Senior Vice President (the “Employee”).

WITNESSETH

     The Company desires to employ the Employee as an employee of the Company or its subsidiaries,
and the Employee desires to provide services to the Company or its subsidiaries, all upon the terms
and conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the promises and mutual agreements hereinafter set forth,
and intending to be legally bound hereby, the parties hereto agree as follows:

1. Offer and Acceptance of Employment. The Company hereby agrees to employ the Employee as
the Corporate Secretary, General Counsel, and Senior Vice President of the Company. The Employee
accepts such employment and agrees to perform the customary responsibilities of such position with
the Company and/or certain of its subsidiaries as may be assigned to him from time to time by the
Company. The Employee will perform such other duties as may from time to time be reasonably
assigned to him by the Company, provided such duties are comparable with the type of duties
performed by persons of similar titles with the Company, its subsidiaries or other affiliates.

2. Compensation and Benefits.

     (a) Base Salary. As long as Employee remains an employee of Company, Employee will be
paid a base salary, less applicable withholding, which shall continue at the rate currently in
effect, subject to adjustment as hereinafter provided. Employee’s base salary shall be reviewed on
an annual basis and the Company shall increase such base salary, by an amount, if any, it
determines to be appropriate. Any such increase shall not reduce or limit any other obligation of
the Company hereunder. Employee’s annual base salary payable hereunder, as it may be increased from
time to time, less applicable withholding, and without reduction for any amounts deferred as
described below, is referred to herein as “Base Salary”. Employee’s Base Salary, as in effect from
time to time, may not be reduced by the Company without Employee’s consent, provided that the Base
Salary payable under this paragraph shall be reduced to the extent Employee elects to defer or
reduce such salary under the terms of any deferred compensation plan or other employee benefit
arrangement maintained or established by the Company. The Company shall pay Employee the portion of
his Base Salary not deferred in accordance with its customary periodic payroll practices.

     (b) Incentive Compensation. Subject to Board approval and based on the recommendation
of the Human Resources Committee, the Employee may be eligible to

 

participate in stock option, incentive compensation and other plans, which reward performance,
at a level consistent with Employee’s then assigned position(s) with the Company or certain of its
subsidiaries and other affiliates and the Company’s then current policies and practices.

     (c) Benefits, Perquisites and Expenses.

          (i) Benefits. Employee shall be eligible to participate in (1) each welfare benefit
plan sponsored or maintained by the Company, including, without limitation, each life, optional
life, hospitalization, medical, dental, vision, health, accident or disability insurance,
individual disability/long term care plan, or similar plan or program of the Company, and (2) each
deferred compensation (including Executive Retirement) or savings plan sponsored or maintained by
the Company, in each case, whether now existing or established hereafter, to the extent that
Employee is eligible to participate in any such plan under company policies and practices and
consistent with the generally applicable provisions thereof. With respect to benefits payable to
Employee, Employee’s service credited for purposes of determining Employee’s benefits and vesting
shall be determined in accordance with the terms of the applicable plan or program. Nothing in this
Section 2(c), in and of itself, shall be construed to limit the ability of the Company to amend or
terminate any particular plan, program or arrangement.

          (ii) Vacation. The Employee shall be entitled to the number of paid vacation days in
each anniversary year determined by the Company from time to time for similar positions. The
Employee shall also be entitled to all paid holidays given by the Company to employees with similar
positions.

          (iii) Business Expenses. The Company shall pay or reimburse Employee for all
reasonable expenses incurred or paid by Employee in the performance of Employee’s duties hereunder,
upon presentation of expense statements or vouchers and such other information as the Company may
reasonably require and in accordance with the then generally applicable policies and practices of
the Company.

          (iv) Auto. The Company shall provide you with a monthly automobile allowance in the
amount of $650. Additionally, the Employee will be reimbursed for miles driven on company business
at the applicable reimbursement rate that is set from time to time by the Company.

3. Employment Termination. The Employee’s employment under this Agreement may be
terminated as follows:

     (a) Good Cause. For purposes hereof, a termination by the Company for “Good Cause”
shall mean termination by action of the Company upon written notice to Employee specifying the
particulars of the action or inaction alleged to constitute “Good Cause” because of (i) Employee’s
commission of any felony (whether or not involving the Company or any of its subsidiaries),
including, without limitation, those involving moral turpitude which subjects, or if generally
known, would subject, the Company or any of its subsidiaries to public ridicule or embarrassment,
(ii) fraud or other willful

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misconduct by Employee in respect of his obligations under this Agreement, (iii) refusal or
continuing failure to attempt, without proper cause and, other than by reason of illness, to follow
the lawful directions of the senior officers or the Board of Directors of the Company, (iv)
willful violation of any material policy of the Company or material agreement with the Company, or
(v) other conduct that may be detrimental to the best interests of the Company or any affiliate
thereof as determined by the Board.

     (b) Without Cause. Notwithstanding anything to the contrary contained in this
Agreement, the Company may at any time terminate the Employee’s employment hereunder without Cause.

     (c) Death. If Employee dies, his employment shall terminate as of the date of death.

     (d) Change in Location; Material Failure. The Employee’s employment shall terminate
upon:

          (i) the provision of written notice from the Company to the Employee that the Employee’s work
location is being shifted to a location more than 50 miles away from the Employee’s current work
location; or

          (ii) there is a material diminution of the Employee’s assigned duties and responsibilities
including any material diminution of the powers associated with such position;

          (iii) and within 30 days after receipt of notice from the Company of an occurrence of an event
described in (i) and/or (ii) above, the Employee advises the Company, in writing, that the
amendments to the conditions of employment in (i) and/or (ii) above are not acceptable.

     (e) Date of Termination. “Date of Termination” shall mean whichever of the following
is applicable:

          (i) if Employee’s employment is terminated under paragraph (c) of this Section 3, the date of
death;

          (ii) if the Employee’s employment is terminated under paragraph (a) or (b) of this Section 3,
the date specified in the Notice of Termination (which shall not be less than 7 days in case of
paragraph (a) and 60 days in case of paragraph (b) nor more than 180 days from the date such Notice
of Termination is given);

          (iii) in the case of an event described in paragraph (d) of this Section 3 the last day of the
month following 30 days after which such event occurs; or

          (iv) Employee may terminate voluntarily and, in such event, the Employee’s Date of Termination
shall be the date which is two weeks after the date the Employee provides notice to the Company of
voluntary termination.

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4. Payments upon Termination.

     (a) Termination Due to Death or Voluntary Termination. Upon termination of the
Employee under Section 3(c) or in the event of Employee’s voluntary termination the Company shall
no later than the first day of the third month following the month in which the Date of Termination
occurs pay to the Employee or his estate (1) his full Base Salary and other accrued benefits earned
up to the Date of Termination and (2) if any bonus, under any bonus plan, shall be payable in
respect of the year in which the Employee’s Date of Termination occurs. Employee shall also be
entitled to all vested deferred compensation (including Executive Retirement) of any kind at such
times and in such amounts provided under the terms of applicable deferred compensation
arrangements. The Company shall have no further obligations to the Employee under this Agreement.

     (b) Termination for Cause. If the Employee’s employment shall be terminated under
Section 3(a), the Company shall no later than thirty (30) days following the month in which the
Date of Termination occurs pay the Employee his full Base Salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given. Employee shall also be entitled to
all vested deferred compensation (including Executive Retirement) of any kind at such times and in
such amounts provided under the terms of applicable deferred compensation arrangements. The Company
shall have no further obligations to the Employee under this Agreement.

     (c) Termination for Disability. In the case of disability, the Employee would be
eligible for short-term and long-term disability plans provided by the Company. If a disability
lasts longer than 12 months, the employee would be terminated.

     (d) Termination by the Company for Reasons other than Voluntary Termination, Death, Cause,
or Disability.

     In the event the Company terminates the Employee pursuant to paragraph (b) or (d) of Section
3, then:

          (i) the Company shall make a lump sum payment (less applicable deductions to include
withholdings for taxes) to the Employee as follows no later than thirty (30) days after the month
in which the Date of Termination occurs equal to the sum of the following:

               (A) Payment of any Base Salary owed to the Date of Termination which has not yet been paid.

               (B) Severance pay in the amount of one year of Base Salary at the rate in effect at the time
of the event described in Section 3(b) or (d) (whichever is applicable) plus $30,000.

               (C) A payment in lieu of bonus in an amount equivalent to 35% of Base Salary (as described in
clause (B) above) and, also, for the year in which termination occurs, a bonus shall be paid to the
Employee on a pro-rata basis for the

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portion of the year in which the Employee was employed, up to the Date of Termination, on the
assumption that 100% of the bonus payment would have been achieved.

               (D) The cash equivalent of 12 months of auto allowance.

               (E) The amount that the Company would have credited as Company contributions over the 12 month
period of time beginning immediately after the Date of Termination to any of the deferred
compensation (including Executive Retirement) plans in which the Employee was a participant.

          (ii) Employee shall also be entitled to all vested deferred compensation (including Executive
Retirement) of any kind at such times and in such amounts provided under the terms of applicable
deferred compensation plans.

          (iii) For the 12 month period beginning with the Date of Termination, the Employee shall be
treated as if the Employee had continued to be employed for all purposes under insured welfare
benefit plans (other than plans providing medical benefits) sponsored or maintained by the Company
on the same participation terms as if still employed. Beginning with the Date of Termination, the
Employee shall be entitled to receive medical plan continuation coverage required under ERISA
(“COBRA Benefits”) subject to payment of full COBRA premiums by Employee.

          (iv) In order to receive the payments described in (c)(i) above, the Employee must (no later
than thirty (30) days following the month in which the Date of Termination occurs) execute (and not
revoke during the seven day revocation period), a release in form substantially similar to that
attached as Exhibit A hereto.

5. Section 280G Limitation on Compensation. In the event that the severance benefits
payable to the Employee under this Agreement or any other payments or benefits received or to be
received by the Employee from the Company (whether payable pursuant to the terms of this Agreement,
any other plan, agreement or arrangement with the Company) or any corporation (“Affiliate”)
affiliated with the Company within the meaning of Section 1504 of the Internal Revenue Code of
1986, as amended (the “Code”), in the opinion of tax counsel selected by the Company’s independent
auditors and reasonably acceptable to the Employee, constitute “parachute payments” within the
meaning of Section 280G(b)(2) of the Code, and the present value of such “parachute payments”
equals or exceeds three times the Employee’s “base amount” within the meaning of Section 280G(b)(3)
of the Code, such severance benefits shall be reduced to an amount the present value of which (when
combined with the present value of any other payments or benefits otherwise received or to be
received by the Employee from the Company (or an Affiliate) that are deemed “parachute payments”)
is equal to 2.99 times the “base amount,” notwithstanding any other provision to the contrary in
this Agreement.

6. Employee’s Covenants.

     (a) Nondisclosure. At all times during and after Employee’s employment with the
Company, Employee shall keep confidential and shall not, except with

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Company’s express prior written consent, or except in the proper course of his employment with
Company, directly or indirectly, communicate, disclose, divulge, publish, or otherwise express, to
any Person, or use for his own benefit or the benefit of any Person, any trade secrets,
confidential or proprietary knowledge or information, no matter when or how acquired concerning the
conduct and details of Company’s business, including without limitation, names of customers and
suppliers, marketing methods, trade secrets, policies, prospects and financial condition. For
purposes of this Section 6, confidential information shall not include any information which is now
known by or readily available to the general public or which becomes known by or readily available
to the general public other than as a result of any improper act or omission of Employee.

     (b) Non-Competition. For a period of one (1) year following termination of Employee’s
employment with the Company for any reason, Employee shall not, except with Company’s express prior
written consent, directly or indirectly, in any capacity, for the benefit of any Person:

          (i) solicit or hire any Person who is or during such period becomes a customer, supplier,
employee, salesman, agent or representative of Company, in any manner which interferes or might
interfere with such Person’s relationship with Company, or in an effort to obtain such Person as a
customer, supplier, employee, salesman, agent, or representative of any business in competition
with Company which conducts operations within 50 miles of the Employee’s present office; or

          (ii) establish, engage, own, manage, operate, join or control, or participate in the
establishment, ownership (other than as the owner of less than one percent of the stock of a
corporation whose shares are publicly traded), management, operation or control of, or be a
director, officer, employee, salesman, agent or representative of, or be a consultant to, any
Person in any business in competition with Company, if such Person has any office or facility at
any location within 50 miles of any location of the Company over which the Employee has direct
responsibility or within 100 miles of the Employee’s current office, or conduct himself in any
manner which he would have reason to believe inimical or contrary to the best interests of Company.

     (c) Enforcement. Employee acknowledges that any breach by him of any of the covenants
and agreements of this Section 6 (“Covenants”) will result in irreparable injury to Company for
which money damages could not adequately compensate Company, and therefore, in the event of any
such breach, Company shall be entitled, in addition to all other rights and remedies which Company
may have at law or in equity, to have an injunction issued by any competent court enjoining and
restraining Employee and/or all other Persons involved therein from continuing such breach. The
existence of any claim or cause of action which Employee or any such other Person may have against
Company shall not constitute a defense or bar to the enforcement of any of the Covenants. If
Company is obliged to resort to litigation to enforce any of the Covenants which has a fixed term,
then such term shall be extended for a period of time equal to the period during which a material
breach of such Covenant was occurring, beginning on the date of a final court order (without
further right of appeal) holding that such a material breach occurred, or, if later, the last day
of the original fixed term of such Covenant.

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     (d) Consideration. Employee expressly acknowledges that the Covenants are a material
part of the consideration bargained for by Company and, without the agreement of Employee to be
bound by the Covenants, Company would not have agreed to enter into this Agreement.

     (e) Scope. If any portion of any Covenant or its application is construed to be
invalid, illegal or unenforceable, then the other portions and their application shall not be
affected thereby and shall be enforceable without regard thereto. If any of the Covenants is
determined to be unenforceable because of its scope, duration, geographical area or similar factor,
then the court making such determination shall have the power to reduce or limit such scope,
duration, area or other factor, and such Covenant shall then be enforceable in its reduced or
limited form.

7. No Obligation to Mitigate Damages; No Effect on Other Contractual Rights.

     (a) The Employee shall not be required to mitigate damages or the amount of any payment
provided for under this Agreement by seeking other employment or otherwise, nor shall the amount of
payment provided for under this Agreement be reduced by any compensation earned by the Employee as
the result of employment by another employer after the Date of Termination, or otherwise. The
amounts payable to Employee under Section 4 hereof shall not be treated as damages but as severance
compensation to which Employee is entitled by reason of termination of his employment in the
circumstances contemplated by this Agreement.

     (b) The provisions of this Agreement, and any payment provided for hereunder, shall not reduce
any amounts otherwise payable, or in any way diminish the Employee’s existing rights, or rights
which would accrue solely as a result of the passage of time, under any benefit plan, employment
agreement or other contract, plan or arrangement.

8. Miscellaneous.

     (a) Notices. All notices, requests, demands, consents or other communications
required or permitted to be given under this Agreement shall be in writing and shall be deemed to
have been duly given if and when (i) delivered personally, (ii) five (5) days after being mailed by
first class certified mail, return receipt requested, postage prepaid, or (iii) sent by a
nationally recognized express courier service, postage or delivery changes prepaid, with receipt,
or (iv) delivered by telecopy (with receipt, and with original delivered in accordance with any of
(i), (ii) or (iii) above) to the parties at their respective addresses stated below or to such
other addresses of which the parties may give notice in accordance with this Section.

If to Company, to:

Assisted Living Concepts, Inc.

111 W. Michigan

Milwaukee, WI 53203

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Attention: President and Chief Executive Officer

Facsimile: (414) 908-8111

If to Employee, to:

Mr. Eric Fonstad

     (b) Entire Understanding. This Agreement sets forth the entire understanding between
the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous,
written, oral, expressed or implied, communications, agreements and understandings with respect to
the subject matter hereof, with the exception of existing deferred compensation (including
Executive Retirement) plans, benefits plans and incentive plans.

     (c) Modification. This Agreement shall not be amended, modified, supplemented or
terminated except in writing signed by both parties.

     (d) Termination of Prior Severance Agreements. All prior severance agreements between
Employee and Company and/or any of its affiliates (and any of their predecessors) are hereby
terminated as of the date hereof as fully performed on both sides.

     (e) Assignability and Binding Effect. This Agreement shall inure to the benefit of and
shall be binding upon the Company and its successors and permitted assigns and upon Employee and
his heirs, executors, legal representatives, successors and permitted assigns. However, neither
party may assign, transfer, pledge, encumber, hypothecate or otherwise dispose of this Agreement or
any of its or his rights hereunder without prior written consent of the other party, and any such
attempted assignment, transfer, pledge, encumbrance, hypothecation or other disposition without
such consent shall be null and voice without effect. Notwithstanding the foregoing, this Agreement
may be assigned by the Company to any of its subsidiaries or other affiliates and the Agreement
shall continue in full force and effect following the sale of any such subsidiary or affiliate;
provided that the buyer of any such subsidiary or affiliate agrees to be bound by the terms hereof.

     (f) Severability. If any provision of this Agreement is construed to be invalid,
illegal or unenforceable, then the remaining provisions hereof shall not be affected thereby and
shall be enforceable without regard thereto.

     (g) Counterparts. This Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be an original hereof, and it shall not be necessary
in making proof of this Agreement to produce or account for more than one counterpart hereof.

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     (h) Section Headings. Section and subsection headings in this Agreement are inserted
for convenience of reference only, and shall neither constitute a part of this Agreement nor affect
its construction, interpretation, meaning or effect.

     (i) References. All words used in this Agreement shall be construed to be of such
number and gender as the context requires or permits.

     (j) Controlling Law. This Agreement is made under, and shall be governed by,
construed and enforced in accordance with, the substantive laws of the State of Wisconsin
applicable to agreements made and to be performed entirely therein.

     (k) Settlement of Disputes. The Company and Employee agree that any claim, dispute or
controversy arising under or in connection with this Agreement, or otherwise in connection with
Employee’s employment by the Company (including, without limitation, any such claim, dispute or
controversy arising under any federal, state or local statute, regulation or ordinance or any of
the Company’s employee benefit plans, policies or programs) shall be resolved solely and
exclusively by binding arbitration. The arbitration shall be held in Milwaukee County, Wisconsin
(or at such other location as shall be mutually agreed by the parties). The arbitration shall be
conducted in accordance with the Expedited Employment Arbitration Rules (the “Rules”) of the
American Arbitration Association (the “AAA”) in effect at the time of the arbitration, except that
the arbitrator shall be selected by alternatively striking from a list of five arbitrators supplied
by the AAA. All fees and expenses of the arbitration, including a transcript if either requests,
shall be borne equally by the parties. Each party will pay for the fees and expenses of its own
attorneys, experts, witnesses, and preparation and presentation of proofs and post-hearing briefs
(unless the party prevails on a claim for which attorney’s fees are recoverable under the Rules).
Any action to enforce or vacate the arbitrator’s award shall be governed by the Federal Arbitration
Act, if applicable, and otherwise by applicable state law.

     (l) Indulgences, Etc. Neither the failure nor delay on the part of either party to
exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall the single or partial exercise of any right, remedy, power or privilege preclude
any other or further exercise of the same or any other right, remedy, power or privilege, nor shall
any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as
a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver
shall be effective unless it is in writing and is signed by the party asserted to have granted such
waiver.

     (m) Notwithstanding anything herein to the contrary, if the severance payment(s) described
herein are considered deferred compensation subject to the provisions of Code Section 409A, then
this Agreement shall be deemed automatically amended to comply with the requirements thereof in a
manner that would cause the payments to comply with the provisions of Code Section 409A, including
but not limited to providing that the severance payment shall be made only upon the Executive’s
separation from service within the meaning of Code Section 409A and requiring that if the Executive
is a “specified employee” within the meaning of Code Section 409A, that

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any severance payment(s) due hereunder shall not be paid until six months following the date
of the Executive’s separation from service to the extent required by Code Section 409A.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first
above mentioned, under seal, intending to be legally bound hereby.

	 	 	 	 	 	 	 	 	 
	Attest:	 	 	 	COMPANY:	 	   
	 
	 	 	 	 	 	 	 	 
	/s/ Joy Zaffke 

	 	 	 	By:	 	/s/ Laurie Bebo 	 	 
	 

	 	 	 	 	 	 	 	 
	Executive Assistant

	 	 	 	Name:
	 	Laurie Bebo	 	 
	 

	 	 	 	Title:
	 	President and Chief Executive Officer, ALC	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Laurie Senger 

	 	 	 	By:	 	/s/ Richard Parker 	 	 
	 

	 	 	 	 	 	 	 	 
	Executive Assistant

	 	 	 	Name:
	 	Richard Parker	 	 
	 

	 	 	 	Title:
	 	Corporate Director of Human Resources	 	 
	 
	 	 	 	 	 	 	 	 
	Witness:	 	 	 	EMPLOYEE:	 	 
	/s/ Bridget Fonstad 
	 	 	 	 	 	/s/ Eric Fonstad 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Eric Fonstad	 	 

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Exhibit A
— Severance Release (actual release would be similar to, but not exactly like the following:

ASSISTED LIVING CONCEPTS, INC.

COMPLETE AND PERMANENT RELEASE AGREEMENT

	 	 	 
	          (NAME)

	 	          (SS#)
	 
	 	 
	Name

	 	Social Security Number

     To indicate your election to receive the severance pay described in the Assisted Living
Concepts, Inc.’s employee agreement to you of (DATE), (the “Severance Pay”), please sign and date
this Agreement on the next page and make sure that it is returned to Assisted Living Concepts, Inc.

     I elect to receive the Severance Pay and provide the following Complete and Permanent Release:

     In consideration for the Severance Pay which I specifically acknowledge to be
sufficient consideration to support this Release, I agree to release and forever
discharge Assisted Living Concepts, Inc., (as well as its subsidiaries,
affiliates, successors and assigns, and its present and former agents, directors,
employees, officers and representatives, or any of them, hereinafter collectively
referred to as “ALC”) of and from any and all claims that I might have arising out
of my employment by ALC and the termination thereof, by reason of any act or
omission on the part of ALC arising at any time up to and including the date I
sign this Agreement. To the fullest extent permitted by law, I agree never to
bring or cause to be brought or permit to be brought on my behalf any charges or
actions against ALC with respect to the claims released herein (and I agree to
immediately withdraw and dismiss with prejudice any such pending charges, claims,
suits, demands, grievances and actions). The claims that I am releasing include,
but are not limited to, claims for wrongful or other discharge, breach of
contract, harassment, unlawful terms and conditions of employment, retaliation,
defamation, invasion of privacy, and discrimination of any kind, including
discrimination on the basis of age under the Age Discrimination in Employment Act
and state and local law. I further agree that I will not make any statements that
defame or disparage the reputation of ALC, the care provided at its facilities, or
the reputation of any employees of ALC.

     I have not relied on any representations, promises or agreements of any kind made to me in
connection with my decision to accept the Severance Pay except for those set forth in ALC’s (DATE),
letter/employment agreement.

     If I bring or cause to be brought or continued or permit to be brought or continued on my
behalf a charge or claim against ALC in violation of this Release or asking that (or seeking relief
which would require that) all or any part of this Release be held unenforceable, invalid or void, I
agree that prior to the commencement or continuation of such action I will tender back to ALC the
Severance Pay which I have received as consideration. I acknowledge and understand that any
obligation on ALC’s part to pay any unpaid Severance Pay to me in return for this Release will
permanently cease as of the date such action is instituted or continued.

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     If any part of this Release is held to be unenforceable, invalid or void, then the balance of
this Release shall nonetheless remain in full force and effect.

     I ACKNOWLEDGE I HAVE READ AND UNDERSTAND THIS RELEASE; THAT MY SIGNATURE ON THIS RELEASE IS
TRULY VOLUNTARY; AND THAT I HAVE ENTERED INTO THIS RELEASE AGREEMENT KNOWINGLY AND VOLUNTARILY.

     I understand that my election of the Severance Pay and my acceptance of the terms of this
Release may be revoked if, within seven (7) calendar days following the date I sign this Agreement,
I give written notice of revocation to Assisted Living Concepts, 111 West Michigan Street,
Milwaukee, Wisconsin 53203. This Release shall not become effective, binding, or enforceable until
the seven (7) calendar day revocation period has expired. Once that seven (7) calendar day period
has elapsed, I can no longer revoke this Release or my election of the Severance Pay. TIME IS OF
THE ESSENCE AS TO THIS SEVEN (7) DAY PERIOD.

	 	 	 
	 
	 	 
	 

(Signature)

	 	 

          (Date)

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Exhibit 10.7

 

$100,000,000

CREDIT AGREEMENT

Dated as
of November 10, 2006

among

ASSISTED LIVING CONCEPTS, INC., as Borrower,

THE LENDERS AND L/C ISSUERS PARTY HERETO

and

GENERAL ELECTRIC CAPITAL CORPORATION,

as Administrative Agent and Collateral Agent

w w w

GE CAPITAL MARKETS, INC.,

as Sole Lead Arranger and Bookrunner

 

 

 

Table of Contents

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	ARTICLE I     DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS	 	 	1	 
	 	 	 	 	 	 	 	 	 
	 
	 	Section 1.1	 	Defined Terms	 	 	1	 
	 
	 	Section 1.2	 	UCC Terms	 	 	28	 
	 
	 	Section 1.3	 	Accounting Terms and Principles	 	 	28	 
	 
	 	Section 1.4	 	Payments	 	 	29	 
	 
	 	Section 1.5	 	Interpretation	 	 	29	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II     THE FACILITY	 	 	30	 
	 
	 
	 	Section 2.1	 	The Commitments	 	 	30	 
	 
	 	Section 2.2	 	Borrowing Procedures	 	 	31	 
	 
	 	Section 2.3	 	Swing Loans	 	 	32	 
	 
	 	Section 2.4	 	Letters of Credit	 	 	34	 
	 
	 	Section 2.5	 	Reduction and Termination of the Commitments	 	 	36	 
	 
	 	Section 2.6	 	Repayment of Loans	 	 	37	 
	 
	 	Section 2.7	 	Optional Prepayments	 	 	37	 
	 
	 	Section 2.8	 	Mandatory Prepayments	 	 	37	 
	 
	 	Section 2.9	 	Interest	 	 	38	 
	 
	 	Section 2.10	 	Conversion and Continuation Options	 	 	39	 
	 
	 	Section 2.11	 	Fees	 	 	39	 
	 
	 	Section 2.12	 	Application of Payments	 	 	40	 
	 
	 	Section 2.13	 	Payments and Computations	 	 	41	 
	 
	 	Section 2.14	 	Evidence of Debt	 	 	42	 
	 
	 	Section 2.15	 	Suspension of Eurodollar Rate Option	 	 	44	 
	 
	 	Section 2.16	 	Breakage Costs; Increased Costs; Capital Requirements	 	 	44	 
	 
	 	Section 2.17	 	Taxes	 	 	45	 
	 
	 	Section 2.18	 	Substitution of Lenders	 	 	48	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE III     CONDITIONS TO LOANS AND LETTERS OF CREDIT	 	 	49	 
	 	 	 	 	 	 	 	 	 
	 
	 	Section 3.1	 	Conditions Precedent to Initial Loans and Letters of Credit	 	 	49	 
	 
	 	Section 3.2	 	Conditions Precedent to Each Loan and Letter of Credit	 	 	51	 
	 
	 	Section 3.3	 	Conditions Precedent to Each Facility Increase	 	 	51	 
	 
	 	Section 3.4	 	Determinations of Initial Borrowing Conditions	 	 	53	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV     REPRESENTATIONS AND WARRANTIES	 	 	53	 
	 	 	 	 	 	 	 	 	 
	 
	 	Section 4.1	 	Corporate Existence; Compliance with Law	 	 	53	 
	 
	 	Section 4.2	 	Loan  and Related Documents	 	 	54	 
	 
	 	Section 4.3	 	Ownership of Group Members	 	 	54	 
	 
	 	Section 4.4	 	Financial Statements	 	 	55	 
	 
	 	Section 4.5	 	Material Adverse Effect	 	 	55	 
	 
	 	Section 4.6	 	Solvency	 	 	55	 
	 
	 	Section 4.7	 	Litigation	 	 	56	 
	 
	 	Section 4.8	 	Taxes	 	 	56	 
	 
	 	Section 4.9	 	Margin Regulations	 	 	56	 
	 
	 	Section 4.10	 	No Burdensome Obligations; No Defaults	 	 	56	 
	 
	 	Section 4.11	 	Investment Company Act; Public Utility Holding Company Act	 	 	56	 
	 
	 	Section 4.12	 	Labor Matters	 	 	57	 
	 
	 	Section 4.13	 	ERISA	 	 	57	 

i

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	Section 4.14	 	Environmental Matters	 	 	57	 
	 
	 	Section 4.15	 	Intellectual Property	 	 	58	 
	 
	 	Section 4.16	 	Title; Real Property	 	 	58	 
	 
	 	Section 4.17	 	Compliance With Healthcare Laws	 	 	58	 
	 
	 	Section 4.18	 	HIPAA Compliance	 	 	59	 
	 
	 	Section 4.19	 	Reimbursement From Third Party Payors	 	 	60	 
	 
	 	Section 4.20	 	Fraud and Abuse	 	 	60	 
	 
	 	Section 4.21	 	Full Disclosure	 	 	60	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE V     FINANCIAL COVENANTS	 	 	60	 
	 	 	 	 	 	 	 	 	 
	 
	 	Section 5.1	 	Maximum Consolidated Leverage Ratio	 	 	60	 
	 
	 	Section 5.2	 	[Reserved]	 	 	61	 
	 
	 	Section 5.3	 	Minimum Consolidated Fixed Charge Coverage Ratio	 	 	61	 
	 
	 	Section 5.4	 	Capital Expenditures	 	 	61	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI     REPORTING COVENANTS	 	 	61	 
	 	 	 	 	 	 	 	 	 
	 
	 	Section 6.1	 	Financial Statements	 	 	61	 
	 
	 	Section 6.2	 	Other Events	 	 	63	 
	 
	 	Section 6.3	 	Copies of Notices and Reports	 	 	63	 
	 
	 	Section 6.4	 	Taxes	 	 	63	 
	 
	 	Section 6.5	 	Labor Matters	 	 	63	 
	 
	 	Section 6.6	 	ERISA Matters	 	 	64	 
	 
	 	Section 6.7	 	Environmental Matters	 	 	64	 
	 
	 	Section 6.8	 	Other Information	 	 	65	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII     AFFIRMATIVE COVENANTS	 	 	65	 
	 	 	 	 	 	 	 	 	 
	 
	 	Section 7.1	 	Maintenance of Corporate Existence	 	 	65	 
	 
	 	Section 7.2	 	Compliance with Laws, Etc	 	 	65	 
	 
	 	Section 7.3	 	Payment of Obligations	 	 	65	 
	 
	 	Section 7.4	 	Maintenance of Property	 	 	66	 
	 
	 	Section 7.5	 	Maintenance of Insurance	 	 	66	 
	 
	 	Section 7.6	 	Keeping of Books	 	 	66	 
	 
	 	Section 7.7	 	Access to Books and Property	 	 	66	 
	 
	 	Section 7.8	 	Environmental	 	 	66	 
	 
	 	Section 7.9	 	Use of Proceeds	 	 	67	 
	 
	 	Section 7.10	 	Additional Collateral and Guaranties	 	 	67	 
	 
	 	Section 7.11	 	Deposit Accounts; Securities Accounts and Cash Collateral Accounts	 	 	68	 
	 
	 	Section 7.12	 	Accreditation and Licensing	 	 	68	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VIII     NEGATIVE COVENANTS	 	 	69	 
	 	 	 	 	 	 	 	 	 
	 
	 	Section 8.1	 	Indebtedness	 	 	69	 
	 
	 	Section 8.2	 	Liens	 	 	70	 
	 
	 	Section 8.3	 	Investments	 	 	71	 
	 
	 	Section 8.4	 	Asset Sales	 	 	72	 
	 
	 	Section 8.5	 	Restricted Payments	 	 	73	 
	 
	 	Section 8.6	 	Prepayment of Indebtedness	 	 	73	 
	 
	 	Section 8.7	 	Fundamental Changes	 	 	74	 
	 
	 	Section 8.8	 	Change in Nature of Business	 	 	74	 
	 
	 	Section 8.9	 	Transactions with Affiliates	 	 	74	 

ii

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	Section 8.10	 	Third-Party Restrictions on Indebtedness, Liens, Investments or	 	 	 	 
	 
	 	 	 	Restricted Payments	 	 	75	 
	 
	 	Section 8.11	 	Modification of Certain Documents	 	 	75	 
	 
	 	Section 8.12	 	Accounting Changes; Fiscal Year	 	 	76	 
	 
	 	Section 8.13	 	Margin Regulations	 	 	76	 
	 
	 	Section 8.14	 	Compliance with ERISA	 	 	76	 
	 
	 	Section 8.15	 	Hazardous Materials	 	 	76	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IX     EVENTS OF DEFAULT	 	 	76	 
	

	 
	 	 	 	 	 	 	 	 
	 
	 	Section 9.1	 	Definition	 	 	76	 
	 
	 	Section 9.2	 	Remedies	 	 	78	 
	 
	 	Section 9.3	 	Actions in Respect of Letters of Credit	 	 	78	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE X     THE ADMINISTRATIVE AGENT	 	 	79	 
	

	 
	 	 	 	 	 	 	 	 
	 
	 	Section 10.1	 	Appointment and Duties	 	 	79	 
	 
	 	Section 10.2	 	Binding Effect	 	 	80	 
	 
	 	Section 10.3	 	Use of Discretion	 	 	80	 
	 
	 	Section 10.4	 	Delegation of Rights and Duties	 	 	80	 
	 
	 	Section 10.5	 	Reliance and Liability	 	 	80	 
	 
	 	Section 10.6	 	Administrative Agent Individually	 	 	82	 
	 
	 	Section 10.7	 	Lender Credit Decision	 	 	82	 
	 
	 	Section 10.8	 	Expenses; Indemnities	 	 	82	 
	 
	 	Section 10.9	 	Resignation of Administrative Agent or L/C Issuer	 	 	83	 
	 
	 	Section 10.10	 	Release of Collateral or Guarantors	 	 	83	 
	 
	 	Section 10.11	 	Additional Secured Parties	 	 	84	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XI     MISCELLANEOUS	 	 	85	 
	

	 
	 	 	 	 	 	 	 	 
	 
	 	Section 11.1	 	Amendments, Waivers, Etc	 	 	85	 
	 
	 	Section 11.2	 	Assignments and Participations; Binding Effect	 	 	86	 
	 
	 	Section 11.3	 	Costs and Expenses	 	 	88	 
	 
	 	Section 11.4	 	Indemnities	 	 	89	 
	 
	 	Section 11.5	 	Survival	 	 	90	 
	 
	 	Section 11.6	 	Limitation of Liability for Certain Damages	 	 	90	 
	 
	 	Section 11.7	 	Lender-Creditor Relationship	 	 	90	 
	 
	 	Section 11.8	 	Right of Setoff	 	 	91	 
	 
	 	Section 11.9	 	Sharing of Payments, Etc	 	 	91	 
	 
	 	Section 11.10	 	Marshaling; Payments Set Aside	 	 	91	 
	 
	 	Section 11.11	 	Notices	 	 	91	 
	 
	 	Section 11.12	 	Electronic Transmissions	 	 	92	 
	 
	 	Section 11.13	 	Governing Law	 	 	93	 
	 
	 	Section 11.14	 	Jurisdiction	 	 	94	 
	 
	 	Section 11.15	 	WAIVER OF JURY TRIAL	 	 	94	 
	 
	 	Section 11.16	 	Severability	 	 	94	 
	 
	 	Section 11.17	 	Execution in Counterparts	 	 	95	 
	 
	 	Section 11.18	 	Entire Agreement	 	 	95	 
	 
	 	Section 11.19	 	Use of Name	 	 	95	 
	 
	 	Section 11.20	 	Non-Public Information; Confidentiality	 	 	95	 
	 
	 	Section 11.21	 	Patriot Act Notice	 	 	96	 

iii

 

SCHEDULES

	 	 	 	 	 
	Schedule I

	 	–
	 	Commitments
	Schedule II

	 	–
	 	Addresses for Notices
	Schedule III

	 	–
	 	Separation Costs
	Schedule IV

	 	–
	 	Minimum Consolidated EBITDA
	Schedule 4.2

	 	–
	 	Consents
	Schedule 4.3

	 	–
	 	Ownership of Borrower and Subsidiaries
	Schedule 4.7

	 	–
	 	Litigation
	Schedule 4.12

	 	–
	 	Labor Matters
	Schedule 4.13

	 	–
	 	List of Plans
	Schedule 4.14

	 	–
	 	Environmental Matters
	Schedule 4.16

	 	–
	 	Real Property
	Schedule 8.1

	 	–
	 	Existing Indebtedness
	Schedule 8.2

	 	–
	 	Existing Liens
	Schedule 8.3

	 	–
	 	Existing Investments

EXHIBITS

	 	 	 	 	 
	Exhibit A

	 	–
	 	Form of Assignment
	Exhibit B

	 	–
	 	Form of Note
	Exhibit C

	 	–
	 	Form of Notice of Borrowing
	Exhibit D

	 	–
	 	Form of Swingline Request
	Exhibit E

	 	–
	 	Form of L/C Request
	Exhibit F

	 	–
	 	Form of Notice of Conversion or Continuation
	Exhibit G

	 	–
	 	Form of Compliance Certificate
	Exhibit H

	 	–
	 	Form of Guaranty and Security Agreement
	Exhibit I

	 	–
	 	Mortgaged Property Report

iv

 

          This
CREDIT AGREEMENT, dated as of November 10, 2006, is entered into among ASSISTED LIVING
CONCEPTS, INC., a Nevada corporation (the “Borrower”), the Lenders (as defined below), the
L/C Issuers (as defined below) and GENERAL ELECTRIC CAPITAL CORPORATION (“GE Capital”), as
administrative agent and collateral agent for the Lenders and the L/C Issuers (in such capacity,
and together with its successors and permitted assigns, the “Administrative
Agent”).

          The parties hereto agree as follows:

ARTICLE I

DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS

     Section 1.1 Defined Terms. As used in this Agreement, the following terms
have the following meanings:

     “Additional Projections” has the meaning specified in Section 6.1(e).

     “Adjusted Consolidated EBITDA” means Consolidated EBITDA, subject to such adjustments
as determined by Administrative Agent in its reasonable discretion.

     “Affected Lender” has the meaning specified in Section 2.18.

     “Affiliate” means, with respect to any Person, each officer, director, general partner
or joint-venturer of such Person and any other Person that directly or indirectly controls, is
controlled by, or is under common control with, such Person; provided, however,
that no Secured Party shall be an Affiliate of the Borrower. For purpose of this definition,
“control” means the possession of either (a) the power to vote, or the beneficial ownership
of, 10% or more of the Voting Stock of such Person or (b) the power to direct or cause the
direction of the management and policies of such Person, whether by contract or otherwise.

     “Agreement” means this Credit Agreement.

     “Applicable Margin” means, with respect to Revolving Loans, Swing Loans and
the Unused Commitment Fee, a percentage equal to (a) during the period commencing on the Closing
Date and ending on the next date of determination that is at least 180 days after the Closing Date,
the percentage set forth in the applicable column opposite Level III in the table set forth in
clause (b) below and (b) thereafter, as of each date of determination (and until the next
such date of determination), a percentage equal to the percentage set forth below in the applicable
column opposite the level corresponding to the Consolidated Leverage Ratio in effect as of the last
day of the most recently ended Fiscal Quarter:

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	EURODOLLAR RATE	 	 
	LEVEL	 	CONSOLIDATED LEVERAGE RATIO	 	BASE RATE LOANS	 	LOANS	 	UNUSED COMMITMENT FEE
	I

	 	Greater than or equal to 4.50 to 1
	 	 	0.50	%	 	 	2.00	 	 	 	0.375	%
	II

	 	Less than 4.50 to 1 and equal to
or greater than 4.00 to 1
	 	 	0.25	%	 	 	1.75	%	 	 	0.375	%
	III

	 	Less than 4.00 to 1
	 	 	0.00	%	 	 	1.50	%	 	 	0.375	%

Each date of determination for the “Applicable Margin” shall be the date that is 3
Business Days after delivery by the Borrower to the Administrative Agent of a new Compliance
Certificate pursuant to Section 6.1(c). Notwithstanding anything to the contrary set forth
in this Agreement (including the then effective Consolidated Leverage Ratio), the Applicable Margin
shall equal the percentage set forth in the appropriate column opposite Level I in the table above,
effective immediately upon (x) the occurrence of any Event of Default under Section
9.1(e)(ii) or (y) the delivery of a notice by the Administrative Agent or the Required Lenders
to the Borrower during the continuance of any other Event of Default and, in each case, for as long
as such Event of Default shall be continuing.

     “Approved Fund” means, with respect to any Lender, any Person (other than a natural
Person) that (a) 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 and (b) is
advised or managed by (i) such Lender, (ii) any Affiliate of such Lender or (iii) any Person (other
than an individual) or any Affiliate of any Person (other than an individual) that administers or
manages such Lender.

     “Arranger” means GE Capital Markets, Inc.

     “Assignment” means an assignment agreement entered into by a Lender, as assignor, and
any prospective assignee thereof and accepted by the Administrative Agent, in substantially the
form of Exhibit A.

     “Base Rate” means, at any time, a rate per annum equal to the higher of (a) the rate
last quoted by The Wall Street Journal as the “base rate on corporate loans posted by at least 75%
of the nation’s 30 largest banks” in the United States or, if The Wall Street Journal ceases to
quote such rate, the highest per annum interest rate published by the Federal Reserve Board in
Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan”
rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined
by the Administrative Agent) or any similar release by the Federal Reserve Board (as determined by
the Administrative Agent) and (b) the sum of 0.5% per annum and the Federal Funds Rate.

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

     “Benefit Plan” means any employee benefit plan as defined in Section 3(3) of ERISA
(whether governed by the laws of the United States or otherwise) to which any Group Member incurs
or otherwise has any obligation or liability, contingent or otherwise.

     “Borrower” has the meaning specified in the preamble.

2

 

     “Borrowing” means a borrowing consisting of Loans (other than Swing Loans and Loans
deemed made pursuant to Section  2.4) made in one Facility on the same day by the
Lenders according to their respective Commitments under such Facility.

     “Business Day” means any day of the year that is not a Saturday, Sunday or a day on
which banks are required or authorized to close in New York City and, when determined in connection
with notices and determinations in respect of any Eurodollar Rate or Eurodollar Rate Loan or any
funding, conversion, continuation, Interest Period or payment of any Eurodollar Rate Loan, that is
also a day on which dealings in Dollar deposits are carried on in the London interbank market.

     “Capital Expenditures” means, for any Person for any period, the aggregate of all
expenditures, whether or not made through the incurrence of Indebtedness, by such Person and its
Subsidiaries during such period for the acquisition, leasing (pursuant to a Capital Lease),
construction, replacement, repair, substitution or improvement of fixed or capital assets or
additions to equipment, in each case required to be capitalized under GAAP on a Consolidated
balance sheet of such Person, excluding (a) interest capitalized during construction and (b) any
expenditure to the extent, for purpose of the definition of Permitted Acquisition, such expenditure
is part of the aggregate amounts payable in connection with, or other consideration for, any
Permitted Acquisition consummated during or prior to such period and (c) expenditures consisting of
Capitalized Lease Obligations or purchase money Indebtedness permitted pursuant to Section
8.1(c).

     “Capital Lease” means, with respect to any Person, any lease of, or other arrangement
conveying the right to use, any property (whether real, personal or mixed) by such Person as lessee
that has been or should be accounted for as a capital lease on a balance sheet of such Person
prepared in accordance with GAAP.

     “Capitalized Lease Obligations” means, at any time, with respect to any Capital Lease,
any lease entered into as part of any Sale and Leaseback Transaction of any Person or any synthetic
lease, the amount of all obligations of such Person that is (or that would be, if such synthetic
lease or other lease were accounted for as a Capital Lease) capitalized on a balance sheet of such
Person prepared in accordance with GAAP.

     “Cash Collateral Account” means a deposit account or securities account in the name of
the Borrower and under the sole control (as defined in the applicable UCC) of the Administrative
Agent and (a) in the case of a deposit account, from which the Borrower may not make withdrawals
except as permitted by the Administrative Agent and (b) in the case of a securities account, with
respect to which the Administrative Agent shall be the entitlement holder and the only Person
authorized to give entitlement orders with respect thereto.

     “Cash Equivalents” means (a) any readily-marketable securities (i) issued by, or
directly, unconditionally and fully guaranteed or insured by the United States federal government
or (ii) issued by any agency of the United States federal government the obligations of which are
fully backed by the full faith and credit of the United States federal government, (b) any
readily-marketable direct obligations issued by any other agency of the United States federal
government, any state of the United States or any political subdivision of any such state or any
public instrumentality thereof, in each case having a rating of at least “A-1” from S&P or at least
“P-1” from Moody’s, (c) any commercial paper rated at least “A-1” by S&P or “P-1”
by Moody’s and issued by any Person organized under the laws of any state of the United States, (d)
any Dollar-

3

 

denominated time deposit, insured certificate of deposit, overnight bank deposit or bankers’
acceptance issued or accepted by (i) any Lender or (ii) any commercial bank that is (A) organized
under the laws of the United States, any state thereof or the District of Columbia, (B) “adequately
capitalized” (as defined in the regulations of its primary federal banking regulators) and (C) has
Tier 1 capital (as defined in such regulations) in excess of $250,000,000 and (e) shares of any
United States money market fund that (i) has substantially all of its assets invested continuously
in the types of investments referred to in clause (a), (b), (c) or (d)
above with maturities as set forth in the proviso below, (ii) has net assets in excess of
$500,000,000 and (iii) has obtained from either S&P or Moody’s the highest rating obtainable for
money market funds in the United States; provided, however, that the maturities of
all obligations specified in any of clauses (a), (b), (c) and (d)
above shall not exceed 365 days.

     “CERCLA” means the United States Comprehensive Environmental Response, Compensation,
and Liability Act (42 U.S.C. §§ 9601 et seq.).

     “Change of Control” means the occurrence of any of the following:

     (a) any person shall become the legal or beneficial owner of, or shall have acquired, pursuant
to any Contractual Obligation or otherwise, control over the voting rights of, 35% or more of the
issued and outstanding Voting Stock of the Borrower;

     (b) at any time after the second anniversary of the Closing Date, continuing directors shall
cease for any reason other than death or disability to constitute a majority of the members of the
board of directors of the Borrower then in office;

     (c) the Borrower shall cease to own and control legally and beneficially all of the economic
and voting rights associated with all classes of the outstanding Stock and Stock Equivalents of any
Guarantor; or

     (d) a “Change of Control” or any term of similar effect, as defined in any other document
governing Indebtedness of any Loan Party having a principal amount in excess of $5,000,000 shall
occur.

For purpose of this definition, the following terms shall have the following meanings: (x)
“person” means any “person” as such term is used in the United States Securities Exchange
Act of 1934, as amended, including any partnership, limited partnership, syndicate or group of
persons that is deemed to be a “person” for purposes of Sections 13(d) and 14(d)(2) of such
Securities Exchange Act, (y) “beneficial owner” means any “beneficial owner” under and as
defined in Rules 13d-3 and 13d-5 of the United States Securities and Exchange Commission under such
Securities Exchange Act; provided, however, that any person shall be deemed to be
the beneficial owner of all Securities that such person has the right to acquire, whether such
right is exercisable immediately or with the passage of time and (z) “continuing director”
means, at any date of determination, each individual member of the board of directors of the
Borrower who (i) has been a member of such board in the period of twelve successive calendar months
last ended prior to such date or (ii) whose nomination for election by the stockholders of the
Borrower was approved by a vote of at least two thirds of the directors who were continuing
directors at the time of such nomination.

     “Closing Date” means the first date on which this Agreement shall have been executed
and all conditions to the initial funding of any Loan set forth in Section 3.1 have been satisfied.

4

 

     “CMS” means the Centers for Medicare and Medicaid Services, formerly known as the Health Care
Financing Administration or HCFA.

     “Code” means the U.S. Internal Revenue Code of 1986.

     “Collateral” means all property and interests in property and proceeds thereof now
owned or hereafter acquired by any Loan Party in or upon which a Lien is granted or purported to be
granted pursuant to any Loan Document.

     “Commitment” means, with respect to any Lender, such Lender’s Revolving Credit
Commitment.

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

     “Consolidated” means, with respect to any Person, the accounts of such Person and its
Subsidiaries consolidated in accordance with GAAP. When used with respect to the Borrower,
consolidated means the accounts of the Borrower consolidated with those of all other Group Members.

     “Consolidated Cash Interest Expense” means, with respect to any Person for any period,
the Consolidated Interest Expense of such Person for such period less the sum of, in each
case to the extent included in the definition of Consolidated Interest Expense, (a) the amortized
amount of debt discount and debt issuance costs, (b) charges relating to write-ups or write-downs
in the book or carrying value of existing Consolidated Total Debt, (c) interest payable in
evidences of Indebtedness or by addition to the principal of the related Indebtedness and (d) other
non-cash interest.

     “Consolidated Current Assets” means, with respect to any Person at any date, the total
Consolidated current assets of such Person at such date other than cash, Cash Equivalents and any
Indebtedness owing to such Person or any of its Subsidiaries by Affiliates of such Person.

     “Consolidated Current Liabilities” means, with respect to any Person at any date, all
liabilities of such Person and its Subsidiaries at such date that should be classified as current
liabilities on a Consolidated balance sheet of such Person; provided, however, that
“Consolidated Current Liabilities” shall exclude the principal amount of the Loans then
outstanding.

     “Consolidated EBITDA” means, with respect to any Person for any period, (a) the
Consolidated Net Income of such Person for such period plus (b) the sum of, in each case to
the extent included in the calculation of such Consolidated Net Income but without duplication, (i)
any provision for United States federal income taxes or other taxes measured by net income, (ii)
Consolidated Interest Expense, amortization of debt discount and commissions and other fees and
charges associated with Indebtedness, (iii) any loss from extraordinary items, (iv) any
depreciation, depletion and amortization expense, (v) any aggregate net loss on the Sale of
property (other than accounts (as defined under the applicable UCC) and inventory) outside the
ordinary course of business, (vi) any other non-cash expenditure, charge or loss for such period
(other than any non-cash expenditure, charge or loss relating to write-offs, write-downs or
reserves with respect to accounts and inventory), including the amount of any compensation
deduction as the result of any grant of Stock or Stock Equivalents to employees, officers,
directors or consultants and (vii) the one-time, non-recurring expenses incurred by the Borrower in
connection with the Related Transactions, as set forth on Schedule III hereto minus
(c) the sum

5

 

of, in each case to the extent included in the calculation of such Consolidated Net Income and
without duplication, (i) any credit for United States federal income taxes or other taxes measured
by net income, (ii) any interest income, (iii) any gain from extraordinary items and any other
non-recurring gain, (iv) any aggregate net gain from the Sale of property (other than accounts (as
defined in the applicable UCC) and inventory) out of the ordinary course of business by such
Person, (v) any other non-cash gain, including any reversal of a charge referred to in clause
(b)(vi) above by reason of a decrease in the value of any Stock or Stock Equivalent, and (vi)
any other cash payment in respect of expenditures, charges and losses that have been added to
Consolidated EBITDA of such Person pursuant to clause (b)(vi) above in any prior period.

     “Consolidated Fixed Charge Coverage Ratio” means, with respect to any Person for any
period, the ratio, computed on a Pro Forma Basis, of (a) Consolidated EBITDA of such Person for
such period minus Consolidated Maintenance Capital Expenditures of such Person for such
period minus the total liability for United States federal income taxes and other taxes
measured by net income earned in the ordinary course of business actually paid or due and payable
by such Person in respect of such period to (b) the Consolidated Fixed Charges of such Person for
such period.

     “Consolidated Fixed Charges” means, with respect to any Person for any period, the
sum, determined on a Consolidated basis, of (a) the Consolidated Cash Interest Expense of such
Person and its Subsidiaries for such period, (b) the principal amount of Consolidated Total Debt of
such Person and its Subsidiaries having a scheduled due date during such period, provided that
there shall be excluded from Consolidated Fixed Charges for any period the principal portion of any
such Indebtedness that is repaid or refinanced at maturity with additional Indebtedness permitted
to be incurred pursuant to the terms of the Loan Documents (other than Loans made under this
Agreement), (c) all cash dividends payable by such Person and its Subsidiaries on Stock in respect
of such period to Persons other than such Person and its Subsidiaries and (d) all commitment fees
and other costs, fees and expenses payable by such Person and its Subsidiaries during such period
in order to effect, or because of, the incurrence of any Indebtedness.

     “Consolidated Growth Capital Expenditures” means, for any period, all Capital
Expenditures of the Borrower and its Subsidiaries for such period representing the purchase price
for, or other costs associated with the acquisition, construction or expansion of, a facility owned
or operated by the Borrower or any Subsidiary.

     “Consolidated Interest Expense” means, for any Person for any period, (a) Consolidated
total interest expense of such Person and its Subsidiaries for such period and including, in any
event, (i) interest capitalized during such period and net costs under Interest Rate Contracts for
such period and (ii) all fees, charges, commissions, discounts and other similar obligations (other
than reimbursement obligations) with respect to letters of credit, bank guarantees, banker’s
acceptances, surety bonds and performance bonds (whether or not matured) payable by such Person and
its Subsidiaries during such period minus (b) the sum of (i) Consolidated net gains of such
Person and its Subsidiaries under Interest Rate Contracts for such period and (ii) Consolidated
interest income of such Person and its Subsidiaries for such period.

     “Consolidated Leverage Ratio” means, with respect to any Person as of any date and
calculated on a Pro Forma Basis, the ratio of (a) Consolidated Total Debt of such Person
outstanding as of such date to (b) Consolidated EBITDA for such Person for the last period of four
consecutive Fiscal Quarters ending on or before such date.

6

 

     “Consolidated Maintenance Capital Expenditures” means, for any period, all Capital
Expenditures of the Borrower and its Subsidiaries for such period other than Consolidated Growth
Capital Expenditures.

     “Consolidated Net Income” means, with respect to any Person, for any period, the
Consolidated net income (or loss) of such Person and its Subsidiaries for such period;
provided, however, that the following shall be excluded: (a) the net income of any
other Person in which such Person or one of its Subsidiaries has a joint interest with a
third-party (which interest does not cause the net income of such other Person to be Consolidated
into the net income of such Person), except to the extent of the amount of dividends or
distributions paid to such Person or Subsidiary, (b) the net income of any Subsidiary of such
Person that is, on the last day of such period, subject to any restriction or limitation on the
payment of dividends or the making of other distributions, to the extent of such restriction or
limitation and (c) except as agreed by the Administrative Agent in connection with any Pro Forma
Transaction, the net income of any other Person arising prior to such other Person becoming a
Subsidiary of such Person or merging or consolidating into such Person or its Subsidiaries.

     “Consolidated Total Debt” of any Person means all Indebtedness of a type described in
clause (a), (b), (c)(i), (d) or (f) of the definition
thereof and all Guaranty Obligations with respect to any such Indebtedness, in each case of such
Person and its Subsidiaries on a Consolidated basis.

     “Constituent Documents” means, with respect to any Person, collectively and, in each
case, together with any modification of any term thereof, (a) the articles of incorporation,
certificate of incorporation, constitution or certificate of formation of such Person, (b) the
bylaws, operating agreement or joint venture agreement of such Person, (c) any other constitutive,
organizational or governing document of such Person, whether or not equivalent, and (d) any other
document setting forth the manner of election or duties of the directors, officers or managing
members of such Person or the designation, amount or relative rights, limitations and preferences
of any Stock of such Person.

     “Contractual Obligation” means, with respect to any Person, any provision of any
Security issued by such Person or of any document or undertaking (other than a Loan Document) to
which such Person is a party or by which it or any of its property is bound or to which any of its
property is subject.

     “Control Agreement” means, with respect to any deposit account, any securities
account, commodity account, securities entitlement or commodity contract, an agreement, in form and
substance satisfactory to the Administrative Agent, among the Administrative Agent, the financial
institution or other Person at which such account is maintained or with which such entitlement or
contract is carried and the Loan Party maintaining such account, effective to grant “control” (as
defined under the applicable UCC) over such account to the Administrative Agent.

     “Controlled Deposit Account” means each deposit account (including all funds on
deposit therein) that is the subject of an effective Control Agreement and that is maintained by
any Loan Party with a financial institution approved by the Administrative Agent.

     “Controlled Securities Account” means each securities account or commodity account
(including all financial assets held therein and all certificates and instruments, if any,
representing or evidencing such financial assets) that is the subject of an effective Control
Agreement and that

7

 

is maintained by any Loan Party with a securities intermediary or commodity intermediary
approved by the Administrative Agent.

     “Copyrights” means all rights, title and interests (and all related IP Ancillary
Rights) arising under any Requirement of Law in or relating to copyrights and all mask work,
database and design rights, whether or not registered or published, all registrations and
recordations thereof and all applications in connection therewith.

     “Corporate Chart” means a document in form reasonably acceptable to the Administrative
Agent and setting forth, as of a date set forth therein, for each Person that is a Loan Party, that
is subject to Section 7.10 or that is a Subsidiary or joint venture of any of them, (a) the
full legal name of such Person, (b) the jurisdiction of organization and any organizational number
and tax identification number of such Person, (c) the location of such Person’s chief executive
office (or, if applicable, sole place of business) and (d) the number of shares of each class of
Stock of such Person authorized, the number outstanding and the number and percentage of such
outstanding shares for each such class owned, directly or indirectly, by any Loan Party or any
Subsidiary of any of them.

     “Customary Permitted Liens” means, with respect to any Person, any of the following:

     (a) Liens (i) with respect to the payment of taxes, assessments or other governmental charges
or (ii) of suppliers, carriers, materialmen, warehousemen, workmen or mechanics and other similar
Liens, in each case imposed by law or arising in the ordinary course of business, and, for each of
the Liens in clauses (i) and (ii) above for amounts that are not yet due or that
are being contested in good faith by appropriate proceedings diligently conducted and with respect
to which adequate reserves or other appropriate provisions are maintained on the books of such
Person in accordance with GAAP;

     (b) Liens of a collection bank on items in the course of collection arising under Section
4-208 of the UCC as in effect in the State of New York or any similar section under any applicable
UCC or any similar Requirement of Law of any foreign jurisdiction;

     (c) pledges or cash deposits made in the ordinary course of business (i) in connection with
workers’ compensation, unemployment insurance or other types of social security benefits (other
than any Lien imposed by ERISA), (ii) to secure the performance of bids, tenders, leases (other
than Capital Leases) sales or other trade contracts (other than for the repayment of borrowed
money) or (iii) made in lieu of, or to secure the performance of, surety, customs, reclamation or
performance bonds (in each case not related to judgments or litigation);

     (d) judgment liens (other than for the payment of taxes, assessments or other governmental
charges) securing judgments and other proceedings not constituting an Event of Default under
Section 9.1(f) and pledges or cash deposits made in lieu of, or to secure the performance
of, judgment or appeal bonds in respect of such judgments and proceedings;

     (e) Liens (i) arising by reason of zoning restrictions, easements, licenses, reservations,
restrictions, covenants, rights-of-way, encroachments, minor defects or irregularities in title
(including leasehold title) and other similar encumbrances on the use of real property or (ii)
consisting of leases, licenses or subleases granted by a lessor, licensor or sublessor on its
property (in each case other than Capital Leases) otherwise permitted under Section 8.4
that, for each of the Liens in clauses (i) and (ii) above, do not, in the
aggregate, materially (x) impair the

8

 

value or marketability of such real property or (y) interfere with the ordinary conduct of the
business conducted and proposed to be conducted at such real property;

     (f) Liens of landlords and mortgagees of landlords (i) arising by statute or under any lease
or related Contractual Obligation entered into in the ordinary course of business, (ii) on fixtures
and movable tangible property located on the real property leased or subleased from such landlord,
(iii) for amounts not yet due or that are being contested in good faith by appropriate proceedings
diligently conducted and (iv) for which adequate reserves or other appropriate provisions are
maintained on the books of such Person in accordance with GAAP; and

     (g) the title and interest of a lessor or sublessor in and to personal property leased or
subleased (other than through a Capital Lease), in each case extending only to such personal
property.

     “Default” means any Event of Default and any event that, with the passing of time or
the giving of notice or both, would become an Event of Default.

     “Disclosure Documents” means, collectively, (a) all confidential information memoranda
and related materials prepared in connection with the syndication of the Facility and (b) all other
documents filed by any Group Member with the United States Securities and Exchange Commission.

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

     “Domestic Person” means any “United States person” under and as defined in
Section 770l(a)(30) of the Code.

     “E-Fax” means any system used to receive or transmit faxes electronically.

     “Electronic Transmission” means each document, instruction, authorization, file,
information and any other communication transmitted, posted or otherwise made or communicated by
e-mail or E-Fax, or otherwise to or from an E-System or other equivalent service.

     “Eligible Assignee” has the meaning specified in Section 11.2.

     “Environmental Laws” means all Requirements of Law and Permits imposing liability or
standards of conduct for or relating to the regulation and protection of human health, safety, the
environment and natural resources, including CERCLA, the SWDA, the Hazardous Materials
Transportation Act (49 U.S.C. §§ 5101 et seq.), the Federal Insecticide, Fungicide, and Rodenticide
Act (7 U.S.C. §§ 136 et seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), the
Clean Air Act (42 U.S.C. §§ 7401 et seq.), the Federal Water Pollution Control Act (33 U.S.C. §§
1251 et seq.), the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.), the Safe Drinking
Water Act (42 U.S.C. §§ 300(f) et seq.), all regulations promulgated under any of the foregoing,
all analogous Requirements of Law and Permits and any environmental transfer of ownership
notification or approval statutes, including the Industrial Site Recovery Act (N.J. Stat. Ann. §§
13:1K-6 et seq.).

     “Environmental Liabilities” means all Liabilities (including costs of Remedial
Actions, natural resource damages and costs and expenses of investigation and feasibility studies)
that may

9

 

be imposed on, incurred by or asserted against any Group Member as a result of, or related to,
any claim, suit, action, investigation, proceeding or demand by any Person, whether based in
contract, tort, implied or express warranty, strict liability, criminal or civil statute or common
law or otherwise, arising under any Environmental Law or in connection with any environmental,
health or safety condition or with any Release and resulting from the ownership, lease, sublease or
other operation or occupation of property by any Group Member, whether on, prior or after the date
hereof.

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

     “ERISA Affiliate” means, collectively, any Group Member, and any Person under common
control, or treated as a single employer, with any Group Member, within the meaning of Section
414(b), (c), (m) or (o) of the Code.

     “ERISA Event” means any of the following: (a) a reportable event described in Section
4043(b) of ERISA (or, unless the 30-day notice requirement has been duly waived under the
applicable regulations, Section 4043(c) of ERISA) with respect to a Title IV Plan, (b) the
withdrawal of any ERISA Affiliate from a Title IV 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, (c)
the complete or partial withdrawal of any ERISA Affiliate from any Multiemployer Plan, (d) with
respect to any Multiemployer Plan, the filing of a notice of reorganization, insolvency or
termination (or treatment of a plan amendment as termination) under Section 4041A of ERISA, (e) the
filing of a notice of intent to terminate a Title IV Plan (or treatment of a plan amendment as
termination) under Section 4041 of ERISA, (f) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC, (g) the failure to make any required contribution to any
Title IV Plan or Multiemployer Plan when due, (h) the imposition of a lien under Section 412 of the
Code or Section 302 or 4068 of ERISA on any property (or rights to property, whether real or
personal) of any ERISA Affiliate, (i) the failure of a Benefit Plan or any trust thereunder
intended to qualify for tax exempt status under Section 401 or 501 of the Code or other
Requirements of Law to qualify thereunder and (j) any other event or condition that might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of any liability upon any ERISA Affiliate under Title IV of ERISA other than for PBGC
premiums due but not delinquent.

     “E-Signature” means the process of attaching to or logically associating with an
Electronic Transmission an electronic symbol, encryption, digital signature or process (including
the name or an abbreviation of the name of the party transmitting the Electronic Transmission) with
the intent to sign, authenticate or accept such Electronic Transmission.

     “E-System” means any electronic system, including Intralinks® and any other
Internet or extranet-based site, whether such electronic system is owned, operated or hosted by the
Administrative Agent, any of its Related Persons or any other Person, providing for access to data
protected by passcodes or other security system.

     “Eurodollar Base Rate” means, with respect to any Interest Period for any Eurodollar
Rate Loan, the rate determined by the Administrative Agent to be the offered rate for deposits in
Dollars for the applicable Interest Period appearing on the Dow Jones Markets Telerate Page 3750 as
of 11:00 a.m. (London time) on the second full Business Day next preceding the first day of each
Interest Period. In the event that such rate does not appear on the Dow Jones Markets

10

 

Telerate Page 3750 (or otherwise on the Dow Jones Markets screen) at such time, the
“Eurodollar Base Rate” shall be determined by reference to such other comparable publicly
available service for displaying the offered rate for deposit in Dollars in the London interbank
market as may be selected by the Administrative Agent and, in the absence of availability, such
other method to determine such offered rate as may be selected by the Administrative Agent in its
sole discretion.

     “Eurodollar Rate” means, with respect to any Interest Period and for any Eurodollar
Rate Loan, an interest rate per annum determined as the ratio of (a) the Eurodollar Base Rate with
respect to such Interest Period for such Eurodollar Rate Loan to (b) the difference between the
number one and the Eurodollar Reserve Requirements with respect to such Interest Period and for
such Eurodollar Rate Loan.

     “Eurodollar Rate Loan” means any Loan that bears interest based on the Eurodollar
Rate.

     “Eurodollar Reserve Requirements” means, with respect to any Interest Period and for
any Eurodollar Rate Loan, a rate per annum equal to the aggregate, without duplication, of the
maximum rates (expressed as a decimal number) of reserve requirements in effect 2 Business Days
prior to the first day of such Interest Period (including basic, supplemental, marginal and
emergency reserves) under any regulations of the Federal Reserve Board or other Governmental
Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as “eurocurrency liabilities” in Regulation D of the
Federal Reserve Board) maintained by a member bank of the United States Federal Reserve System.

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

     “Excluded Foreign Subsidiary” means any Subsidiary that is not a Domestic Person and
in respect of which any of (a) the pledge of all of the Stock of such Subsidiary as Collateral for
any Obligation of the Borrower, (b) the grant by such Subsidiary of a Lien on any of its property
as Collateral for any Obligation of the Borrower or (c) such Subsidiary incurring Guaranty
Obligations with respect to any Obligation of the Borrower, the Borrower or any Domestic Person
would, in the good faith judgment of the Borrower, result in materially adverse tax consequences to
the Loan Parties and their Subsidiaries, taken as a whole; provided, however, that
(x) the Administrative Agent and the Borrower may agree that, despite the foregoing, any such
Subsidiary shall not be an “Excluded Foreign Subsidiary” and (y) no such Subsidiary shall
be an “Excluded Foreign Subsidiary” if, with substantially similar tax consequences, such
Subsidiary has entered into any Guaranty Obligations with respect to, such Subsidiary has granted a
security interest in any of its property to secure, or more than 66% of the Voting Stock of such
Subsidiary was pledged to secure, directly or indirectly, any Indebtedness (other than the
Obligations) of any Loan Party.

     “Extendicare” means Extendicare, Inc., a corporation organized under the laws of
Ontario.

     “Facility” means the Revolving Credit Facility.

     “Facility Increase” has the meaning specified in Section 2.1(b).

     “Facility Increase Date” has the meaning specified in Section 2.1(b).

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     “Facility Increase Notice” means a notice from the Borrower to the Administrative
Agent requesting a Facility Increase, which may include any proposed term and condition for such
proposed Facility Increase but shall include in any event the amount of such proposed Facility
Increase.

     “Federal Funds Rate” means, for any period, a fluctuating interest rate per annum
equal for each day during such period to the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as
determined by the Administrative Agent in its sole discretion.

     “Federal Reserve Board” means the Board of Governors of the United States Federal
Reserve System and any successor thereto.

     “Fee Letters” means (a) the letter agreement, dated as of August 25, 2006, addressed
to the Borrower from the Administrative Agent and accepted by the Borrower, with respect to certain
fees to be paid from time to time to the Administrative Agent and its Related Persons and (b) any
additional fee letter entered into as part of the Facility Increase and executed by, among others,
the Borrower and the Administrative Agent.

     “Financial Statement” means each financial statement delivered pursuant to Section
4.4 or 6.1.

     “Fiscal Quarter” means each 3 fiscal month period ending on March 31, June 30,
September 30 or December 31.

     “Fiscal Year” means the twelve month period ending on December 31.

     “GAAP” means generally accepted accounting principles in the United States of America,
as in effect from time to time, set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants, in the statements and
pronouncements of the Financial Accounting Standards Board and in such other statements by such
other entity as may be in general use by significant segments of the accounting profession that are
applicable to the circumstances as of the date of determination. Subject to Section 1.3,
all references to “GAAP” shall be to GAAP applied consistently with the principles used in
the preparation of the Financial Statements described in Section 4.4(a).

     “Governmental Authority” means any nation, sovereign or government, any state or other
political subdivision thereof, any agency, authority or instrumentality thereof and any entity or
authority exercising executive, legislative, taxing, judicial, regulatory or administrative
functions of or pertaining to government, including any central bank, stock exchange, regulatory
body, arbitrator, public sector entity, supra-national entity (including the European Union and the
European Central Bank) and any self-regulatory organization (including the National Association of
Insurance Commissioners).

     “Government Reimbursement Program” means (i) Medicare, the Federal Employees Health
Benefit Program under 5 U.S.C. §§ 8902 et seq., the TRICARE program established by the Department
of Defense under 10 U.S.C. §§ 1071 et seq. or the Civilian Health and Medical Program of the
Uniformed Services under 10 U.S.C. §§ 1079 and 1086, (ii) Medicaid or (iii) any agent,
administrator, intermediary or carrier for any of the foregoing.

12

 

     “Group Members” means, collectively, the Borrower and its Subsidiaries.

     “Group Members’ Accountants” means KPMG LLP or other nationally-recognized independent
registered certified public accountants selected by Borrower and reasonably acceptable to the
Administrative Agent.

     “Guarantor” means each Subsidiary of the Borrower listed on Schedule 4.3 that
is not an Excluded Foreign Subsidiary and each other Person that enters into any Guaranty
Obligation with respect to any Obligation of any Loan Party.

     “Guaranty and Security Agreement” means a guaranty and security agreement, in
substantially the form of Exhibit H, among the Administrative Agent, the Borrower and other
Guarantors from time to time party thereto.

     “Guaranty Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of such Person for any Indebtedness, lease, dividend or other
obligation (the “primary obligation”) of another Person (the “primary obligor”), if
the purpose or intent of such Person in incurring such liability, or the economic effect thereof,
is to guarantee such primary obligation or provide support, assurance or comfort to the holder of
such primary obligation or to protect or indemnify such holder against loss with respect to such
primary obligation, including (a) the direct or indirect guaranty, endorsement (other than for
collection or deposit in the ordinary course of business), co-making, discounting with recourse or
sale with recourse by such Person of any primary obligation, (b) the incurrence of reimbursement
obligations with respect to any letter of credit or bank guarantee in support of any primary
obligation, (c) the existence of any Lien, or any right, contingent or otherwise, to receive a
Lien, on the property of such Person securing any part of any primary obligation and (d) any
liability of such Person for a primary obligation through any Contractual Obligation (contingent or
otherwise) or other arrangement (i) to purchase, repurchase or otherwise acquire such primary
obligation or any security therefor or to provide funds for the payment or discharge of such
primary obligation (whether in the form of a loan, advance, stock purchase, capital contribution or
otherwise), (ii) to maintain the solvency, working capital, equity capital or any balance sheet
item, level of income or cash flow, liquidity or financial condition of any primary obligor, (iii)
to make take-or-pay or similar payments, if required, regardless of non-performance by any other
party to any Contractual Obligation, (iv) to purchase, sell or lease (as lessor or lessee) any
property, or to purchase or sell services, primarily for the purpose of enabling the primary
obligor to satisfy such primary obligation or to protect the holder of such primary obligation
against loss or (v) to supply funds to or in any other manner invest in, such primary obligor
(including to pay for property or services irrespective of whether such property is received or
such services are rendered); provided, however, that “Guaranty Obligations”
shall not include (x) endorsements for collection or deposit in the ordinary course of business and
(y) product warranties given in the ordinary course of business. The outstanding amount of any
Guaranty Obligation shall equal the outstanding amount of the primary obligation so guaranteed or
otherwise supported as reasonably determined by the Administrative Agent or, if lower, the stated
maximum amount for which such Person may be liable under such Guaranty Obligation.

     “Hazardous Material” means any substance, material or waste that is classified,
regulated or otherwise characterized under any Environmental Law as hazardous, toxic, a contaminant
or a pollutant or by other words of similar meaning or regulatory effect, including petroleum or
any fraction thereof, asbestos, polychlorinated biphenyls and radioactive substances.

13

 

     “Healthcare Laws” collectively, any and all federal, state or local laws, rules,
regulations and administrative manuals, orders, guidelines and requirements issued under or in
connection with Medicare, Medicaid or any Government Reimbursement Program or any law governing the
licensure of or regulating healthcare providers, professionals, facilities or payors or otherwise
governing or regulating the provision of, or payment for, medical services or the sale of medical
supplies. Healthcare Laws include, but are not limited to, 31 U.S.C. Section 3729, et seq. (the
“Federal False Claims Act”); 42 U.S.C. Section 1320a-7(b) (the “Federal Anti-Kickback Statute”);
and 42 U.S.C. 1395nn (the “Physician Self Referral Statute” or “Stark Law”).

     “Hedging Agreement” means any Interest Rate Contract, foreign exchange, swap, option
or forward contract, spot, cap, floor or collar transaction, any other derivative instrument and
any other similar speculative transaction and any other similar agreement or arrangement designed
to alter the risks of any Person arising from fluctuations in any underlying variable.

     “HIPAA” means the Health Insurance Portability and Accountability Act of 1996, and any
and all rules or regulations promulgated from time to time thereunder.

     “Indebtedness” of any Person means, without duplication, any of the following, whether
or not matured: (a) all indebtedness for borrowed money, (b) all obligations evidenced by notes,
bonds, debentures or similar instruments, (c) all reimbursement and all obligations with respect to
(i) letters of credit, bank guarantees or bankers’ acceptances or (ii) surety, customs, reclamation
or performance bonds (in each case not related to judgments or litigation) other than those entered
into in the ordinary course of business, (d) all obligations to pay the deferred purchase price of
property or services, other than trade payables incurred in the ordinary course of business, (e)
all obligations created or arising under any conditional sale or other title retention agreement,
regardless of whether the rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property, (f) all Capitalized Lease
Obligations, (g) all obligations, whether or not contingent, to purchase, redeem, retire, defease
or otherwise acquire for value any of its own Stock or Stock Equivalents (or any Stock or Stock
Equivalent of a direct or indirect parent entity thereof) prior to the date that is 180 days after
the Scheduled Revolving Credit Termination Date, valued at, in the case of redeemable preferred
Stock, the greater of the voluntary liquidation preference and the involuntary liquidation
preference of such Stock plus accrued and unpaid dividends, (h) all payments that would be required
to be made in respect of any Hedging Agreement in the event of a termination (including an early
termination) on the date of determination and (i) all Guaranty Obligations for obligations of any
other Person constituting Indebtedness of such other Person; provided, however,
that the items in each of clauses (a) through (i) above shall constitute
“Indebtedness” of such Person solely to the extent, directly or indirectly, (x) such Person
is liable for any part of any such item, (y) any such item is secured by a Lien on such Person’s
property or (z) any other Person has a right, contingent or otherwise, to cause such Person to
become liable for any part of any such item or to grant such a Lien.

     “Indemnified Matter” has the meaning specified in Section 11.4.

     “Indemnitee” has the meaning specified in Section 11.4.

     “Initial Projections” means those financial projections, dated August 24, 2006,
covering the Fiscal Years ending in 2007 through 2011 and delivered to the Administrative Agent by
the Borrower prior to the date hereof.

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     “Intellectual Property” means all rights, title and interests in or relating to
intellectual property arising under any Requirement of Law and all IP Ancillary Rights relating
thereto, including all Copyrights, Patents, Trademarks, Internet Domain Names, Trade Secrets and IP
Licenses.

     “Interest Period” means, with respect to any Eurodollar Rate Loan, the period
commencing on the date such Eurodollar Rate Loan is made or converted to a Eurodollar Rate Loan or,
if such loan is continued, on the last day of the immediately preceding Interest Period therefor
and, in each case, ending 1, 2, 3 or 6 months thereafter, as selected by the Borrower pursuant
hereto; provided, however, that (a) if any Interest Period would otherwise end on a
day that is not a Business Day, such Interest Period shall be extended to the next succeeding
Business Day, unless the result of such extension would be to extend such Interest Period into
another such Business Day falls in the next calendar month, in which case such Interest Period
shall end on the immediately preceding Business Day, (b) any Interest Period that begins on the
last Business Day of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on the last Business Day of
a calendar month, (c) the Borrower may not select any Interest Period ending after the Scheduled
Revolving Credit Termination Date, (d) the Borrower may not select any Interest Period in respect
of Loans having an aggregate principal amount of less than $5,000,000 and (e) there shall be
outstanding at any one time no more than 5 Interest Periods.

     “Interest Rate Contracts” means all interest rate swap agreements, interest rate cap
agreements, interest rate collar agreements and interest rate insurance.

     “Internet Domain Names” means all rights, title and interests (and all related IP
Ancillary Rights) arising under any Requirement of Law in or relating to Internet domain names.

     “Investment” means, with respect to any Person, directly or indirectly, (a) to own,
purchase or otherwise acquire, in each case whether beneficially or otherwise, any investment in,
including any interest in, any Security of any other Person (other than any evidence of any
Obligation), (b) to purchase or otherwise acquire, whether in one transaction or in a series of
transactions, all or a significant part of the property of any other Person or a business conducted
by any other Person or all or substantially all of the assets constituting the business of a
division, branch, brand or other unit operation of any other Person, (c) to incur, or to remain
liable under, any Guaranty Obligation for Indebtedness of any other Person, to assume the
Indebtedness of any other Person or to make, hold, purchase or otherwise acquire, in each case
directly or indirectly, any deposit, loan, advance, commitment to lend or advance, or other
extension of credit (including by deferring or extending the date of, in each case outside the
ordinary course of business, the payment of the purchase price for Sales of property or services to
any other Person, to the extent such payment obligation constitutes Indebtedness of such other
Person), excluding deposits with financial institutions available for withdrawal on demand, prepaid
expenses, accounts receivable and similar items created in the ordinary course of business, (d) to
make, directly or indirectly, any contribution to the capital of any other Person or (e) to Sell
any property for less than fair market value (including a disposition of cash or Cash Equivalents
in exchange for consideration of lesser value); provided, however, that such
Investment shall be valued at the difference between the value of the consideration for such Sale
and the fair market value of the property Sold.

     “IP Ancillary Rights” means, with respect to any other Intellectual Property, as
applicable, all foreign counterparts to, and all divisionals, reversions, continuations,

15

 

continuations-in-part, reissues, reexaminations, renewals and extensions of, such Intellectual
Property and all income, royalties, proceeds and Liabilities at any time due or payable or asserted
under or with respect to any of the foregoing or otherwise with respect to such Intellectual
Property, including all rights to sue or recover at law or in equity for any past, present or
future infringement, misappropriation, dilution, violation or other impairment thereof, and, in
each case, all rights to obtain any other IP Ancillary Right.

     “IP License” means all Contractual Obligations (and all related IP Ancillary Rights),
whether written or oral, granting any right title and interest in or relating to any Intellectual
Property.

     “IRS” means the Internal Revenue Service of the United States and any successor
thereto.

     “Issue” means, with respect to any Letter of Credit, to issue, extend the expiration
date of, renew (including by failure to object to any automatic renewal on the last day such
objection is permitted), increase the face amount of, or reduce or eliminate any scheduled decrease
in the face amount of, such Letter of Credit, or to cause any Person to do any of the foregoing.
The terms “Issued” and “Issuance” have correlative meanings.

     “L/C Cash Collateral Account” means any Cash Collateral Account (a) specifically
designated as such by the Borrower in a notice to the Administrative Agent and (b) from and after
the effectiveness of such notice, not containing any funds other than those required under the Loan
Documents to be placed therein.

     “L/C
Issuer” means (a) U.S. Bank National Association or any of its Affiliates and (b) each Person that
hereafter becomes an L/C Issuer with the approval of, and pursuant to an agreement with and in form
and substance satisfactory to, the Administrative Agent and the Borrower, in each case in their
capacity as L/C Issuers hereunder and together with their successors.

     “L/C Obligations” means, for any Letter of Credit at any time, the sum of (a) the L/C
Reimbursement Obligations at such time for such Letter of Credit and (b) the aggregate maximum
undrawn face amount of such Letter of Credit outstanding at such time.

     “L/C Reimbursement Agreement” has the meaning specified in Section 2.4(a).

     “L/C Reimbursement Date” has the meaning specified in Section 2.4(e).

     “L/C Reimbursement Obligation” means, for any Letter of Credit, the obligation of the
Borrower to the L/C Issuer thereof, as and when matured, to pay all amounts drawn under such Letter
of Credit.

     “L/C Request” has the meaning specified in Section 2.4(b).

     “L/C Sublimit” means $50,000,000.

     “Lender” means, collectively, the Swingline Lender and any other financial institution
or other Person that (a) is listed on the signature pages hereof as a “Lender” (b) from
time to time becomes a party hereto by execution of an Assignment, in each case together with its
successors, or (c) becomes a party hereto in connection with a Facility Increase by execution of an
assumption agreement in connection with such Facility Increase.

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     “Letter of Credit” means any letter of credit Issued pursuant to Section 2.4.

     “Liabilities” means all claims, actions, suits, judgments, damages, losses, liability,
obligations, responsibilities, fines, penalties, sanctions, costs, fees, taxes, commissions,
charges, disbursements and expenses, in each case of any kind or nature (including interest accrued
thereon or as a result thereto and fees, charges and disbursements of financial, legal and other
advisors and consultants), whether joint or several, whether or not indirect, contingent,
consequential, actual, punitive, treble or otherwise.

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

     “Loan” means any loan made or deemed made by any Lender hereunder.

     “Loan Documents” means, collectively, this Agreement, any Notes, the Guaranty and
Security Agreement, the Mortgages, the Control Agreements, the Fee Letters, the L/C Reimbursement
Agreements, the Secured Hedging Agreements and, when executed, each document executed by a Loan
Party and delivered to the Administrative Agent, any Lender or any L/C Issuer in connection with or
pursuant to any of the foregoing or the Obligations, together with any modification of any term, or
any waiver with respect to, any of the foregoing.

     “Loan Party” means each Borrower and each Guarantor.

     “Loan To Value Ratio” means, as of any date of determination, the ratio of (a) the sum
of outstanding Loans and L/C Obligations to (b) the aggregate value of all Mortgaged Property as
reasonably determined by the Administrative Agent as of the Closing Date; provided that if
any Mortgaged Property Report has been delivered by the Borrower to the Administrative Agent in
accordance with Section 6.1(j), then the aggregate value of all Mortgaged Property shall be
determined in accordance with the most recently delivered Mortgaged Property Report.

     “Material Adverse Effect” means an effect that results in or causes, or could
reasonably be expected to result in or cause, a material adverse change in any of (a) the condition
(financial or otherwise), business, performance, operations or property of the Group Members, taken
as a whole, (b) the ability of any Loan Party to perform its obligations under any Loan Document
and (c) the validity or enforceability of any Loan Document or the rights and remedies of the
Administrative Agent, the Lenders and the other Secured Parties under any Loan Document.

     “Material Environmental Liabilities” means Environmental Liabilities exceeding (a)
$1,000,000 individually, or (b) $5,000,000 in the aggregate for any one or more Group Members.

     “Maximum Lawful Rate” has the meaning specified in Section 2.13.

     “Medicaid” means the medical assistance programs administered by state agencies and
approved by CMS pursuant to the terms of Title XIX of the Social Security Act, codified at 42
U.S.C. 1396 et seq.

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     “Medicare” means the program of health benefits for the aged and disabled administered
by CMS pursuant to the terms of Title XVIII of the Social Security Act, codified at 42 U.S.C. 1395
et seq.

     “Moody’s” means Moody’s Investors Service, Inc.

     “Mortgage” means any mortgage, deed of trust or other document executed or required
herein to be executed by any Loan Party and granting a security interest over real property in
favor of the Administrative Agent as security for the Obligations.

     “Mortgage Supporting Documents” means, with respect to any Mortgage for a parcel of
real property, each document (including title policies or marked-up unconditional insurance
binders, in each case, together with copies of all documents referred to therein, maps,
environmental assessments and reports and evidence regarding recording and payment of fees,
insurance premium and taxes) that the Administrative Agent may reasonably request, to create,
register, perfect, maintain, evidence the existence, substance, form or validity of or enforce a
valid lien on such parcel of real property in favor of the Administrative Agent for the benefit of
the Secured Parties, subject only to such Liens as the Administrative Agent may approve.

     “Mortgaged Property” means any real property of any Loan Party that is the subject of
a Mortgage.

     “Mortgaged Property Report” has the meaning specified in Section 6.1(j).

     “Multiemployer Plan” means any multiemployer plan, as defined in Section 400l(a)(3) of
ERISA, to which any ERISA Affiliate incurs or otherwise has any obligation or liability, contingent
or otherwise.

     “Net Cash Proceeds” means proceeds received in cash from (a) any Sale of, or Property
Loss Event with respect to, property, net of (i) the customary out-of-pocket cash costs, fees and
expenses paid or required to be paid in connection therewith, (ii) taxes paid or reasonably
estimated to be payable as a result thereof and (iii) any amount required to be paid or prepaid on
Indebtedness (other than the Obligations and Indebtedness owing to any Group Member) secured by the
property subject thereto or (b) any sale or issuance of Stock or incurrence of Indebtedness, in
each case net of brokers’, advisors’ and investment banking fees and other customary out-of-pocket
underwriting discounts, commissions and other customary out-of-pocket cash costs, fees and
expenses, in each case incurred in connection with such transaction; provided,
however, that any such proceeds received by any Subsidiary of the Borrower that is not a
Wholly Owned Subsidiary of the Borrower shall constitute “Net Cash Proceeds” only to the
extent of the aggregate direct and indirect beneficial ownership interest of the Borrower therein.

     “Non-Funding Lender” has the meaning specified in Section 2.2(c).

     “Non-Recourse Indebtedness” means Indebtedness (a) as to which none of the Group
Members (other than a Non-Recourse Subsidiary that is the obligor on such Indebtedness) (i)
provides credit support of any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (ii) is directly or indirectly liable (as a guarantor or otherwise), or
(iii) constitutes the lender; (b) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against any Non-Recourse Subsidiary) would
permit (upon notice, lapse of time or both) any holder of any other Indebtedness (other

18

 

than the Obligations) of any of the Group Members to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated
maturity, (c) as to which the lenders thereunder will not have any recourse to the Stock or assets
of any Group Member (other than the Non-Recourse Subsidiary that is the obligor on such
Indebtedness), and (d) the Net Cash Proceeds of which are used to finance the purchase of property
used in the business of the Group Members or improvements made to such property.

     “Non-Recourse Subsidiary” means any Subsidiary that incurs Non-Recourse Indebtedness
and has no material assets other than the property that was purchased or improved with the proceeds
of such Non-Recourse Indebtedness.

     “Non-U.S. Lender Party” means each of the Administrative Agent, each Lender, each L/C
Issuer, each SPV and each participant, in each case that is not a Domestic Person.

     “Note” means a promissory note of the Borrower, in substantially the form of
Exhibit B, payable to the order of a Lender in the Facility in a principal amount
equal to the amount of such Lender’s Commitment under the Facility.

     “Notice of Borrowing” has the meaning specified in Section 2.2.

     “Notice of Conversion or Continuation” has the meaning specified in Section
2.10.

     “Obligations” means, with respect to any Loan Party, all amounts, obligations,
liabilities, covenants and duties of every type and description owing by such Loan Party to the
Administrative Agent, any Lender, any L/C Issuer, any other Indemnitee, any participant, any SPV
or, in the case of any Secured Hedging Agreement, any Affiliate of any of them arising out of,
under, or in connection with, any Loan Document, whether direct or indirect (regardless of whether
acquired by assignment), absolute or contingent, due or to become due, whether liquidated or not,
now existing or hereafter arising and however acquired, and whether or not evidenced by any
instrument or for the payment of money, including, without duplication, (a) if such Loan Party is
the Borrower, all Loans and L/C Obligations, (b) all interest, whether or not accruing after the
filing of any petition in bankruptcy or after the commencement of any insolvency, reorganization or
similar proceeding, and whether or not a claim for post-filing or post-petition interest is allowed
in any such proceeding, and (c) all other fees, expenses (including fees, charges and disbursement
of counsel), interest, commissions, charges, costs, disbursements, indemnities and reimbursement of
amounts paid and other sums chargeable to such Loan Party under any Loan Document (including those
payable to L/C Issuers as described in Section 2.11).

     “Other Taxes” has the meaning specified in Section 2.17(c).

     “Patents” means all rights, title and interests (and all related IP Ancillary Rights)
arising under any Requirement of Law in or relating to letters patent and applications therefor.

     “PBGC” means the United States Pension Benefit Guaranty Corporation and any successor
thereto.

     “Permit” means, with respect to any Person, any permit, approval, authorization,
license, registration, certificate, concession, grant, franchise, variance or permission from, and
any other Contractual Obligations with, any Governmental Authority, in each case whether or not
having

19

 

the force of law and applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.

     “Permitted Acquisition” means any Proposed Acquisition satisfying each of the
following conditions: (a) the aggregate amounts payable in connection with, and other
consideration for (in each case, including all transaction costs and all Indebtedness, liabilities
and Guaranty Obligations incurred or assumed in connection therewith or otherwise reflected in a
Consolidated balance sheet of the Borrower and the Proposed Acquisition Target), such Proposed
Acquisition and all other Permitted Acquisitions consummated on or prior to the date of the
consummation of such Proposed Acquisition shall not exceed $100,000,000, provided that if
immediately before and after giving effect to such Proposed Acquisition the Borrower’s Consolidated
Leverage Ratio is less than 4.25 to 1.00, no such Dollar limit shall apply; provided,
further, for avoidance of doubt, the parties agree and acknowledge that, if, at any time after
consummating Permitted Acquisitions with an aggregate consideration in excess of $100,000,000 in
accordance with the terms of this Agreement, the Borrower’s Consolidated Leverage Ratio shall be
more than 4.25 to 1.00, the Loan Parties shall not be precluded from consummating additional
Permitted Acquisitions subject to the aforementioned $100,000,000 limit and the other terms hereof,
and if the Borrower’s Consolidated Leverage Ratio shall thereafter be less than 4.25 to 1.00, no
such Dollar limit shall apply, (b) the Administrative Agent shall have received reasonable advance
notice of such Proposed Acquisition including a reasonably detailed description thereof at least 30
days prior to the consummation of such Proposed Acquisition (or such later date as may be agreed by
the Administrative Agent) and on or prior to the date of such Proposed Acquisition, the
Administrative Agent shall have received copies of the acquisition agreement and related
Contractual Obligations and other documents (including financial information and analysis,
environmental assessments and reports, opinions, certificates and lien searches) and information
reasonably requested by the Administrative Agent and (c) as of the date of consummation of any
transaction as part of such Proposed Acquisition and after giving effect to all transactions to
occur on such date as part of such Proposed Acquisition, all conditions set forth in clauses
(i) and (ii) of Section 3.2(b) shall be satisfied or duly waived and, after
giving effect to such Permitted Acquisition, the Borrower shall be in compliance with the financial
covenants set forth in Article V on a Pro Forma Basis as of the last day of the last Fiscal
Quarter for which Financial Statements have been delivered hereunder.

     “Permitted Indebtedness” means any Indebtedness of any Group Member that is not
prohibited by Section 8.1 or any other provision of any Loan Document.

     “Permitted Investment” means any Investment of any Group Member that is not prohibited
by Section 8.3 or any other provision of any Loan Document.

     “Permitted Lien” means any Lien on or with respect to the property of any Group Member
that is not prohibited by Section 8.2 or any other provision of any Loan Document.

     “Permitted Refinancing” means Indebtedness constituting a refinancing or extension of
Permitted Indebtedness that (a) has an aggregate outstanding principal amount not greater than the
aggregate principal amount of such Permitted Indebtedness outstanding at the time of such
refinancing or extension, (b) has a weighted average maturity (measured as of the date of such
refinancing or extension) and maturity no shorter than that of such Permitted Indebtedness, (c) is
not entered into as part of a Sale and Leaseback transaction, (d) is not secured by any property or
any Lien other than those securing such Permitted Indebtedness and (e) is otherwise on terms no
less favorable to the Group Members, taken as a whole, than those of such Permitted

20

 

Indebtedness; provided, however, that, notwithstanding the foregoing, (x) the
terms of such Permitted Indebtedness may be modified as part of such Permitted Refinancing if such
modification would have been permitted pursuant to Section 8.11 and (y) no Guaranty
Obligation for such Indebtedness shall constitute part of such Permitted Refinancing unless similar
Guaranty Obligations with respect to such Permitted Indebtedness existed and constituted Permitted
Indebtedness prior to such refinancing or extension.

     “Permitted Mortgaged Property Reinvestment” means, with respect to the Net Cash
Proceeds of any Sale of Mortgaged Property, to acquire (or make Capital Expenditures to finance the
acquisition, repair, improvement or construction of), to the extent otherwise permitted hereunder,
real property useful in the business of the Borrower or any of its Subsidiaries (including through
a Permitted Acquisition); provided that (i) the Administrative Agent shall have received
reasonable advance notice of the proposed acquisition of such real property including a reasonably
detailed description thereof at least 30 days prior to the consummation of such acquisition (or
such later date as the Administrative Agent may reasonably agree), (ii) as determined by the Agent
in its reasonable discretion, the value of the real property to be acquired in exchange for any Net
Cash Proceeds is equal to or greater than the value of the Mortgaged Property sold to generate such
Net Cash Proceeds, (iii) before and after giving effect to the acquisition of such real property,
no Default or Event of Default has occurred and is continuing, (iv) such real property, once
acquired, shall be subject to (a) a Mortgage and (b) all applicable Mortgage Supporting Documents
and (v) the Borrower shall obtain ALTA (or TLTA, if applicable) as-built surveys for such real
property (in form and as to date that is sufficiently acceptable to the title insurer insuring
title insurance to the Administrative Agent for such title insurer to deliver endorsements to such
title insurance as reasonably requested by the Administrative Agent).

     “Permitted Reinvestment” means, with respect to the Net Cash Proceeds of any Sale or
Property Loss Event, to acquire (or make Capital Expenditures to finance the acquisition, repair,
improvement or construction of), to the extent otherwise permitted hereunder, property useful in
the business of the Borrower or any of its Subsidiaries (including through a Permitted Acquisition)
or, if such Property Loss Event involves loss or damage to property, to repair such loss or damage.

     “Person” means any individual, partnership, corporation (including a business trust
and a public benefit corporation), joint stock company, estate, association, firm, enterprise,
trust, limited liability company, unincorporated association, joint venture and any other entity or
Governmental Authority.

     “Primary Syndication” means the syndication by Arranger of at least $25,000,000 of the
aggregate Revolving Credit Commitments to two (2) or fewer financial institutions identified by
Arranger and Borrower prior to the Closing Date.

     “Private Payor” means any insurance company, health maintenance organization,
professional provider organization or similar entity that is obligated to make payments for goods
or services provided to a patient, other than a governmental entity.

     “Private Payor Arrangement” means an agreement or arrangement with a Private Payor
pursuant to which the Private Payor pays all or a portion of the charges of the Borrower for
providing goods and services to a patient.

21

 

     “Pro Forma Balance Sheet” has the meaning specified in Section 4.4(d).

     “Pro Forma Basis” means, with respect to any determination for any period and any Pro
Forma Transaction, that such determination shall be made by giving pro forma effect to each such
Pro Forma Transaction, as if each such Pro Forma Transaction had been consummated on the first day
of such period, based on historical results accounted for in accordance with GAAP and, to the
extent applicable, reasonable assumptions that are specified in detail in the relevant Compliance
Certificate, Financial Statement or other document provided to the Administrative Agent or any
Lender in connection herewith in accordance with Regulation S-X of the Securities Act of 1933.

     “Pro Forma Transaction” means any transaction consummated as part of any Permitted
Acquisition, together with each other transaction relating thereto and consummated in connection
therewith, including any incurrence or repayment of Indebtedness.

     “Projections” means, collectively, the Initial Projections and the Additional
Projections delivered pursuant to Section 6.1(e).

     “Property Loss Event” means, with respect to any property, any loss of or damage to
such property or any taking of such property or condemnation thereof.

     “Proposed Acquisition” means (a) any proposed acquisition that is consensual and
approved by the board of directors of such Proposed Acquisition Target, of all or substantially all
of the assets or Stock of any Proposed Acquisition Target by the Borrower or any Subsidiary of the
Borrower or (b) any proposed merger of any Proposed Acquisition Target with or into the Borrower or
any Subsidiary of the Borrower (and, in the case of a merger with the Borrower, with the Borrower
being the surviving corporation).

     “Proposed Acquisition Target” means any Person or any brand, line of business,
division, branch, operating division or other unit operation of any Person.

     “Pro Rata Outstandings”, of any Lender at any time, means the sum of (a) the
outstanding principal amount of Revolving Loans owing to such Lender and (b) the amount of the
participation of such Lender in the L/C Obligations outstanding with respect to all Letters of
Credit.

     “Pro Rata Share” means, with respect to any Lender at any time, the percentage
obtained by dividing (a) the sum of the Commitments (or, if such Commitments in the Facility are
terminated, the Pro Rata Outstandings therein) of such Lender then in effect under the Facility by
(b) the sum of the Commitments (or, if such Commitments in the Facility are terminated, the Pro
Rata Outstandings therein) of all Lenders then in effect under the Facility; provided,
however, that, if there are no Commitments and no Pro Rata Outstandings in the Facility,
such Lender’s Pro Rata Share in the Facility shall be determined based on the Pro Rata Share in the
Facility most recently in effect, after giving effect to any subsequent assignment and any
subsequent non-pro rata payments of any Lender pursuant to Section 2.18.

     “Register” has the meaning specified in Section 2.14(b).

     “Reinvestment Prepayment Amount” means, with respect to any Net Cash Proceeds on the
Reinvestment Prepayment Date therefor, the amount of such Net Cash Proceeds less any amount
paid or required to be paid by any Group Member to make Permitted Reinvestments or

22

 

Permitted Mortgaged Property Reinvestments with such Net Cash Proceeds pursuant to a
Contractual Obligation entered into prior to such Reinvestment Prepayment Date with any Person that
is not an Affiliate of the Borrower.

     “Reinvestment Prepayment Date” means, with respect to any portion of any Net Cash
Proceeds of any Sale or Property Loss Event, the earliest of (a) the 365th day after the
completion of the portion of such Sale or Property Loss Event corresponding to such Net Cash
Proceeds, (b) the date that is 5 Business Days after the date on which the Borrower shall have
notified the Administrative Agent of the Borrower’s determination not to make Permitted
Reinvestments or Permitted Mortgaged Property Reinvestments with such Net Cash Proceeds, (c) the
occurrence of any Event of Default set forth in Section 9.1(e)(ii) and (d) 5 Business Days
after the delivery of a notice by the Administrative Agent or the Required Lenders to the Borrower
during the continuance of any other Event of Default.

     “Related Documents” means all documents evidencing the Related Transactions, including
without limitation, that certain Separation Agreement dated on or
about November 10, 2006 between
the Borrower and Extendicare.

     “Related Person” means, with respect to any Person, each Affiliate of such Person and
each director, officer, employee, agent, trustee, representative, attorney, accountant and each
insurance, environmental, legal, financial and other advisor (including those retained in
connection with the satisfaction or attempted satisfaction of any condition set forth in
Article III) and other consultants and agents of or to such Person or any of its
Affiliates, together with, if such Person is the Administrative Agent, each other Person or
individual designated, nominated or otherwise mandated by or helping the Administrative Agent
pursuant to and in accordance with Section 10.4 or any comparable provision of any Loan
Document.

     “Related Transactions” means the separation of the assets of the Borrower and
Extendicare, the delivery of all Related Documents and the payment of all related fees, costs and
expenses.

     “Release” means any release, threatened release, spill, emission, leaking, pumping,
pouring, emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Material into or through the environment.

     “Remedial Action” means all actions required to (a) clean up, remove, treat or in any
other way address any Hazardous Material in the indoor or outdoor environment, (b) prevent or
minimize any Release so that a Hazardous Material does not migrate or endanger or threaten to
endanger public health or welfare or the indoor or outdoor environment or (c) perform pre-remedial
studies and investigations and post-remedial monitoring and care with respect to any Hazardous
Material.

     “Required Lenders” means, at any time, Lenders having at such time in excess of 50% of
the sum of the aggregate Revolving Credit Commitments (or, if such Commitments are terminated, the
sum of the amounts of the participations in Swing Loans, the principal amount of unparticipated
portions of the Swing Loans and the Pro Rata Outstandings in the Revolving Credit Facility) then in
effect, ignoring, in such calculation, the amounts held by any Non-Funding Lender;
provided, that so long as any single Lender’s Revolving Credit Commitment or portion of
Swing Loans and Pro Rata Outstandings, as applicable, shall exceed 50% of the total

23

 

for all Lenders (other than Non-Funding Lenders), then the Required Lenders shall mean such
Lender plus at least one additional Lender.

     “Requirements of Law” means, with respect to any Person, collectively, the common law
and all federal, state, local, foreign, multinational or international laws, statutes, codes,
treaties, standards, rules and regulations, guidelines, ordinances, orders, judgments, writs,
injunctions, decrees (including administrative or judicial precedents or authorities) and the
interpretation or administration thereof by, and other determinations, directives, requirements or
requests of, any Governmental Authority, in each case whether or not having the force of law and
that are applicable to or binding upon such Person or any of its property or to which such Person
or any of its property is subject.

     “Responsible Officer” means, with respect to any Person, any of the president, chief
executive officer, treasurer, assistant treasurer, controller, managing member or general partner
of such Person but, in any event, with respect to financial matters, any such officer that is
responsible for preparing the Financial Statements delivered hereunder and, with respect to the
Corporate Chart and other documents delivered pursuant to Section 6.1(d), documents
delivered on the Closing Date and documents delivered pursuant to Section 7.10, the
secretary or assistant secretary of such Person or any other officer responsible for maintaining
the corporate and similar records of such Person.

     “Restricted Payment” means (a) any dividend, return of capital, distribution or any
other payment or Sale of property for less than fair market value, whether direct or indirect
(including through the use of Hedging Agreements, the making, repayment, cancellation or
forgiveness of Indebtedness and similar Contractual Obligations) and whether in cash, Securities or
other property, on account of any Stock or Stock Equivalent of the Borrower or any of its
Subsidiaries, in each case now or hereafter outstanding, including with respect to a claim for
rescission of a Sale of such Stock or Stock Equivalent and (b) any redemption, retirement,
termination, defeasance, cancellation, purchase or other acquisition for value, whether direct or
indirect (including through the use of Hedging Agreements, the making, repayment, cancellation or
forgiveness of Indebtedness and similar Contractual Obligations), of any Stock or Stock Equivalent
of any Group Member or of any direct or indirect parent entity of the Borrower, now or hereafter
outstanding, and any payment or other transfer setting aside funds for any such redemption,
retirement, termination, cancellation, purchase or other acquisition, whether directly or
indirectly and whether to a sinking fund, a similar fund or otherwise.

     “Revolving Credit Availability” means at any time of determination, the lesser of:

     (i) Five (5) times Consolidated EBITDA for the Borrower on a Pro Forma Basis for the last
period of four (4) consecutive Fiscal Quarters ending on or before such date minus Consolidated
Total Debt of the Borrower outstanding as of such date determined on a Pro Forma Basis; and

     (ii) the amount that would cause the Loan To Value Ratio to exceed 75%.

     “Revolving Credit Commitment” means, with respect to each Revolving Credit Lender, the
commitment of such Lender to make Revolving Loans and acquire interests in other Revolving Credit
Outstandings, which commitment is in the amount set forth opposite such Lender’s name on
Schedule I under the caption “Revolving Credit Commitment”, as amended to reflect
Assignments and each additional commitment by such Lender in the Revolving Credit

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Facility that is made as part of the Facility Increase and as such amount may be reduced
pursuant to this Agreement. The aggregate amount of the Revolving Credit Commitments on the date
hereof equals $100,000,000.

     “Revolving Credit Facility” means the Revolving Credit Commitments and the provisions
herein related to the Revolving Loans, Swing Loans and Letters of Credit.

     “Revolving Credit Lender” means each Lender that has a Revolving Credit Commitment,
holds a Revolving Loan or participates in any Swing Loan or Letter of Credit.

     “Revolving Credit Outstandings” means, at any time, the sum of, in each case to the
extent outstanding at such time, (a) the aggregate principal amount of the Revolving Loans and
Swing Loans and (b) the L/C Obligations for all Letters of Credit.

     “Revolving Credit Termination Date” shall mean the earliest of (a) the Scheduled
Revolving Credit Termination Date, (b) the date of termination of the Revolving Credit Commitments
pursuant to Section 2.5 or 9.2 and (c) the date on which the Obligations become due
and payable pursuant to Section 9.2.

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

     “S&P” means Standard & Poor’s Rating Services.

     “Sale and Leaseback Transaction” means, with respect to any Person (the
“obligor”), any Contractual Obligation or other arrangement with any other Person (the
“counterparty”) consisting of a lease by such obligor of any property that, directly or
indirectly, has been or is to be Sold by the obligor to such counterparty or to any other Person to
whom funds have been advanced by such counterparty based on a Lien on, or an assignment of, such
property or any obligations of such obligor under such lease.

     “Scheduled
Revolving Credit Termination Date” means November 10, 2011.

     “Secured Hedging Agreements” means any Hedging Agreement that (a) is entered into by
the Borrower and any Person that, at the time such Person entered into such Hedging Agreement, was
the Administrative Agent, a Lender or an Affiliate of a Lender, (b) in the case of any Person that
is not the Administrative Agent or an Affiliate of the Administrative Agent, is expressly
identified as being a “Secured Hedging Agreement” hereunder in a joint notice from such Loan Party
and such Person delivered to the Administrative Agent reasonably promptly after the execution of
such Hedging Agreement and (c) meets the requirements of Section 8.1(g).

     “Secured Parties” means the Lenders, the L/C Issuers, the Administrative Agent, each
other Indemnitee and any other holder of any Obligation of any Loan Party.

     “Security” means all Stock, Stock Equivalents, voting trust certificates, bonds,
debentures, instruments and other evidence of Indebtedness, whether or not secured, convertible or
subordinated, all certificates of interest, share or participation in, all certificates for the
acquisition of, and all warrants, options and other rights to acquire, any Security.

     “Sell” means, with respect to any property, to sell, convey, transfer, assign,
license, lease or otherwise dispose of, any interest therein or to permit any Person to acquire any
such interest,

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including, in each case, through a Sale and Leaseback Transaction or through a sale, factoring
at maturity, collection of or other disposal, with or without recourse, of any notes or accounts
receivable. Conjugated forms thereof and the noun “Sale” have correlative meanings.

     “Solvent” means, with respect to any Person as of any date of determination, that, as
of such date, (a) the value of the assets of such Person (both at fair value and present fair
saleable value) is greater than the total amount of liabilities (including contingent and
unliquidated liabilities) of such Person, (b) such Person is able to pay all liabilities of such
Person as such liabilities mature and (c) such Person does not have unreasonably small capital. In
computing the amount of contingent or unliquidated liabilities at any time, such liabilities shall
be computed at the amount that, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or matured liability.

     “SPV” means any special purpose funding vehicle identified as such in a writing by any
Lender to the Administrative Agent.

     “Stock” means all shares of capital stock (whether denominated as common stock or
preferred stock), equity interests, beneficial, partnership or membership interests, joint venture
interests, participations or other ownership or profit interests in or equivalents (regardless of
how designated) of or in a Person (other than an individual), whether voting or non-voting.

     “Stock Equivalents” means all securities convertible into or exchangeable for Stock or
any other Stock Equivalent and all warrants, options or other rights to purchase, subscribe for or
otherwise acquire any Stock or any other Stock Equivalent, whether or not presently convertible,
exchangeable or exercisable.

     “Subordinated Debt” means any Indebtedness that is subordinated to the payment in full
of the Obligations on terms and conditions satisfactory to the Administrative Agent.

     “Subsidiary” means, with respect to any Person, any corporation, partnership, joint
venture, limited liability company, association or other entity, the management of which is,
directly or indirectly, controlled by, or of which an aggregate of more than 50% of the outstanding
Voting Stock is, at the time, owned or controlled directly or indirectly by, such Person or one or
more Subsidiaries of such Person.

     “Substitute Lender” has the meaning specified in Section 2.18(a).

     “SWDA” means the Solid Waste Disposal Act (42 U.S.C. §§ 6901 et seq.).

     “Swingline Commitment” means $10,000,000.

     “Swingline Lender” means, each in its capacity as Swingline Lender hereunder, GE
Capital or, upon the resignation of GE Capital as Administrative Agent hereunder, any Lender (or
Affiliate or Approved Fund of any Lender) that agrees, with the approval of the Administrative
Agent (or, if there is no such successor Administrative Agent, the Required Lenders) and the
Borrower, to act as the Swingline Lender hereunder.

     “Swingline Request” has the meaning specified in Section 2.3(b).

     “Swing Loan” has the meaning specified in Section 2.3.

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     “Syndication Completion Date” means the earlier to occur of (a) the 31st
day following the Closing Date and (b) the date that the Arranger shall notify the Borrower and the
Administrative Agent that the Arranger has completed the Primary Syndication.

     “Tax Affiliate” means, (a) the Borrower and its Subsidiaries and (b) any Affiliate of
the Borrower with which the Borrower files or is eligible to file consolidated, combined or unitary
tax returns.

     “Tax Return” has the meaning specified in Section 4.8.

     “Taxes” has the meaning specified in Section 2.17(a).

     “Title IV Plan” means a pension plan subject to Title IV of ERISA, other than a
Multiemployer Plan, to which any ERISA Affiliate incurs or otherwise has any obligation or
liability, contingent or otherwise.

     “Trademarks” means all rights, title and interests (and all related IP Ancillary
Rights) arising under any Requirement of Law in or relating to trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade styles, service marks, logos
and other source or business identifiers and, in each case, all goodwill associated therewith, all
registrations and recordations thereof and all applications in connection therewith.

     “Trade Secrets” means all right, title and interest (and all related IP Ancillary
Rights) arising under any Requirement of Law in or relating to trade secrets.

     “UCC” means the Uniform Commercial Code of any applicable jurisdiction and, if the
applicable jurisdiction shall not have any Uniform Commercial Code, the Uniform Commercial Code as
in effect in the State of New York.

     “United States” means the United States of America.

     “Unused Commitment Fee” has the meaning specified in Section 2.11.

     “U.S. Lender Party” means each of the Administrative Agent, each Lender, each L/C
Issuer, each SPV and each participant, in each case that is a Domestic Person.

     “Voting Stock” means Stock of any Person having ordinary power to vote in the election
of members of the board of directors, managers, trustees or other controlling Persons, of such
Person (irrespective of whether, at the time, Stock of any other class or classes of such entity
shall have or might have voting power by reason of the occurrence of any contingency).

     “Wholly Owned Subsidiary” of any Person means any Subsidiary of such Person, all of
the Stock of which (other than nominal holdings and director’s qualifying shares) is owned by such
Person, either directly or through one or more Wholly Owned Subsidiaries of such Person.

     “Withdrawal Liability” means, at any time, any liability incurred (whether or not
assessed) by any ERISA Affiliate and not yet satisfied or paid in full at such time with respect to
any Multiemployer Plan pursuant to Section 4201 of ERISA.

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     “Working Capital” means, for any Person at any date, its Consolidated Current Assets
at such date minus its Consolidated Current Liabilities at such date.

     Section 1.2 UCC Terms. The following terms have the meanings given to them in the
applicable UCC: “commodity account”, “commodity contract”, “commodity intermediary”, “deposit
account”, “entitlement holder”, “entitlement order”, “equipment”, “financial asset”, “general
intangible”, “goods”, “instruments”, “inventory”, “securities account”, “securities intermediary”
and “security entitlement”.

     Section 1.3 Accounting Terms and Principles. (a) GAAP. All
accounting determinations required to be made pursuant hereto shall, unless expressly otherwise
provided herein, be made in accordance with GAAP. No change in the accounting principles used in
the preparation of any Financial Statement hereafter adopted by the Borrower shall be given effect
if such change would affect a calculation that measures compliance with any provision of
Article V or VIII unless the Borrower, the Administrative Agent and the Required
Lenders agree to modify such provisions to reflect such changes in GAAP and, unless such provisions
are modified, all Financial Statements, Compliance Certificates and similar documents provided
hereunder shall be provided together with a reconciliation between the calculations and amounts set
forth therein before and after giving effect to such change in GAAP.

          (b) Pro Forma. All components of financial calculations made to determine compliance
with Article V shall be adjusted on a Pro Forma Basis to include or exclude, as the case
may be, without duplication, such components of such calculations attributable to any Pro Forma
Transaction consummated after the first day of the applicable period of determination and prior to
the end of such period, as determined in good faith by the Borrower based on assumptions expressed
therein and that were reasonable based on the information available to the Borrower at the time of
preparation of the Compliance Certificate setting forth such calculations.

     Section 1.4 Payments. The Administrative Agent may set up standards and
procedures to determine or redetermine the equivalent in Dollars of any amount expressed in any
currency other than Dollars and otherwise may, but shall not be obligated to, rely on any
determination made by any Loan Party or any L/C Issuer. Any such determination or redetermination
by the Administrative Agent shall be conclusive and binding for all purposes, absent manifest
error. No determination or redetermination by any Secured Party or Loan Party and no other
currency conversion shall change or release any obligation of any Loan Party or of any Secured
Party (other than the Administrative Agent and its Related Persons) under any Loan Document, each
of which agrees to pay separately for any shortfall remaining after any conversion and payment of
the amount as converted.

     Section 1.5 Interpretation. (a) Certain Terms. Except as set forth
in any Loan Document, all accounting terms not specifically defined herein shall be construed in
accordance with GAAP (except for the term “property”, which shall be interpreted as broadly
as possible, including, in any case, cash, Securities, other assets, rights under Contractual
Obligations and Permits and any right or interest in any property). The terms “herein”,
“hereof” and similar terms refer to this Agreement as a whole. In the computation of
periods of time from a specified date to a later specified date in any Loan Document, the terms
“from” means “from and including” and the words “to” and “until” each mean
“to but excluding” and the word “through” means “to and including.” In any other case, the
term “including” when used in any Loan

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Document means “including without limitation.” The term “documents” means all
writings, however evidenced and whether in physical or electronic form, including all documents,
instruments, agreements, notices, demands, certificates, forms, financial statements, opinions and
reports. The term “incur” means incur, create, make, issue, assume or otherwise become
directly or indirectly liable in respect of or responsible for, in each case whether directly or
indirectly, and the terms “incurrence” and “incurred” and similar derivatives shall have
correlative meanings.

          (b) Certain References. Unless otherwise expressly indicated, references (i) in this
Agreement to an Exhibit, Schedule, Article, Section or clause refer to the appropriate Exhibit or
Schedule to, or Article, Section or clause in, this Agreement and (ii) in any Loan Document, to (A)
any agreement shall include, without limitation, all exhibits, schedules, appendixes and annexes to
such agreement and, unless the prior consent of any Secured Party required therefor is not
obtained, any modification to any term of such agreement, (B) any statute shall be to such statute
as modified from time to time and to any successor legislation thereto, in each case as in effect
at the time any such reference is operative and (C) any time of day shall be a reference to New
York time. Titles of articles, sections, clauses, exhibits, schedules and annexes contained in any
Loan Document are without substantive meaning or content of any kind whatsoever and are not a part
of the agreement between the parties hereto. Unless otherwise expressly indicated, the meaning of
any term defined (including by reference) in any Loan Document shall be equally applicable to both
the singular and plural forms of such term.

ARTICLE II

THE FACILITY

     Section 2.1 The Commitments.

          (a) Revolving Credit Commitments. On the terms and subject to the conditions
contained in this Agreement, each Revolving Credit Lender severally, but not jointly, agrees to
make loans in Dollars (each a “Revolving Loan”) to the Borrower from time to time on any
Business Day during the period from the date hereof until the Revolving Credit Termination Date in
an aggregate principal amount at any time outstanding for all such loans by such Lender not to
exceed such Lender’s Revolving Credit Commitment; provided, however, that at no
time shall any Revolving Credit Lender be obligated to make a Revolving Loan in excess of such
Lender’s Pro Rata Share of the amount by which the then effective Revolving Credit Commitments
exceeds the aggregate Revolving Credit Outstandings at such time. Within the limits set forth in
the first sentence of this Section 2.1, amounts of Revolving Loans repaid may be reborrowed
under this Section 2.1.

          (b) Facility Increase.

               (i) After the Closing Date, the Borrower may deliver to the Administrative Agent a
Facility Increase Notice to request an increase (a “Facility Increase”) in the
aggregate Revolving Credit Commitments in a principal amount not to exceed $50,000,000 in
the aggregate for all such requests; provided, however, that (A) no
Facility Increase of the Revolving Credit Facility shall be effective later than 180
Business Days prior to the Scheduled Revolving Credit Termination Date, (B) no Facility

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Increase shall be effective earlier than 10 Business Days after the delivery of the
Facility Increase Notice to the Administrative Agent in respect of such Facility Increase,
(C) no more than two (2) Facility Increases shall be made pursuant to this clause
(b) and (D) no Facility Increase shall be in an amount less than $20,000,000. Nothing
in this Agreement shall be construed to obligate any Lender to negotiate for (whether or
not in good faith), solicit, provide or consent to any increase in the Commitments, and any
such increase may be subject to changes in any term herein; provided, that, subject to the
terms of Section 3.3(d), if any portion of the Facility Increase is not subscribed
for by the Lenders, the Borrower may, with the consent of the Administrative Agent as to
any bank or financial institution that is not at such time a Lender (which consent shall
not be unreasonably withheld or delayed) offer to any existing Lender or to one or more
additional banks or financial institutions the opportunity to provide all or a portion of
such unsubscribed portion of the Facility Increase.

               (ii) The Administrative Agent shall promptly notify each Lender of the proposed
Facility Increase and of the proposed terms and conditions therefor agreed between the
Borrower and the Administrative Agent. Each such Lender (and each of their Affiliates and
Approved Funds) may, in its sole discretion, commit to participate in such Facility
Increase by forwarding its commitment to the Administrative Agent therefor in form and
substance satisfactory to the Administrative Agent. The Administrative Agent shall
allocate, in its sole discretion but in amounts not to exceed for each such Lender the
commitment received from such Lender, Affiliate or Approved Fund for the Facility, the
Commitments to be made as part of the Facility Increase in the Facility to the Lenders from
which it has received such commitments to participate in the Facility. If the
Administrative Agent does not receive sufficient commitments for the Facility Increase from
existing Lenders, their Affiliates or Approved Funds, it may obtain commitments in the
amount of any deficiency in such Facility Increase commitments from other Eligible
Assignees.

               (iii) Each Facility Increase shall become effective after the satisfaction of the
conditions precedent set forth in Section 3.3, on a date agreed by the Borrower and
the Administrative Agent (a “Facility Increase Date”). The Administrative Agent
shall notify the Lenders and the Borrower, on or before 1:00 p.m. on the Business Day
following the Facility Increase Date of the effectiveness of the Facility Increase and
shall record in the Register all applicable additional information required to be
registered therein because of such Facility Increase.

               (iv) On the Facility Increase Date for any Facility Increase, each Lender or Eligible
Assignee participating in such Facility Increase shall purchase from each existing
Revolving Credit Lender having Revolving Loans outstanding on such Facility Increase Date,
without recourse or warranty, an undivided interest and participation, to the extent of
such Revolving Credit Lender’s Pro Rata Share in the Revolving Credit Facility of the new
Revolving Credit Commitments (after giving effect to such Facility Increase), in the
aggregate outstanding Revolving Loans, so as to ensure that, on the Facility Increase Date
after giving effect to such Facility Increase, each Revolving Credit Lender holds its Pro
Rata Share in the Revolving Credit Facility and the Revolving Loans outstanding on such
Facility Increase Date.

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     Section 2.2 Borrowing Procedures.

          (a) Notice From the Borrower. Each Borrowing shall be made on notice given by the
Borrower to the Administrative Agent not later than 11:00 a.m. on (i) the first Business Day, in
the case of a Borrowing of Base Rate Loans and (ii) the third Business Day, in the case of a
Borrowing of Eurodollar Rate Loans, prior to the date of the proposed Borrowing. Each such notice
may be made in a writing substantially in the form of Exhibit C (a “Notice of
Borrowing”) duly completed or by telephone if confirmed promptly, but in any event within one
Business Day and prior to such Borrowing, with such a Notice of Borrowing. Loans shall be made as
Base Rate Loans unless, outside of a suspension period pursuant to Section 2.15, the Notice
of Borrowing specifies that all or a portion thereof shall be Eurodollar Rate Loans. Each
Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000. No Borrowing
of any Eurodollar Rate Loan shall be made prior to the Syndication Completion Date.

          (b) Notice to Each Lender. The Administrative Agent shall give to each Lender prompt
notice of the Administrative Agent’s receipt of a Notice of Borrowing and, if Eurodollar Rate Loans
are properly requested in such Notice of Borrowing, prompt notice of the applicable interest rate.
Each Lender shall, before 11:00 a.m. on the date of the proposed Borrowing, make available to the
Administrative Agent at its address referred to in Section 11.11, such Lender’s Pro Rata
Share of such proposed Borrowing. Upon fulfillment or due waiver (i) on the Closing Date, of the
applicable conditions set forth in Section 3.1 and (ii) on the Closing Date and any time
thereafter, of the applicable conditions set forth in Section 3.2, the Administrative Agent
shall make such funds available to the Borrower.

          (c) Non-Funding Lenders. Unless the Administrative Agent shall have received notice
from any Lender prior to the date such Lender is required to make any payment hereunder with
respect to any Loan or any participation in any Swing Loan or Letter of Credit that such Lender
will not make such payment (or any portion thereof) available to the Administrative Agent, the
Administrative Agent may assume that such Lender has made such payment available to the
Administrative Agent on the date such payment is required to be made in accordance with this
Article II and the Administrative Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. The Borrower agrees to repay to the
Administrative Agent on demand such amount (until repaid by such Lender) with interest thereon for
each day from the date such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent, at the interest rate applicable to the Obligation that would
have been created when the Administrative Agent made available such amount to the Borrower had such
Lender made a corresponding payment available; provided, however, that such payment
shall not relieve such Lender of any obligation it may have to the Borrower, the Swingline Lender
or any L/C Issuer. In addition, any Lender that shall not have made available to the
Administrative Agent any portion of any payment described above (any such Lender, a
“Non-Funding Lender”) agrees to pay such amount to the Administrative Agent on demand
together with interest thereon, for each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Administrative Agent, at the Federal Funds
Rate for the first Business Day and thereafter (i) in the case of a payment in respect of a Loan,
at the interest rate applicable at the time to such Loan and (ii) otherwise, at the interest rate
applicable to Base Rate Loans under the Revolving Credit Facility. Such repayment shall then
constitute the funding of the corresponding Loan (including any Loan deemed to have been made
hereunder with such payment) or participation. The existence of any Non-Funding Lender shall not
relieve any other Lender of its obligations under any Loan Document, but no other Lender shall be
responsible for the failure of any Non-Funding Lender to make any payment required under any Loan
Document.

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     Section 2.3 Swing Loans.

          (a) Availability. On the terms and subject to the conditions contained in this
Agreement, the Swingline Lender may, in its sole discretion, make loans in Dollars (each a
“Swing Loan”) available to the Borrower under the Revolving Credit Facility from time to
time on any Business Day during the period from the date hereof until the Revolving Credit
Termination Date in an aggregate principal amount at any time outstanding not to exceed its
Swingline Commitment; provided, however, that the Swingline Lender may not make any
Swing Loan (x) to the extent that after giving effect to such Swing Loan, the aggregate Revolving
Credit Outstandings would exceed the Revolving Credit Commitments and (y) in the period commencing
on the first Business Day after it receives notice from the Administrative Agent or the Required
Lenders that one or more of the conditions precedent contained in Section 3.2 are not
satisfied and ending when such conditions are satisfied or duly waived. In connection with the
making of any Swing Loan, the Swingline Lender may but shall not be required to determine that, or
take notice whether, the conditions precedent set forth in Section 3.2 have been satisfied
or waived. Each Swing Loan shall be a Base Rate Loan and must be repaid in full on the earliest of
(i) the funding date of any Borrowing of Revolving Loans and (ii) the Revolving Credit Termination
Date. Within the limits set forth in the first sentence of this clause (a), amounts of
Swing Loans repaid may be reborrowed under this clause (a).

          (b) Borrowing Procedures. In order to request a Swing Loan, the Borrower shall give
to the Administrative Agent a notice to be received not later than 1:00 p.m. on the day of the
proposed borrowing, which may be made in a writing substantially in the form of Exhibit D
duly completed (a “Swingline Request”) or by telephone if confirmed promptly but, in any
event, prior to such borrowing, with such a Swingline Request. In addition, if any Notice of
Borrowing requests a Borrowing of Base Rate Loans, the Swing Line Lender may, notwithstanding
anything else to the contrary in Section 2.2, make a Swing Loan available to the Borrower
in an aggregate amount not to exceed such proposed Borrowing, and the aggregate amount of the
corresponding proposed Borrowing shall be reduced accordingly by the principal amount of such Swing
Loan. The Administrative Agent shall promptly notify the Swingline Lender of the details of the
requested Swing Loan. Upon receipt of such notice and subject to the terms of this Agreement, the
Swingline Lender may make a Swing Loan available to the Borrower by making the proceeds thereof
available to the Administrative Agent and, in turn, the Administrative Agent shall make such
proceeds available to the Borrower on the date set forth in the relevant Swingline Request.

          (c) Refinancing Swing Loans. The Swingline Lender may at any time forward a demand to
the Administrative Agent (which the Administrative Agent shall, upon receipt, forward to each
Revolving Credit Lender) that each Revolving Credit Lender pay to the Administrative Agent, for the
account of the Swingline Lender, such Revolving Credit Lender’s Pro Rata Share of all or a portion
of the outstanding Swing Loans. Each Revolving Credit Lender shall pay such Pro Rata Share to the
Administrative Agent for the account of the Swingline Lender. Upon receipt by the Administrative
Agent of such payment (other than during the continuation of any Event of Default under Section
9.1(e)), such Revolving Credit Lender shall be deemed to have made a Revolving Loan to the
Borrower, which, upon receipt of such payment by the Swingline Lender from the Administrative
Agent, the Borrower shall be deemed to have used in whole to refinance such Swing Loan. In
addition, regardless of whether any such demand is made, upon the occurrence of any Event of
Default under Section 9.1(e), each Revolving Credit Lender shall be deemed to have
acquired, without recourse or warranty, an undivided interest and participation in each Swing Loan
in an amount equal to such Lender’s Pro Rata Share of such

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Swing Loan. If any payment made by any Revolving Credit Lender as a result of any such demand
is not deemed a Revolving Loan, such payment shall be deemed a funding by such Lender of such
participation. Such participation shall not be otherwise required to be funded. Upon receipt by
the Swingline Lender of any payment from any Revolving Credit Lender pursuant to this clause
(c) with respect to any portion of any Swing Loan, the Swingline Lender shall promptly pay over
to such Revolving Credit Lender all payments of principal (to the extent received after such
payment by such Lender) and interest (to the extent accrued with respect to periods after such
payment) received by the Swingline Lender with respect to such portion.

          (d) Obligation to Fund Absolute. Each Revolving Credit Lender’s obligations pursuant
to clause (c) above shall be absolute, unconditional and irrevocable and shall be performed
strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever,
including (A) the existence of any setoff, claim, abatement, recoupment, defense or other right
that such Lender, any Affiliate thereof or any other Person may have against the Swing Loan Lender,
any other Secured Party or any other Person, (B) the failure of any condition precedent set forth
in Section 3.2 to be satisfied or the failure of the Borrower to deliver any notice set
forth in Section 2.2(a) (each of which requirements the Revolving Credit Lenders hereby
irrevocably waive) and (C) any adverse change in the condition (financial or otherwise) of any Loan
Party.

     Section 2.4 Letters of Credit.

          (a) Commitment and Conditions. On the terms and subject to the conditions contained
herein, each L/C Issuer agrees to Issue, at the request of the Borrower, in accordance with such
L/C Issuer’s usual and customary business practices, and for the account of the Borrower (or, as
long as the Borrower remains responsible for the payment in full of all amounts drawn thereunder
and related fees, costs and expenses, for the account of any Group Member), Letters of Credit
(denominated in Dollars) from time to time on any Business Day during the period from the Closing
Date through the earlier of the Revolving Credit Termination Date and 7 days prior to the Scheduled
Revolving Credit Termination Date; provided, however, that such L/C Issuer shall
not be under any obligation to Issue any Letter of Credit upon the occurrence of any of the
following, after giving effect to such Issuance:

               (i) (A) the aggregate Revolving Credit Outstandings would exceed the aggregate
Revolving Credit Commitments or (B) the L/C Obligations for all Letters of Credit would
exceed the L/C Sublimit;

               (ii) the expiration date of such Letter of Credit (A) is not a Business Day, (B) is
more than one year after the date of issuance thereof or (C) is later than 7 days prior to
the Scheduled Revolving Credit Termination Date; provided, however, that
any Letter of Credit with a term not exceeding one year may provide for its renewal for
additional periods not exceeding one year as long as (x) each of the Borrower and such L/C
Issuer have the option to prevent such renewal before the expiration of such term or any
such period and (y) neither such L/C Issuer nor the Borrower shall permit any such renewal
to extend such expiration date beyond the date set forth in clause (C) above; or

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               (iii) (A) any fee due in connection with, and on or prior to, such Issuance has not
been paid, (B) such Letter of Credit is requested to be Issued in a form that is not
acceptable to such L/C Issuer or (C) such L/C Issuer shall not have received, each in form
and substance reasonably acceptable to it and duly executed by the Borrower (and, if such
Letter of Credit is issued for the account of any other Group Member, such Group Member),
the documents that such L/C Issuer generally uses in the ordinary course of its business
for the Issuance of letters of credit of the type of such Letter of Credit (collectively,
the “L/C Reimbursement Agreement”).

For each such Issuance, the applicable L/C Issuer may, but shall not be required to, determine
that, or take notice whether, the conditions precedent set forth in Section 3.2 have been
satisfied or waived in connection with the Issuance of any Letter of Credit; provided,
however, that no Letter of Credit shall be Issued during the period starting on the first
Business Day after the receipt by such L/C Issuer of notice from the Administrative Agent or the
Required Lenders that any condition precedent contained in Section 3.2 is not satisfied and
ending on the date all such conditions are satisfied or duly waived.

          (b) Notice of Issuance. The Borrower shall give the relevant L/C Issuer and the
Administrative Agent a notice of any requested Issuance of any Letter of Credit, which shall be
effective only if received by such L/C Issuer and the Administrative Agent not later than 11:00
a.m. on the third Business Day prior to the date of such requested Issuance. Such notice may be
made in a writing substantially the form of Exhibit E duly completed or in a writing in any
other form acceptable to such L/C Issuer (an “L/C Request”) or by telephone if confirmed
promptly, but in any event within one Business Day and prior to such Issuance, with such an L/C
Request.

          (c) Reporting Obligations of L/C Issuers. Each L/C Issuer agrees to provide the
Administrative Agent (which, after receipt, the Administrative Agent shall provide to each
Revolving Credit Lender), in form and substance satisfactory to the Administrative Agent, each of
the following on the following dates: (i) on or prior to (A) any Issuance of any Letter of Credit
by such L/C Issuer, (B) any drawing under any such Letter of Credit or (C) any payment (or failure
to pay when due) by the Borrower of any related L/C Reimbursement Obligation, notice thereof, which
shall contain a reasonably detailed description of such Issuance, drawing or payment, (ii) upon the
request of the Administrative Agent (or any Revolving Credit Lender through the Administrative
Agent), copies of any Letter of Credit Issued by such L/C Issuer and any related L/C Reimbursement
Agreement and such other documents and information as may reasonably be requested by the
Administrative Agent and (iii) on the first Business Day of each calendar week, a schedule of the
Letters of Credit Issued by such L/C Issuer, in form and substance reasonably satisfactory to the
Administrative Agent, setting forth the L/C Obligations for such Letters of Credit outstanding on
the last Business Day of the previous calendar week.

          (d) Acquisition of Participations. Upon any Issuance of a Letter of Credit in
accordance with the terms of this Agreement resulting in any increase in the L/C Obligations, each
Revolving Credit Lender shall be deemed to have acquired, without recourse or warranty, an
undivided interest and participation in such Letter of Credit and the related L/C Obligations in an
amount equal to such Lender’s Pro Rata Share of such L/C Obligations.

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          (e) Reimbursement Obligations of the Borrower. The Borrower agrees to pay to the L/C
Issuer of any Letter of Credit each L/C Reimbursement Obligation owing with respect to such Letter
of Credit no later than the first Business Day after the Borrower receives notice from such L/C
Issuer that payment has been made under such Letter of Credit or that such L/C Reimbursement
Obligation is otherwise due (the “L/C Reimbursement Date”) with interest thereon computed
as set forth in clause (i) below. In the event that any L/C Issuer incurs any L/C
Reimbursement Obligation not repaid by the Borrower as provided in this clause (e) (or any
such payment by the Borrower is rescinded or set aside for any reason), such L/C Issuer shall
promptly notify the Administrative Agent of such failure (and, upon receipt of such notice, the
Administrative Agent shall forward a copy to each Revolving Credit Lender) and, irrespective of
whether such notice is given, such L/C Reimbursement Obligation shall be payable on demand by the
Borrower with interest thereon computed (i) from the date on which such L/C Reimbursement
Obligation arose to the L/C Reimbursement Date, at the interest rate applicable during such period
to Revolving Loans that are Base Rate Loans and (ii) thereafter until payment in full, at the
interest rate applicable during such period to past due Revolving Loans that are Base Rate Loans.

          (f) Reimbursement Obligations of the Revolving Credit Lenders. Upon receipt of the
notice described in clause (e) above from the Administrative Agent, each Revolving Credit
Lender shall pay to the Administrative Agent for the account of such L/C Issuer its Pro Rata Share
of such L/C Reimbursement Obligation. By making such payment (other than during the continuation
of an Event of Default under Section 9.1(e)), such Lender shall be deemed to have made a
Revolving Loan to the Borrower, which, upon receipt thereof by such L/C Issuer, the Borrower shall
be deemed to have used in whole to repay such L/C Reimbursement Obligation. Any such payment that
is not deemed a Revolving Loan shall be deemed a funding by such Lender of its participation in the
applicable Letter of Credit and the related L/C Obligations. Such participation shall not
otherwise be required to be funded. Upon receipt by any L/C Issuer of any payment from any Lender
pursuant to this clause (f) with respect to any portion of any L/C Reimbursement
Obligation, such L/C Issuer shall promptly pay over to such Lender all payments received after such
payment by such L/C Issuer with respect to such portion.

          (g) Obligations Absolute. The obligations of the Borrower and the Revolving Credit
Lenders pursuant to clauses (d), (e) and (f) above shall be absolute,
unconditional and irrevocable and performed strictly in accordance with the terms of this Agreement
irrespective of (i) (A) the invalidity or unenforceability of any term or provision in any Letter
of Credit, any document transferring or purporting to transfer a Letter of Credit, any Loan
Document (including the sufficiency of any such instrument), or any modification to any provision
of any of the foregoing, (B) any document presented under a Letter of Credit being forged,
fraudulent, invalid, insufficient or inaccurate in any respect or failing to comply with the terms
of such Letter of Credit or (C) any loss or delay, including in the transmission of any document,
(ii) the existence of any setoff, claim, abatement, recoupment, defense or other right that any
Person (including any Group Member) may have against the beneficiary of any Letter of Credit or any
other Person, whether in connection with any Loan Document or any other Contractual Obligation or
transaction, or the existence of any other withholding, abatement or reduction; provided,
in each such case, that payment by the L/C Issuer under the applicable Letter of Credit shall not
have resulted solely from the gross negligence or willful misconduct of the L/C Issuer under the
circumstances in question (as determined by a final, non-appealable judgment of a court of
competent jurisdiction), (iii) in the case of the obligations of any Revolving Credit Lender, (A)
the failure of any condition precedent set forth in Section 3.2 to be satisfied (each of
which conditions precedent the Revolving Credit Lenders hereby irrevocably waive) or (B) any

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adverse change in the condition (financial or otherwise) of any Loan Party and (iv) any other
act or omission to act or delay of any kind of any Secured Party or any other Person or any other
event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but
for the provisions of this Section 2.4, constitute a legal or equitable discharge of any
obligation of the Borrower or any Revolving Credit Lender hereunder.

     Section 2.5 Reduction and Termination of the Commitments.

          (a) Optional. The Borrower may, upon notice to the Administrative Agent, terminate in
whole or reduce in part ratably any unused portion of the Revolving Credit Commitments;
provided, however, that each partial reduction shall be in an aggregate amount that
is an integral multiple of $1,000,000.

          (b) Mandatory. All outstanding Commitments shall terminate on the Scheduled Revolving
Credit Termination Date.

          (c) Reductions for Mandatory Prepayments. The then current Revolving Credit
Commitments shall be reduced ratably on each date on which a prepayment of Revolving Loans or Swing
Loans is made pursuant to clause (b) (Equity and Debt Issuances), (c)
(Asset Sales and Property Loss Events) of Section 2.8 or would be required to be
made had the aggregate outstanding principal amount of the Revolving Loans and Swing Loans been
equal to the Revolving Credit Commitments then in effect, in each case in the amount of such
prepayment.

     Section 2.6 Repayment of Loans. The Borrower promises to repay the entire
unpaid principal amount of the Revolving Loans and the Swing Loans on the Scheduled Revolving
Credit Termination Date.

     Section 2.7 Optional Prepayments. The Borrower may prepay the outstanding
principal amount of any Loan in whole or in part at any time (together with any breakage costs that
may be owing pursuant to Section 2.16(a) after giving effect to such prepayment);
provided, however, that each partial prepayment that is not of the entire
outstanding amount under any Facility shall be in an aggregate amount that is an integral multiple
of $1,000,000 or such lesser amount as the Administrative Agent may agree.

     Section 2.8 Mandatory Prepayments.

          (a) Sales of Mortgaged Property. Upon receipt on or after the Closing Date by any
Loan Party or any of its Subsidiaries of Net Cash Proceeds arising from any Sale by any Group
Member of any Mortgaged Property if, after giving effect to any Sale by any Group Member of any
Mortgaged Property, the Loan To Value Ratio does not exceed 50%, the recipient thereof may retain
such Net Cash Proceeds for its own account; provided, however, if the Loan To Value
Ratio exceeds 50%, then the Borrower shall immediately pay or cause to be paid to the
Administrative Agent an amount equal to 100% of such Net Cash Proceeds; provided
further, however that, upon any such receipt, as long as no Event of Default shall
be continuing, any Group Member may make Permitted Mortgaged Property Reinvestments with such Net
Cash Proceeds and the Borrower shall not be required to make or cause such payment to the extent
(x) such Net Cash Proceeds are intended to be used to make Permitted Mortgaged Property

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Reinvestments and (y) on each Reinvestment Prepayment Date for such Net Cash Proceeds, the
Borrower shall pay or cause to be paid to the Administrative Agent an amount equal to the
Reinvestment Prepayment Amount applicable to such Reinvestment Prepayment Date and such Net Cash
Proceeds.

          (b) Equity and Debt Issuances. Upon receipt on or after the Closing Date by any Loan
Party or any of its Subsidiaries of Net Cash Proceeds arising from (i) the issuance or Sale by the
Borrower of its own Stock (other than any issuance of common Stock of the Borrower occurring in the
ordinary course of business to any director, member of the management or employee of the Borrower
or its Subsidiaries), the Borrower shall immediately pay or cause to be paid to the Administrative
Agent an amount equal to 50% of such Net Cash Proceeds or (ii) the incurrence by any Loan Party or
any of its Subsidiaries of Indebtedness of the type specified in clause (a) or (b)
of the definition thereof (other than any such Indebtedness permitted hereunder in reliance upon
any of clauses (a) through (i) of Section 8.1), the Borrower shall
immediately pay or cause to be paid to the Administrative Agent an amount equal to 100% of such Net
Cash Proceeds.

          (c) Asset Sales and Property Loss Events. Upon receipt on or after the Closing Date
by any Loan Party or any of its Subsidiaries of Net Cash Proceeds arising from (i) any Sale by any
Group Member of any of its property other than Sales of its own Stock, Sales of Mortgaged Property
and Sales of other personal property permitted hereunder in reliance upon any of clauses
(a) through (e) of Section 8.4 or (ii) any Property Loss Event with respect to
any property of any Group Member to the extent resulting, in the aggregate with all other such
Property Loss Events in any Fiscal Year, in the receipt by any of them of Net Cash Proceeds in
excess of $10,000,000, the Borrower shall immediately pay or cause to be paid to the Administrative
Agent an amount equal to 100% of such Net Cash Proceeds; provided, however, that,
upon any such receipt, as long as no Event of Default shall be continuing, any Group Member may
make Permitted Reinvestments with such Net Cash Proceeds and the Borrower shall not be required to
make or cause such payment to the extent (x) such Net Cash Proceeds are intended to be used to make
Permitted Reinvestments and (y) on each Reinvestment Prepayment Date for such Net Cash Proceeds,
the Borrower shall pay or cause to be paid to the Administrative Agent an amount equal to the
Reinvestment Prepayment Amount applicable to such Reinvestment Prepayment Date and such Net Cash
Proceeds.

          (d) Excess Outstandings. On any date on which the aggregate principal amount of
Revolving Credit Outstandings exceeds either: (i) the aggregate Revolving Credit Commitments or
(ii) the Revolving Credit Availability, the Borrower shall pay to the Administrative Agent an
amount equal to such excess.

          (e) Application of Payments. Any payments made to the Administrative Agent pursuant to this
Section 2.8 shall be applied to the Obligations in accordance with Section 2.12(b).

     Section 2.9 Interest.

          (a) Rate. All Loans and the outstanding amount of all other Obligations (other than
pursuant to Secured Hedging Agreements) shall bear interest, in the case of Loans, on the unpaid
principal amount thereof from the date such Loans are made and, in the case of such

37

 

other Obligations, from the date such other Obligations are due and payable until, in all
cases, paid in full, except as otherwise provided in clause (c) below, as follows: (i) in
the case of Base Rate Loans, at a rate per annum equal to the sum of the Base Rate and the
Applicable Margin, each as in effect from time to time, (ii) in the case of Eurodollar Rate Loans,
at a rate per annum equal to the sum of the Eurodollar Rate and the Applicable Margin, each as in
effect for the applicable Interest Period, and (iii) in the case of other Obligations, at a rate
per annum equal to the sum of the Base Rate and the Applicable Margin for Revolving Loans that are
Base Rate Loans, each as in effect from time to time.

          (b) Payments. Interest accrued shall be payable in arrears (i) if accrued on the
principal amount of any Loan, (A) at maturity (whether by acceleration or otherwise), and (B)(1) if
such Loan is a Base Rate Loan (including a Swing Loan), on the last day of each calendar quarter
commencing on the first such day following the making of such Loan, (2) if such Loan is a
Eurodollar Rate Loan, on the last day of each Interest Period applicable to such Loan and, if
applicable, on each date during such Interest Period occurring every 3 months from the first day of
such Interest Period and (ii) if accrued on any other Obligation, on demand from any after the time
such Obligation is due and payable (whether by acceleration or otherwise).

          (c) Default Interest. Notwithstanding the rates of interest specified in clause
(a) above or elsewhere in any Loan Document, effective immediately upon (A) the occurrence of
any Event of Default under Section 9.1(e)(ii) or (B) the delivery of a notice by the
Administrative Agent or the Required Lenders to the Borrower during the continuance of any other
Event of Default and, in each case, for as long as such Event of Default shall be continuing, the
principal balance of all Obligations (including any Obligation that bears interest by reference to
the rate applicable to any other Obligation) then due and payable shall bear interest at a rate
that is 2% per annum in excess of the interest rate applicable to such Obligations from time to
time, payable on demand or, in the absence of demand, on the date that would otherwise be
applicable.

     Section 2.10 Conversion and Continuation Options.

          (a) Option. The Borrower may elect (i) in the case of any Eurodollar Rate Loan, (A)
to continue such Eurodollar Rate Loan or any portion thereof for an additional Interest Period on
the last day of the Interest Period applicable thereto and (B) to convert such Eurodollar Rate Loan
or any portion thereof into a Base Rate Loan at any time on any Business Day, subject to the
payment of any breakage costs required by Section 2.16(a), and (ii) in the case of Base
Rate Loans (other than Swing Loans), to convert such Base Rate Loans or any portion thereof into
Eurodollar Rate Loans at any time on any Business Day upon 3 Business Days’ prior notice;
provided, however, that, (x) for each Interest Period, the aggregate amount of
Eurodollar Rate Loans having such Interest Period must be an integral multiple of $1,000,000 or, if
less, the remaining outstanding principal amount of the Revolving Loans and (y) no conversion in
whole or in part of Base Rate Loans to Eurodollar Rate Loans and no continuation in whole or in
part of Eurodollar Rate Loans shall be permitted at any time at which (1) an Event of Default shall
be continuing and the Administrative Agent or the Required Lenders shall have determined in their
sole discretion not to permit such conversions or continuations, (2) such continuation or
conversion would be made during a suspension imposed by Section 2.15 or (3) prior to the
Syndication Completion Date.

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          (b) Procedure. Each such election shall be made by giving the Administrative Agent at
least 3 Business Days’ prior notice in substantially the form of Exhibit F (a “Notice
of Conversion or Continuation”) duly completed. The Administrative Agent shall promptly notify
each Lender of its receipt of a Notice of Conversion or Continuation and of the options selected
therein. If the Administrative Agent does not receive a timely Notice of Conversion or
Continuation from the Borrower containing a permitted election to continue or convert any
Eurodollar Rate Loan, then, upon the expiration of the applicable Interest Period, such Loan shall
be automatically converted to a Base Rate Loan. Each partial conversion or continuation shall be
allocated ratably among the Lenders in the applicable Facility in accordance with their Pro Rata
Share.

     Section 2.11 Fees.

          (a) Unused Commitment Fee. The Borrower agrees to pay to each Revolving Credit Lender
a commitment fee on the actual daily amount by which the Revolving Credit Commitment of such Lender
exceeds its Pro Rata Share of the sum of (i) the aggregate outstanding principal amount of
Revolving Loans and (ii) the outstanding amount of the L/C Obligations for all Letters of Credit
(the “Unused Commitment Fee”) from the date hereof through the Revolving Credit Termination
Date at a rate per annum equal to the Applicable Margin, payable in arrears (x) on the last day of
each calendar quarter and (y) on the Revolving Credit Termination Date.

          (b) Letter of Credit Fees. The Borrower agrees to pay, with respect to all Letters of
Credit issued by any L/C Issuer, (i) to such L/C Issuer, certain fees, documentary and processing
charges as separately agreed between the Borrower and such L/C Issuer or otherwise in accordance
with such L/C Issuer’s standard schedule in effect at the time of determination thereof and (ii) to
the Administrative Agent, for the benefit of the Revolving Credit Lenders according to their Pro
Rata Shares, a fee accruing at a rate per annum equal to the Applicable Margin for Revolving Loans
that are Eurodollar Rate Loans on the maximum undrawn face amount of such Letters of Credit,
payable in arrears (A) on the last day of each calendar quarter, ending after the issuance of such
Letter of Credit and (B) on the Revolving Credit Termination Date; provided,
however, that the fee payable under this clause (ii) shall be increased by 2% per
annum and shall be payable, in addition to any date it is otherwise required to be paid hereunder,
on demand, effective immediately upon (x) the occurrence of any Event of Default under Section
9.1(e)(ii) or (y) the delivery of a notice by the Administrative Agent or the Required Lenders
to the Borrower during the continuance of any other Event of Default and, in each case, for as long
as such Event of Default shall be continuing.

          (c) Additional Fees. The Borrower shall pay to the Administrative Agent and its
Related Persons its reasonable and customary fees and expenses in connection with any payments made
pursuant to Section 2.16(a) (Breakage Costs) and has agreed to pay the additional fees
described in the Fee Letters.

     Section 2.12 Application of Payments.

          (a) Application of Voluntary Prepayments. Unless otherwise provided in this
Section 2.12 or elsewhere in any Loan Document, all payments and any other amounts

39

 

received by the Administrative Agent from or for the benefit of the Borrower shall be applied
to repay the Obligations the Borrower designates.

          (b) Application of Mandatory Prepayments. Subject to the provisions of clause
(c) below with respect to the application of payments during the continuance of an Event of
Default, any payment made by the Borrower to the Administrative Agent pursuant to Section
2.8 or any other prepayment of the Obligations required to be applied in accordance with this
clause (b) shall be applied first, (to repay the outstanding principal balance of
the Revolving Loans and the Swing Loans, second, in the case of any payment required
pursuant to Section 2.8(e), to provide cash collateral to the extent and in the manner in
Section 9.3 and, then, any excess shall be retained by the Borrower.

          (c) Application of Payments During an Event of Default. The Borrower hereby
irrevocably waives, and agrees to cause each Loan Party and each other Group Member to waive, the
right to direct the application during the continuance of an Event of Default of any and all
payments in respect of any Obligation and any proceeds of Collateral and agrees that,
notwithstanding the provisions of clause (a) above, the Administrative Agent may, and, upon
either (A) the direction of the Required Lenders or (B) the termination of any Commitment or the
acceleration of any Obligation pursuant to Section 9.2, shall, apply all payments in
respect of any Obligation, all funds on deposit in any Cash Collateral Account and all other
proceeds of Collateral (i) first, to pay Obligations in respect of any cost or expense
reimbursements, fees or indemnities then due to the Administrative Agent, (ii) second, to
pay Obligations in respect of any cost or expense reimbursements, fees or indemnities then due to
the Lenders and the L/C Issuers, (iii) third, to pay interest then due and payable in
respect of the Loans and L/C Reimbursement Obligations, (iv) fourth, to repay the
outstanding principal amounts of the Loans and L/C Reimbursement Obligations, to provide cash
collateral for Letters of Credit in the manner and to the extent described in Section 9.3
and to pay amounts owing with respect to Secured Hedging Agreements and (v) fifth, to the
ratable payment of all other Obligations.

          (d) Application of Payments Generally. All payments that would otherwise be allocated
to the Revolving Credit Lenders pursuant to this Section 2.12 shall instead be allocated
first, to repay interest on Swing Loans, on any portion of the Revolving Loans that the
Administrative Agent may have advanced on behalf of any Lender and on any L/C Reimbursement
Obligation, in each case for which the Administrative Agent or, as the case may be, the L/C Issuer
has not then been reimbursed by such Lender or the Borrower, second to pay the outstanding
principal amount of the foregoing obligations and third, to repay the Revolving Loans. All
repayments of any Revolving Loans shall be applied first, to repay such Loans outstanding
as Base Rate Loans and then, to repay such Loans outstanding as Eurodollar Rate Loans, with
those Eurodollar Rate Loans having earlier expiring Interest Periods being repaid prior to those
having later expiring Interest Periods. If sufficient amounts are not available to repay all
outstanding Obligations described in any priority level set forth in this Section 2.12, the
available amounts shall be applied, unless otherwise expressly specified herein, to such
Obligations ratably based on the proportion of the Secured Parties’ interest in such Obligations.
Any priority level set forth in this Section 2.12 that includes interest shall include all
such interest, whether or not accruing after the filing of any petition in bankruptcy or the
commencement of any insolvency, reorganization or similar proceeding, and whether or not a claim
for post-filing or post-petition interest is allowed in any such proceeding.

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     Section 2.13 Payments and Computations.

          (a) Procedure. The Borrower shall make each payment under any Loan Document not later
than 11:00 a.m. on the day when due to the Administrative Agent by wire transfer to the following
account (or at such other account or by such other means to such other address as the
Administrative Agent shall have notified the Borrower in writing within a reasonable time prior to
such payment) in immediately available Dollars and without setoff or counterclaim:

ABA No. 

Account Number 

Deutsche Bank Trust Company Americas, New York, New York

Account Name: 

Reference: GE Capital Re Assisted Living Concepts, Inc.

The Administrative Agent shall promptly thereafter cause to be distributed immediately available
funds relating to the payment of principal, interest or fees to the Lenders, in accordance with the
application of payments set forth in Section 2.12. The Lenders shall make any payment
under any Loan Document in immediately available Dollars and without setoff or counterclaim. Each
Revolving Credit Lender shall make each payment for the account of any L/C Issuer or Swingline
Lender required pursuant to Section 2.3 or 2.4 (A) if the notice or demand therefor
was received by such Lender prior to 11:00 a.m. on any Business Day, on such Business Day and (B)
otherwise, on the Business Day following such receipt. Payments received by the Administrative
Agent after 11:00 a.m. shall be deemed to be received on the next Business Day.

          (b) Computations of Interests and Fees. All computations of interest and of fees
shall be made by the Administrative Agent on the basis of a year of 360 days (or, in the case of
Base Rate Loans whose interest rate is calculated based on the rate set forth in clause (a)
of the definition of “Base Rate”, 365/366 days), in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for which such
interest and fees are payable. Each determination of an interest rate or the amount of a fee
hereunder shall be made by the Administrative Agent (including determinations of a Eurodollar Rate
or Base Rate in accordance with the definitions of “Eurodollar Rate” and “Base Rate”, respectively)
and shall be conclusive, binding and final for all purposes, absent manifest error.

          (c) Payment Dates. Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, the due date for such payment shall be extended to the next succeeding
Business Day without any increase in such payment as a result of additional interest or fees;
provided, however, that such interest and fees shall continue accruing as a result
of such extension of time.

          (d) Advancing Payments. Unless the Administrative Agent shall have received notice
from the Borrower to the Lenders prior to the date on which any payment is due hereunder that the
Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower
has made such payment in full to the Administrative Agent on such date and the Administrative Agent
may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent that the Borrower shall not
have made such payment in full to the Administrative Agent, each Lender shall repay to the
Administrative Agent on demand such amount distributed to such Lender together with interest
thereon (at the Federal Funds Rate for the first Business Day and thereafter, at the rate
applicable to Base Rate Loans under the applicable Facility) for each

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day from the date such amount is distributed to such Lender until the date such Lender repays
such amount to the Administrative Agent.

          (e) Maximum Lawful Rate. Notwithstanding the provisions of Section 2.9, in no
event shall the rate of interest payable by Borrower with respect to the Loan exceed the maximum
rate of interest permitted to be charged under applicable Requirements of Law (the “Maximum
Lawful Rate”). If at any time such interest exceeds the Maximum Lawful Rate, then, so long as
the Maximum Lawful Rate would be exceeded, the applicable rate of interest shall be equal to the
Maximum Lawful Rate. If at any time thereafter the applicable rate of interest is less than the
Maximum Lawful Rate, Borrower shall continue to pay interest under the Loan at the Maximum Lawful
Rate until such time as the total interest paid by Borrower therefor is equal to the total interest
that would have been paid had applicable law not limited the interest rate payable under this
Agreement.

     Section 2.14 Evidence of Debt.

          (a) Records of Lenders. Each Lender shall maintain in accordance with its usual
practice accounts evidencing Indebtedness of the Borrower to such Lender resulting from each Loan
of such Lender from time to time, including the amounts of principal and interest payable and paid
to such Lender from time to time under this Agreement. In addition, each Lender having sold a
participation in any of its Obligations or having identified an SPV as such to the Administrative
Agent, acting as agent of the Borrower solely for this purpose and solely for tax purposes, shall
establish and maintain at its address referred to in Section 11.11 (or at such other
address as such Lender shall notify the Borrower) a record of ownership, in which such Lender shall
register by book entry (A) the name and address of each such participant and SPV (and each change
thereto, whether by assignment or otherwise) and (B) the rights, interest or obligation of each
such participant and SPV in any Obligation, in any Commitment and in any right to receive any
payment hereunder.

          (b) Records of Administrative Agent. The Administrative Agent, acting as agent of the
Borrower solely for tax purposes and solely with respect to the actions described in this
Section 2.14, shall establish and maintain at its address referred to in Section
11.11 (or at such other address as the Administrative Agent may notify the Borrower) (A) a
record of ownership (the “Register”) in which the Administrative Agent agrees to register
by book entry the interests (including any rights to receive payment hereunder) of the
Administrative Agent, each Lender and each L/C Issuer in the Revolving Credit Outstandings, each of
their obligations under this Agreement to participate in each Loan, Letter of Credit and L/C
Reimbursement Obligation, and any assignment of any such interest, obligation or right and (B)
accounts in the Register in accordance with its usual practice in which it shall record (1) the
names and addresses of the Lenders and the L/C Issuers (and each change thereto pursuant to
Section 2.18 (Substitution of Lenders) and Section 11.2 (Assignments
and Participations; Binding Effect)), (2) the Commitments of each Lender, (3) the amount of
each Loan and each funding of any participation described in clause (A) above, for
Eurodollar Rate Loans, the Interest Period applicable thereto, (4) the amount of any principal or
interest due and payable or paid, (5) the amount of the L/C Reimbursement Obligations due and
payable or paid and (6) any other payment received by the Administrative Agent from the Borrower
and its application to the Obligations.

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          (c) Registered Obligations. Notwithstanding anything to the contrary contained in
this Agreement, the Loans (including any Notes evidencing such Loans and the corresponding
obligations to participate in L/C Obligations and Swing Loans) and the L/C Reimbursement
Obligations are registered obligations, the right, title and interest of the Lenders and the L/C
Issuers and their assignees in and to such Loans or L/C Reimbursement Obligations, as the case may
be, shall be transferable only upon notation of such transfer in the Register and no assignment
thereof shall be effective until recorded therein. This Section 2.14 and Section
11.2 shall be construed so that the Loans and L/C Reimbursement Obligations are at all times
maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and
881(c)(2) of the Code and any related regulations (and any successor provisions).

          (d) Prima Facie Evidence. The entries made in the Register and in the accounts
maintained pursuant to clauses (a) and (b) above shall, to the extent permitted by
applicable Requirements of Law, be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided, however, that no error in such account and
no failure of any Lender or the Administrative Agent to maintain any such account shall affect the
obligations of any Loan Party to repay the Loans in accordance with their terms. In addition, the
Loan Parties, the Administrative Agent, the Lenders and the L/C Issuers shall treat each Person
whose name is recorded in the Register as a Lender or L/C Issuer, as applicable, for all purposes
of this Agreement. Information contained in the Register with respect to any Lender or L/C Issuer
shall be available for inspection by the Borrower, the Administrative Agent, such Lender or such
L/C Issuer at any reasonable time and from time to time upon reasonable prior notice.

          (e) Notes. Upon any Lender’s request, the Borrower shall promptly execute and deliver
Notes to such Lender evidencing the Loans of such Lender in a Facility and substantially in the
form of Exhibit B; provided, however, that only one Note for each Facility
shall be issued to each Lender, except (i) to an existing Lender exchanging existing Notes to
reflect changes in the Register relating to such Lender, in which case the new Notes delivered to
such Lender shall be dated the date of the original Notes and (ii) in the case of loss, destruction
or mutilation of existing Notes and similar circumstances. Each Note, if issued, shall only be
issued as means to evidence the right, title or interest of a Lender or a registered assignee in
and to the related Loan, as set forth in the Register, and in no event shall any Note be considered
a bearer instrument or obligation.

     Section 2.15 Suspension of Eurodollar Rate Option. Notwithstanding any
provision to the contrary in this Article II, the following shall apply:

          (a) Interest Rate Unascertainable, Inadequate or Unfair. In the event that (A) the
Administrative Agent determines that adequate and fair means do not exist for ascertaining the
applicable interest rates by reference to which the Eurodollar Rate is determined or (B) the
Required Lenders notify the Administrative Agent that the Eurodollar Rate for any Interest Period
will not adequately reflect the cost to the Lenders of making or maintaining such Loans for such
Interest Period, the Administrative Agent shall promptly so notify the Borrower and the Lenders,
whereupon the obligation of each Lender to make or to continue Eurodollar Rate Loans shall be
suspended as provided in clause (c) below until the Administrative Agent shall notify the
Borrower that the Required Lenders have determined that the circumstances causing such suspension
no longer exist.

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          (b) Illegality. If any Lender determines that the introduction of, or any change in
or in the interpretation of, any Requirement of Law after the date of this Agreement shall make it
unlawful, or any Governmental Authority shall assert that it is unlawful, for any Lender or its
applicable lending office to make Eurodollar Rate Loans or to continue to fund or maintain
Eurodollar Rate Loans, then, on notice thereof and demand therefor by such Lender to the Borrower
through the Administrative Agent, the obligation of such Lender to make or to continue Eurodollar
Rate Loans shall be suspended as provided in clause (c) below until such Lender shall,
through the Administrative Agent, notify the Borrower that it has determined that it may lawfully
make Eurodollar Rate Loans.

          (c) Effect of Suspension. If the obligation of any Lender to make or to continue
Eurodollar Rate Loans is suspended, (A) the obligation of such Lender to convert Base Rate Loans
into Eurodollar Rate Loans shall be suspended, (B) such Lender shall make a Base Rate Loan at any
time such Lender would otherwise be obligated to make a Eurodollar Rate Loan, (C) the Borrower may
revoke any pending Notice of Borrowing or Notice of Conversion or Continuation to make or continue
any Eurodollar Rate Loan or to convert any Base Rate Loan into a Eurodollar Rate Loan and (D) each
Eurodollar Rate Loan of such Lender shall automatically and immediately (or, in the case of any
suspension pursuant to clause (a) above, on the last day of the current Interest Period
thereof) be converted into a Base Rate Loan.

     Section 2.16 Breakage Costs; Increased Costs; Capital Requirements.

          (a) Breakage Costs. The Borrower shall compensate each Lender, upon demand from such
Lender to such Borrower (with copy to the Administrative Agent), for all Liabilities (including, in
each case, those incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to prepare to fund, to fund or to maintain the Eurodollar Rate Loans of
such Lender to the Borrower but excluding any loss of the Applicable Margin on the relevant Loans)
that such Lender may incur (A) to the extent, for any reason other than solely by reason of such
Lender being a Non-Funding Lender, a proposed Borrowing, conversion into or continuation of
Eurodollar Rate Loans does not occur on a date specified therefor in a Notice of Borrowing or a
Notice of Conversion or Continuation or in a similar request made by telephone by the Borrower, (B)
to the extent any Eurodollar Rate Loan is paid (whether through a scheduled, optional or mandatory
prepayment) or converted to a Base Rate Loan (including because of Section 2.15) on a date
that is not the last day of the applicable Interest Period or (C) as a consequence of any failure
by the Borrower to repay Eurodollar Rate Loans when required by the terms hereof. For purposes of
this clause (a), each Lender shall be deemed to have funded each Eurodollar Rate Loan made
by it using a matching deposit or other borrowing in the London interbank market.

          (b) Increased Costs. If at any time any Lender or L/C Issuer determines that, after
the date hereof, the adoption of, or any change in or in the interpretation, application or
administration of, or compliance with, any Requirement of Law (other than any imposition or
increase of Eurodollar Reserve Requirements) from any Governmental Authority shall have the effect
of (i) increasing the cost to such Lender of making, funding or maintaining any Eurodollar Rate
Loan or to agree to do so or of participating, or agreeing to participate, in extensions of credit,
(ii) increasing the cost to such L/C Issuer of Issuing or maintaining any Letter of Credit or of
agreeing to do so or (iii) imposing any other cost to such Lender or L/C Issuer with respect to
compliance with its obligations under any Loan Document, then, upon demand by such Lender or L/C
Issuer (with copy to the Administrative Agent), the Borrower shall pay to the Administrative

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Agent for the account of such Lender or L/C Issuer amounts sufficient to compensate such
Lender or L/C Issuer for such increased cost.

          (c) Increased Capital Requirements. If at any time any Lender or L/C Issuer
determines that, after the date hereof, the adoption of, or any change in or in the interpretation,
application or administration of, or compliance with, any Requirement of Law (other than any
imposition or increase of Eurodollar Reserve Requirements) from any Governmental Authority
regarding capital adequacy, reserves, special deposits, compulsory loans, insurance charges against
property of, deposits with or for the account of, Obligations owing to, or other credit extended or
participated in by, any Lender or L/C Issuer or any similar requirement (in each case other than
any imposition or increase of Eurodollar Reserve Requirements) shall have the effect of reducing
the rate of return on the capital of such Lender’s or L/C Issuer (or any corporation controlling
such Lender or L/C Issuer) as a consequence of its obligations under or with respect to any Loan
Document or Letter of Credit to a level below that which, taking into account the capital adequacy
policies of such Lender, L/C Issuer or corporation, such Lender, L/C Issuer or corporation could
have achieved but for such adoption or change, then, upon demand from time to time by such Lender
or L/C Issuer (with a copy of such demand to the Administrative Agent), the Borrower shall pay to
the Administrative Agent for the account of such Lender amounts sufficient to compensate such
Lender for such reduction.

          (d) Compensation Certificate. Each demand for compensation under this Section
2.16 shall be accompanied by a certificate of the Lender or L/C Issuer claiming such
compensation, setting forth the amounts to be paid hereunder in reasonable detail and the bases
therefor, which certificate shall be conclusive, binding and final for all purposes, absent
manifest error. In determining such amount, such Lender or L/C Issuer may use any reasonable
averaging and attribution methods.

     Section 2.17 Taxes.

          (a) Payments Free and Clear of Taxes. Except as otherwise provided in this
Section 2.17, each payment by any Loan Party under any Loan Document shall be made free and
clear of all present or future taxes, levies, imposts, deductions, charges or withholdings and all
liabilities with respect thereto (and without deduction for any of them) (collectively, but
excluding the taxes set forth in clauses (i) and (ii) below, the “Taxes”)
other than for (i) taxes measured by net income (including branch profits taxes) and franchise
taxes imposed in lieu of net income taxes, in each case imposed on any Secured Party as a result of
a present or former connection between such Secured Party and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing authority thereof or therein
(other than such connection arising solely from any Secured Party having executed, delivered or
performed its obligations or received a payment under, or enforced, any Loan Document) or (ii)
taxes that are directly attributable to the failure (other than as a result of a change in any
Requirement of Law) by any Secured Party to deliver the documentation required to be delivered
pursuant to clause (f) below.

          (b) Gross-Up. If any Taxes shall be required by law to be deducted from or in respect
of any amount payable under any Loan Document (other than any Secured Hedging Agreement) to any
Secured Party (i) such amount shall be increased as necessary to ensure that, after all required
deductions for Taxes are made (including deductions applicable to any increases

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to any amount under this Section 2.17), such Secured Party receives the amount it
would have received had no such deductions been made, (ii) the relevant Loan Party shall make such
deductions, (iii) the relevant Loan Party shall timely pay the full amount deducted to the relevant
taxing authority or other authority in accordance with applicable Requirements of Law and (iv)
within 30 days after such payment is made, the relevant Loan Party shall deliver to the
Administrative Agent an original or certified copy of a receipt evidencing such payment;
provided, however, that no such increase shall be made with respect to, and no Loan
Party shall be required to indemnify any such Secured Party pursuant to clause (d) below
for, withholding taxes to the extent that the obligation to withhold amounts existed on the date
that such Secured Party became a “Secured Party” under this Agreement in the capacity under which
such Secured Party makes a claim under this clause (b), except in each case to the extent
such Secured Party is a direct or indirect assignee (other than pursuant to Section 2.18
(Substitution of Lenders)) of any other Secured Party that was entitled, at the time the
assignment of such other Secured Party became effective, to receive additional amounts under this
clause (b).

          (c) Other Taxes. In addition, the Borrower agrees to pay, and authorizes the
Administrative Agent to pay in its name, any stamp, documentary, excise or property tax, charges or
similar levies imposed by any applicable Requirement of Law or Governmental Authority and all
Liabilities with respect thereto (including by reason of any delay in payment thereof), in each
case arising from the execution, delivery or registration of, or otherwise with respect to, any
Loan Document or any transaction contemplated therein (collectively, “Other Taxes”). The
Swingline Lender may, without any need for notice, demand or consent from the Borrower, by making
funds available to the Administrative Agent in the amount equal to any such payment, make a Swing
Loan to the Borrower in such amount, the proceeds of which shall be used by the Administrative
Agent in whole to make such payment. Within 30 days after the date of any payment of Taxes or
Other Taxes by any Loan Party, the Borrower shall furnish to the Administrative Agent, at its
address referred to in Section 11.11, the original or a certified copy of a receipt
evidencing payment thereof.

          (d) Indemnification. The Borrower shall reimburse and indemnify, within 30 days after
receipt of demand therefor (with copy to the Administrative Agent), each Secured Party for all
Taxes and Other Taxes (including any Taxes and Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.17) paid by such Secured Party and any Liabilities arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. A certificate of the Secured Party (or of the Administrative Agent on behalf of
such Secured Party) claiming any compensation under this clause (d), setting forth the
amounts to be paid thereunder and delivered to the Borrower with copy to the Administrative Agent,
shall be conclusive, binding and final for all purposes, absent manifest error. In determining
such amount, the Administrative Agent and such Secured Party may use any reasonable averaging and
attribution methods.

          (e) Mitigation. Any Lender claiming any additional amounts payable pursuant to this
Section 2.17 shall use its reasonable efforts (consistent with its internal policies and
Requirements of Law) to change the jurisdiction of its lending office if such a change would reduce
any such additional amounts (or any similar amount that may thereafter accrue) and would not, in
the sole determination of such Lender, be otherwise disadvantageous to such Lender.

          (f) Tax Forms. (i) Each Non-U.S. Lender Party that, at any of the following times, is
entitled to an exemption from United States withholding tax or, after a change in any

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Requirement of Law, is subject to such withholding tax at a reduced rate under an applicable
tax treaty, shall (w) on or prior to the date such Non-U.S. Lender Party becomes a “Non-U.S. Lender
Party” hereunder, (x) on or prior to the date on which any such form or certification expires or
becomes obsolete, (y) after the occurrence of any event requiring a change in the most recent form
or certification previously delivered by it pursuant to this clause (i) and (z) from time
to time if requested by the Borrower or the Administrative Agent (or, in the case of a participant
or SPV, the relevant Lender), provide the Administrative Agent and the Borrower (or, in the case of
a participant or SPV, the relevant Lender) with two completed originals of each of the following,
as applicable: (A) Forms W-8ECI (claiming exemption from U.S. withholding tax because the income
is effectively connected with a U.S. trade or business), W-8BEN (claiming exemption from, or a
reduction of, U.S. withholding tax under an income tax treaty) or any successor forms, (B) in the
case of a Non-U.S. Lender Party claiming exemption under Sections 871(h) or 881(c) of the Code,
Form W-8BEN (claiming exemption from U.S. withholding tax under the portfolio interest exemption)
or any successor form and a certificate in form and substance acceptable to the Administrative
Agent that such Non-U.S. Lender Party is not (1) a “bank” within the meaning of Section
881(c)(3)(A) of the Code, (2) a “10 percent shareholder” of the Borrower within the meaning of
Section 881(c)(3)(B) of the Code or (3) a “controlled foreign corporation” described in Section
881(c)(3)(C) of the Code or (C) any other applicable document prescribed by the IRS certifying as
to the entitlement of such Non-U.S. Lender Party to such exemption from United States withholding
tax or reduced rate with respect to all payments to be made to such Non-U.S. Lender Party under the
Loan Documents. Unless the Borrower and the Administrative Agent have received forms or other
documents satisfactory to them indicating that payments under any Loan Document to or for a
Non-U.S. Lender Party are not subject to United States withholding tax or are subject to such tax
at a rate reduced by an applicable tax treaty, the Loan Parties and the Administrative Agent shall
withhold amounts required to be withheld by applicable Requirements of Law from such payments at
the applicable statutory rate.

               (i) Each U.S. Lender Party shall (A) on or prior to the date such U.S. Lender Party
becomes a “U.S. Lender Party” hereunder, (B) on or prior to the date on which any such form
or certification expires or becomes obsolete, (C) after the occurrence of any event
requiring a change in the most recent form or certification previously delivered by it
pursuant to this clause (f) and (D) from time to time if requested by the Borrower
or the Administrative Agent (or, in the case of a participant or SPV, the relevant Lender),
provide the Administrative Agent and the Borrower (or, in the case of a participant or SPV,
the relevant Lender) with two completed originals of Form W-9 (certifying that such U.S.
Lender Party is entitled to an exemption from U.S. backup withholding tax) or any successor
form.

               (ii) Each Lender having sold a participation in any of its Obligations or identified
an SPV as such to the Administrative Agent shall collect from such participant or SPV the
documents described in this clause (f) and provide them to the Administrative
Agent.

     Section 2.18 Substitution of Lenders.

          (a) Substitution Right. In the event that any Lender in any Facility that is not an
Affiliate of the Administrative Agent (an “Affected Lender”), (i) makes a claim under
clause (b) (Increased Costs) or (c) (Increased Capital
Requirements) of Section 2.16, (ii) notifies the Borrower pursuant to Section
2.15(b) (Illegality) that it becomes illegal for such Lender to

47

 

continue to fund or make any Eurodollar Rate Loan in such Facility, (iii) makes a claim for
payment pursuant to Section 2.17(b) (Taxes), (iv) becomes a Non-Funding Lender with
respect to such Facility or (v) does not consent to any amendment, waiver or consent to any Loan
Document for which the consent of the Required Lenders is obtained but that requires the consent of
other Lenders in such Facility, the Borrower may either pay in full such Affected Lender with
respect to amounts due in such Facility with the consent of the Administrative Agent or substitute
for such Affected Lender in such Facility any Lender or any Affiliate or Approved Fund of any
Lender or any other Person acceptable (which acceptance shall not be unreasonably withheld or
delayed) to the Administrative Agent (in each case, a “Substitute Lender”).

          (b) Procedure. To substitute such Affected Lender or pay in full the Obligations owed
to such Affected Lender under such Facility, the Borrower shall deliver a notice to the
Administrative Agent and such Affected Lender. The effectiveness of such payment or substitution
shall be subject to the delivery to the Administrative Agent by the Borrower (or, as may be
applicable in the case of a substitution, by the Substitute Lender) of (i) payment for the account
of such Affected Lender, of, to the extent accrued through, and outstanding on, the effective date
for such payment or substitution, all Obligations owing to such Affected Lender with respect to
such Facility (including those that will be owed because of such payment and all Obligations that
would be owed to such Lender if it was solely a Lender in such Facility), (ii) in the case of a
payment in full of the Obligations owing to such Affected Lender in the Revolving Credit Facility,
payment of any amount that, after giving effect to the termination of the Commitment of such
Affected Lender, is required to be paid pursuant to Section 2.8(e) (Excess
Outstandings) and (iii) in the case of a substitution, (A) payment of the assignment fee set
forth in Section 11.2(c) and (B) an assumption agreement in form and substance satisfactory
to the Administrative Agent whereby the Substitute Lender shall, among other things, agree to be
bound by the terms of the Loan Documents and assume the Commitment of the Affected Lender under
such Facility.

          (c) Effectiveness. Upon satisfaction of the conditions set forth in clause
(b) above, the Administrative Agent shall record such substitution or payment in the Register,
whereupon (i) in the case of any payment in full in any Facility, such Affected Lender’s
Commitments in such Facility shall be terminated and (ii) in the case of any substitution in any
Facility, (A) the Affected Lender shall sell and be relieved of, and the Substitute Lender shall
purchase and assume, all rights and claims of such Affected Lender under the Loan Documents with
respect to such Facility, except that the Affected Lender shall retain such rights expressly
providing that they survive the repayment of the Obligations and the termination of the
Commitments, (B) the Substitute Lender shall become a “Lender” hereunder having a
Commitment in such Facility in the amount of such Affected Lender’s Commitment in such Facility and
(C) the Affected Lender shall execute and deliver to the Administrative Agent an Assignment to
evidence such substitution and deliver any Note in its possession with respect to such Facility;
provided, however, that the failure of any Affected Lender to execute any such
Assignment or deliver any such Note shall not render such sale and purchase (or the corresponding
assignment) invalid.

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ARTICLE III

CONDITIONS TO LOANS AND LETTERS OF CREDIT

     Section 3.1 Conditions Precedent to Initial Loans and Letters of Credit. The
obligation of each Lender to make any Loan and the obligation of each L/C Issuer to Issue any
Letter of Credit is subject to the satisfaction or due waiver of each of the following conditions
precedent on or prior to the Closing Date:

          (a) Certain Documents. The Administrative Agent shall have received on or prior to
the Closing Date each of the following, each dated the Closing Date unless otherwise agreed by the
Administrative Agent, in form and substance satisfactory to the Administrative Agent and each
Lender:

               (i) this Agreement duly executed by the Borrower and, for the account of each Lender
having requested the same by notice to the Administrative Agent and the Borrower received
by each at least 3 Business Days prior to the Closing Date (or such later date as may be
agreed by the Borrower), Notes in each applicable Facility conforming to the requirements
set forth in Section 2.14(e);

               (ii) the Guaranty and Security Agreement, duly executed by each Guarantor, together
with (A) copies of UCC, Intellectual Property and other appropriate search reports and of
all effective prior filings listed therein, together with evidence of the termination of
such prior filings and other documents with respect to the priority of the security
interest of the Administrative Agent in the Collateral, in each case as may be reasonably
requested by the Administrative Agent, (B) all documents representing all Securities being
pledged pursuant to such Guaranty and Security Agreement and related undated powers or
endorsements duly executed in blank and (C) all Control Agreements that, in the reasonable
judgment of the Administrative Agent, are required for the Loan Parties to comply with the
Loan Documents as of the Closing Date, each duly executed by, in addition to the applicable
Loan Party, the applicable financial institution;

               (iii) Mortgages for each real property of the Loan Parties identified on Schedule
4.16 (except as may be agreed to by the Administrative Agent), together with all
Mortgage Supporting Documents relating thereto that are available on the Closing Date;

               (iv) duly executed favorable opinions of counsel to the Loan Parties in Arizona,
Delaware, Idaho, Indiana, Nevada, Ohio, Pennsylvania, Texas, Washington and Wisconsin, each
addressed to the Administrative Agent, the L/C Issuers and the Lenders and addressing such
matters as the Administrative Agent may reasonably request;

               (v) a copy of each Constituent Document of each Loan Party that is on file with any
Governmental Authority in any jurisdiction, certified as of a recent date by such
Governmental Authority, together with, if applicable, certificates attesting to the good
standing of such Loan Party in such jurisdiction and each other jurisdiction where

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such Loan Party is qualified to do business as a foreign entity or where such
qualification is necessary (and, if appropriate in any such jurisdiction, related tax
certificates);

               (vi) a certificate of the secretary or other officer of each Loan Party in charge of
maintaining books and records of such Loan Party certifying as to (A) the names and
signatures of each officer of such Loan Party authorized to execute and deliver any Loan
Document, (B) the Constituent Documents of such Loan Party attached to such certificate are
complete and correct copies of such Constituent Documents as in effect on the date of such
certification (or, for any such Constituent Document delivered pursuant to clause
(v) above, that there have been no changes from such Constituent Document so delivered)
and (C) the resolutions of such Loan Party’s board of directors or other appropriate
governing body approving and authorizing the execution, delivery and performance of each
Loan Document to which such Loan Party is a party;

               (vii) a certificate of a Responsible Officer of the Borrower to the effect that (A)
each condition set forth in Section 3.2(b) has been satisfied, (B) both the Loan
Parties taken as a whole and the Borrower are Solvent after giving effect to the initial
Loans and Letters of Credit, the consummation of the Related Transactions, the application
of the proceeds thereof in accordance with Section 7.9 and the payment of all
estimated legal, accounting and other fees and expenses related hereto and thereto, and (C)
attached thereto are complete and correct copies of each Related Document;

               (viii) insurance certificates in form and substance satisfactory to the Administrative
Agent demonstrating that the insurance policies required by Section 7.5 are in full
force and effect and have all endorsements required by such Section 7.5; and

               (ix) such other documents and information as any Lender through the Administrative
Agent may reasonably request.

          (b) Fee and Expenses. There shall have been paid to the Administrative Agent, for the
account of the Administrative Agent, its Related Persons, any L/C Issuer or any Lender, as the case
may be, all fees and all reimbursements of costs or expenses, in each case due and payable under
any Loan Document on or before the Closing Date.

          (c) Consents. Each Group Member shall have received all consents and authorizations
required pursuant to any material Contractual Obligation with any other Person and shall have
obtained all Permits of, and effected all notices to and filings with, any Governmental Authority,
in each case, as may be necessary in connection with the consummation of the transactions
contemplated in any Loan Document or Related Document (including the Related Transactions).

          (d) Minimum Consolidated EBITDA. The Pro Forma Adjusted Consolidated EBITDA of the
Borrower for the four Fiscal Quarter period most recently ended prior to the Closing Date as shown
on Schedule IV hereto shall exceed $45,000,000.

          (e) Related Transactions. The Administrative Agent shall be satisfied that as of the
Closing Date, that the Related Transactions shall have been consummated in accordance

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with the terms of the Related Documents in all material respects as determined by the
Administrative Agent in the exercise of its reasonable judgment.

          (f) No Material Adverse Effect. Since December 31, 2005, with respect to the Borrower
and its Subsidiaries taken as a whole, there has been no Material Adverse Effect.

          Section 3.2 Conditions Precedent to Each Loan and Letter of Credit. The
obligation of each Lender on any date (including the Closing Date) to make any Loan and of each L/C
Issuer on any date (including the Closing Date) to Issue any Letter of Credit is subject to the
satisfaction of each of the following conditions precedent:

          (a) Request. The Administrative Agent (and, in the case of any Issuance, the relevant
L/C Issuer) shall have received, to the extent required by Article II, a written, timely
and duly executed and completed Notice of Borrowing, Swingline Request or, as the case may be, L/C
Request.

          (b) Representations and Warranties; No Defaults. The following statements shall be
true on such date, both before and after giving effect to such Loan or, as applicable, such
Issuance: (i) the representations and warranties set forth in any Loan Document shall be true and
correct (A) if such date is the Closing Date, on and as of such date and (B) otherwise, in all
material respects on and as of such date or, to the extent such representations and warranties
expressly relate to an earlier date, on and as of such earlier date and (ii) no Default shall be
continuing.

          (c) Availability. After giving pro forma effect to such Loan or Issuance of such
Letter of Credit, the aggregate outstanding Loans and L/C Obligations will not exceed the Revolving
Credit Availability.

          (d) Additional Matters. The Administrative Agent shall have received such additional
documents and information as any Lender, through the Administrative Agent, may reasonably request.

The representations and warranties set forth in any Notice of Borrowing, Swingline Request or L/C
Request (or any certificate delivered in connection therewith) shall be deemed to be made again on
and as of the date of the relevant Loan or Issuance and the acceptance of the proceeds thereof or
of the delivery of the relevant Letter of Credit.

     Section 3.3 Conditions Precedent to Each Facility Increase. The effectiveness
of each Facility Increase shall be subject to the satisfaction of all of the following conditions
precedent:

          (a) Loan To Value Ratio. The Loan To Value Ratio, after giving effect to such
Facility Increase, shall not exceed 75%.

          (b) Certain Documents. The Administrative Agent shall have received on or prior to the
Facility Increase Date for such Facility Increase each of the following, each dated

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such Facility Increase Date unless otherwise indicated or agreed to by the Administrative
Agent, in form and substance satisfactory to the Administrative Agent:

               (i) written commitments duly executed by existing Lenders or Eligible Assignees in an
aggregate amount equal to the amount of the proposed Facility Increase (as agreed between
the Borrower and the Administrative Agent but in any case not to exceed, in the aggregate
for all such Facility Increases, the maximum amount set forth in the Facility Increase
Notice) and, in the case of each such Eligible Assignee, an assumption agreement in form
and substance satisfactory to the Administrative Agent and duly executed by the Borrower,
the Administrative Agent and such Eligible Assignee;

               (ii) an amendment to this Agreement (including to Schedule I), effective as of
the Facility Increase Date and executed by the Borrower and the Administrative Agent, to
the extent necessary to implement terms and conditions of the Facility Increase (including
interest rates, fees and scheduled repayment dates and maturity), as agreed by the Borrower
and the Administrative Agent but, which, in any case, except for interest, fees, scheduled
repayment dates and maturity, shall not be applied materially differently to the Facility
Increase and the existing Facility;

               (iii) for the account of each Lender or Eligible Assignee participating in such
Facility Increase having requested the same by notice to the Administrative Agent and the
Borrower received by each at least three Business Days prior to the Facility Increase Date
(or such later date as may be agreed by the Borrower), Notes in each applicable Facility
conforming to the requirements set forth in Section 2.14(e);

               (iv) for each Loan Party executing any Loan Document as part of such Facility
Increase, a certificate of the secretary or other officer of such Loan Party in charge of
maintaining books and records of such Loan Party certifying as to the resolutions of such
Loan Party’s board of directors or other appropriate governing body approving and
authorizing the execution, delivery and performance of each document executed as part of
such Facility Increase to which such Loan Party is a party;

               (v) duly executed favorable opinions of counsel to the Loan Parties, each addressed to
the Administrative Agent, the L/C Issuers and the Lenders and addressing such matters as
the Administrative Agent may reasonably request; provided that any opinions
addressing matters addressed in the legal opinions delivered on the Facility Increase Date
shall be in form and substance substantially similar to such legal opinions delivered on
the Closing Date; and

               (vi) such other document as the Administrative Agent may reasonably request or as any
Lender participating in such Facility Increase may reasonably require as a condition to its
commitment in such Facility Increase.

          (c) Fee and Expenses. There shall have been paid to the Administrative Agent, for the
account of the Administrative Agent, the Arranger, any Lender (including any Person becoming a
Lender as part of such Facility Increase on such Facility Increase Date) or any

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L/C Issuer, as the case may be, all fees and expenses due and payable on or before the
Facility Increase Date for such Facility Increase.

          (d) Conditions to Extensions of Credit. As of the Facility Increase Date for such
Facility Increase, (i) the conditions precedent set forth in Section 3.2 shall have been
satisfied both before and after giving effect to such Facility Increase, (ii) such Facility
Increase shall be made on the terms and conditions set forth in Section 2.1(b)(i) and (iii)
the Group Members shall be in compliance with Article V as of the most recently ended
Fiscal Quarter for which Financial Statements were delivered hereunder on a pro forma basis both
before and after giving effect to such Facility Increase.

          (e) Yield Maintenance. As of the Facility Increase Date for such Facility Increase,
(i) the “all-in yield” (after taking into account commissions and related fees, costs and expenses)
to the Lenders participating in such Facility Increase in any existing Facility shall not exceed
such all-in yield (on a marked-to-market basis) for such existing Facility (after giving effect to
any increase in the Applicable Margin applicable to such existing Facility that becomes effective
on the Facility Increase Date) and (ii) the weighted average life of any facility modified or as
part of such Facility Increase shall not be shorter than the weighted average life for the
corresponding Facility prior to giving effect to such modification.

          Section 3.4 Determinations of Initial Borrowing Conditions. For purposes of
determining compliance with the conditions specified in Sections 3.1 and 3.3, each Lender
shall be deemed to be satisfied with each document and each other matter required to be
satisfactory to such Lender unless, prior to the Closing Date (or, as the case may be, the
corresponding Facility Increase Date), the Administrative Agent receives notice from such Lender
specifying such Lender’s objections and such Lender has not made available its Pro Rata Share of
any Borrowing scheduled to be made on the Closing Date (or, as the case may be, the corresponding
Facility Increase Date).

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

          To induce the Lenders, the L/C Issuers and the Administrative Agent to enter into the Loan
Documents, the Borrower (and, to the extent set forth in any other Loan Document, each other Loan
Party) represents and warrants to each of them each of the following on and as of each date
applicable pursuant to Section 3.2:

     Section 4.1 Corporate Existence; Compliance with Law. Each Group Member (a)
is duly organized, validly existing and in good standing or active status under the laws of the
jurisdiction of its organization, (b) is duly qualified to do business as a foreign entity and in
good standing under the laws of each jurisdiction where such qualification is necessary, except
where the failure to be so qualified or in good standing would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect, (c) has all requisite power and authority and the legal
right to own, pledge, mortgage and operate its property, to lease or sublease any property it
operates under lease or sublease and to conduct its business as now or currently proposed to be

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conducted, (d) is in compliance with its Constituent Documents, (e) is in compliance with all
applicable Requirements of Law except where the failure to be in compliance would not reasonably be
expected to have a Material Adverse Effect and (f) has all necessary Permits from or by, has made
all necessary filings with, and has given all necessary notices to, each Governmental Authority
having jurisdiction, to the extent required for such ownership, lease, sublease, operation,
occupation or conduct of business, except where the failure to obtain such Permits, make such
filings or give such notices would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.

     Section 4.2 Loan and Related Documents.

          (a) Power and Authority. The execution, delivery and performance by each Loan Party
of the Loan Documents and Related Documents to which it is a party and the consummation of the
Related Transactions and other transactions contemplated therein (i) are within such Loan Party’s
corporate or similar powers and, at the time of execution thereof, have been duly authorized by all
necessary corporate and similar action (including, if applicable, consent of holders of its
Securities), (ii) do not (A) contravene such Loan Party’s Constituent Documents, (B) violate any
applicable Requirement of Law, (C) conflict with, contravene, constitute a default or breach under,
or result in or permit the termination or acceleration of, any material Contractual Obligation of
any Loan Party or any of its Subsidiaries (including other Related Documents or Loan Documents)
other than those that would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect and are not created or caused by, or a conflict, breach, default or termination or
acceleration event under, any Loan Document or (D) result in the imposition of any Lien (other than
a Permitted Lien) upon any property of any Loan Party or any of its Subsidiaries and (iii) do not
require any Permit of, or filing with, any Governmental Authority or any consent of, or notice to,
any Person, other than (A) with respect to the Loan Documents, the filings required to perfect the
Liens created by the Loan Documents, (B) those listed on Schedule 4.2 and that have been,
or will be prior to the Closing Date, obtained or made, copies of which have been, or will be prior
to the Closing Date, delivered to the Administrative Agent, and each of which on the Closing Date
will be in full force and effect and (C) with respect to the Related Transactions, those that, if
not obtained, would not, in the aggregate, have a Material Adverse Effect.

          (b) Due Execution and Delivery. From and after its delivery to the Administrative
Agent, each Loan Document has been duly executed and delivered to the other parties thereto by each
Loan Party party thereto, is the legal, valid and binding obligation of such Loan Party and is
enforceable against such Loan Party in accordance with its terms.

          (c) Related Documents. Each representation and warranty in each Related Document is
true and correct in all material respects and no default, or event that, with the giving of notice
or lapse of time or both, would constitute a default, has occurred thereunder. As of the Closing
Date, all applicable waiting periods in connection with the Related Transactions have expired or
have been terminated without any action being taken by any Governmental Authority.

     Section 4.3 Ownership of Loan Parties. Set forth on Schedule 4.3 is a
complete and accurate list showing, as of the Closing Date, for each Loan Party and each Subsidiary
of any Guarantor and each joint venture of any of them, its jurisdiction of organization, the
number of shares of each class of Stock authorized (if applicable), the number outstanding on the
Closing

54

 

Date and the number and percentage of the outstanding shares of each such class owned
(directly or indirectly) by the Borrower. All outstanding Stock of each of them (except in the
case of the Borrower) has been validly issued, is fully paid and non-assessable (to the extent
applicable) and is owned beneficially and of record by a Loan Party (or, in the case of Texas ALC
Partners II, LP, by the partners thereof) free and clear of all Liens other than the security
interests created by the Loan Documents and, in the case of joint ventures, Permitted Liens. There
are no Stock Equivalents with respect to the Stock of any Loan Party or any Subsidiary of any
Guarantor or any joint venture of any of them. There are no Contractual Obligations or other
understandings to which any Loan Party, any Subsidiary of any Guarantor or any joint venture of any
of them is a party with respect to (including any restriction on) the issuance, voting, Sale or
pledge of any Stock or Stock Equivalent of any Loan Party or any such Guarantor or joint venture.

     Section 4.4 Financial Statements.

          (a) Each of (i) the audited Consolidated balance sheet of the Borrower as at December 31, 2005
and the related Consolidated statements of income, retained earnings and cash flows of the Borrower
for the Fiscal Year then ended, certified by KPMG, and (ii) subject to the absence of footnote
disclosure and normal recurring year-end audit adjustments, the unaudited Consolidated balance
sheets of the Borrower as at June 30, 2006 and the related Consolidated statements of income,
retained earnings and cash flows of the Borrower for the six months then ended, copies of each of
which have been furnished to the Administrative Agent, fairly present in all material respects the
Consolidated financial position, results of operations and cash flow of the Borrower as at the
dates indicated and for the periods indicated in accordance with GAAP.

          (b) [Reserved]

          (c) The Initial Projections have been prepared by the Borrower in light of the past operations
of the business of the Borrower and its Subsidiaries and reflect projections for the 5 year period
beginning on January 1, 2007 on a year by year basis. As of the Closing Date, the Initial
Projections are based upon estimates and assumptions stated therein, all of which the Borrower
believes to be reasonable and fair in light of conditions and facts known to the Borrower as of the
Closing Date and reflect the good faith, reasonable and fair estimates by the Borrower of the
future Consolidated financial performance of the Borrower and the other information projected
therein for the periods set forth therein.

          (d) The unaudited Consolidated balance sheet of the Borrower (the “Pro Forma Balance
Sheet”) delivered to the Administrative Agent prior to the date hereof, has been prepared as of
June 30, 2006 and reflects as of such date, on a Pro Forma Basis for the transactions contemplated
herein to occur on the Closing Date, the Consolidated financial condition of the Borrower, and the
assumptions expressed therein are reasonable based on the information available to the Borrower at
such date and on the Closing Date.

     Section 4.5 Material Adverse Effect. Since December 31, 2005, there have been
no events, circumstances, developments or other changes in facts that would, in the aggregate,
reasonably be expected to have a Material Adverse Effect.

     Section 4.6 Solvency. Both before and after giving effect to (a) the Loans
and Letters of Credit made or Issued on or prior to the date this representation and warranty is
made,

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(b) the disbursement of the proceeds of such Loans and (c) the payment and accrual of all
transaction costs in connection with the foregoing, both the Loan Parties taken as a whole and the
Borrower are Solvent.

     Section 4.7 Litigation. There are no pending (or, to the knowledge of any
Group Member, threatened) actions, investigations, suits, proceedings, audits, claims, demands,
orders or disputes affecting the Borrower or any of its Subsidiaries with, by or before any
Governmental Authority other than those that cannot reasonably be expected to affect the
Obligations, the Loan Documents, the Letters of Credit, the Related Documents, the Related
Transactions and the other transactions contemplated therein and would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.

     Section 4.8 Taxes. All federal, state, local and foreign income and franchise
and other material tax returns, reports and statements (collectively, the “Tax Returns”)
required to be filed by any Tax Affiliate have been filed with the appropriate Governmental
Authorities in all jurisdictions in which such Tax Returns are required to be filed, all such Tax
Returns are true and correct in all material respects, and all taxes, charges and other impositions
reflected therein or otherwise due and payable have been paid prior to the date on which any
Liability may be added thereto for non-payment thereof except for those contested in good faith by
appropriate proceedings diligently conducted and for which adequate reserves are maintained on the
books of the appropriate Tax Affiliate in accordance with GAAP or state and local taxes involving
an amount, in the aggregate, of less than $50,000. No Tax Return is under audit or examination by
any Governmental Authority and no notice of such an audit or examination or any assertion of any
claim for Taxes has been given or made by any Governmental Authority. Proper and accurate amounts
have been withheld by each Tax Affiliate from their respective employees for all periods in full
and complete compliance with the tax, social security and unemployment withholding provisions of
applicable Requirements of Law and such withholdings have been timely paid to the respective
Governmental Authorities. No Tax Affiliate has participated in a “reportable transaction” within
the meaning of Treasury Regulation Section 1.6011-4(b) or has been a member of an affiliated,
combined or unitary group other than the group of which a Tax Affiliate is the common parent.

     Section 4.9 Margin Regulations. The Borrower is not engaged in the business
of extending credit for the purpose of, and no proceeds of any Loan or other extensions of credit
hereunder will be used for the purpose of, buying or carrying margin stock (within the meaning of
Regulation U of the Federal Reserve Board) or extending credit to others for the purpose of
purchasing or carrying any such margin stock, in each case in contravention of Regulation T, U or X
of the Federal Reserve Board.

     Section 4.10 No Burdensome Obligations; No Defaults. No Group Member is a
party to any Contractual Obligation, no Group Member has Constituent Documents containing
obligations, and, to the knowledge of any Group Member, there are no applicable Requirements of
Law, in each case the compliance with which would reasonably be expected to have, in the aggregate,
a Material Adverse Effect. No Group Member (and, to the knowledge of each Group Member, no other
party thereto) is in default under or with respect to any Contractual Obligation of any Group
Member, other than those that would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.

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     Section 4.11 Investment Company Act; Public Utility Holding Company Act. No
Group Member is an “investment company” or an “affiliated person” of, or “promoter” or “principal
underwriter” for, an “investment company”, as such terms are defined in the Investment Company Act
of 1940.

     Section 4.12 Labor Matters. There are no strikes, work stoppages, slowdowns
or lockouts existing, pending (or, to the knowledge of any Group Member, threatened) against or
involving any Group Member, except, for those that would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as set forth on Schedule 4.12, as of
the Closing Date, (a) there is no collective bargaining or similar agreement with any union, labor
organization, works council or similar representative covering any employee of any Group Member,
(b) no petition for certification or election of any such representative is existing or pending
with respect to any employee of any Group Member and (c) no such representative has sought
certification or recognition with respect to any employee of any Group Member.

     Section 4.13 ERISA. Schedule 4.13 sets forth, as of the Closing Date,
a complete and correct list of, and that separately identifies, (a) all Title IV Plans, (b) all
Multiemployer Plans and (c) all material Benefit Plans. Each Benefit Plan, and each trust
thereunder, intended to qualify for tax exempt status under Section 401 or 501 of the Code or other
Requirements of Law so qualifies. Except for those that would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect, (x) each Benefit Plan is in compliance with applicable
provisions of ERISA, the Code and other Requirements of Law, (y) there are no existing or pending
(or to the knowledge of any Group Member, threatened) claims (other than routine claims for
benefits in the normal course), sanctions, actions, lawsuits or other proceedings or investigation
involving any Benefit Plan to which any Group Member incurs or otherwise has or could have an
obligation or any Liability and (z) no ERISA Event is reasonably expected to occur. On the Closing
Date, no ERISA Event has occurred in connection with which obligations and liabilities (contingent
or otherwise) remain outstanding. No ERISA Affiliate would have any Withdrawal Liability as a
result of a complete withdrawal from any Multiemployer Plan on the date this representation is
made.

     Section 4.14 Environmental Matters. Except as set forth on Schedule
4.14, (a) the operations of each Group Member are and have been in compliance with all
applicable Environmental Laws, including obtaining, maintaining and complying with all Permits
required by any applicable Environmental Law, other than non-compliances that, in the aggregate,
would not have a reasonable likelihood of resulting in Material Environmental Liabilities, (b) no
Group Member is party to, and no Group Member and no real property currently (or to the knowledge
of any Group Member previously) owned, leased, subleased, operated or otherwise occupied by or for
any Group Member is subject to or the subject of, any Contractual Obligation or any pending (or, to
the knowledge of any Group Member, threatened) order, action, investigation, suit, proceeding,
audit, claim, demand, dispute or notice of violation or of potential liability or similar notice
under or pursuant to any Environmental Law other than those that, in the aggregate, are not
reasonably likely to result in Material Environmental Liabilities, (c) no Lien in favor of any
Governmental Authority securing, in whole or in part, Environmental Liabilities has attached to any
property of any Group Member and, to the knowledge of any Group Member, no facts, circumstances or
conditions exist that could reasonably be expected to result in any such Lien attaching to any such
property, (d) no Group Member has caused or suffered to occur a Release of Hazardous Materials at,
to or from any real property of any Group Member and each such real property is free of
contamination by any Hazardous Materials except for such Release

57

 

or contamination that could not reasonably be expected to result, in the aggregate, in
Material Environmental Liabilities, (e) no Group Member (i) is or has been engaged in operations,
or (ii) knows of any facts, circumstances or conditions, including receipt of any information
request or notice of potential responsibility under CERCLA or similar Environmental Laws, that, in
the aggregate, would have a reasonable likelihood of resulting in Material Environmental
Liabilities and (f) each Group Member has made available to the Administrative Agent copies of all
existing environmental reports, reviews and audits and all documents pertaining to actual or
potential Environmental Liabilities, in each case to the extent such reports, reviews, audits and
documents are in their possession, custody or control.

     Section 4.15 Intellectual Property. Each Group Member owns or licenses all
Intellectual Property that is necessary for the operations of its businesses. To the knowledge of
each Group Member, (a) the conduct and operations of the businesses of each Group Member does not
infringe, misappropriate, dilute, violate or otherwise impair any Intellectual Property owned by
any other Person and (b) no other Person has contested any right, title or interest of any Group
Member in, or relating to, any Intellectual Property, other than, in each case, as cannot
reasonably be expected to affect the Loan Documents and the transactions contemplated therein and
would not, in the aggregate, reasonably be expected to have a Material Adverse Effect. In
addition, (x) there are no pending (or, to the knowledge of any Group Member, threatened) actions,
investigations, suits, proceedings, audits, claims, demands, orders or disputes affecting any Group
Member with respect to, (y) no judgment or order regarding any such claim has been rendered by any
competent Governmental Authority, no settlement agreement or similar Contractual Obligation has
been entered into by any Group Member, with respect to and (z) no Group Member knows or has any
reason to know of any valid basis for any claim based on, any such infringement, misappropriation,
dilution, violation or impairment or contest, other than, in each case, as cannot reasonably be
expected to affect the Loan Documents and the transactions contemplated therein and would not, in
the aggregate, reasonably be expected to have a Material Adverse Effect.

     Section 4.16 Title; Real Property.

          (a) Each Group Member has good and marketable fee simple title to all owned real property and
valid leasehold interests in all leased real property, and owns all personal property, in each case
that is purported to be owned or leased by it, including those reflected on the most recent
Financial Statements delivered by the Borrower, and none of such property is subject to any Lien
except Permitted Liens.

          (b) Set forth on Schedule 4.16 is, as of the Closing Date, (i) a complete and accurate
list of all real property owned in fee simple by any Group Member or in which any Group Member owns
a leasehold interest setting forth, for each such real property, the current street address
(including, where applicable, county, state and other relevant jurisdictions), the record owner
thereof and, where applicable, each lessee and sublessee thereof, (ii) any lease, sublease, license
or sublicense of such real property by any Group Member and (iii) for each such real property that
the Administrative Agent has requested be subject to a Mortgage or that is otherwise material to
the business of any Group Member, each non-contingent Contractual Obligation by any Group Member to
Sell such real property.

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     Section 4.17 Compliance With Healthcare Laws. Without limiting any other
representation or warranty made herein, each Group Member, each property owned or managed by such
Group Member, and, to the knowledge of Borrower, each Group Member’s licensed employees and
contractors (other than contracted agencies) in the exercise of their respective duties on behalf
of such Group Member, is in compliance with all applicable Healthcare Laws except where the failure
to comply could not reasonably be expected to have a Material Adverse Effect. To the extent
applicable to itself or any property owned or managed by it, each Group Member has maintained in
all material respects all records required to be maintained by all applicable licensing and
accreditation agencies, Government Reimbursement Programs, Private Payor Arrangements and
Healthcare Laws, and, to the knowledge of Borrower, there are no presently existing circumstances
which reasonably could be expected to constitute or result in a violation of any license,
accreditation, Private Payor Arrangement, or Healthcare Law in each case that could reasonably be
expected to have a Material Adverse Effect. Except as disclosed on Schedule 4.17, no Group
Member, and no property owned or managed by any Group Member, is currently, or has in the past
been, subject to any federal, state, local governmental or private payor civil or criminal
inspections, investigations, inquiries or audits involving and/or related to its, its activities’
or its compliance with Healthcare Laws. No Group Member: (i) has had a civil monetary penalty
assessed against it pursuant to 42 U.S.C. §1320a 7a; (ii) has been excluded from participation in a
Federal Health Care Program (as that term is defined in 42 U.S.C. §1320a 7b); (iii) has been
convicted (as that term is defined in 42 C.F.R. §1001.2) of any of those offenses described in 42
U.S.C. §1320a 7b or 18 U.S.C. §§669, 1035, 1347, 1518; or (iv) has been involved or named in a U.S.
Attorney complaint made or any other action taken pursuant to the False Claims Act under 31 U.S.C.
§§3729 3731 or qui tam action brought pursuant to 31 U.S.C. §3729 et seq. Each Group Member and
the owners of the facilities and other businesses managed by each Group Member have such permits,
licenses, franchises, certificates and other approvals or authorizations of governmental or
regulatory authorities as are necessary under applicable law to own its respective properties and
to conduct its respective business (including without limitation such permits as are required under
Healthcare Laws, and under such HMO or similar licensure laws and such insurance laws and
regulations, as are applicable thereto) except to the extent that the failure to obtain or possess
such approvals or authorizations could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.

     Section 4.18 HIPAA Compliance. To the extent that and for so long as any
Group Member is a “covered entity” within the meaning of HIPAA, such Group Member (a) has
undertaken or will promptly undertake all necessary surveys, audits, inventories, reviews, analyses
and/or assessments (including any necessary risk assessments) of all areas of its business and
operations required by HIPAA and/or that could be adversely affected by the failure of such Group
Member to be HIPAA Compliant (as defined below); (b) has developed or will promptly develop a
detailed plan and time line for becoming HIPAA Compliant (a “HIPAA Compliance Plan”); and
(c) has implemented or will implement those provisions of such HIPAA Compliance Plan in all
material respects necessary to ensure that such Group Member is or becomes HIPAA Compliant. For
purposes hereof, “HIPAA Compliant” shall mean that the Group Member (i) is or will be in compliance
with each of the applicable requirements of the so-called “Administrative Simplification”
provisions of HIPAA on and as of each date that any part thereof, or any final rule or regulation
thereunder, becomes effective in accordance with its or their terms, as the case may be (each such
date, a “HIPAA Compliance Date”) and (ii) is not and could not reasonably be expected to
become, as of any date following any such HIPAA Compliance Date, the subject of any civil or
criminal penalty, process, claim, action or

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proceeding, or any administrative or other regulatory review, survey, process or proceeding
(other than routine surveys or reviews conducted by any government health plan or other
accreditation entity) that could reasonably be expected to have a Material Adverse Effect.

     Section 4.19 Reimbursement From Third Party Payors. Each Group Member is in
compliance with the written material reimbursement policies, rules and regulations of third party
payors such as Medicare, Medicaid, private insurance companies, health maintenance organizations,
preferred provider organizations, managed care systems and other third party payors, including,
without limitation, adjustments under any capitation arrangement, fee schedule, discount formula or
cost-based reimbursement the failure to comply with which would be reasonably likely to have a
Material Adverse Effect.

     Section 4.20 Fraud and Abuse. No Group Member, nor any stockholder, officer
or director, acting on behalf of any Group Member, has engaged on behalf of any Group Member in any
of the following, except where there could not reasonably be expected to be a Material Adverse
Effect: (a) knowing and willfully making or causing to be made a false statement or representation
of a material fact in any applications for any benefit or payment under Medicare or Medicaid
programs or any other Government Reimbursement Program; (b) knowing and willfully making or causing
to be made any false statement or representation of a material fact for use in determining rights
to any benefit or payment under Medicare or Medicaid programs or any other Government Reimbursement
Program; (c) any knowing and willful failure by any Group Member to disclose to the appropriate
government contractor any material overpayment or other improper payment received from the Medicare
and Medicaid program or any other Government Reimbursement Program; or (iv) any knowing and willful
violation of the Federal and State anti-kick-back or fraud and abuse laws, the regulations
promulgated thereunder.

     Section 4.21 Full Disclosure. The information prepared or furnished by or on
behalf of any Loan Party in connection with any Loan Document or Related Document (including the
information contained in any Financial Statement or Disclosure Document) or the consummation of any
Related Transaction or any other transaction contemplated therein, does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements
contained therein, in light of the circumstances when made, not misleading; provided,
however, that projections contained therein are not to be viewed as factual and that actual
results during the periods covered thereby may differ from the results set forth in such
projections by a material amount. All projections that are part of such information (including
those set forth in any Projections delivered subsequent to the Closing Date) are based upon good
faith estimates and stated assumptions believed to be reasonable and fair as of the date made in
light of conditions and facts then known and, as of such date, reflect good faith, reasonable and
fair estimates of the information projected for the periods set forth therein. All facts known to
any Loan Party and material to an understanding of the financial condition, business, property or
prospects of the Loan Party taken as one enterprise have been disclosed to the Lenders.

ARTICLE V

FINANCIAL COVENANTS

          The Borrower (and, to the extent set forth in any other Loan Document, each other Loan Party)
agrees with the Lenders, the L/C Issuers and the Administrative Agent to each of the following, as
long as any Obligation or any Commitment remains outstanding:

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     Section 5.1 Maximum Consolidated Leverage Ratio. The Borrower shall not at
any time have a Consolidated Leverage Ratio greater than 5.00 to 1.00.

     Section 5.2 [Reserved]

     Section 5.3 Minimum Consolidated Fixed Charge Coverage Ratio. The Borrower
shall not have, on the last day of any Fiscal Quarter, a Consolidated Fixed Charge Coverage Ratio
for the 4 Fiscal Quarter period ending on such day of less than 1.40:1.00.

     Section 5.4 Capital Expenditures. The aggregate amount of all Consolidated
Growth Capital Expenditures and Permitted Acquisitions shall not exceed $100,000,000; provided,
that if immediately before and after giving effect to any such Consolidated Growth Capital
Expenditures the Borrower’s Consolidated Leverage Ratio is less than 4.25 to 1.00, no such Dollar
limit shall apply.

ARTICLE VI

REPORTING COVENANTS

          The Borrower (and, to the extent set forth in any other Loan Document, each other Loan Party)
agrees with the Lenders, the L/C Issuers and the Administrative Agent to each of the following, as
long as any Obligation or any Commitment remains outstanding:

     Section 6.1 Financial Statements. The Borrower shall deliver to the
Administrative Agent each of the following:

          (a) Quarterly Financials. As soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of each Fiscal Year of the
Borrower, the unaudited consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of
income and of cash flows for such quarter and the portion of the fiscal year through the end of
such quarter, setting forth in each case in comparative form the figures as of the end of and for
the corresponding period in the previous year, certified by a Responsible Officer as being fairly
stated in all material respects (subject to normal year end audit adjustments). The parties hereto
acknowledge and agree that the posting of the foregoing information on the Borrower’s website shall
constitute “delivery” to the Administrative Agent for purposes hereof.

          (b) Annual Financials. As soon as available, but in any event within 90 days after
the end of each Fiscal Year of the Borrower, a copy of the audited consolidated balance sheet of
the Borrower and its consolidated Subsidiaries as at the end of such year and the related audited
consolidated statements of income and of cash flows for such year, setting forth in each case in
comparative form the figures as of the end of and for the previous year, reported on without a
“going concern” or like qualification or exception, or qualification arising out of the scope of
the audit, by KPMG LLP or other independent certified public accountants of nationally recognized
standing. The parties hereto acknowledge and agree that the posting of the foregoing

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information on the Borrower’s website shall constitute “delivery” to the Administrative Agent
for purposes hereof

          (c) Compliance Certificate. Together with each delivery of any Financial Statement
pursuant to clause (a) or (b) above, a Compliance Certificate duly executed by a
Responsible Officer of the Borrower that, among other things, (i) shows in reasonable detail the
calculations used in determining the Consolidated Leverage Ratio, (ii) demonstrates compliance with
each financial covenant contained in Article V that is tested at least on a quarterly basis
and (iii) states that no Default is continuing as of the date of delivery of such Compliance
Certificate or, if a Default is continuing, states the nature thereof and the action that the
Borrower proposes to take with respect thereto.

          (d) Corporate Chart and Other Collateral Updates. As part of the Compliance
Certificate delivered pursuant to clause (c) above, each in form and substance satisfactory
to the Administrative Agent, a certificate by a Responsible Officer of the Borrower that (i) the
Corporate Chart attached thereto (or the last Corporate Chart delivered pursuant to this clause
(d)) is correct and complete as of the date of such Compliance Certificate, (ii) the Loan
Parties have delivered all documents (including updated schedules as to locations of Collateral and
acquisition of Intellectual Property or real property) they are required to deliver pursuant to any
Loan Document on or prior to the date of delivery of such Compliance Certificate and (iii) complete
and correct copies of all documents modifying any term of any Constituent Document of any Group
Member or any Subsidiary or joint venture thereof on or prior to the date of delivery of such
Compliance Certificate have been delivered to the Administrative Agent or are attached to such
certificate.

          (e) Additional Projections. As soon as available, and in any event no later than 45
days after the end of each Fiscal Year of the Borrower, a detailed consolidated budget for the
following Fiscal Year (including projected consolidated and consolidating balance sheets of the
Borrower and its Subsidiaries as of the end of the following Fiscal Year, and the related
consolidated and consolidating statements of projected cash flow, projected changes in financial
position and projected income), and, as soon as available, significant revisions, if any, of such
budget and projections with respect to such Fiscal Year (collectively, the “Additional
Projections”), which Additional Projections shall in each case be accompanied by a
certificate of a Responsible Officer stating that such Additional Projections are based on
reasonable estimates, information and assumptions and that such Responsible Officer has no reason
to believe that such Additional Projections are incorrect or misleading in any material respect.

          (f) Management Discussion and Analysis. Together with each delivery of any Compliance
Certificate pursuant to clause (c) above, a discussion and analysis of the financial
condition and results of operations of the Group Members for the portion of the Fiscal Year then
elapsed and discussing the reasons for any significant variations from the Projections for such
period and the figures for the corresponding period in the previous Fiscal Year.

          (g) Intercompany Loan Balances. Together with each delivery of any Compliance
Certificate pursuant to clause (c) above, a summary of the outstanding balances of all
intercompany Indebtedness as of the last day of the Fiscal Quarter covered by such Financial
Statement, certified as complete and correct by a Responsible Officer of the Borrower as part of
the Compliance Certificate delivered in connection with such Financial Statements.

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          (h) Audit Reports, Management Letters, Etc. Together with each delivery of any
Financial Statement for any Fiscal Year pursuant to clause (b) above, copies of each
management letter, audit report or similar letter or report received by any Group Member from any
independent registered certified public accountant (including the Group Members’ Accountants) in
connection with such Financial Statements or any audit thereof, each certified to be complete and
correct copies by a Responsible Officer of the Borrower as part of the Compliance Certificate
delivered in connection with such Financial Statements.

          (i) Insurance. Together with each delivery of any Financial Statement for any Fiscal
Year pursuant to clause (b) above, each in form and substance satisfactory to the
Administrative Agent and certified as complete and correct by a Responsible Officer of the Borrower
as part of the Compliance Certificate delivered in connection with such Financial Statements, a
summary of all material insurance coverage maintained as of the date thereof by any Group Member,
together with such other related documents and information as the Administrative Agent may
reasonably require.

          (j) Real Property Valuation. (i) at least 5 Business Days prior to the Sale of any
Mortgaged Property (or such later date as the Administrative Agent shall reasonably agree) and (ii)
together with the delivery of a Facility Increase Notice to the Administrative Agent, an updated
valuation of all real property subject to a Mortgage, using substantially the same methodology as
was used by the Administrative Agent in the original valuation of such real property and
substantially in the form of Exhibit I hereto (a “Mortgaged Property Report”).

     Section 6.2 Other Events. The Borrower shall give the Administrative Agent
notice of each of the following (which may be made by telephone if promptly confirmed in writing)
promptly after any Responsible officer of any Group Member knows or has reason to know of it:
(a)(i) any Default and (ii) any event that would reasonably be likely to have a Material Adverse
Effect, specifying, in each case, the nature and anticipated effect thereof and any action proposed
to be taken in connection therewith, (b) any event (other than any event involving loss or damage
to property) reasonably expected to result in a mandatory payment of the Obligations pursuant to
Section 2.8, stating the material terms and conditions of such transaction and estimating
the Net Cash Proceeds thereof, (c) the commencement of, or any material developments in, any
action, investigation, suit, proceeding, audit, claim, demand, order or dispute with, by or before
any Governmental Authority affecting any Group Member or any property of any Group Member that (i)
seeks injunctive or similar relief, (ii) in the reasonable judgment of the Borrower, exposes any
Group Member to liability in an aggregate amount in excess of $5,000,000 or (iii) if adversely
determined would reaonably be likely to have a Material Adverse Effect and (d) the acquisition of
any material real property or the entering into any material lease.

     Section 6.3 Copies of Notices and Reports. Within five (5) days after the
same are sent, copies of all financial statements and reports that the Borrower sends to the
holders of any class of its debt securities or public equity securities and, within five (5) days
after the same are filed, copies of all Disclosure Documents.

     Section 6.4 Taxes. The Borrower shall give the Administrative Agent notice of
each of the following (which may be made by telephone if promptly confirmed in writing) promptly
after any Responsible Officer of any Group Member knows or has reason to know of it: (a) the
creation, or filing with the IRS or any other Governmental Authority, of any Contractual

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Obligation or other document extending, or having the effect of extending, the period for
assessment or collection of any taxes with respect to any Tax Affiliate and (b) the creation of any
Contractual Obligation of any Tax Affiliate, or the receipt of any request directed to any Tax
Affiliate, to make any adjustment under Section 481(a) of the Code, by reason of a change in
accounting method or otherwise, which would reasonably be likely to have a Material Adverse Effect.

     Section 6.5 Labor Matters. The Borrower shall give the Administrative Agent
notice of each of the following (which may be made by telephone if promptly confirmed in writing),
promptly after, and in any event within 30 days after any Responsible Officer of any Group Member
knows or has reason to know of it: (a) the commencement of any material labor dispute to which any
Group Member is or may become a party, including any strikes, lockouts or other disputes relating
to any of such Person’s plants and other facilities and (b) the incurrence by any Group Member of
any Worker Adjustment and Retraining Notification Act or related or similar liability incurred with
respect to the closing of any plant or other facility of any such Person (other than, in the case
of this clause (b), those that would not, in the aggregate, be reasonably likely to have a
Material Adverse Effect).

     Section 6.6 ERISA Matters. The Borrower shall give the Administrative Agent
(a) on or prior to any filing by any ERISA Affiliate of any notice of intent to terminate any Title
IV Plan, a copy of such notice and (b) promptly, and in any event within 10 days, after any
Responsible Officer of any ERISA Affiliate knows or has reason to know that a request for a minimum
funding waiver under Section 412 of the Code has been filed with respect to any Title IV Plan or
Multiemployer Plan, a notice (which may be made by telephone if promptly confirmed in writing)
describing such waiver request and any action that any ERISA Affiliate proposes to take with
respect thereto, together with a copy of any notice filed with the PBGC or the IRS pertaining
thereto.

     Section 6.7 Environmental Matters.

          (a) The Borrower shall provide the Administrative Agent notice of each of the following (which
may be made by telephone if promptly confirmed by the Administrative Agent in writing) promptly
after any Responsible Officer of any Group Member knows or has reason to know of it (and, upon
reasonable request of the Administrative Agent, documents and information in connection therewith):
(i)(A) unpermitted Releases, (B) the receipt by any Group Member of any notice of violation of or
potential liability or similar notice under, or the existence of any condition that could
reasonably be expected to result in violations of or liabilities under, any Environmental Law or
(C) the commencement of, or any material change to, any action, investigation, suit, proceeding,
audit, claim, demand, dispute alleging a violation of or liability under any Environmental Law,
that, for each of clauses (A), (B) and (C) above (and, in the case of
clause (C), if adversely determined), in the aggregate for each such clause, could
reasonably be expected to result in Environmental Liabilities in excess of $250,000, (ii) the
receipt by any Group Member of notification that any property of any Group Member is subject to any
Lien in favor of any Governmental Authority securing, in whole or in part, Environmental
Liabilities and (iii) any proposed acquisition or lease of real property (except as part of any
Permitted Acquisition) if such acquisition or lease would have a reasonable likelihood of resulting
in aggregate Environmental Liabilities in excess of $250,000.

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          (b) Upon the reasonable request of the Administrative Agent, the Borrower shall provide the
Administrative Agent a report containing an update as to the status of any environmental, health or
safety compliance, hazard or liability issue identified in any document delivered to any Secured
Party pursuant to any Loan Document or as to any condition reasonably believed by the
Administrative Agent to result in material Environmental Liabilities.

     Section 6.8 Other Information. The Borrower shall provide the Administrative
Agent with such other documents and information with respect to the business, property, condition
(financial or otherwise), legal, financial or corporate or similar affairs or operations of any
Group Member as the Administrative Agent or such Lender through the Administrative Agent may from
time to time reasonably request.

ARTICLE VII

AFFIRMATIVE COVENANTS

          The Borrower (and, to the extent set forth in any other Loan Document, each other Loan Party)
agrees with the Lenders, the L/C Issuers and the Administrative Agent to each of the following, as
long as any Obligation or any Commitment remains outstanding:

     Section 7.1 Maintenance of Corporate Existence. Each Group Member shall (a)
preserve and maintain its legal existence, except in the consummation of transactions expressly
permitted by Sections 8.4 and 8.7, and (b) preserve and maintain it rights (charter
and statutory), privileges franchises and Permits necessary or desirable in the conduct of its
business, except, in the case of this clause (b), where the failure to do so would not, in
the aggregate, reasonably be expected to have a Material Adverse Effect.

     Section 7.2 Compliance with Laws, Etc.

          (a) Each Group Member shall comply with all applicable Requirements of Law, Contractual
Obligations and Permits (including Healthcare Laws), except for such failures to comply that would
not, in the aggregate, reasonably expected to have a Material Adverse Effect. Each Group Member
will file all material applicable Government Reimbursement Program and Private Payor Arrangement
cost reports in a timely and complete manner.

          (b) Each Group Member will maintain all certificates of need, provider numbers, supplier
numbers, and licenses necessary to conduct its business as currently conducted, and take any steps
required to comply with any such new or additional requirements that may be imposed on providers of
the types of services such Group Member provides. If required, all Medicaid and Medicare cost
reports and claims will be properly filed, in all material respects.

          (c) Each Group Member shall maintain on its behalf, and shall allow Administrative Agent
and/or consultants of Administrative Agent to review upon reasonable request: (i) a corporate
healthcare regulatory compliance program (“CCP”) that complies with the applicable guidelines
developed by the Office of the Inspector General of the Department of Health and Human Services for
a compliance programs, and (ii) a program that complies with the privacy standards pertaining to
health information as set forth at 45 C.F.R. part 164, subparts A

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and E, and an effective program that complies with the security standards pertaining to health
information as set forth at 45 C.F.R. part 164, subpart C.

     Section 7.3 Payment of Obligations. Each Group Member shall pay or discharge
before they become delinquent (a) all material claims, taxes, assessments, charges and levies
imposed by any Governmental Authority and (b) all other lawful claims that if unpaid would, by the
operation of applicable Requirements of Law, become a Lien upon any property of any Group Member,
except, in each case, for those whose amount or validity is being contested in good faith by proper
proceedings diligently conducted and for which adequate reserves are maintained on the books of the
appropriate Group Member in accordance with GAAP, or where the amounts in dispute are less than
$50,000 in the aggregate.

     Section 7.4 Maintenance of Property. Each Group Member shall maintain and
preserve (a) in good working order and condition all of its property necessary in the conduct of
its business and (b) all rights, permits, licenses, approvals and privileges (including all
Permits) necessary, used or useful, whether because of its ownership, lease, sublease or other
operation or occupation of property or other conduct of its business, and shall make all necessary
or appropriate filings with, and give all required notices to, Government Authorities, except for
such failures to maintain and preserve the items set forth in clauses (a) and (b)
above that would not, in the aggregate, be reasonably likely to have a Material Adverse Effect.

     Section 7.5
Maintenance of Insurance. Each Group Member shall (a)
maintain or cause to be maintained in full force and effect all policies of insurance of any kind
with respect to the property and businesses of the Group Members (including policies of life, fire,
theft, product liability, public liability, property damage, other casualty, employee fidelity,
workers’ compensation, business interruption and employee health and welfare insurance) with
financially sound and reputable insurance companies or associations of a nature and providing such
coverage as is sufficient and as is customarily carried by businesses of the size and character of
the business of the Group Members and (b) cause all such insurance relating to any property or
business of any Loan Party to name the Administrative Agent on behalf of the Secured Parties as
additional insured or loss payee, as appropriate, and to provide that no cancellation, material
addition in amount or material change in coverage shall be effective until after 30 days’ notice
thereof to the Administrative Agent.

     Section 7.6 Keeping of Books. The Group Members shall keep proper books of
record and account, in which full, true and correct entries shall be made in accordance with GAAP
and all other applicable Requirements of Law of all financial transactions and the assets and
business of each Group Member.

     Section 7.7 Access to Books and Property. Each Group Member shall permit the
Administrative Agent, the Lenders and any Related Person of any of them, as often as reasonably
requested, at any reasonable time during normal business hours and with reasonable advance notice
(except that, during the continuance of an Event of Default, no such notice shall be required) to
(a) visit and inspect the property of each Group Member and examine and make copies of and
abstracts from, the corporate (and similar), financial, operating and other books

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and records of each Group Member, (b) discuss the affairs, finances and accounts of each Group
Member with any officer or director of any Group Member and (c) communicate directly with any
registered certified public accountants (including the Group Members’ Accountants) of any Group
Member. Each Group Member shall authorize their respective registered certified public accountants
(including the Group Members’ Accountants) to communicate directly with the Administrative Agent,
the Lenders and their Related Persons and to disclose to the Administrative Agent, the Lenders and
their Related Persons all financial statements and other documents and information as they might
have and the Administrative Agent or any Lender reasonably requests with respect to any Group
Member.

     Section 7.8 Environmental. Each Group Member shall comply with, and maintain
its real property, whether owned, leased, subleased or otherwise operated or occupied, in
compliance with, all applicable Environmental Laws (including by implementing any Remedial Action
necessary to achieve such compliance or that is required by orders and directives of any
Governmental Authority) except for failures to comply that would not, in the aggregate, be
reasonably likely to have a Material Adverse Effect. Without limiting the foregoing, if an Event
of Default is continuing or if the Administrative Agent at any time has a reasonable basis to
believe that there exist violations of Environmental Laws by any Group Member or that there exist
any Environmental Liabilities, in each case, that would be reasonably likely to have, in the
aggregate, a Material Adverse Effect, then each Group Member shall, promptly upon receipt of
request from the Administrative Agent, cause the performance of, and allow the Administrative Agent
and its Related Persons access to such real property for the purpose of conducting, such
environmental audits and assessments, including subsurface sampling of soil and groundwater, and
cause the preparation of such reports, in each case as the Administrative Agent may from time to
time reasonably request. Such audits, assessments and reports, to the extent not conducted by the
Administrative Agent or any of its Related Persons, shall be conducted and prepared by reputable
environmental consulting firms reasonably acceptable to the Administrative Agent and shall be in
form and substance reasonably acceptable to the Administrative Agent.

     Section 7.9 Use of Proceeds. The proceeds of the Loans shall be used by the
Borrower (and, to the extent distributed to them by the Borrower, each other Group Member) solely
(a) for the payment of transaction costs, fees and expenses incurred in connection with the Loan
Documents and the transactions contemplated therein and (b) for working capital, Permitted
Acquisitions, Permitted Investments, Permitted Restated Payments, general corporate and similar
purposes, and other purposes permitted by the terms of this Agreement.

     Section 7.10 Additional Collateral and Guaranties. To the extent not
delivered to the Administrative Agent on or before the Closing Date (including in respect of
after-acquired property and Persons that become Subsidiaries of any Loan Party after the Closing
Date), each Loan Party shall, promptly, do each of the following, unless otherwise agreed by the
Administrative Agent:

          (a) deliver to the Administrative Agent such modifications to the terms of the Loan Documents
(or, to the extent applicable as determined by the Administrative Agent, such other documents), in
each case in form and substance reasonably satisfactory to the Administrative Agent and as the
Administrative Agent deems necessary or advisable in order to ensure the following:

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          (i) (A) each Subsidiary of any Loan Party that has entered into Guaranty Obligations
with respect to any Indebtedness of the Borrower and (B) each Wholly Owned Subsidiary of
any Loan Party shall guaranty, as primary obligor and not as surety, the payment of the
Obligations of the Borrower; and

          (ii) each Loan Party (including any Person required to become a Guarantor pursuant to
clause (i) above) shall effectively grant to the Administrative Agent, for the
benefit of the Secured Parties, a valid and enforceable security interest in all of its
personal property, including all of its Stock and Stock Equivalents and other Securities,
as security for the Obligations of such Loan Party;

provided, however, that, unless the Borrower and the Administrative Agent otherwise
agree, in no event shall (x) any Excluded Foreign Subsidiary be required to guaranty the payment of
any Obligation, (y) the Loan Parties, individually or collectively, be required to pledge in excess
of 66% of the outstanding Voting Stock of any Excluded Foreign Subsidiary or (z) a security
interest be required to be granted on any property of any Excluded Foreign Subsidiary as security
for any Obligation;

          (b) deliver to the Administrative Agent all documents representing all Stock, Stock
Equivalents and other Securities pledged pursuant to the documents delivered pursuant to clause
(a) above, together with undated powers or endorsements duly executed in blank;

          (c) to take all other actions necessary or advisable to ensure the validity or continuing
validity of any guaranty for any Obligation or any Lien securing any Obligation, to perfect,
maintain, evidence or enforce any Lien securing any Obligation or to ensure such Liens have the
same priority as that of the Liens on similar Collateral set forth in the Loan Documents executed
on the Closing Date (or, for Collateral located outside the United States, a similar priority
acceptable to the Administrative Agent), including the filing of UCC financing statements in such
jurisdictions as may be required by the Loan Documents or applicable Requirements of Law or as the
Administrative Agent may otherwise reasonably request; and

          (d) deliver to the Administrative Agent legal opinions relating to the matters described in
this Section 7.10, which opinions shall be as reasonably required by, and in form and
substance and from counsel reasonably satisfactory to, the Administrative Agent.

     Section 7.11 Deposit Accounts; Securities Accounts and Cash Collateral
Accounts.

          (a) Each Loan Party (other than Excluded Foreign Subsidiaries) shall (i) deposit all of its
cash in deposit accounts that are Controlled Deposit Accounts, provided, however,
that each Loan Party may maintain zero-balance accounts for the purpose of managing local
disbursements and may maintain payroll, withholding tax and other fiduciary accounts, (ii) deposit
all of its Cash Equivalents in securities accounts that are Controlled Securities Accounts, in each
case except for cash and Cash Equivalents the aggregate value of which does not exceed $50,000 at
any time.

          (b) The Administrative Agent shall not have any responsibility for, or bear any risk of loss
of, any investment or income of any funds in any Cash Collateral Account. From

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time to time after funds are deposited in any Cash Collateral Account, the Administrative
Agent may apply funds then held in such Cash Collateral Account to the payment of Obligations in
accordance with Section 2.12. No Loan Party and no Person claiming on behalf of or through
any Loan Party shall have any right to demand payment of any funds held in any Cash Collateral
Account at any time prior to the termination of all Commitments and the payment in full of all
Obligations and, in the case of L/C Cash Collateral Accounts, the termination of all outstanding
Letters of Credit.

     Section 7.12 Accreditation and Licensing.

          (a) Each Group Member shall (i) obtain and maintain all certificates of need, provider
numbers, supplier numbers, and permits and other licenses required to operate such Person’s
business and its business locations under applicable laws, rules, and regulations and maintain such
Person’s qualification for participation in, and payment under, Medicare, Medicaid, Government
Reimbursement Program, or any private program providing for payment or reimbursement for services
rendered by such Person except to the extent such loss or relinquishment could not reasonably be
expected to have a Material Adverse Effect, (ii) properly file all Medicaid/Medicare cost reports
and claims, and (iii) promptly furnish or cause to be furnished to the Agent copies of all reports
and correspondence that it sends or receives relating to any loss or revocation (or threatened loss
or revocation) of any qualification described in this Section or any other violation or possible
violation of Healthcare Laws.

          (b) Each Group Member shall (i) provide goods and services to its customers in compliance with
ethical standards, laws, rules and regulations applicable to it or any facility or location it
operates; (ii) assure that each of its employees and each employee of such facility or location has
all required licenses, credentials, approvals and other certifications to perform his or her duties
and services for such location; and (iii) maintain all permits and other licenses required to
operate its facilities and locations and conduct its business under applicable law; except to the
extent, with respect to each of clauses (i), (ii), and (iii) above, where the failure to comply,
individually or in the aggregate, has not had and could not reasonably be expected to have a
Material Adverse Effect.

          (c) Borrower shall notify Administrative Agent within two (2) Business Days following the
occurrence of any of the following events: (1) the notification, through letter or otherwise, of a
potential investigation relating to any Group Member’s submission of claims to Medicare, Medicaid,
other Government Reimbursement Programs or any private payor; or (2) the voluntary disclosure by
any Group Member to the Office of the Inspector General of the United States Department of Health
and Human Services, a Medicare fiscal intermediary or, any state’s Medicaid program, or any other
governmental authority or agency of a potential overpayment matter involving the submission of
claims toin connection with any such program or payor.

ARTICLE VIII

NEGATIVE COVENANTS

          The Borrower (and, to the extent set forth in any other Loan Document, each other Loan Party)
agrees with the Lenders, the L/C Issuers and the Administrative Agent to each of the following, as
long as any Obligation or any Commitment remains outstanding:

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     Section 8.1 Indebtedness. No Group Member shall, directly or indirectly,
incur or otherwise remain liable with respect to or responsible for, any Indebtedness except for
the following:

          (a) the Obligations;

          (b) Indebtedness existing on the date hereof and set forth on Schedule 8.1, together
with any Permitted Refinancing of any Indebtedness permitted hereunder in reliance upon this
clause (b);

          (c) Indebtedness consisting of (A) secured Indebtedness owed to Persons other than the Lenders
and related Guaranty Obligations of any Group Member in respect of such Indebtedness, (B)
Capitalized Lease Obligations (other than with respect to a lease entered into as part of a Sale
and Leaseback Transaction), (C) Indebtedness of any Person assumed in connection with any Permitted
Acquisitions; provided that (i) such Indebtedness is not created in anticipation of any
such Acquisition, and (ii) the amount of such Indebtedness is not increased and (D) purchase money
Indebtedness, in each case incurred by any Group Member to finance the acquisition, repair,
improvement or construction of fixed or capital assets of such Group Member, together with any
Permitted Refinancing of any Indebtedness permitted hereunder in reliance upon this Section
8.1(c); provided that the principal amount of such Indebtedness does not exceed the
lower of the cost or fair market value of the property so acquired or built or of such repairs or
improvements financed, whether directly or through a Permitted Refinancing, with such Indebtedness
(each measured at the time such acquisition, repair, improvement or construction is made);
provided, however, that (i) the aggregate outstanding principal amount of all such
Indebtedness in this Section 8.1(c) does not exceed $175,000,000 at any time, and (ii) no
Indebtedness in this Section 8.1(c) is secured by Collateral on which any Lender has a
Lien;

          (d) Non-Recourse Indebtedness secured by real property acquired (in conjunction with a
Permitted Acquisition) or constructed after the Closing Date; provided that such
Indebtedness does not exceed an amount that would cause the Borrower to violate the Maximum
Consolidated Leverage Ratio at any time;

          (e) Capitalized Lease Obligations arising under Sale and Leaseback Transactions permitted
hereunder in reliance upon Section 8.4(b)(ii);

          (f) intercompany loans owing to any Group Member and constituting Permitted Investments of
such Group Member;

          (g) (i) obligations under Interest Rate Contracts entered into to comply with Section
7.12 and (ii) obligations under other Hedging Agreements entered into for the sole purpose of
hedging in the normal course of business and consistent with industry practices;

          (h) Guaranty Obligations of any Group Member with respect to Indebtedness of any Group Member
(other than Indebtedness permitted hereunder in reliance upon clause (b) or (c)
above, for which Guaranty Obligations may be permitted to the extent set forth in such clauses);

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          (i) any unsecured Indebtedness of any Group Member; provided, however, that
the aggregate outstanding principal amount of all such unsecured Indebtedness shall not exceed
$10,000,000 at any time; and

          (j) any unsecured, subordinated Indebtedness of any Group Member consisting of the issuance
and sale of debt securities; provided, however, that such Indebtedness is subject
to a subordination agreement between such Group Member, the holder and the Administrative Agent
that is satisfactory to the Administrative Agent in its reasonable discretion; provided,
further, that the aggregate outstanding principal amount of all such Indebtedness shall not
exceed $100,000,000 at any time.

     Section 8.2 Liens. No Group Member shall incur, maintain or otherwise suffer
to exist any Lien upon or with respect to any of its property, whether now owned or hereafter
acquired, or assign any right to receive income or profits, except for the following:

          (a) Liens created pursuant to any Loan Document;

          (b) Customary Permitted Liens of Group Members;

          (c) Liens existing on the date hereof and set forth on Schedule 8.2;

          (d) Liens on the property of the Borrower or any of its Subsidiaries securing Indebtedness
permitted hereunder in reliance upon Section 8.1(c); provided, however,
that (i) such Liens exist prior to the acquisition of, or attach substantially simultaneously with,
or within 90 days after, the acquisition, repair, improvement or construction of, such property
financed, whether directly or through a Permitted Refinancing, by such Indebtedness and (ii) such
Liens do not extend to any property of any Group Member other than the property (and proceeds
thereof) acquired or built, or the improvements or repairs, financed, whether directly or through a
Permitted Refinancing, by such Indebtedness; provided, however, that in the case of
Indebtedness permitted pursuant to Section 8.1(c), Liens securing such Indebtedness may
attach to property of any Group Member so long as such property is not Collateral otherwise subject
to a Lien in favor of any Lender;

          (e) Liens on the property of the Borrower or any of its Subsidiaries securing Indebtedness
permitted hereunder, and liens on the Stock of a Non-Recourse Subsidiary permitted hereunder, in
each case, in reliance upon Section 8.1(b) or Section 8.1(d); provided,
however, that such Liens do not extend to any property of any Group Member other than the
property (and proceeds thereof) acquired or built or securing the Indebtedness assumed, or the
improvements or repairs, financed, whether directly or through a Permitted Refinancing, by such
Indebtedness;

          (f) Liens on the property of the Borrower or any of its Subsidiaries securing the Permitted
Refinancing of any Indebtedness secured by any Lien on such property permitted hereunder in
reliance upon clause (c) , (d) or (e) above without any change in the
property subject to such Liens; and

          (g) Liens (i) on any property of the Borrower or any of its Subsidiaries securing any of their
Indebtedness or their other liabilities; provided, however, that the aggregate

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outstanding principal amount of all such Indebtedness and other liabilities shall not exceed
$10,000,000 at any time, and (ii) that do not attach to any Collateral.

     Section 8.3 Investments. No Group Member shall make or maintain, directly or
indirectly, any Investment except for the following:

          (a) Investments existing on the date hereof and set forth on Schedule 8.3 (the
“Existing Non-Guarantor Investments”);

          (b) Investments in cash and Cash Equivalents;

          (c) (i) endorsements for collection or deposit in the ordinary course of business consistent
with past practice, (ii) extensions of trade credit (other than to Affiliates of the Borrower)
arising or acquired in the ordinary course of business and (iii) Investments received in
settlements in the ordinary course of business of such extensions of trade credit;

          (d) Investments made as part of a Permitted Acquisition;

          (e) Investments by (i) any Loan Party in any other Loan Party, (ii) any Group Member that is
not a Loan Party in any Group Member or in any joint venture or (iii) any Loan Party in any Group
Member that is not a Loan Party or in any joint venture; provided, however, that
the aggregate outstanding amount of all Investments permitted pursuant to this clause (iii)
shall not exceed the sum of: (x) the principal amount of the Existing Non-Guarantor Investments
plus (y) $30,000,000 at any time; and provided, further, that any
Investment consisting of loans or advances to any Loan Party pursuant to clause (ii) above
shall be subordinated in full to the payment of the Obligations of such Loan Party on terms and
conditions satisfactory to the Administrative Agent;

          (f) loans or advances to employees of the Borrower or any of its Subsidiaries to finance
travel, entertainment and relocation expenses and other ordinary business purposes in the ordinary
course of business as presently conducted; provided, however, that the aggregate
outstanding principal amount of all loans and advances permitted pursuant to this clause
(f) shall not exceed $1,000,000 at any time; and

          (g) any Investment by the Borrower or any of its Subsidiaries not identified in clauses
(a) through (f), above; provided, however, that the aggregate
outstanding amount of all such Investments shall not exceed $5,000,000 at any time.

     Section 8.4 Asset Sales. No Group Member shall Sell any of its property
(other than cash) or issue shares of its own Stock, except for the following:

          (a) In each case to the extent entered into in the ordinary course of business and made to a
Person that is not an Affiliate of the Borrower, (i) Sales of Cash Equivalents, inventory or
property that has become obsolete or worn out and (ii) non-exclusive licenses of Intellectual
Property;

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          (b) (i) a true lease or sublease of real property not constituting Indebtedness and not
entered into as part of a Sale and Leaseback Transaction and (ii) a Sale of real property acquired
after the Closing Date and that does not constitute Mortgaged Property pursuant to a Sale and
Leaseback Transaction;

          (c) (i) any Sale of any property (other than (x) Mortgaged Property, except to the extent Sold
to a Loan Party or as otherwise permitted under clause (e), and (y) their own Stock or Stock
Equivalents) by any Group Member to any other Group Member to the extent any resulting Investment
constitutes a Permitted Investment, (ii) any Restricted Payment by any Group Member permitted
pursuant to Section 8.5 and (iii) any distribution by the Borrower of the proceeds of
Restricted Payments from any other Group Member to the extent permitted in Section 8.5;

          (d) (i) any Sale or issuance by any Subsidiary of the Borrower of its own Stock to any Group
Member, provided, however, that the proportion of such Stock and of each class of
such Stock (both on an outstanding and fully-diluted basis) held by the Loan Parties, taken as a
whole, does not change as a result of such Sale or issuance and (ii) to the extent necessary to
satisfy any Requirement of Law in the jurisdiction of incorporation of any Subsidiary of the
Borrower, any Sale or issuance by such Subsidiary of its own Stock constituting directors’
qualifying shares or nominal holdings; and

          (e) as long as no Default is continuing or would result therefrom (including with respect to
any Default under Section 9.1(h)), (i) any Sale of property (other than as part of a Sale
and Leaseback Transaction) of any Group Member, (ii) any Sale or issuance of its own Stock by, any
Non-Recourse Subsidiary for fair market value payable in cash upon such sale, or (iii) any Sale or
issuance of its own Stock by, Borrower for fair market value payable in cash upon such sale;
provided, however, that the aggregate consideration received during any Fiscal Year
for all such Sales under (ii) above shall not exceed $1,000,000.

     Section 8.5 Restricted Payments. No Group Member shall directly or
indirectly, declare, order, pay, make or set apart any sum for any Restricted Payment except for
the following:

          (a) (i) Restricted Payments (A) by any Group Member to any Loan Party and (B) by any Group
Member that is not a Loan Party to any Group Member and (ii) dividends and distributions by any
Subsidiary of the Borrower that is not a Loan Party to any holder of its Stock, to the extent made
to all such holders ratably according to their ownership interests in such Stock;

          (b) dividends and distributions declared and paid on the common Stock of any Group Member
ratably to the holders of such common Stock and payable only in common Stock of such Group Member;

          (c) cash payments for the purpose of funding the redemption, purchase or other acquisition or
retirement for value by the Borrower of its common Stock (or Stock Equivalents with respect to its
common Stock) from any present or former employee, director or officer (or the assigns, estate,
heirs or current or former spouses thereof) of any Group Member upon the death, disability or
termination of employment of such employee, director or officer;

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provided, however, that the amount of such cash dividends paid in any Fiscal
Year shall not exceed $1,000,000 in the aggregate; and

          (d) Restricted Payments by the Borrower in any Fiscal Year in an aggregate amount not
exceeding $35,000,000; provided that if immediately before and after giving effect to any
such Restricted Payments the Borrower’s Consolidated Leverage Ratio is less than 3.50 to 1.00, no
such Dollar limit shall apply.

provided, however, that no action that would otherwise be permitted hereunder in
reliance upon this clauses (c) or (d) above shall be permitted if (A) a Default is then
continuing or would result therefrom or (B) such action is otherwise prohibited under any Loan
Document or under the terms of any Indebtedness (other than the Obligations) of any Group Member.

     Section 8.6 Prepayment of Indebtedness. No Group Member shall (x) prepay,
redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof any
Indebtedness, (y) set apart any property for such purpose, whether directly or indirectly and
whether to a sinking fund, a similar fund or otherwise, or (z) make any payment in violation of any
subordination terms of any Indebtedness; provided, however, that each Group Member
may, to the extent otherwise permitted by the Loan Documents, do each of the following:

          (a) (i) prepay the Obligations, or (ii) consummate a Permitted Refinancing;

          (b) prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity
thereof (or set apart any property for such purpose) (A) in the case of any Group Member that is
not a Loan Party, any Indebtedness owing by such Group Member to any other Group Member and (B)
otherwise, any Indebtedness owing to any Loan Party;

          (c) make regularly scheduled or otherwise required repayments or redemptions of Indebtedness
(other than Indebtedness owing to any Affiliate of the Borrower) but only, in the case of
Subordinated Debt, to the extent permitted by the subordination provisions thereof; and

          (d) prepay any other Indebtedness, other than Subordinated Debt; provided that: (x)
the Group Member determines, in good faith, that such prepayment can be made on favorable economic
terms and is in the best interests of such Group Member and (y) if the Group Member making such
prepayment is not at the time thereof a Loan Party, it shall become a Loan Party pursuant to the
terms of Section 7.10 hereof.

     Section 8.7 Fundamental Changes. No Group Member shall (a) merge, consolidate
or amalgamate with any Person, (b) acquire all or substantially all of the Stock or Stock
Equivalents of any Person or (c) acquire any brand or all or substantially all of the assets of any
Person or all or substantially all of the assets constituting any line of business, division,
branch, operating division or other unit operation of any Person, in each case except for the
following: (x) to consummated any Permitted Acquisition, (y) the merger, consolidation or
amalgamation of any Subsidiary of the Borrower into any Loan Party and (z) the merger,
consolidation or amalgamation of any Group Member for the sole purpose, and with the sole material
effect, of changing its State of organization within the United States; provided,
however, that (A) in the

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case of any merger, consolidation or amalgamation involving the Borrower, the Borrower shall
be the surviving Person and (B) in the case of any merger, consolidation or amalgamation involving
any other Loan Party, a Loan Party shall be the surviving corporation and all actions required to
maintain the perfection of the Lien of the Administrative Agent on the Stock or property of such
Loan Party shall have been made.

     Section 8.8 Change in Nature of Business. No Group Member shall carry on any
business, operations or activities (whether directly, through a joint venture, in connection with a
Permitted Acquisition or otherwise) substantially different from those carried on by the Borrower
and its Subsidiaries at the date hereof and business, operations and activities reasonably related
thereto.

     Section 8.9 Transactions with Affiliates. No Group Member shall, except as
otherwise expressly permitted herein, enter into any other transaction directly or indirectly with,
or for the benefit of, any Affiliate of the Borrower that is not a Loan Party (including Guaranty
Obligations with respect to any obligation of any such Affiliate), except for (a) transactions in
the ordinary course of business on a basis no less favorable to such Group Member as would be
obtained in a comparable arm’s length transaction with a Person not an Affiliate of the Borrower,
(b) Restricted Payments, the proceeds of which, if received by the Borrower, are used as required
by Section 8.5 and (c) reasonable salaries and other reasonable director or employee
compensation to officers and directors of any Group Member.

     Section 8.10 Third-Party Restrictions on Indebtedness, Liens, Investments or
Restricted Payments. No Group Member shall incur or otherwise suffer to exist or become
effective or remain liable on or responsible for any Contractual Obligation limiting the ability of
(a) any Subsidiary of the Borrower to make Restricted Payments to, or Investments in, or repay
Indebtedness or otherwise Sell property to, any Group Member or (b) any Group Member to incur or
suffer to exist any Lien upon any property of any Group Member, whether now owned or hereafter
acquired, securing any of its Obligations (including any “equal and ratable” clause and any similar
Contractual Obligation requiring, when a Lien is granted on any property, another Lien to be
granted on such property or any other property), except, for each of clauses (a) and
(b) above, (x) pursuant to the Loan Documents and (y) limitations on Liens (other than
those securing any Obligation) on any property whose acquisition, repair, improvement or
construction is financed by purchase money Indebtedness, Capitalized Lease Obligations or Permitted
Refinancings permitted hereunder in reliance upon Section 8.1(b) or (c) set forth
in the Contractual Obligations governing such Indebtedness, Capitalized Lease Obligations or
Permitted Refinancing or Guaranty Obligations with respect thereto.

     Section 8.11 Modification of Certain Documents. No Group Member shall do any
of the following:

          (a) waive or otherwise modify any term of any Related Document or any Constituent Document of,
or otherwise change the capital structure of, any Group Member (including the terms of any of their
outstanding Stock or Stock Equivalents), in each case except for those modifications and waivers
that (x) do not elect, or permit the election, to treat the Stock or Stock Equivalents of any
limited liability company (or similar entity) as certificated and (y) do not materially affect the
rights and privileges of any Group Member and do not materially affect the interests of any Secured
Party under the Loan Documents or in the Collateral; and

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          (b) waive or otherwise modify any term of any Subordinated Debt if the effect thereof on such
Subordinated Debt is to (i) increase the interest rate, (ii) change the due dates for principal or
interest, other than to extend such dates, (iii) modify any default or event of default, other than
to delete it or make it less restrictive, (iv) add any covenant with respect thereto, (v) modify
any subordination provision, (vi) modify any redemption or prepayment provision, other than to
extend the dates therefor or to reduce the premiums payable in connection therewith or (vii)
materially increase any obligation of any Group Member or confer additional material rights to the
holder of such Subordinated Debt in a manner adverse to any Group Member or any Secured Party.

     Section 8.12 Accounting Changes; Fiscal Year. No Group Member shall change
its (a) accounting treatment or reporting practices, except as required by GAAP or any Requirement
of Law, or (b) its fiscal year or its method for determining fiscal quarters or fiscal months.

     Section 8.13 Margin Regulations. No Group Member shall use all or any portion
of the proceeds of any credit extended hereunder to purchase or carry margin stock (within the
meaning of Regulation U of the Federal Reserve Board) in contravention of Regulation U of the
Federal Reserve Board.

     Section 8.14 Compliance with ERISA. No ERISA Affiliate shall cause or suffer
to exist (a) any event that could result in the imposition of a Lien with respect to any Title IV
Plan or Multiemployer Plan or (b) any other ERISA Event, that would, in the aggregate, have a
Material Adverse Effect. No Group Member shall cause or suffer to exist any event that could
result in the imposition of a Lien with respect to any Benefit Plan.

     Section 8.15 Hazardous Materials. No Group Member shall cause or suffer to
exist any Release of any Hazardous Material at, to or from any real property owned, leased,
subleased or otherwise operated or occupied by any Group Member that would violate any
Environmental Law, form the basis for any Environmental Liabilities or otherwise adversely affect
the value or marketability of any real property (whether or not owned by any Group Member), other
than such violations, Environmental Liabilities and effects that would not, in the aggregate,
reasonably expected to have a Material Adverse Effect.

ARTICLE IX

EVENTS OF DEFAULT

     Section 9.1 Definition. Each of the following shall be an Event of Default:

          (a) the Borrower shall fail to pay (i) any principal of any Loan or any L/C Reimbursement
Obligation when the same becomes due and payable or (ii) any interest on any Loan, any fee under
any Loan Document or any other Obligation (other than those set forth in clause (i) above)
and, in the case of this clause (ii), such non-payment continues for a period of 3 Business
Days after the due date therefor; or

          (b) any representation, warranty or certification made or deemed made by or on behalf of any
Loan Party in any Loan Document or by or on behalf of any Loan Party (or any

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Responsible Officer thereof) in connection with any Loan Document (including in any document
delivered in connection with any Loan Document) shall prove to have been incorrect in any material
respect when made or deemed made; or

          (c) any Loan Party shall fail to comply with (i) any provision of Article V (Financial
Covenants), Section 6.1 (Financial Statements), 6.2(a)(i) (Other Events), 7.1 (Maintenance of
Corporate Existence), 7.9 (Application of Loan Proceeds) or Article VIII (Negative Covenants) or
(ii) any other provision of any Loan Document if, in the case of this clause (ii), such failure
shall remain unremedied for 30 days after the earlier of (A) the date on which a Responsible
Officer of the Borrower becomes aware of such failure and (B) the date on which notice thereof
shall have been given to the Borrower by the Administrative Agent or the Required Lenders; or

          (d) (i) any Group Member shall fail to make any payment when due (whether due because of
scheduled maturity, required prepayment provisions, acceleration, demand or otherwise) on any
Indebtedness of any Group Member (other than the Obligations or any Hedging Agreement) and, in each
case, such failure relates to Indebtedness having a principal amount of $5,000,000 or more, (ii)
any other event shall occur or condition shall exist under any Contractual Obligation relating to
any such Indebtedness, if the effect of such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness or (iii) any such Indebtedness shall become or
be declared to be due and payable, or be required to be prepaid, redeemed, defeased or repurchased
(other than by a regularly scheduled required prepayment), prior to the stated maturity thereof; or

          (e) (i) any Group Member shall generally not pay its debts as such debts become due, shall
admit in writing its inability to pay its debts generally or shall make a general assignment for
the benefit of creditors, (ii) any proceeding shall be instituted by or against any Group Member
seeking to adjudicate it a bankrupt or insolvent or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, composition of it or its debts or any
similar order, in each case under any Requirement of Law relating to bankruptcy, insolvency or
reorganization or relief of debtors or seeking the entry of an order for relief or the appointment
of a custodian, receiver, trustee, conservator, liquidating agent, liquidator, other similar
official or other official with similar powers, in each case for it or for any substantial part of
its property and, in the case of any such proceedings instituted against (but not by or with the
consent of) any Group Member, either such proceedings shall remain undismissed or unstayed for a
period of 60 days or more or any action sought in such proceedings shall occur or (iii) any Group
Member shall take any corporate or similar action or any other action to authorize any action
described in clause (i) or (ii) above; or

          (f) one or more judgments, orders or decrees (or other similar process) shall be rendered
against any Group Member (i)(A) in the case of money judgments, orders and decrees, involving an
aggregate amount (excluding amounts adequately covered by insurance payable to any Group Member, to
the extent the relevant insurer has not denied coverage therefor) in excess of $5,000,000 or (B)
otherwise, that would have, in the aggregate, a Material Adverse Effect and (ii)(A) enforcement
proceedings shall have been commenced by any creditor upon any such judgment, order or decree or
(B) such judgment, order or decree shall not have been vacated or discharged for a period of 30
consecutive days and there shall not be in effect (by reason of a pending appeal or otherwise) any
stay of enforcement thereof; or

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          (g) except pursuant to a valid, binding and enforceable termination or release permitted under
the Loan Documents and executed by the Administrative Agent or as otherwise expressly permitted
under any Loan Document, (i) any provision of any Loan Document shall, at any time after the
delivery of such Loan Document, fail to be valid and binding on, or enforceable against, any Loan
Party party thereto or (ii) any Loan Document purporting to grant a Lien to secure any Obligation
shall, at any time after the delivery of such Loan Document, fail to create a valid and enforceable
Lien on any Collateral purported to be covered thereby or such Lien shall fail or cease to be a
perfected Lien with the priority required in the relevant Loan Document or, or any Group Member
shall state in writing that any of the events described in clause (i) or (ii) above
shall have occurred; or

          (h) there shall occur any Change of Control; or

          (i) any Group Member, to the extent, if any, presently participating or required by law to
participate, in Medicaid or Medicare programs is excluded from or shall otherwise fail to be
eligible for any reason to participate in Medicaid or Medicare programs or to accept assignments or
rights to reimbursement under Requirements of Law applicable to Medicaid or Medicare, such failure
could reasonably be expected to have a Material Adverse Effect, and such failure shall also
continue beyond the completion of any appeal process diligently pursued by such Group Member in
good faith

     Section 9.2 Remedies. During the continuance of any Event of Default, the
Administrative Agent may, and, at the request of the Required Lenders, shall, in each case by
notice to the Borrower and in addition to any other right or remedy provided under any Loan
Document or by any applicable Requirement of Law, do each of the following: (a) declare all or any
portion of the Commitments terminated, whereupon the Commitments shall immediately be reduced by
such portion or, in the case of a termination in whole, shall terminate together with any
obligation any Lender may have hereunder to make any Loan and any L/C Issuer may have hereunder to
Issue any Letter of Credit or (b) declare immediately due and payable all or part of any Obligation
(including any accrued but unpaid interest thereon), whereupon the same shall become immediately
due and payable, without presentment, demand, protest or further notice or other requirements of
any kind, all of which are hereby expressly waived by the Borrower (and, to the extent provided in
any other Loan Document, other Loan Parties); provided, however, that, effective
immediately upon the occurrence of the Events of Default specified in Section 9.1(e)(ii),
(x) the Commitments of each Lender to make Loans and the commitment of each L/C Issuer to Issue
Letters of Credit shall each automatically be terminated and (y) each Obligation (including in each
case any accrued all accrued but unpaid interest thereon) shall automatically become and be due and
payable, without presentment, demand, protest or further notice or other requirement of any kind,
all of which are hereby expressly waived by the Borrower (and, to the extent provided in any other
Loan Document, any other Loan Party).

     Section 9.3 Actions in Respect of Letters of Credit. At any time (i) upon the
Revolving Credit Termination Date, (ii) after the Revolving Credit Termination Date when the
aggregate funds on deposit in L/C Cash Collateral Accounts shall be less than 105% of the L/C
Obligations for all Letters of Credit at such time and (iii) as required by Section 2.12,
the Borrower shall pay to the Administrative Agent in immediately available funds at the
Administrative Agent’s office referred to in Section 11.11, for deposit in a L/C Cash
Collateral Account, the amount required so that, after such payment, the aggregate funds on deposit
in the L/C Cash Collateral Accounts equals or exceeds 105% of the L/C Obligations for all Letters
of

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Credit at such time (not to exceed, in the case of clause (iii) above, the payment to
be applied pursuant to Section 2.12 to provide cash collateral for Letters of Credit).

ARTICLE X

THE ADMINISTRATIVE AGENT

     Section 10.1 Appointment and Duties.

          (a) Appointment of Administrative Agent. Each Lender and each L/C Issuer hereby
appoints GE Capital (together with any successor Administrative Agent pursuant to Section
10.9) as the Administrative Agent hereunder and authorizes the Administrative Agent to (i)
execute and deliver the Loan Documents and accept delivery thereof on its behalf from any Group
Member, (ii) take such action on its behalf and to exercise all rights, powers and remedies and
perform the duties as are expressly delegated to the Administrative Agent under such Loan Documents
and (iii) exercise such powers as are reasonably incidental thereto.

          (b) Duties as Collateral and Disbursing Agent. Without limiting the generality of
clause (a) above, the Administrative Agent shall have the sole and exclusive right and
authority (to the exclusion of the Lenders and L/C Issuers), and is hereby authorized, to (i) act
as the disbursing and collecting agent for the Lenders and the L/C Issuers with respect to all
payments and collections arising in connection with the Loan Documents (including in any proceeding
described in Section 9.1(e)(ii) or any other bankruptcy, insolvency or similar proceeding),
and each Person making any payment in connection with any Loan Document to any Secured Party is
hereby authorized to make such payment to the Administrative Agent, (ii) file and prove claims and
file other documents necessary or desirable to allow the claims of the Secured Parties with respect
to any Obligation in any proceeding described in Section 9.1(e)(ii) or any other
bankruptcy, insolvency or similar proceeding (but not to vote, consent or otherwise act on behalf
of such Secured Party), (iii) act as collateral agent for each Secured Party for purposes of the
perfection of all Liens created by such agreements and all other purposes stated therein, (iv)
manage, supervise and otherwise deal with the Collateral, (v) take such other action as is
necessary or desirable to maintain the perfection and priority of the Liens created or purported to
be created by the Loan Documents, (vi) except as may be otherwise specified in any Loan Document,
exercise all remedies given to the Administrative Agent and the other Secured Parties with respect
to the Collateral, whether under the Loan Documents, applicable Requirements of Law or otherwise
and (vii) execute any amendment, consent or waiver under the Loan Documents on behalf of any Lender
that has consented in writing to such amendment, consent or waiver; provided,
however, that the Administrative Agent hereby appoints, authorizes and directs each Lender
and L/C Issuer to act as collateral sub-agent for the Administrative Agent, the Lenders and the L/C
Issuers for purposes of the perfection of all Liens with respect to the Collateral, including any
deposit account maintained by a Loan Party with, and cash and Cash Equivalents held by, such Lender
or L/C Issuer, and may further authorize and direct the Lenders and the L/C Issuers to take further
actions as collateral sub-agents for purposes of enforcing such Liens or otherwise to transfer the
Collateral subject thereto to the Administrative Agent, and each Lender and L/C Issuer hereby
agrees to take such further actions to the extent, and only to the extent, so authorized and
directed.

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          (c) Limited Duties. Under the Loan Documents, the Administrative Agent (i) is acting
solely on behalf of the Lenders and the L/C Issuers (except to the limited extent provided in
Section 2.14(b) with respect to the Register and in Section 10.11), with duties
that are entirely administrative in nature, notwithstanding the use of the defined term
“Administrative Agent”, the terms “agent”, “administrative agent” and “collateral agent” and
similar terms in any Loan Document to refer to the Administrative Agent, which terms are used for
title purposes only, (ii) is not assuming any obligation under any Loan Document other than as
expressly set forth therein or any role as agent, fiduciary or trustee of or for any Lender, L/C
Issuer or any other Secured Party and (iii) shall have no implied functions, responsibilities,
duties, obligations or other liabilities under any Loan Document, and each Lender and L/C Issuer
hereby waives and agrees not to assert any claim against the Administrative Agent based on the
roles, duties and legal relationships expressly disclaimed in clauses (i) through
(iii) above.

     Section 10.2 Binding Effect. Each Lender and each L/C Issuer agrees that (i)
any action taken by the Administrative Agent or the Required Lenders (or, if expressly required
hereby, a greater proportion of the Lenders) in accordance with the provisions of the Loan
Documents, (ii) any action taken by the Administrative Agent in reliance upon the instructions of
Required Lenders (or, where so required, such greater proportion) and (iii) the exercise by the
Administrative Agent or the Required Lenders (or, where so required, such greater proportion) of
the powers set forth herein or therein, together with such other powers as are reasonably
incidental thereto, shall be authorized and binding upon all of the Secured Parties.

     Section 10.3 Use of Discretion.

          (a) No Action without Instructions. The Administrative Agent shall not be required to
exercise any discretion or take, or to omit to take, any action, including with respect to
enforcement or collection, except any action it is required to take or omit to take (i) under any
Loan Document or (ii) pursuant to instructions from the Required Lenders (or, where expressly
required by the terms of this Agreement, a greater proportion of the Lenders).

          (b) Right Not to Follow Certain Instructions. Notwithstanding clause (a)
above, the Administrative Agent shall not be required to take, or to omit to take, any action (i)
unless, upon demand, the Administrative Agent receives an indemnification satisfactory to it from
the Lenders (or, to the extent applicable and acceptable to the Administrative Agent, any other
Secured Party) against all Liabilities that, by reason of such action or omission, may be imposed
on, incurred by or asserted against the Administrative Agent or any Related Person thereof or (ii)
that is, in the opinion of the Administrative Agent or its counsel, contrary to any Loan Document
or applicable Requirement of Law.

     Section 10.4 Delegation of Rights and Duties. The Administrative Agent may,
upon any term or condition it specifies, delegate or exercise any of its rights, powers and
remedies under, and delegate or perform any of its duties or any other action with respect to, any
Loan Document by or through any trustee, co-agent, employee, attorney-in-fact and any other Person
(including any Secured Party). Any such Person shall benefit from this Article X to the
extent provided by the Administrative Agent.

     Section 10.5 Reliance and Liability.

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          (a) The Administrative Agent may, without incurring any liability hereunder, (i) treat the
payee of any Note as its holder until such Note has been assigned in accordance with Section
11.2(e), (ii) rely on the Register to the extent set forth in Section 2.14, (iii)
consult with any of its Related Persons and, whether or not selected by it, any other advisors,
accountants and other experts (including advisors to, and accountants and experts engaged by, any
Loan Party) and (iv) rely and act upon any document and information (including those transmitted by
Electronic Transmission) and any telephone message or conversation, in each case believed by it to
be genuine and transmitted, signed or otherwise authenticated by the appropriate parties.

          (b) None of the Administrative Agent and its Related Persons shall be liable for any action
taken or omitted to be taken by any of them under or in connection with any Loan Document, and each
Lender, L/C Issuer and the Borrower hereby waive and shall not assert (and the Borrower shall cause
each other Loan Party to waive and agree not to assert) any right, claim or cause of action based
thereon, except to the extent of liabilities resulting primarily from the gross negligence or
willful misconduct of the Administrative Agent or, as the case may be, such Related Person (each as
determined in a final, non-appealable judgment by a court of competent jurisdiction) in connection
with the duties expressly set forth herein. Without limiting the foregoing, the Administrative
Agent:

          (i) shall not be responsible or otherwise incur liability for any action or omission
taken in reliance upon the instructions of the Required Lenders or for the actions or
omissions of any of its Related Persons selected with reasonable care (other than
employees, officers and directors of the Administrative Agent, when acting on behalf of the
Administrative Agent);

          (ii) shall not be responsible to any Secured Party for the due execution, legality,
validity, enforceability, effectiveness, genuineness, sufficiency or value of, or the
attachment, perfection or priority of any Lien created or purported to be created under or
in connection with, any Loan Document;

          (iii) makes no warranty or representation, and shall not be responsible, to any
Secured Party for any statement, document, information, representation or warranty made or
furnished by or on behalf of any Related Person, in or in connection with any Loan Document
or any transaction contemplated therein, whether or not transmitted by the Administrative
Agent, including as to completeness, accuracy, scope or adequacy thereof, or for the scope,
nature or results of any due diligence performed by the Administrative Agent in connection
with the Loan Documents; and

          (iv) shall not have any duty to ascertain or to inquire as to the performance or
observance of any provision of any Loan Document, whether any condition set forth in any
Loan Document is satisfied or waived, as to the financial condition of any Loan Party or as
to the existence or continuation or possible occurrence or continuation of any Default or
Event of Default and shall not be deemed to have notice or knowledge of such occurrence or
continuation unless it has received a notice from the Borrower, any Lender or L/C Issuer
describing such Default or Event of Default clearly labeled “notice of default” (in which
case the Administrative Agent shall promptly give notice of such receipt to all Lenders);

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and, for each of the items set forth in clauses (i) through (iv) above, each
Lender, L/C Issuer and the Borrower hereby waives and agrees not to assert (and the Borrower shall
cause each other Loan Party to waive and agree not to assert) any right, claim or cause of action
it might have against the Administrative Agent based thereon.

     Section 10.6 Administrative Agent Individually. The Administrative Agent and
its Affiliates may make loans and other extensions of credit to, acquire Stock and Stock
Equivalents of, engage in any kind of business with, any Loan Party or Affiliate thereof as though
it were not acting the Administrative Agent and may receive separate fees and other payments
therefor. To the extent the Administrative Agent or any of its Affiliates makes any Loan or
otherwise becomes a Lender hereunder, it shall have and may exercise the same rights and powers
hereunder and shall be subject to the same obligations and liabilities as any other Lender and the
terms “Lender”, “Revolving Credit Lender” and “Required Lender” and any similar terms shall, except
where otherwise expressly provided in any Loan Document, include, without limitation, the
Administrative Agent or such Affiliate, as the case may be, in its individual capacity as Lender,
Revolving Credit Lender or as one of the Required Lenders.

     Section 10.7 Lender Credit Decision. Each Lender and each L/C Issuer
acknowledges that it shall, independently and without reliance upon the Administrative Agent, any
Lender or L/C Issuer or any of their Related Persons or upon any document (including the Disclosure
Documents) solely or in part because such document was transmitted by the Administrative Agent or
any of its Related Persons, conduct its own independent investigation of the financial condition
and affairs of each Loan Party and make and continue to make its own credit decisions in connection
with entering into, and taking or not taking any action under, any Loan Document or with respect to
any transaction contemplated in any Loan Document, in each case based on such documents and
information as it shall deem appropriate.

     Section 10.8 Expenses; Indemnities.

          (a) Each Lender agrees to reimburse the Administrative Agent and each of its Related Persons
(to the extent not reimbursed by any Loan Party) promptly upon demand for such Lender’s Pro Rata
Share with respect to the Facility of any costs and expenses (including fees, charges and
disbursements of financial, legal and other advisors and Other Taxes paid in the name of, or on
behalf of, any Loan Party) that may be incurred by the Administrative Agent or any of its Related
Persons in connection with the preparation, syndication, execution, delivery, administration,
modification, consent, waiver or enforcement (whether through negotiations, through any work-out,
bankruptcy, restructuring or other legal or other proceeding or otherwise) of, or legal advice in
respect of its rights or responsibilities under, any Loan Document.

          (b) Each Lender further agrees to indemnify the Administrative Agent and each of its Related
Persons (to the extent not reimbursed by any Loan Party), from and against such Lender’s aggregate
Pro Rata Share with respect to the Facility of the Liabilities (including taxes, interests and
penalties imposed for not properly withholding or backup withholding on payments made to on or for
the account of any Lender) that may be imposed on, incurred by or asserted against the
Administrative Agent or any of its Related Persons in any matter relating to or arising out of, in
connection with or as a result of any Loan Document or any other act, event or transaction related,
contemplated in or attendant to any such document, or, in each case, any action taken or omitted to
be taken by the Administrative Agent or any of its Related Persons

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under or with respect to any of the foregoing; provided, however, that no
Lender shall be liable to the Administrative Agent or any of its Related Persons to the extent such
liability has resulted primarily from the gross negligence or willful misconduct of the
Administrative Agent or, as the case may be, such Related Person, as determined by a court of
competent jurisdiction in a final non-appealable judgment or order.

     Section 10.9 Resignation of Administrative Agent or L/C Issuer.

          (a) The Administrative Agent may resign at any time by delivering notice of such resignation
to the Lenders and the Borrower, effective on the date set forth in such notice or, if not such
date is set forth therein, upon the date such notice shall be effective. If the Administrative
Agent delivers any such notice, the Required Lenders shall have the right to appoint a successor
Administrative Agent. If, within 30 days after the retiring Administrative Agent having given
notice of resignation, no successor Administrative Agent has been appointed by the Required Lenders
that has accepted such appointment, then the retiring Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent from among the Lenders. Each appointment under
this clause (a) shall be subject to the prior consent of the Borrower, which may not be
unreasonably withheld but shall not be required during the continuance of a Default.

          (b) Effective immediately upon its resignation, (i) the retiring Administrative Agent shall be
discharged from its duties and obligations under the Loan Documents, (ii) the Lenders shall assume
and perform all of the duties of the Administrative Agent until a successor Administrative Agent
shall have accepted a valid appointment hereunder, (iii) the retiring Administrative Agent and its
Related Persons shall no longer have the benefit of any provision of any Loan Document other than
with respect to any actions taken or omitted to be taken while such retiring Administrative Agent
was, or because such Administrative Agent had been, validly acting as Administrative Agent under
the Loan Documents and (iv) subject to its rights under Section 10.3, the retiring
Administrative Agent shall take such action as may be reasonably necessary to assign to the
successor Administrative Agent its rights as Administrative Agent under the Loan Documents.
Effective immediately upon its acceptance of a valid appointment as Administrative Agent, a
successor Administrative Agent shall succeed to, and become vested with, all the rights, powers,
privileges and duties of the retiring Administrative Agent under the Loan Documents.

          (c) Any L/C Issuer may resign at any time by delivering notice of such resignation to the
Administrative Agent, effective on the date set forth in such notice or, if no such date is set
forth therein, on the date such notice shall be effective. Upon such resignation, the L/C Issuer
shall remain an L/C Issuer and shall retain its rights and obligations in its capacity as such
(other than any obligation to Issue Letters of Credit but including the right to receive fees or to
have Lenders participate in any L/C Reimbursement Obligation thereof) with respect to Letters of
Credit issued by such L/C Issuer prior to the date of such resignation and shall otherwise be
discharged from all other duties and obligations under the Loan Documents.

     Section 10.10 Release of Collateral or Guarantors. Each Lender and L/C Issuer
hereby consents to the release and hereby directs the Administrative Agent to release (or, in the
case of clause (b)(ii) below, release or subordinate) the following:

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          (a) any Subsidiary of the Borrower from its guaranty of any Obligation of any Loan Party if
all of the Securities of such Subsidiary owned by any Group Member are Sold in a Sale permitted
under the Loan Documents (including pursuant to a waiver or consent), to the extent that, after
giving effect to such Sale, such Subsidiary would not be required to guaranty any Obligations
pursuant to Section 7.10; and

          (b) any Lien held by the Administrative Agent for the benefit of the Secured Parties against
(i) any Collateral that is Sold by a Loan Party in a Sale permitted by the Loan Documents
(including pursuant to a valid waiver or consent), to the extent all Liens required to be granted
in such Collateral pursuant to Section 7.10 after giving effect to such Sale have been
granted, (ii) any property subject to a Lien permitted hereunder in reliance upon Section
8.2(d) or (e) and (iii) all of the Collateral and all Loan Parties, upon (A)
termination of the Commitments, (B) payment and satisfaction in full of all Loans, all L/C
Reimbursement Obligations and all other Obligations that the Administrative Agent has been notified
in writing are then due and payable, (C) deposit of cash collateral with respect to all contingent
Obligations (or, in the case of any L/C Obligation, a back-up letter of credit has been issued), in
amounts and on terms and conditions and with parties satisfactory to the Administrative Agent and
each Indemnitee that is owed such Obligations and (D) to the extent requested by the Administrative
Agent, receipt by the Secured Parties of liability releases from the Loan Parties each in form and
substance acceptable to the Administrative Agent.

Each Lender and L/C Issuer hereby directs the Administrative Agent, and the Administrative Agent
hereby agrees, upon receipt of reasonable advance notice from the Borrower, to execute and deliver
or file such documents and to perform other actions reasonably necessary to release the guaranties
and Liens when and as directed in this Section 10.10.

     Section 10.11 Additional Secured Parties. The benefit of the provisions of
the Loan Documents directly relating to the Collateral or any Lien granted thereunder shall extend
to and be available to any Secured Party that is not a Lender or L/C Issuer as long as, by
accepting such benefits, such Secured Party agrees, as among the Administrative Agent and all other
Secured Parties, that such Secured Party is bound by (and, if requested by the Administrative
Agent, shall confirm such agreement in a writing in form and substance acceptable to the
Administrative Agent) this Article X, Section 11.8 (Right of Setoff),
Section 11.9 (Sharing of Payments) and Section 11.20
(Confidentiality) and the decisions and actions of the Administrative Agent and the
Required Lenders (or, where expressly required by the terms of this Agreement, a greater proportion
of the Lenders) to the same extent a Lender is bound; provided, however, that,
notwithstanding the foregoing, (a) such Secured Party shall be bound by Section 10.8 only
to the extent of Liabilities, costs and expenses with respect to or otherwise relating to the
Collateral held for the benefit of such Secured Party, in which case the obligations of such
Secured Party thereunder shall not be limited by any concept of Pro Rata Share or similar concept,
(b) each of the Administrative Agent, the Lenders and the L/C Issuers shall be entitled to act at
its sole discretion, without regard to the interest of such Secured Party, regardless of whether
any Obligation to such Secured Party thereafter remains outstanding, is deprived of the benefit of
the Collateral, becomes unsecured or is otherwise affected or put in jeopardy thereby, and without
any duty or liability to such Secured Party or any such Obligation and (c) such Secured Party shall
not have any right to be notified of, consent to, direct, require or be heard with respect to, any
action taken or omitted in respect of the Collateral or under any Loan Document.

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ARTICLE XI

MISCELLANEOUS

     Section 11.1 Amendments, Waivers, Etc.

          (a) No amendment or waiver of any provision of any Loan Document (other than the Fee Letters,
the Control Agreements, the L/C Reimbursement Agreements and the Secured Hedging Agreements, the
amendment of which shall be determined by the terms thereof) and no consent to any departure by any
Loan Party therefrom shall be effective unless the same shall be in writing and signed (1) in the
case of an amendment, consent or waiver to cure any ambiguity, omission, defect or inconsistency or
granting a new Lien for the benefit of the Secured Parties or extending an existing Lien over
additional property, by the Administrative Agent and the Borrower, (2) in the case of any other
waiver or consent, by the Required Lenders (or by the Administrative Agent with the consent of the
Required Lenders) and (3) in the case of any amendment necessary to implement the terms of a
Facility Increase in accordance with the terms hereof, by the Borrower and the Administrative Agent
and (4) in the case of any other amendment, by the Required Lenders (or by the Administrative Agent
with the consent of the Required Lenders) and the Borrower; provided, however, that
no amendment, consent or waiver described in clause (2), (3) or (4) above shall,
unless in writing and signed by each Lender directly affected thereby (or by the Administrative
Agent with the consent of such Lender), in addition to any other Person the signature of which is
otherwise required pursuant to any Loan Document, do any of the following:

          (i) waive any condition specified in Section 3.1, except any condition
referring to any other provision of any Loan Document;

          (ii) increase the Commitment of such Lender or subject such Lender to any additional
obligation;

          (iii) reduce (including through release, forgiveness, assignment or otherwise) (A) the
principal amount of, the interest rate on, or any obligation of the Borrower to repay
(whether or not on a fixed date), any outstanding Loan owing to such Lender, (B) any fee or
accrued interest payable to such Lender or (C) if such Lender is a Revolving Credit Lender,
any L/C Reimbursement Obligation or any obligation of the Borrower to repay (whether or not
on a fixed date) any L/C Reimbursement Obligation; provided, however, that
this clause (iii) does not apply to (x) any change to any provision increasing any
interest rate or fee during the continuance of an Event of Default or to any payment of any
such increase or (y) any modification to any financial covenant set forth in Article
V or in any definition set forth therein or principally used therein;

          (iv) waive or postpone any scheduled maturity date or other scheduled date fixed for
the payment, in whole or in part, of principal of or interest on any Loan or fee owing to
such Lender or for the reduction of such Lender’s Commitment; provided,
however, that this clause (iv) does not apply to any change to mandatory
prepayments, including those required under Section 2.8, or to the application of
any payment, including as set forth in Section 2.12;

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          (v) except as provided in Section 10.10, release all or substantially all of
the Collateral or any Guarantor from its guaranty of any Obligation of the Borrower;

          (vi) reduce or increase the proportion of Lenders required for the Lenders (or any
subset thereof) to take any action hereunder or change the definition of the terms
“Required Lenders”, “Pro Rata Share” or “Pro Rata Outstandings”; or

          (vii) amend Section 10.10 (Release of Collateral or Guarantor), Section 11.9 (Sharing
of Payments) or this Section 11.1;

and provided, further, that (x)(A) any waiver of any payment applied pursuant to
Section 2.12(b) (Application of Mandatory Prepayments) to, and any modification of
the application of any such payment to the Loans shall require the consent of the Required
Revolving Credit Lenders, (B) any change to the definition of the term “Required Lender” shall
require the consent of the Required Lenders, (y) no amendment, waiver or consent shall affect the
rights or duties under any Loan Document of, or any payment to, the Administrative Agent (or
otherwise modify any provision of Article X or the application thereof), the Swingline
Lender, any L/C Issuer or any SPV that has been granted an option pursuant to Section
11.2(f) unless in writing and signed by the Administrative Agent, the Swingline Lender, such
L/C Issuer or, as the case may be, such SPV in addition to any signature otherwise required and (z)
the consent of the Borrower shall not be required to change any order of priority set forth in
Section 2.12.

          (b) Each waiver or consent under any Loan Document shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or demand on any Loan
Party shall entitle any Loan Party to any notice or demand in the same, similar or other
circumstances. No failure on the part of any Secured Party to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the exercise of any
other right.

     Section 11.2 Assignments and Participations; Binding Effect.

          (a) Binding Effect. This Agreement shall become effective when it shall have been
executed by the Borrower and the Administrative Agent and when the Administrative Agent shall have
been notified by each Lender and L/C Issuer that such Lender or L/C Issuer has executed it.
Thereafter, it shall be binding upon and inure to the benefit of, but only to the benefit of the
Borrower (in each case except for Article X), the Administrative Agent, each Lender and L/C
Issuer and, to the extent provided in Section 10.11, each other Indemnitee and Secured
Party and, in each case, their respective successors and permitted assigns. Except as expressly
provided in any Loan Document (including in Section 10.9), none of the Borrower, any L/C
Issuer or the Administrative Agent shall have the right to assign any rights or obligations
hereunder or any interest herein.

          (b) Right to Assign. Each Lender may sell, transfer, negotiate or assign all or a
portion of its rights and obligations hereunder (including all or a portion of its Commitments and
its rights and obligations with respect to Loans and Letters of Credit) to any of the following
Persons (each an “Eligible Assignee”) (i) any existing Lender, (ii) any Affiliate or
Approved

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Fund of any existing Lender or (iii) any other Person acceptable (which acceptance shall not
be unreasonably withheld or delayed) to the Administrative Agent and, as long as no Event of
Default is continuing, the Borrower; provided, however, that (x) such Sales must be
ratable among the obligations owing to and owed by such Lender with respect to the Facility and (y)
the aggregate outstanding principal amount (determined as of the effective date of the applicable
Assignment) of the Loans, Commitments and L/C Obligations subject to any such Sale shall be an
integral multiple of $1,000,000, unless such Sale is made to an existing Lender or an Affiliate or
Approved Fund of any existing Lender, is of the assignor’s (together with its Affiliates and
Approved Funds) entire interest in such Facility or is made with the prior consent of the Borrower
and the Administrative Agent.

          (c) Procedure. The parties to each Sale made in reliance on clause (b) above
(other than those described in clause (e) or (f) below) shall execute and deliver
to the Administrative Agent (which shall keep a copy thereof) an Assignment, together with any
existing Note subject to such Sale (or any affidavit of loss therefor acceptable to the
Administrative Agent), any tax forms required to be delivered pursuant to Section 2.17(f)
and payment by the assignee of an assignment fee in the amount of $3,500. Upon receipt of all the
foregoing, and conditioned upon such receipt and upon the Administrative Agent consenting to such
Assignment, from and after the effective date specified in such Assignment, the Administrative
Agent shall record or cause to be recorded in the Register the information contained in such
Assignment.

          (d) Effectiveness. Effective upon the entry of such record in the Register, (i) such
assignee shall become a party hereto and, to the extent that rights and obligations under the Loan
Documents have been assigned to such assignee pursuant to such Assignment, shall have the rights
and obligations of a Lender, (ii) any applicable Note shall be transferred to such assignee through
such entry and (iii) the assignor thereunder shall, to the extent that rights and obligations under
this Agreement have been assigned by it pursuant to such Assignment, relinquish its rights (except
for those surviving the termination of the Commitments and the payment in full of the Obligations)
and be released from its obligations under the Loan Documents, other than those relating to events
or circumstances occurring prior to such assignment (and, in the case of an Assignment covering all
or the remaining portion of an assigning Lender’s rights and obligations under the Loan Documents,
such Lender shall cease to be a party hereto except that each Lender agrees to remain bound by
Article X, Section 11.8 (Right of Setoff) and Section 11.9
(Sharing of Payments) to the extent provided in Section 10.11 (Additional
Beneficiaries of Collateral)).

          (e) Grant of Security Interests. In addition to the other rights provided in this
Section 11.2, each Lender may grant a security interest in, or otherwise assign as
collateral, any of its rights under this Agreement, whether now owned or hereafter acquired
(including rights to payments of principal or interest on the Loans), to (A) any federal reserve
bank (pursuant to Regulation A of the Federal Reserve Board), without notice to the Administrative
Agent or (B) any holder of, or trustee for the benefit of the holders of, such Lender’s Securities
by notice to the Administrative Agent; provided, however, that no such holder or
trustee, whether because of such grant or assignment or any foreclosure thereon (unless such
foreclosure is made through an assignment in accordance with clause (b) above), shall be
entitled to any rights of such Lender hereunder and no such Lender shall be relieved of any of its
obligations hereunder.

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          (f) Participants and SPVs. In addition to the other rights provided in this
Section 11.2, each Lender may, (x) with notice to the Administrative Agent, grant to an SPV
the option to make all or any part of any Loan that such Lender would otherwise be required to make
hereunder (and the exercise of such option by such SPV and the making of Loans pursuant thereto
shall satisfy the obligation of such Lender to make such Loans hereunder) and such SPV may assign
to such Lender the right to receive payment with respect to any Obligation and (y) without notice
to or consent from the Administrative Agent or the Borrower, sell participations to one or more
Persons in or to all or a portion of its rights and obligations under the Loan Documents (including
all its rights and obligations with respect to the Revolving Loans and Letters of Credit);
provided, however, that, whether as a result of any term of any Loan Document or of
such grant or participation, (i) no such SPV or participant shall have a commitment, or be deemed
to have made an offer to commit, to make Loans hereunder, and, except as provided in the applicable
option agreement, none shall be liable for any obligation of such Lender hereunder, (ii) such
Lender’s rights and obligations, and the rights and obligations of the Loan Parties and the Secured
Parties towards such Lender, under any Loan Document shall remain unchanged and each other party
hereto shall continue to deal solely with such Lender, which shall remain the holder of the
Obligations in the Register, except that (A) each such participant and SPV shall be entitled to the
benefit of Sections 2.16 (Breakage Costs; Increased Costs; Capital Requirements)
and 2.17 (Taxes), but only to the extent such participant or SPV delivers the tax
forms such Lender is required to collect pursuant to Section 2.17(f) and then only to the
extent of any amount to which such Lender would be entitled in the absence of any such grant or
participation and (B) each such SPV may receive other payments that would otherwise be made to such
Lender with respect to Loans funded by such SPV to the extent provided in the applicable option
agreement and set forth in a notice provided to the Administrative Agent by such SPV and such
Lender, provided, however, that in no case (including pursuant to clause
(A) or (B) above) shall an SPV or participant have the right to enforce any of the
terms of any Loan Document, and (iii) the consent of such SPV or participant shall not be required
(either directly, as a restraint on such Lender’s ability to consent hereunder or otherwise) for
any amendments, waivers or consents with respect to any Loan Document or to exercise or refrain
from exercising any powers or rights such Lender may have under or in respect of the Loan Documents
(including the right to enforce or direct enforcement of the Obligations), except for those
described in clauses (iii) and (iv) of Section 11.1(a) with respect to
amounts, or dates fixed for payment of amounts, to which such participant or SPV would otherwise be
entitled and, in the case of participants, except for those described in Section 11.1(a)(v)
(or amendments, consents and waivers with respect to Section 10.10 to release all or
substantially all of the Collateral). No party hereto shall institute against any SPV grantee of
an option pursuant to this clause (f) any bankruptcy, reorganization, insolvency,
liquidation or similar proceeding, prior to the date that is one year and one day after the payment
in full of all outstanding commercial paper of such SPV; provided, however, that each Lender having
designated an SPV as such agrees to indemnify each Indemnitee against any Liability that may be
incurred
by, or asserted against, such Indemnitee as a result of failing to institute such
proceeding (including a failure to get reimbursed by such SPV for any such Liability). The
agreement in the preceding sentence shall survive the termination of the Commitments and the
payment in full of the Obligations.

     Section 11.3 Costs and Expenses. Any action taken by any Loan Party under or
with respect to any Loan Document, even if required under any Loan Document or at the request of
any Secured Party, shall be at the expense of such Loan Party, and no Secured Party shall be
required under any Loan Document to reimburse any Loan Party or Group Member therefor except as
expressly provided therein. In addition, the Borrower agrees to pay or reimburse upon

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demand (a) the Administrative Agent for all reasonable out-of-pocket costs and expenses
incurred by it or any of its Related Persons in connection with the investigation, development,
preparation, negotiation, syndication, execution, interpretation or administration of, any
modification of any term of or termination of, any Loan Document, any commitment or proposal letter
therefor, any other document prepared in connection therewith or the consummation and
administration of any transaction contemplated therein (including periodic audits in connection
therewith and environmental audits and assessments), in each case including the reasonable fees,
charges and disbursements of legal counsel to the Administrative Agent or such Related Persons,
fees, costs and expenses incurred in connection with Intralinks® or any other E-System
and allocated to the Facility by the Administrative Agent in its sole discretion and fees, charges
and disbursements of the auditors, appraisers, printers and other of their Related Persons retained
by or on behalf of any of them or any of their Related Persons, (b) the Administrative Agent for
all reasonable costs and expenses incurred by it or any of its Related Persons in connection with
internal audit reviews, field examinations and Collateral examinations (which shall be reimbursed,
in addition to the out-of-pocket costs and expenses of such examiners, at the per diem rate per
individual charged by the Administrative Agent for its examiners) and (c) each of the
Administrative Agent, its Related Persons, and each Lender and L/C Issuer for all costs and
expenses incurred in connection with (i) any refinancing or restructuring of the credit
arrangements provided hereunder in the nature of a “work-out”, (ii) the enforcement or preservation
of any right or remedy under any Loan Document, any Obligation, with respect to the Collateral or
any other related right or remedy or (iii) the commencement, defense, conduct of, intervention in,
or the taking of any other action with respect to, any proceeding (including any bankruptcy or
insolvency proceeding) related to any Group Member, Loan Document or Obligation (or the response to
and preparation for any subpoena or request for document production relating thereto), including
fees and disbursements of counsel (including allocated costs of internal counsel).

     Section 11.4 Indemnities.

          (a) The Borrower agrees to indemnify, hold harmless and defend the Administrative Agent, each
Lender, each L/C Issuer, each Person (other than the Borrower) party to a Secured Hedging
Agreement, each Person that each L/C Issuer causes to Issue Letters of Credit hereunder and each of
their respective Related Persons (each such Person being an “Indemnitee”) from and against
all Liabilities (including brokerage commissions, fees and other compensation) that may be imposed
on, incurred by or asserted against any such Indemnitee in any matter relating to or arising out
of, in connection with or as a result of (i) any Loan Document, any Disclosure Document, any
Obligation (or the repayment thereof), any Letter of Credit, the use or intended use of the
proceeds of any Loan or the use of any Letter of Credit, or any securities filing of, or with
respect to, any Group Member, (ii) any commitment letter, proposal letter or term sheet with any
Person or any Contractual Obligation, arrangement or understanding with any broker, finder or
consultant, in each case entered into by or on behalf of any Group Member or any Affiliate of any
of them in connection with any of the foregoing and any Contractual Obligation entered into in
connection with any E-Systems or other Electronic Transmissions, (iii) any actual or prospective
investigation, litigation or other proceeding, whether or not brought by any such Indemnitee or any
of its Related Persons, any holders of Securities or creditors (and including reasonable attorneys’
fees in any case), whether or not any such Indemnitee, Related Person, holder or creditor is a
party thereto, and whether or not based on any securities or commercial law or regulation or any
other Requirement of Law or theory thereof, including common law, equity, contract, tort or
otherwise, or (iv) any other act, event or

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transaction related, contemplated in or attendant to any of the foregoing (collectively, the
“Indemnified Matters”); provided, however, that the Borrower shall not have
any liability under this Section 11.4 to any Indemnitee with respect to any Indemnified
Matter, and no Indemnitee shall have any liability with respect to any Indemnified Matter other
than (to the extent otherwise liable), to the extent such liability has resulted primarily from the
gross negligence or willful misconduct of such Indemnitee, as determined by a court of competent
jurisdiction in a final non-appealable judgment or order. Furthermore, the Borrower waives and
agrees not to assert against any Indemnitee, and shall cause each other Loan Party to waive and not
assert against any Indemnitee, any right of contribution with respect to any Liabilities that may
be imposed on, incurred by or asserted against any Related Person.

          (b) Without limiting the foregoing, “Indemnified Matters” includes all Environmental
Liabilities, including those arising from, or otherwise involving, any property of any Related
Person or any actual, alleged or prospective damage to property or natural resources or harm or
injury alleged to have resulted from any Release of Hazardous Materials on, upon or into such
property or natural resource or any property on or contiguous to any real property of any Related
Person, whether or not, with respect to any such Environmental Liabilities, any Indemnitee is a
mortgagee pursuant to any leasehold mortgage, a mortgagee in possession, the successor-in-interest
to any Related Person or the owner, lessee or operator of any property of any Related Person
through any foreclosure action, in each case except to the extent such Environmental Liabilities
(i) are incurred solely following foreclosure by any Secured Party or following any Secured Party
having become the successor-in-interest to any Loan Party and (ii) are attributable solely to acts
of such Indemnitee.

     Section 11.5 Survival. Any indemnification or other protection provided to
any Indemnitee pursuant to any Loan Document (including pursuant to Section 2.17
(Taxes), Section 2.16 (Breakage Costs; Increased Costs; Capital
Requirements), Article X (The Administrative Agent), Section 11.3
(Costs and Expenses), Section 11.4 (Indemnities) or this Section
11.5) and all representations and warranties made in any Loan Document shall (A) survive the
termination of the Commitments and the payment in full of other Obligations and (B) inure to the
benefit of any Person that at any time held a right thereunder (as an Indemnitee or otherwise) and,
thereafter, its successors and permitted assigns.

     Section 11.6 Limitation of Liability for Certain Damages. In no event shall
any Indemnitee be liable on any theory of liability for any special, indirect, consequential or
punitive damages (including any loss of profits, business or anticipated savings). The Borrower
hereby waives, releases and agrees (and shall cause each other Loan Party to waive, release and
agree) not to sue upon any such claim for any special, indirect, consequential or punitive damages,
whether or not accrued and whether or not known or suspected to exist in its favor.

     Section 11.7 Lender-Creditor Relationship. The relationship between the
Lenders, the L/C Issuers and the Administrative Agent, on the one hand, and the Loan Parties, on
the other hand, is solely that of lender and creditor. No Secured Party has any fiduciary
relationship or duty to any Loan Party arising out of or in connection with, and there is no
agency, tenancy or joint venture relationship between the Secured Parties and the Loan Parties by
virtue of, any Loan Document or any transaction contemplated therein.

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     Section 11.8 Right of Setoff. Each of the Administrative Agent, each Lender,
each L/C Issuer and each Affiliate (including each branch office thereof) of any of them is hereby
authorized, without notice or demand (each of which is hereby waived by the Borrower), at any time
and from time to time during the continuance of any Event of Default and to the fullest extent
permitted by applicable Requirements of Law, to set off and apply any and all deposits (whether
general or special, time or demand, provisional or final) at any time held and other Indebtedness,
claims or other obligations at any time owing by the Administrative Agent, such Lender, such L/C
Issuer or any of their respective Affiliates to or for the credit or the account of the Borrower
against any Obligation of any Loan Party now or hereafter existing, whether or not any demand was
made under any Loan Document with respect to such Obligation and even though such Obligation may be
unmatured. Each of the Administrative Agent, each Lender and each L/C Issuer agrees promptly to
notify the Borrower and the Administrative Agent after any such setoff and application made by such
Lender or its Affiliates; provided, however, that the failure to give such notice
shall not affect the validity of such setoff and application. The rights under this Section
11.8 are in addition to any other rights and remedies (including other rights of setoff) that
the Administrative Agent, the Lenders and the L/C Issuers and their Affiliates and other Secured
Parties may have.

     Section 11.9 Sharing of Payments, Etc. If any Lender, directly or through an
Affiliate or branch office thereof, obtains any payment of any Obligation of any Loan Party
(whether voluntary, involuntary or through the exercise of any right of setoff or the receipt of
any Collateral or “proceeds” (as defined under the applicable UCC) of Collateral) other
than pursuant to Sections 2.16 (Breakage Costs; Increased Costs; Capital
Requirements), 2.17 (Taxes) and 2.18 (Substitution of Lenders)
and such payment exceeds the amount such Lender would have been entitled to receive if all payments
had gone to, and been distributed by, the Administrative Agent in accordance with the provisions of
the Loan Documents, such Lender shall purchase for cash from other Secured Parties such
participations in their Obligations as necessary for such Lender to share such excess payment with
such Secured Parties to ensure such payment is applied as though it had been received by the
Administrative Agent and applied in accordance with this Agreement (or, if such application would
then be at the discretion of the Borrower, applied to repay the Obligations in accordance
herewith); provided, however, that (a) if such payment is rescinded or otherwise
recovered from such Lender or L/C Issuer in whole or in part, such purchase shall be rescinded and
the purchase price therefor shall be returned to such Lender or L/C Issuer without interest and (b)
such Lender shall, to the fullest extent permitted by applicable Requirements of Law, be able to
exercise all its rights of payment (including the right of setoff) with respect to such
participation as fully as if such Lender were the direct creditor of the Borrower in the amount of
such participation.

     Section 11.10 Marshaling; Payments Set Aside. No Secured Party shall be under
any obligation to marshal any property in favor of any Loan Party or any other party or against or
in payment of any Obligation. To the extent that any Secured Party receives a payment from the
Borrower, from the proceeds of the Collateral, from the exercise of its rights of setoff, any
enforcement action or otherwise, and such payment is subsequently, in whole or in part,
invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a
trustee, receiver or any other party, then to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied, and all Liens, rights and remedies therefor, shall be
revived and continued in full force and effect as if such payment had not occurred.

     Section 11.11 Notices.

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          (a) Addresses. All notices, demands, requests, directions and other communications
required or expressly authorized to be made by this Agreement shall, whether or not specified to be
in writing but unless otherwise expressly specified to be given by any other means, be given in
writing and (i) addressed to (A) if to the Borrower, to Assisted Living Concepts, Inc., 111 West
Michigan Street, Milwaukee, WI 53203, Attention: Chief Financial Officer, Fax: 414-908-7123,
with copy to Quarles & Brady, LLP, Attention: David L. Bourne, Tel: 414-277-5343, Fax:
414-978-8743, (B) if to the Administrative Agent or the Swingline Lender, to General Electric
Capital Corporation, 500 West Monroe Street, Chicago, Illinois 60661, Attention: Assisted Living
Concepts Account Manager, Tel: 312-441-6979, Fax: 312-441-7598, with copy to General Electric Capital
Corporation, Healthcare Financial Services, 2 Bethesda Metro Center, Suite 600, Bethesda, Maryland
20814, Attention: Legal Department, Tel: (301) 961-1640, Fax: (301) 664-9866 and (C) otherwise
to the party to be notified at its address specified opposite its name on Schedule II or on
the signature page of any applicable Assignment, (ii) posted to Intralinks® (to the
extent such system is available and set up by or at the direction of the Administrative Agent prior
to posting) in an appropriate location by uploading such notice, demand, request, direction or
other communication to www.intralinks.com, faxing it to 866-545-6600 with an appropriate bar-coded
fax coversheet or using such other means of posting to Intralinks® as may be available
and reasonably acceptable to the Administrative Agent prior to such posting, (iii) posted to any
other E-System set up by or at the direction of the Administrative Agent in an appropriate location
or (iv) addressed to such other address as shall be notified in writing (A) in the case of the
Borrower, the Administrative Agent and the Swingline Lender, to the other parties hereto and (B) in
the case of all other parties, to the Borrower and the Administrative Agent. Transmission by
electronic mail (including E-Fax, even if transmitted to the fax numbers set forth in clause
(i) above) shall not be sufficient or effective to transmit any such notice under this
clause (a) unless such transmission is an available means to post to any E-System.

          (b) Effectiveness. All communications described in clause (a) above and all
other notices, demands, requests and other communications made in connection with this Agreement
shall be effective and be deemed to have been received (i) if delivered by hand, upon personal
delivery, (ii) if delivered by overnight courier service, one Business Day after delivery to such
courier service, (iii) if delivered by mail, when deposited in the mails, (iv) if delivered by
facsimile (other than to post to an E-System pursuant to clause (a)(ii) or (a)(iii)
above), upon sender’s receipt of confirmation of proper transmission, and (v) if delivered by
posting to any E-System, on the later of the date of such posting in an appropriate location and
the date access to such posting is given to the recipient thereof in accordance with the standard
procedures applicable to such E-System; provided, however, that no communications
to the Administrative Agent pursuant to Article II or Article X shall be effective
until received by the Administrative Agent.

     Section 11.12 Electronic Transmissions.

          (a) Authorization. Subject to the provisions of Section 11.11(a), each of the
Administrative Agent, the Borrower, the Lenders, the L/C Issuers and each of their Related Persons
is authorized (but not required) to transmit, post or otherwise make or communicate, in its sole
discretion, Electronic Transmissions in connection with any Loan Document and the transactions
contemplated therein. The Borrower and each Secured Party hereby acknowledges and agrees, and the
Borrower shall cause each other Group Member to acknowledge and agree, that the use of Electronic
Transmissions is not necessarily secure and that there are risks

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associated with such use, including risks of interception, disclosure and abuse and each
indicates it assumes and accepts such risks by hereby authorizing the transmission of Electronic
Transmissions.

          (b) Signatures. Subject to the provisions of Section 11.11(a), (i)(A) no
posting to any E-System shall be denied legal effect merely because it is made electronically, (B)
each E-Signature on any such posting shall be deemed sufficient to satisfy any requirement for a
“signature” and (C) each such posting shall be deemed sufficient to satisfy any requirement for a
“writing”, in each case including pursuant to any Loan Document, any applicable provision of any
UCC, the federal Uniform Electronic Transactions Act, the Electronic Signatures in Global and
National Commerce Act and any substantive or procedural Requirement of Law governing such subject
matter, (ii) each such posting that is not readily capable of bearing either a signature or a
reproduction of a signature may be signed, and shall be deemed signed, by attaching to, or
logically associating with such posting, an E-Signature, upon which each Secured Party and Loan
Party may rely and assume the authenticity thereof, (iii) each such posting containing a signature,
a reproduction of a signature or an E-Signature shall, for all intents and purposes, have the same
effect and weight as a signed paper original and (iv) each party hereto or beneficiary hereto
agrees not to contest the validity or enforceability of any posting on any E-System or E-Signature
on any such posting under the provisions of any applicable Requirement of Law requiring certain
documents to be in writing or signed; provided, however, that nothing herein shall
limit such party’s or beneficiary’s right to contest whether any posting to any E-System or
E-Signature has been altered after transmission.

          (c) Separate Agreements. All uses of an E-System shall be governed by and subject to,
in addition to Section 11.11 and this Section 11.12, separate terms and conditions
posted or referenced in such E-System and related Contractual Obligations executed by Secured
Parties and Group Members in connection with the use of such E-System.

          (d) LIMITATION OF LIABILITY. ALL E-SYSTEMS AND ELECTRONIC TRANSMISSIONS SHALL BE
PROVIDED “AS IS” AND “AS AVAILABLE”. NONE OF ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PERSONS
WARRANTS THE ACCURACY, ADEQUACY OR COMPLETENESS OF ANY E-SYSTEMS OR ELECTRONIC TRANSMISSION, AND
EACH DISCLAIMS ALL LIABILITY FOR ERRORS OR OMISSIONS THEREIN. NO WARRANTY OF ANY KIND IS MADE BY
THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PERSONS IN CONNECTION WITH ANY E-SYSTEMS OR
ELECTRONIC COMMUNICATION, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS. THE
BORROWER AND EACH SECURED PARTY AGREES (AND THE BORROWER SHALL CAUSE EACH OTHER LOAN PARTY TO
AGREE) THAT THE ADMINISTRATIVE AGENT HAS NO RESPONSIBILITY FOR MAINTAINING OR PROVIDING ANY
EQUIPMENT, SOFTWARE, SERVICES OR ANY TESTING REQUIRED IN CONNECTION WITH ANY ELECTRONIC
TRANSMISSION OR OTHERWISE REQUIRED FOR ANY E-SYSTEM.

     Section 11.13 Governing Law. This Agreement, each other Loan Document that
does not expressly set forth its applicable law, and the rights and obligations of the parties
hereto and thereto shall be governed by, and construed and interpreted in accordance with, the law
of the State of Illinois.

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     Section 11.14 Jurisdiction.

          (a) Submission to Jurisdiction. Any legal action or proceeding with respect to any
Loan Document may be brought in the courts of the State of Illinois located in the City of Chicago,
Illinois, or of the United States of America sitting in the City of Chicago, Illinois and, by
execution and delivery of this Agreement, the Borrower hereby accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the aforesaid courts. The parties
hereto (and, to the extent set forth in any other Loan Document, each other Loan Party) hereby
irrevocably waive any objection, including any objection to the laying of venue or based on the
grounds of forum non conveniens, that any of them may now or hereafter have to the bringing of any
such action or proceeding in such jurisdictions.

          (b) Service of Process. The Borrower (and, to the extent set forth in any other Loan
Document, each other Loan Party) hereby irrevocably waives personal service of any and all legal
process, summons, notices and other documents and other service of process of any kind and consents
to such service in any suit, action or proceeding brought in the United States of America with
respect to or otherwise arising out of or in connection with any Loan Document by any means
permitted by applicable Requirements of Law, including by the mailing thereof (by registered or
certified mail, postage prepaid) to the address of Borrower specified in Section 11.11 (and
shall be effective when such mailing shall be effective, as provided therein). The Borrower (and,
to the extent set forth in any other Loan Document, each other Loan Party) agrees that a final
judgment in any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.

          (c) Non-Exclusive Jurisdiction. Nothing contained in this Section 11.14 shall
affect the right of the Administrative Agent or any Lender to serve process in any other manner
permitted by applicable Requirements of Law or commence legal proceedings or otherwise proceed
against any Loan Party in any other jurisdiction.

     Section 11.15 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING WITH RESPECT TO, OR DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH, ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREIN OR RELATED THERETO (WHETHER FOUNDED IN CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY
HERETO (A) CERTIFIES THAT NO OTHER PARTY AND NO RELATED PERSON OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THE LOAN DOCUMENTS, AS APPLICABLE, BY THE MUTUAL WAIVERS AND CERTIFICATIONS
IN THIS SECTION 11.15.

     Section 11.16 Severability. Any provision of any Loan Document being held
illegal, invalid or unenforceable in any jurisdiction shall not affect any part of such provision
not held illegal, invalid or unenforceable, any other provision of any Loan Document or any part of
such provision in any other jurisdiction.

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     Section 11.17 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute one and
the same agreement. Signature pages may be detached from multiple separate counterparts and
attached to a single counterpart. Delivery of an executed signature page of this Agreement by
facsimile transmission or Electronic Transmission shall be as effective as delivery of a manually
executed counterpart hereof.

     Section 11.18 Entire Agreement. The Loan Documents embody the entire
agreement of the parties and supersede all prior agreements and understandings relating to the
subject matter thereof and any prior letter of interest, commitment letter, fee letter,
confidentiality and similar agreements involving any Loan Party and any of the Administrative
Agent, any Lender or any L/C Issuer or any of their respective Affiliates relating to a financing
of substantially similar form, purpose or effect. In the event of any conflict between the terms
of this Agreement and any other Loan Document, the terms of this Agreement shall govern (unless
such terms of such other Loan Documents are necessary to comply with applicable Requirements of
Law, in which case such terms shall govern to the extent necessary to comply therewith).

     Section 11.19 Use of Name. The Borrower agrees, and shall cause each other
Loan Party to agree, that it shall not, and none of its Affiliates shall, issue any press release
or other public disclosure (other than any document filed with any Governmental Authority relating
to a public offering of the Securities of any Loan Party) using the name, logo or otherwise
referring to GE Capital or of any of its Affiliates, the Loan Documents or any transaction
contemplated therein to which the Secured Parties are party without at least 2 Business Days’ prior
notice to GE Capital and without the prior consent of GE Capital except to the extent required to
do so under applicable Requirements of Law and then, only after consulting with GE Capital prior
thereto.

     Section 11.20 Non-Public Information; Confidentiality.

          (a) Each Lender and L/C Issuer acknowledges and agrees that it may receive material non-public
information hereunder concerning the Loan Parties and their Affiliates and Securities and agrees to
use such information in compliance with all relevant policies, procedures and Contractual
Obligations and applicable Requirements of Laws (including United States federal and state security
laws and regulations).

          (b) Each Lender, L/C Issuer and the Administrative Agent agrees to use all reasonable efforts
to maintain, in accordance with its customary practices, the confidentiality of information
obtained by it pursuant to any Loan Document and designated in writing by any Loan Party as
confidential, except that such information may be disclosed (i) with the Borrower’s consent, (ii)
to Related Persons of such Lender, L/C Issuer or the Administrative Agent, as the case may be, or
to any Person that any L/C Issuer causes to Issue Letters of Credit hereunder, that are advised of
the confidential nature of such information and are instructed to keep such information
confidential, (iii) to the extent such information presently is or hereafter becomes available to
such Lender, L/C Issuer or the Administrative Agent, as the case may be, on a non-confidential
basis from a source other than any Loan Party, (iv) to the extent disclosure is required by
applicable Requirements of Law or other legal process or requested or demanded by any Governmental
Authority, (v) to the extent necessary or customary for inclusion in league

95

 

table measurements or in any tombstone or other advertising materials (and the Loan Parties
consent to the publication of such tombstone or other advertising materials by the Administrative
Agent, any Lender, any L/C Issuer or any of their Related Persons), (vi) to the National
Association of Insurance Commissioners or any similar organization, any examiner or any nationally
recognized rating agency or otherwise to the extent consisting of general portfolio information
that does not identify borrowers, (vii) to current or prospective assignees, SPVs grantees of any
option described in Section 11.2(f) or participants, direct or contractual counterparties
to any Hedging Agreement permitted hereunder and to their respective Related Persons, in each case
to the extent such assignees, participants, counterparties or Related Persons agree to be bound by
the provisions of this Section 11.20 and (viii) in connection with the exercise of any
remedy under any Loan Document. In the event of any conflict between the terms of this Section
11.20 and those of any other Contractual Obligation entered into with any Loan Party (whether
or not a Loan Document), the terms of this Section 11.20 shall govern.

     Section 11.21 Patriot Act Notice. Each Lender subject to the USA Patriot Act
of 2001 (31 U.S.C. 5318 et seq.) hereby notifies the Borrower that, pursuant to Section 326
thereof, it is required to obtain, verify and record information that identifies the Borrower,
including the name and address of the Borrower and other information allowing such Lender to
identify the Borrower in accordance with such act.

[SIGNATURE PAGES FOLLOW]

96

 

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective officers thereunto duly authorized, as of the date first above written.

	 	 	 	 	 
	 	ASSISTED LIVING CONCEPTS, INC.,

as Borrower

 	 
	 	By:  	/s/
Walter A. Levonowich	 
	 	 	Name:  	Walter A. Levonowich	 
	 	 	Title:  	Vice President, Controller and Assistant
Treasurer	 
	 

	 	 	 	 	 
	 	GENERAL ELECTRIC CAPITAL CORPORATION
 	 
	 	 	as Administrative Agent,
Swingline Lender

 and Lender

 	 
	 	By:  	/s/
John Dale	 
	 	 	Name:  	John Dale	 
	 	 	Title:  	Duly Authorized Signatory	 

	 	 	 	 	 
	 	U. S. BANK NATIONAL ASSOCIATION,
 	 
	 	 	as Lender and as L/C Issuer

 	 
	 	By:  	/s/
Matthew J. Schulz	 
	 	 	Name:  	Matthew J. Schulz	 
	 	 	Title:  	Vice President	 

 

	 	 	 	 	 

	 	 	 	 	 
	 	OTHER LENDERS:

CIBC INC., as Lender

 	 
	 	By:  	/s/
Doug Cornett	 
	 	 	Name:  	Doug Cornett	 
	 	 	Title:  	Authorized Signatory	 
	 

98

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