Document:

Exhibit 4.2

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT, dated as
of July 29, 2009 (the “Agreement”), is entered into by and among
Prospect Medical Holdings, Inc., a Delaware corporation (the “Company”),
the guarantors listed in Schedule 1 hereto (the “Guarantors”), and RBC
Capital Markets Corporation and Jefferies & Company, Inc (the “Initial
Purchasers”).

 

The Company, the Guarantors and the Initial
Purchasers are parties to the Purchase Agreement dated July 22, 2009 (the “Purchase
Agreement”), which provides for the sale by the Company to the Initial
Purchasers of $160,000,000 aggregate principal amount of the Company’s 123⁄4%
Senior Secured Notes due 2014 (the “Securities”) which will be
guaranteed on a senior secured basis by each of the Guarantors.  As an inducement to the Initial Purchasers to
enter into the Purchase Agreement, the Company and the Guarantors have agreed
to provide to the Initial Purchasers and their direct and indirect transferees
the registration rights set forth in this Agreement.  The execution and delivery of this Agreement
is a condition to the closing under the Purchase Agreement.

 

In consideration of the foregoing, the
parties hereto agree as follows:

 

1.             Definitions. 
As used in this Agreement, the following terms shall have the following
meanings:

 

“Additional Guarantor” shall mean any
subsidiary of the Company that executes a Subsidiary Guarantee under the
Indenture after the date of this Agreement.

 

“Business Day” shall mean any day that
is not a Saturday, Sunday or other day on which commercial banks in New York
City are authorized or required by law to remain closed.

 

“Company” shall have the meaning set
forth in the preamble and shall also include the Company’s successors.

 

“Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended from time
to time.

 

“Exchange
Dates” shall have the meaning set forth in Section 2(a)(ii) hereof.

 

“Exchange
Offer” shall mean the exchange offer by the Company and the Guarantors of
Exchange Securities for Registrable Securities pursuant to Section 2(a) hereof.

 

“Exchange
Offer Registration” shall mean a registration under the Securities Act
effected pursuant to Section 2(a) hereof.

 

“Exchange Offer Registration Statement”
shall mean an exchange offer registration statement on Form S-4 (or, if
applicable, on another appropriate form) and all 

 

 

amendments and
supplements to such registration statement, in each case including the
Prospectus contained therein or deemed a part thereof, all exhibits thereto and
any document incorporated by reference therein.

 

“Exchange Securities” shall mean
senior secured notes issued by the Company and guaranteed by the Guarantors
under the Indenture containing terms identical to the Securities (except that
the Exchange Securities will not be subject to restrictions on transfer or to
any increase in annual interest rate for failure to comply with this Agreement)
and to be offered to Holders of Securities in exchange for Securities pursuant
to the Exchange Offer.

 

“Free Writing Prospectus” means each
free writing prospectus (as defined in Rule 405 under the Securities Act)
prepared by or on behalf of the Company or used or referred to by the Company
in connection with the sale of the Securities or the Exchange Securities.

 

“Guarantors” shall have the meaning
set forth in the preamble and shall also include any Guarantor’s successors and
any Additional Guarantors.

 

“Holders” shall mean the Initial
Purchasers, for so long as they own any Registrable Securities, and each of
their successors, assigns and direct and indirect transferees who become owners
of Registrable Securities under the Indenture; provided that for purposes of
Sections 4 and 5 of this Agreement, the term “Holders” shall include
Participating Broker-Dealers.

 

“Indemnified Person” shall have the
meaning set forth in Section 5 (c) hereof.

 

“Indemnifying Person” shall have the
meaning set forth in Section 5 (c) hereof.

 

“Indenture” shall mean the Indenture
relating to the Securities, dated as of July 29, 2009, among the Company,
the Guarantors and U.S. Bank National Association, as trustee, as the same may
be amended from time to time in accordance with the terms thereof.

 

“Initial Purchasers” shall have the
meaning set forth in the preamble.

 

“Inspector” shall have the meaning set
forth in Section 3(a)(xiii) hereof.

 

“Issue Date” shall mean July 29,
2009.

 

“Issuer Information” shall have the
meaning set forth in Section 5(a) hereof.

 

“Majority Holders” shall mean the
Holders of a majority of the aggregate principal amount of the outstanding
Registrable Securities; provided that whenever the consent or approval of
Holders of a specified percentage of Registrable Securities is required
hereunder, any Registrable Securities owned directly or indirectly by the
Company or any of its affiliates shall not be counted in determining whether
such consent or approval was given by the Holders of such required percentage
or amount; and

 

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provided,
further, that if the Company shall issue any additional Securities under the
Indenture prior to consummation of the Exchange Offer or, if applicable, the
effectiveness of any Shelf Registration Statement, such additional Securities
and the Registrable Securities to which this Agreement relates shall be treated
together as one class for purposes of determining whether the consent or
approval of Holders of a specified percentage of Registrable Securities has
been obtained.

 

“Participating Broker-Dealers” shall
have the meaning set forth in Section 4(a) hereof.

 

“Person” shall mean an individual,
partnership, limited liability company, corporation, trust or unincorporated
organization, or a government or agency or political subdivision thereof.

 

“Prospectus” shall mean the prospectus
included in, or, pursuant to the rules and regulations of the Securities
Act, deemed a part of, a Registration Statement, including any preliminary
prospectus, and any such prospectus as amended or supplemented by any
prospectus supplement, including a prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by a
Shelf Registration Statement, and by all other amendments and supplements to
such prospectus, and in each case including any document incorporated by reference
therein.

 

“Purchase Agreement” shall have the
meaning set forth in the preamble.

 

“Registrable Securities” shall mean
the Securities; provided that the Securities shall cease to be Registrable
Securities on the earliest to occur of (i) when a Registration Statement
with respect to such Securities has become effective under the Securities Act
and such Securities have been exchanged or disposed of pursuant to such
Registration Statement (ii) the later of one year after (a) the Issue
Date and (b) any purchase and resale of such Securities by the Company or
any of its affiliates and (iii) the date on which such Securities cease to
be outstanding.

 

“Registration Default” shall have the
meaning set forth in Section 2(d) hereof.

 

“Registration Expenses” shall mean any
and all expenses incident to performance of or compliance by the Company and
the Guarantors with this Agreement, including without limitation: (i) all
SEC, stock exchange or Financial Industry Regulatory Authority registration and
filing fees, (ii) all fees and expenses incurred in connection with
compliance with state securities or blue sky laws (including reasonable fees
and disbursements of counsel for any Underwriters or Holders in connection with
blue sky qualification of any Exchange Securities or Registrable Securities), (iii) all
expenses of any Persons in preparing or assisting in preparing, word
processing, printing and distributing any Registration Statement, any
Prospectus and any amendments or supplements thereto, any underwriting agreements,
securities sales agreements or other similar agreements and any other documents
relating to the performance of and compliance with this Agreement, (iv) all
rating agency fees, (v) all fees and disbursements relating to the
qualification of the Indenture under applicable securities

 

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laws, (vi) the
fees and disbursements of the Trustee and its counsel, (vii) the fees and
disbursements of counsel for the Company and the Guarantors and, in the case of
a Shelf Registration Statement, the reasonable fees and disbursements of one
counsel for the Holders (which counsel shall be selected by the Majority
Holders and which counsel may also be counsel for the Initial Purchasers) and (viii) the
fees and disbursements of the independent public accountants of the Company and
the Guarantors, including the expenses of any special audits or “comfort”
letters required by or incident to the performance of and compliance with this
Agreement, but excluding fees and expenses of counsel to the Underwriters
(other than fees and expenses set forth in clause (ii) above) or the
Holders and underwriting discounts and commissions, brokerage commissions and
transfer taxes, if any, relating to the sale or disposition of Registrable Securities
by a Holder.

 

“Registration Statement” shall mean
any registration statement of the Company and the Guarantors that covers any of
the Exchange Securities or Registrable Securities pursuant to the provisions of
this Agreement and all amendments and supplements to any such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein or deemed a part thereof, all exhibits thereto and
any document incorporated by reference therein.

 

“Representatives” shall mean RBC
Capital Markets Corporation and Jefferies & Company, Inc.

 

“SEC” shall mean the United States
Securities and Exchange Commission.

 

“Securities” shall have the meaning
set forth in the preamble.

 

“Securities Act” shall mean the
Securities Act of 1933, as amended from time to time.

 

“Shelf Effectiveness Period” shall
have the meaning set forth in Section 2(b) hereof.

 

“Shelf Registration” shall mean a
registration effected pursuant to Section 2(b) hereof.

 

“Shelf Registration Statement” shall
mean a “shelf” registration statement of the Company and the Guarantors that
covers all or a portion of the Registrable Securities on an appropriate form
under Rule 415 under the Securities Act, or any similar rule that may
be adopted by the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein or deemed a part thereof, all exhibits thereto and
any document incorporated by reference therein.

 

“Subsidiary Guarantees” shall mean the
guarantees of the Securities and Exchange Securities by the Guarantors under
the Indenture.

 

“Staff” shall mean the staff of the
SEC.

 

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“Target Registration Date” shall mean
the date that is 270 days after the Issue Date.

 

“Trust Indenture Act” shall mean the
Trust Indenture Act of 1939, as amended from time to time.

 

“Trustee” shall mean the trustee with
respect to the Securities under the Indenture.

 

“Underwriter” shall have the meaning
set forth in Section 3(e) hereof.

 

“Underwritten Offering” shall mean an
offering in which Registrable Securities are sold to an Underwriter for
reoffering to the public.

 

2.             Registration Under the Securities Act.  (a)  To the extent not prohibited by any
applicable law or applicable interpretations of the Staff, the Company and the
Guarantors shall use their reasonable best efforts to (i) cause to be
filed an Exchange Offer Registration Statement covering an offer to the Holders
to exchange all the Registrable Securities for Exchange Securities and (ii) have
such Registration Statement remain effective until 180 days after the last
Exchange Date for use by one or more Participating Broker-Dealers.  The Company and the Guarantors shall commence
the Exchange Offer promptly after the Exchange Offer Registration Statement is
declared effective by the SEC and use their reasonable best efforts to complete
the Exchange Offer not later than 60 days after such effective date and, in any
event, not later than the Target Registration Date.

 

The Company and the Guarantors shall commence
the Exchange Offer by mailing the related Prospectus, appropriate letters of
transmittal and other accompanying documents to each Holder stating, in
addition to such other disclosures as are required by applicable law,
substantially the following:

 

(i)           that the Exchange
Offer is being made pursuant to this Agreement and that all Registrable
Securities validly tendered and not properly withdrawn will be accepted for
exchange;

 

(ii)          the dates of
acceptance for exchange (which shall be a period of at least 20 Business Days
(or longer if required by applicable law) from the date such notice is mailed)
(the “Exchange Dates”);

 

(iii)         that any Registrable
Security not tendered will remain outstanding and continue to accrue interest
but will not retain any rights under this Agreement, except as otherwise
specified herein;

 

(iv)        that any Holder
electing to have a Registrable Security exchanged pursuant to the Exchange
Offer will be required to (A) surrender such Registrable Security,
together with the appropriate letters of transmittal, to the institution and at
the address (located in the Borough of Manhattan, The City of New York) and in
the manner specified in the notice, or (B) effect such exchange otherwise
in compliance with the applicable procedures of the depositary for such
Registrable 

 

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Security, in
each case prior to the close of business on the last Exchange Date; and

 

(v)         that any Holder will
be entitled to withdraw its election, not later than the close of business on
the last Exchange Date, by (A) sending to the institution and at the
address (located in the Borough of Manhattan, The City of New York) specified
in the notice, a telegram, telex, facsimile transmission or letter setting
forth the name of such Holder, the principal amount of Registrable Securities
delivered for exchange and a statement that such Holder is withdrawing its
election to have such Securities exchanged or (B) effecting such
withdrawal in compliance with the applicable procedures of the depositary for
the Registrable Securities.

 

As a condition to participating in the
Exchange Offer, a Holder will be required to represent to the Company and the
Guarantors that (i) any Exchange Securities to be received by it will be
acquired in the ordinary course of its business, (ii) at the time of the
commencement of the Exchange Offer it has no arrangement or understanding with
any Person to participate in the distribution (within the meaning of the
Securities Act) of the Exchange Securities in violation of the provisions of
the Securities Act, (iii) it is not an “affiliate” (within the meaning of Rule 405
under the Securities Act) of the Company or any Guarantor and (iv) if such
Holder is a broker-dealer that will receive Exchange Securities for its own
account in exchange for Registrable Securities that were acquired as a result
of market-making or other trading activities, then such Holder will deliver a
Prospectus (or, to the extent permitted by law, make available a Prospectus to
purchasers) in connection with any resale of such Exchange Securities.

 

As soon as reasonably practicable after the
last Exchange Date, the Company and the Guarantors shall:

 

(i)                                     accept for
exchange Registrable Securities or portions thereof validly tendered and not
properly withdrawn pursuant to the Exchange Offer; and

 

(ii)                                  deliver, or cause to
be delivered, to the Trustee for cancellation all Registrable Securities or
portions thereof so accepted for exchange by the Company and issue, and cause
the Trustee to promptly authenticate and deliver to each Holder, Exchange
Securities equal in principal amount to the principal amount of the Registrable
Securities tendered by such Holder.

 

The Company and the Guarantors shall use
their reasonable best efforts to complete the Exchange Offer as provided above
and shall comply with the applicable requirements of the Securities Act, the
Exchange Act and other applicable laws and regulations in connection with the
Exchange Offer.  The Exchange Offer shall
not be subject to any conditions, other than that the Exchange Offer does not
violate any applicable law or applicable interpretations of the Staff.

 

(b)         In the event that (i) the Company
and the Guarantors determine that the Exchange Offer Registration provided for
in Section 2(a) above is not available 

 

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or may not be completed as soon
as reasonably practicable after the last Exchange Date because it would violate
any applicable law or applicable interpretations of the Staff, (ii) the
Exchange Offer is not for any other reason completed by the Target Registration
Date, (iii) upon receipt of a written request from any Initial Purchaser
representing that it holds Registrable Securities that are or were ineligible
to be exchanged in the Exchange Offer, or (iv) any Holder (other than the
Initial Purchasers) is not eligible to participate in the Exchange Offer, the
Company and the Guarantors shall cause to be filed on or prior to 30 days after
such filing obligation arises (or, if later, 150 days after the Issue Date), a
Shelf Registration Statement providing for the sale of all the Registrable
Securities by the Holders thereof and to use their reasonable best efforts to
cause such Shelf Registration Statement to be declared effective on or prior to
75 days after such filing (or, if later, 270 days after the Issue Date).

 

In the event that the Company and the
Guarantors are required to file a Shelf Registration Statement pursuant to
clause (iii) of the preceding sentence, the Company and the Guarantors
shall use their reasonable best efforts to file and have become effective both
an Exchange Offer Registration Statement pursuant to Section 2(a) with
respect to all Registrable Securities and a Shelf Registration Statement (which
may be a combined Registration Statement with the Exchange Offer Registration
Statement) with respect to offers and sales of Registrable Securities held by
the Initial Purchasers after completion of the Exchange Offer.

 

The Company and the Guarantors agree to use
their reasonable best efforts to keep the Shelf Registration Statement
continuously effective until the earlier to occur of (A) the second
anniversary of the Issue Date and (B) such time as there are no
Registrable Securities outstanding (the “Shelf Effectiveness Period”).  The Company and the Guarantors further agree
to supplement or amend the Shelf Registration Statement and the related
Prospectus if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration Statement
or by the Securities Act or by any other rules and regulations thereunder
or if reasonably requested by a Holder of Registrable Securities with respect
to information relating to such Holder, and to use their reasonable best
efforts to cause any such amendment to become effective, if required, and such
Shelf Registration Statement and Prospectus to become usable as soon as
thereafter reasonably practicable.  The
Company and the Guarantors agree to furnish to the Holders of Registrable
Securities copies of any such supplement or amendment promptly after its being
used or filed with the SEC.

 

(c)          The Company and the Guarantors shall
pay all Registration Expenses in connection with any registration pursuant to Section 2(a) or
Section 2(b) hereof.  Each
Holder shall pay all underwriting discounts and commissions, brokerage
commissions and transfer taxes, if any, relating to the sale or disposition of
such Holder’s Registrable Securities pursuant to the Shelf Registration
Statement.

 

(d)         An Exchange Offer Registration
Statement pursuant to Section 2(a) hereof will not be deemed to have
become effective unless it has been declared effective by the SEC.  A Shelf Registration Statement pursuant to Section 2(b) hereof
will not be deemed to have become effective unless it has been declared
effective by the SEC or is 

 

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automatically effective upon
filing with the SEC as provided by Rule 462 under the Securities Act.

 

In the event that (i) the Exchange Offer
is not completed on or before the Target Registration Date, (ii) the Shelf
Registration Statement, if required pursuant to Section 2(b) hereof,
has not been filed on or prior to the date specified in Section 2(b) hereof
for such filing, (iii) the Shelf Registration Statement, if required
pursuant to Section 2(b) hereof, has not been declared effective on
or prior to the date specified in Section 2(b) hereof for such
effectiveness or (iv) the Shelf Registration Statement, if required
hereby, has become effective and thereafter either ceases to be effective or
the Prospectus contained therein ceases to be usable, in each case whether or
not permitted by this Agreement, at any time during the Shelf Effectiveness
Period, and such failure to remain effective or usable exists for more than 30
days (whether or not consecutive) in any 12-month period  (each such event in clauses (i), (ii), (iii) and
(iv) above, a “Registration Default”), then the interest rate on
the Registrable Securities will be increased by (1) 0.25% per annum for
the first 90-day period immediately following such Registration Default and (2) an
additional 0.25% per annum with respect to each subsequent 90-day period, up to
a maximum increase of 1.00% per annum. 
The interest rate on the Registrable Securities shall cease to be
increased pursuant to this paragraph:  (1) in
the case of a Registration Default described in clause (i) above, when the
Exchange Offer is completed; (2) in the case of a Registration Default
described in clause (ii) above, when the Shelf Registration Statement has
been filed; (3) in the case of a Registration Default described in clause (iii) above,
when the Shelf Registration Statement has been declared effective; or (4) in
the case of a Registration Default described in clause (iv) above, when
the Shelf Registration Statement has again become effective or the Prospectus
again becomes usable, as the case may be.

 

(e)          The Company represents, warrants and
covenants that it (including its agents and representatives) will not prepare,
make, use, authorize, approve or refer to any Free Writing Prospectus.

 

(f)          Notwithstanding any other obligations
of the Company or the Guarantors contained herein, the Company shall use
reasonable best efforts, on or prior to the first anniversary of the Issue
Date, to remove the restrictive legend from any Registrable Securities that
bear such legend on such date and to obtain an unrestricted CUSIP number for
such Registrable Securities, in each case to the extent permitted by applicable
law.

 

3.             Registration Procedures.  (a) In connection with the preparation
and filing of any Registration Statement required pursuant to Section 2(a) and
Section 2(b) hereof, the Company and the Guarantors shall as
expeditiously as reasonably possible:

 

(i)           prepare and file
with the SEC a Registration Statement on the appropriate form under the
Securities Act, which form (x) shall be selected by the Company and the Guarantors,
(y) shall, in the case of a Shelf Registration, be available for the sale
of the Registrable Securities by the Holders thereof and (z) shall comply
as to form in all material respects with the requirements of the

 

8

 

applicable
form and include all financial statements required by the SEC to be filed
therewith; and use their reasonable best efforts to cause such Registration
Statement to become effective and remain effective for the applicable period in
accordance with Section 2 hereof;

 

(ii)          prepare and file
with the SEC such amendments and post-effective amendments to each Registration
Statement as may be necessary to keep such Registration Statement effective for
the applicable period in accordance with Section 2 hereof and cause each
Prospectus to be supplemented by any required prospectus supplement and, as so
supplemented, to be filed pursuant to Rule 424 under the Securities Act;
and keep each Prospectus current during the period described in Section 4(3) of
and Rule 174 under the Securities Act that is applicable to transactions
by brokers or dealers with respect to the Registrable Securities or Exchange
Securities;

 

(iii)         in the case of a
Shelf Registration, furnish to each Holder of Registrable Securities, to
counsel for the Initial Purchasers, to counsel for such Holders and to each
Underwriter of an Underwritten Offering of Registrable Securities, if any,
without charge, as many copies of each Prospectus or preliminary prospectus,
and any amendment or supplement thereto, as such Holder, counsel or Underwriter
may reasonably request in order to facilitate the sale or other disposition of
the Registrable Securities thereunder; and the Company and the Guarantors
consent to the use of such Prospectus, preliminary prospectus and any amendment
or supplement thereto in accordance with applicable law by each of the Holders
of Registrable Securities and any such Underwriters in connection with the
offering and sale of the Registrable Securities covered by and in the manner
described in such Prospectus, preliminary prospectus or any amendment or
supplement thereto in accordance with applicable law;

 

(iv)        use their reasonable
best efforts to register or qualify the Registrable Securities under all applicable
state securities or blue sky laws of such jurisdictions as any Holder of
Registrable Securities covered by a Registration Statement shall reasonably
request in writing by the time the applicable Registration Statement becomes
effective; cooperate with such Holders in connection with any filings required
to be made with the Financial Industry Regulatory Authority; and do any and all
other acts and things that may be reasonably necessary or advisable to enable
each Holder to complete the disposition in each such jurisdiction of the
Registrable Securities owned by such Holder; provided that neither the Company
nor any Guarantor shall be required to (1) qualify as a foreign
corporation or other entity or as a dealer in securities in any such
jurisdiction where it would not otherwise be required to so qualify, (2) file
any general consent to service of process in any such jurisdiction or (3) subject
itself to taxation in any such jurisdiction if it is not so subject;

 

(v)         in the case of a Shelf
Registration, notify each Holder of Registrable Securities and counsel for such
Holders promptly and, if requested by 

 

9

 

any such
Holder or counsel, confirm such advice in writing (1) when a Registration
Statement has become effective, when any post-effective amendment thereto has
been filed and becomes effective and when any amendment or supplement to the
Prospectus has been filed, (2) of any request by the SEC or any state
securities authority for amendments and supplements to a Registration Statement
or Prospectus or for additional information after the Registration Statement
has become effective, (3) of the issuance by the SEC or any state
securities authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose,
including the receipt by the Company of any notice of objection of the SEC to
the use of a Shelf Registration Statement or any post-effective amendment
thereto pursuant to Rule 401(g)(2) under the Securities Act, (4) if,
between the applicable effective date of a Shelf Registration Statement and the
closing of any sale of Registrable Securities covered thereby, the
representations and warranties of the Company or any Guarantor contained in any
underwriting agreement, securities sales agreement or other similar agreement,
if any, relating to an offering of such Registrable Securities cease to be true
and correct in all material respects or if the Company or any Guarantor
receives any notification with respect to the suspension of the qualification
of the Registrable Securities for sale in any jurisdiction or the initiation of
any proceeding for such purpose, (5) of the happening of any event during
the period a Registration Statement is effective that makes any statement made
in such Registration Statement or the related Prospectus untrue in any material
respect or that requires the making of any changes in such Registration
Statement or Prospectus in order to make the statements therein not misleading
(in the case of the Prospectus, in light of the circumstances under which they
were made) and (6) of any determination by the Company or any Guarantor
that a post-effective amendment to a Registration Statement or any amendment or
supplement to the Prospectus would be appropriate;

 

(vi)        use their reasonable
best efforts to obtain the withdrawal of any order suspending the effectiveness
of a Registration Statement or, in the case of a Shelf Registration, the
resolution of any objection of the SEC pursuant to Rule 401(g)(2),
including by filing an amendment to such Shelf Registration Statement on the
proper form, at the earliest possible moment and provide immediate notice to
each Holder of the withdrawal of any such order or such resolution;

 

(vii)       in the case of a Shelf
Registration, furnish to each Holder of Registrable Securities, without charge,
at least one conformed copy of each Registration Statement and any
post-effective amendment thereto (without any documents incorporated therein by
reference or exhibits thereto, unless requested);

 

(viii)      in the case of a Shelf
Registration, cooperate with the Holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends and
enable such Registrable Securities to be issued in such denominations and
registered in such names (consistent with the provisions of the

 

10

 

Indenture) as
such Holders may reasonably request at least one Business Day prior to the
closing of any sale of Registrable Securities;

 

(ix)         in the case of a
Shelf Registration, upon the occurrence of any event contemplated by Section 3(a)(v)(5) hereof,
use their reasonable best efforts to prepare and file with the SEC a supplement
or post-effective amendment to such Shelf Registration Statement or the related
Prospectus or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered (or, to the extent permitted
by law, made available) to purchasers of the Registrable Securities, such
Prospectus will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and the Company
and the Guarantors shall notify the Holders of Registrable Securities to
suspend use of the Prospectus as promptly as practicable after the occurrence
of such an event, and such Holders hereby agree to suspend use of the
Prospectus until the Company and the Guarantors have amended or supplemented
the Prospectus to correct such misstatement or omission;

 

(x)          a reasonable time
prior to the filing of any Registration Statement, any Prospectus, any
amendment to a Registration Statement or amendment or supplement to a
Prospectus, provide copies of such document to the Initial Purchasers and their
counsel (and, in the case of a Shelf Registration Statement, to the Holders of
Registrable Securities and their counsel) and reasonably accept any comments to
such document provided by the Initial Purchasers and their counsel (and, in the
case of a Shelf Registration Statement, by the Holders of Registrable
Securities and their counsel).  The
comments of the Initial Purchasers, Holders of Registrable Securities or their
respective counsel, if any, shall be deemed to be reasonable if made to correct
in such Registration Statement, amendment, Prospectus or supplement, as
applicable, as proposed to be filed, any untrue statement of a material fact or
omission to state a material fact necessary to make the statements therein not
misleading;

 

(xi)         obtain a CUSIP number
for all Exchange Securities or Registrable Securities, as the case may be, not
later than the initial effective date of a Registration Statement;

 

(xii)        cause the Indenture
to be qualified under the Trust Indenture Act in connection with the
registration of the Exchange Securities or Registrable Securities, as the case may
be; cooperate with the Trustee and the Holders to effect such changes to the
Indenture as may be required for the Indenture to be so qualified in accordance
with the terms of the Trust Indenture Act; and execute, and use their
reasonable best efforts to cause the Trustee to execute, all documents as may
be required to effect such changes and all other forms and documents required
to be filed with the SEC to enable the Indenture to be so qualified in a timely
manner;

 

11

 

(xiii)                          in the case of
a Shelf Registration, make available for inspection by a representative of the
Holders of the Registrable Securities (an “Inspector”), any Underwriter
participating in any disposition pursuant to such Shelf Registration Statement,
any attorneys and accountants designated by a majority of the Holders of
Registrable Securities to be included in such Shelf Registration and any
attorneys and accountants designated by such Underwriter, at reasonable times
and in a reasonable manner, all pertinent financial and other records,
documents and properties of the Company and its subsidiaries, and cause the
respective officers, directors and employees of the Company and the Guarantors
to supply all information reasonably requested by any such Inspector,
Underwriter, attorney or accountant in connection with a Shelf Registration
Statement; provided that if any such information is identified by the Company
or any Guarantor as being confidential or proprietary, each Person receiving
such information shall take such actions as are reasonably necessary to protect
the confidentiality of such information to the extent such action is otherwise
not inconsistent with, an impairment of or in derogation of the rights and
interests of any Inspector, Holder or Underwriter;

 

(xiv)                         if reasonably
requested by any Holder of Registrable Securities covered by a Shelf
Registration Statement, promptly include in a Prospectus supplement or
post-effective amendment such information with respect to such Holder as such
Holder reasonably requests in writing to be included therein and make all
required filings of such Prospectus supplement or such post-effective amendment
as soon as the Company has received notification of the matters to be so
included in such filing; and

 

(xv)                            in the case of
a Shelf Registration, enter into such customary agreements and take all such
other reasonable actions in connection therewith (including those requested by
the Holders of a majority in principal amount of the Registrable Securities
covered by the Shelf Registration Statement) in order to expedite or facilitate
the disposition of such Registrable Securities including, but not limited to,
an Underwritten Offering and in such Underwritten Offering, (1) to the
extent possible, make such representations and warranties to the Holders and
any Underwriters of such Registrable Securities with respect to the business of
the Company and its subsidiaries and the Registration Statement, Prospectus and
documents incorporated by reference or deemed incorporated by reference, if
any, in each case, in form, substance and scope as are customarily made by
issuers to underwriters in underwritten offerings and confirm the same if and
when requested by the Underwriters, (2) obtain opinions of counsel to the
Company and the Guarantors covering the matters customarily covered in opinions
requested in underwritten offerings, (3) obtain “comfort” letters from the
independent certified public accountants of the Company and the Guarantors
(and, if necessary, any other certified public accountant of any subsidiary of
the Company or any Guarantor, or of any business acquired by the Company or any
Guarantor for which financial statements and financial data are or are required
to be included in the Registration Statement) in customary form and covering
matters of the type customarily covered in “comfort” letters in connection with
underwritten

 

12

 

offerings, including but not
limited to financial information contained in any preliminary prospectus or
Prospectus and (4) deliver such documents and certificates as may be
reasonably requested by the Underwriters, and which are customarily delivered
in underwritten offerings, to evidence the continued validity of the
representations and warranties of the Company and the Guarantors made pursuant
to clause (1) above and to evidence compliance with any customary
conditions contained in an underwriting agreement.

 

(b)                                 In the case of
a Shelf Registration Statement, the Company may require each Holder of
Registrable Securities to furnish to the Company such information regarding
such Holder and the proposed disposition by such Holder of such Registrable
Securities as the Company and the Guarantors may from time to time reasonably
request in writing.  No Holder of
Registrable Securities shall be entitled to include any of its Registrable
Securities in any Shelf Registration Statement pursuant to this Agreement
unless such Holder furnishes to the Company and the Trustee in writing, within
30 days after receipt of a written request therefor, such information as the
Company and the Trustee, after conferring with counsel with regard to
information relating to Holders that would be required by the SEC to be
included in such Shelf Registration Statement or Prospectus included therein,
may reasonably request for inclusion in any Shelf Registration Statement or
Prospectus included therein, and no such Holder shall be entitled to additional
interest pursuant to Section 2(d) hereof in the event such Holder
shall not have provided such information and the 30-day period to produce such
information has lapsed.

 

(c)                                  In the case of
a Shelf Registration Statement, each Holder of Registrable Securities covered
in such Shelf Registration Statement agrees that, upon receipt of any notice
from the Company and the Guarantors of the happening of any event of the kind
described in Section 3(a)(v)(3) or 3(a)(v)(5) hereof, such
Holder will forthwith discontinue disposition of Registrable Securities
pursuant to the Shelf Registration Statement until such Holder’s receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 3(a)(ix) hereof
and, if so directed by the Company and the Guarantors, such Holder will deliver
to the Company and the Guarantors all copies in its possession, other than
permanent file copies then in such Holder’s possession, of the Prospectus
covering such Registrable Securities that is current at the time of receipt of
such notice.

 

(d)                                 If the Company
and the Guarantors shall give any notice to suspend the disposition of
Registrable Securities pursuant to a Registration Statement, the Company and
the Guarantors shall extend the period during which such Registration Statement
shall be maintained effective pursuant to this Agreement by the number of days
during the period from and including the date of the giving of such notice to
and including the date when the Holders of such Registrable Securities shall
have received copies of the supplemented or amended Prospectus necessary to
resume such dispositions. The Company and the Guarantors may give any such
notice only twice during any 365-day period (other than notices relating to
suspensions where the Company did not voluntarily take action to cause such
suspensions, unless such voluntary action was

 

13

 

required by law) and any such suspensions
shall not exceed 30 days for each suspension and there shall not be more than
two suspensions in effect during any 365-day period.

 

(e)                                  The Holders of
Registrable Securities covered by a Shelf Registration Statement who desire to
do so may sell such Registrable Securities in an Underwritten Offering.  In any such Underwritten Offering, the
investment bank or investment banks and manager or managers (each an “Underwriter”)
that will administer the offering will be selected by the Holders of a majority
in principal amount of the Registrable Securities included in such offering,
with the consent of the Company not to be unreasonably withheld.

 

4.                                       Participation of
Broker-Dealers in Exchange Offer.  (a)     The Staff has taken the position that any
broker-dealer that receives Exchange Securities for its own account in the
Exchange Offer in exchange for Securities that were acquired by such
broker-dealer as a result of market-making or other trading activities (a “Participating
Broker-Dealer”) may be deemed to be an “underwriter” within the meaning of
the Securities Act and must deliver a prospectus meeting the requirements of
the Securities Act in connection with any resale of such Exchange Securities.

 

The Company and the Guarantors understand that it is
the Staff’s position that if the Prospectus contained in the Exchange Offer
Registration Statement includes a plan of distribution containing a statement
to the above effect and the means by which Participating Broker-Dealers may
resell the Exchange Securities, without naming the Participating Broker-Dealers
or specifying the amount of Exchange Securities owned by them, such Prospectus
may be delivered by Participating Broker-Dealers (or, to the extent permitted
by law, made available to purchasers) to satisfy their prospectus delivery
obligation under the Securities Act in connection with resales of Exchange
Securities for their own accounts, so long as the Prospectus otherwise meets
the requirements of the Securities Act.

 

(b)                                 In light of the
above, and notwithstanding the other provisions of this Agreement, the Company
and the Guarantors agree to amend or supplement the Prospectus contained in the
Exchange Offer Registration Statement for a period of up to 180 days after the
last Exchange Date (as such period may be extended pursuant to Section 3(d) of
this Agreement), if requested by the Initial Purchasers or by one or more
Participating Broker-Dealers, in order to expedite or facilitate the
disposition of any Exchange Securities by Participating Broker-Dealers
consistent with the positions of the Staff recited in Section 4(a) above.  The Company and the Guarantors further agree
that Participating Broker-Dealers shall be authorized to deliver such
Prospectus (or, to the extent permitted by law, make available) during such
period in connection with the resales contemplated by this Section 4.

 

(c)                                  The Initial
Purchasers shall have no liability to the Company, any Guarantor or any Holder
with respect to any request that they may make pursuant to Section 4(b) above.

 

14

 

5.                                       Indemnification and
Contribution.  (a)                                        The Company and
each Guarantor, jointly and severally, agree to indemnify and hold harmless
each Initial Purchaser and each Holder, their respective affiliates, directors
and officers and each Person, if any, who controls any Initial Purchaser or any
Holder within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, reasonable legal fees and other
expenses incurred in connection with any suit, action or proceeding or any
claim asserted, as such fees and expenses are incurred), joint or several, that
arise out of, or are based upon, (1) any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement or
any omission or alleged omission to state therein a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading, or (2) any untrue statement or alleged untrue statement of a
material fact contained in any Prospectus, any Free Writing Prospectus used in
violation of this Agreement or any “issuer information” (“Issuer Information”)
filed or required to be filed pursuant to Rule 433(d) under the
Securities Act, or any omission or alleged omission to state therein a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case except
insofar as such losses, claims, damages or liabilities arise out of, or are
based upon, any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with any information relating
to any Initial Purchaser or information relating to any Holder furnished to the
Company in writing through the Representatives or any selling Holder, respectively
expressly for use therein.  In connection
with any Underwritten Offering permitted by Section 3, the Company and the
Guarantors, jointly and severally, will also indemnify the Underwriters, if
any, selling brokers, dealers and similar securities industry professionals
participating in the distribution, their respective affiliates and each Person
who controls such Persons (within the meaning of the Securities Act and the
Exchange Act) to the same extent as provided above with respect to the indemnification
of the Holders, if requested in connection with any Registration Statement, any
Prospectus, any Free Writing Prospectus or any Issuer Information.

 

(b)                                 Each Holder
agrees, severally and not jointly, to indemnify and hold harmless the Company,
the Guarantors, the Initial Purchasers and the other selling Holders, the
directors of the Company and the Guarantors, each officer of the Company and
the Guarantors who signed the Registration Statement and each Person, if any,
who controls the Company, the Guarantors, any Initial Purchaser and any other
selling Holder within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent as the indemnity set forth in paragraph (a) above,
but only with respect to any losses, claims, damages or liabilities that arise
out of, or are based upon, any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with any
information relating to such Holder furnished to the Company in writing by such
Holder expressly for use in any Registration Statement and any Prospectus.

 

(c)                                  If any suit,
action, proceeding (including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against any Person in respect of
which indemnification may be sought pursuant to either paragraph (a)

 

15

 

or (b) above, such Person (the “Indemnified
Person”) shall promptly notify the Person against whom such indemnification
may be sought (the “Indemnifying Person”) in writing; provided that the
failure to notify the Indemnifying Person shall not relieve it from any
liability that it may have under this Section 5 except to the extent that
it has been materially prejudiced by such failure; and provided, further, that
the failure to notify the Indemnifying Person shall not relieve it from any
liability that it may have to an Indemnified Person otherwise than under this Section 5.  If any such proceeding shall be brought or
asserted against an Indemnified Person and it shall have notified the
Indemnifying Person thereof, the Indemnifying Person shall be entitled to
participate in the defense thereof and to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Person.  In any such proceeding, any Indemnified
Person shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary; (ii) the Indemnifying Person has failed
within a reasonable time to retain counsel reasonably satisfactory to the
Indemnified Person; (iii) the Indemnified Person shall have reasonably
concluded that there may be legal defenses available to it that are different
from or in addition to those available to the Indemnifying Person; or (iv) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. 
It is understood and agreed that the Indemnifying Person shall not, in
connection with any proceeding or related proceeding in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be reimbursed as they are incurred.  Any such separate firm (x) for any
Initial Purchaser, its affiliates, directors and officers and any control
Persons of such Initial Purchaser shall be designated in writing by the
Representatives, (y) for any Holder, its directors and officers and any
control Persons of such Holder shall be designated in writing by the Majority
Holders and (z) in all other cases shall be designated in writing by the
Company.  The Indemnifying Person shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment.  Notwithstanding the foregoing
sentence, if at any time an Indemnified Person shall have requested that an
Indemnifying Person reimburse the Indemnified Person for fees and expenses of
counsel as contemplated by this paragraph, the Indemnifying Person shall be
liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 30 days after
receipt by the Indemnifying Person of such request and (ii) the
Indemnifying Person shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement.  No Indemnifying Person shall, without the
written consent of the Indemnified Person, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnification could have been sought hereunder by such
Indemnified Person, unless such settlement (A) includes an unconditional
release of such Indemnified Person, in form and substance reasonably satisfactory
to such Indemnified

 

16

 

Person, from all liability on claims that are
the subject matter of such proceeding and (B) does not include any
statement as to or any admission of fault, culpability or a failure to act by
or on behalf of any Indemnified Person.

 

(d)                                 If the
indemnification provided for in paragraphs (a) and (b) above is
unavailable to an Indemnified Person or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Person under such paragraph, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Guarantors from the offering of the Securities and the
Exchange Securities, on the one hand, and by the Holders from receiving
Securities or Exchange Securities registered under the Securities Act, on the
other hand, or (ii) if the allocation provided by clause (i) is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) but also the
relative fault of the Company and the Guarantors on the one hand and the
Holders on the other in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations.  The
relative fault of the Company and the Guarantors on the one hand and the
Holders on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Guarantors or by the Holders and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

 

(e)                                  The Company,
the Guarantors and the Holders agree that it would not be just and equitable if
contribution pursuant to this Section 5 were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation that does not take account of the equitable
considerations referred to in paragraph (d) above.  The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages and liabilities referred to
in paragraph (d) above shall be deemed to include, subject to the
limitations set forth above, any reasonable legal or other expenses incurred by
such Indemnified Person in connection with any such action or claim.  Notwithstanding the provisions of this Section 5,
in no event shall a Holder be required to contribute any amount in excess of
the amount by which the total price at which the Securities or Exchange
Securities sold by such Holder exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.  No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. 
The Holders’ obligations to contribute pursuant to this Section 5
are several and not joint.

 

(f)                                    The remedies
provided for in this Section 5 are not exclusive and shall not limit any rights
or remedies that may otherwise be available to any Indemnified Person at law or
in equity.

 

17

 

(g)                                 The indemnity
and contribution provisions contained in this Section 5 shall remain
operative and in full force and effect regardless of (i) any termination
of this Agreement, (ii) any investigation made by or on behalf of the
Initial Purchasers or any Holder or any Person controlling any Initial
Purchaser or any Holder, or by or on behalf of the Company or the Guarantors or
the officers or directors of or any Person controlling the Company or the
Guarantors, (iii) acceptance of any of the Exchange Securities and (iv) any
sale of Registrable Securities pursuant to a Shelf Registration Statement.

 

6.                                       General.

 

(a)                                  No
Inconsistent Agreements.   The
Company and the Guarantors represent, warrant and agree that (i) the
rights granted to the Holders hereunder do not in any way conflict with and are
not inconsistent with the rights granted to the holders of any other
outstanding securities issued or guaranteed by the Company or any Guarantor
under any other agreement and (ii) neither the Company nor any Guarantor
has entered into, or on or after the date of this Agreement will enter into,
any agreement that is inconsistent with the rights granted to the Holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof.

 

(b)                                 Amendments
and Waivers.   The
provisions of this Agreement, including the provisions of this sentence, may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given unless the Company and the
Guarantors have obtained the written consent of Holders of at least a majority
in aggregate principal amount of the outstanding Registrable Securities
affected by such amendment, modification, supplement, waiver or consent;
provided that no amendment, modification, supplement, waiver or consent to any
departure from the provisions of Section 5 hereof shall be effective as
against any Holder of Registrable Securities unless consented to in writing by
such Holder.  Any amendments,
modifications, supplements, waivers or consents pursuant to this Section 6(b) shall
be by a writing executed by each of the parties hereto.

 

(c)                                  Notices.  All notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, telex, telecopier, or any courier guaranteeing
overnight delivery (i) if to a Holder, at the most current address given
by such Holder to the Company by means of a notice given in accordance with the
provisions of this Section 6(c), which address initially is, with respect
to the Initial Purchasers, the address set forth in the Purchase Agreement; (ii) if
to the Company and the Guarantors, initially at the Company’s address set forth
in the Purchase Agreement and thereafter at such other address, notice of which
is given in accordance with the provisions of this Section 6(c); and (iii) to
such other persons at their respective addresses as provided in the Purchase
Agreement and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 6(c).  All such notices and communications shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt is acknowledged, if facsimiled; and on the
next Business Day if timely delivered to an air courier guaranteeing overnight

 

18

 

delivery. 
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.

 

(d)                                 Successors
and Assigns. This Agreement shall inure to the benefit of and
be binding upon the successors, assigns and transferees of each of the parties,
including, without limitation and without the need for an express assignment,
subsequent Holders; provided that nothing herein shall be deemed to permit any
assignment, transfer or other disposition of Registrable Securities in
violation of the terms of the Purchase Agreement or the Indenture.  If any transferee of any Holder shall acquire
Registrable Securities in any manner, whether by operation of law or otherwise,
such Registrable Securities shall be held subject to all the terms of this
Agreement, and by taking and holding such Registrable Securities such Person
shall be conclusively deemed to have agreed to be bound by and to perform all
of the terms and provisions of this Agreement and such Person shall be entitled
to receive the benefits hereof.  The
Initial Purchasers (in their capacity as Initial Purchasers) shall have no
liability or obligation to the Company or the Guarantors with respect to any
failure by a Holder to comply with, or any breach by any Holder of, any of the
obligations of such Holder under this Agreement.

 

(e)                                  Third
Party Beneficiaries.  Each Holder
shall be a third party beneficiary to the agreements made hereunder between the
Company and the Guarantors, on the one hand, and the Initial Purchasers, on the
other hand, and shall have the right to enforce such agreements directly to the
extent it deems such enforcement necessary or advisable to protect its rights
or the rights of other Holders hereunder.

 

(f)                                    Counterparts. This
Agreement may be executed in any number of counterparts and by the parties
hereto 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.

 

(g)                                 Headings.  The headings in this Agreement are for
convenience of reference only, are not a part of this Agreement and shall not
limit or otherwise affect the meaning hereof.

 

(h)                                 Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.

 

(i)                                     Entire
Agreement; Severability.  This
Agreement contains the entire agreement between the parties relating to the
subject matter hereof and supersedes all oral statements and prior writings
with respect thereto.  If any term,
provision, covenant or restriction contained in this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable or against
public policy, the remainder of the terms, provisions, covenants and
restrictions contained herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. 
The Company, the Guarantors and the Initial Purchasers shall endeavor in
good faith negotiations to replace the invalid, void or unenforceable
provisions with valid provisions the economic

 

19

 

effect of which comes as close as possible to
that of the invalid, void or unenforceable provisions.

 

20

 

IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first written above.

 

	
   

  	
  PROSPECT
  MEDICAL HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel S. Lee

  
	
   

  	
   

  	
  Name:
  Samuel S. Lee

  
	
   

  	
   

  	
  Title:
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ALTA
  HOLLYWOOD HOSPITALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel S. Lee

  
	
   

  	
   

  	
  Name:
  Samuel S. Lee

  
	
   

  	
   

  	
  Title:
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ALTA
  HOSPITALS SYSTEM, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel S. Lee

  
	
   

  	
   

  	
  Name:
  Samuel S. Lee

  
	
   

  	
   

  	
  Title:
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ALTA
  LOS ANGELES HOSPITALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel S. Lee

  
	
   

  	
   

  	
  Name:
  Samuel S. Lee

  
	
   

  	
   

  	
  Title:
  President

  

 

{Registration Rights
Agreement}

 

 

	
   

  	
  GENESIS
  HEALTHCARE OF SOUTHERN CALIFORNIA, INC., A MEDICAL GROUP 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel S. Lee

  
	
   

  	
   

  	
  Name:
  Samuel S. Lee

  
	
   

  	
   

  	
  Title:
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  POMONA
  VALLEY MEDICAL GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel S. Lee

  
	
   

  	
   

  	
  Name:
  Samuel S. Lee

  
	
   

  	
   

  	
  Title:
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PROMED
  HEALTH CARE  ADMINISTRATORS 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel S. Lee

  
	
   

  	
   

  	
  Name:
  Samuel S. Lee

  
	
   

  	
   

  	
  Title:
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PROMED
  HEALTH SERVICES COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel S. Lee

  
	
   

  	
   

  	
  Name:
  Samuel S. Lee

  
	
   

  	
   

  	
  Title:
  Vice President

  

 

{Registration Rights
Agreement}

 

 

	
   

  	
  PROSPECT
  HOSPITAL ADVISORY SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel S. Lee

  
	
   

  	
   

  	
  Name:
  Samuel S. Lee

  
	
   

  	
   

  	
  Title:
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PROSPECT
  HEALTH SOURCE MEDICAL GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel S. Lee

  
	
   

  	
   

  	
  Name:
  Samuel S. Lee

  
	
   

  	
   

  	
  Title:
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PROSPECT
  MEDICAL GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel S. Lee

  
	
   

  	
   

  	
  Name:
  Samuel S. Lee

  
	
   

  	
   

  	
  Title:
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PROSPECT
  MEDICAL SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel S. Lee

  
	
   

  	
   

  	
  Name:
  Samuel S. Lee

  
	
   

  	
   

  	
  Title:
  Chairman

  

 

{Registration
Rights Agreement}

 

 

	
   

  	
  PROSPECT
  NWOC MEDICAL GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel S. Lee

  
	
   

  	
   

  	
  Name:
  Samuel S. Lee

  
	
   

  	
   

  	
  Title:
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PROSPECT
  PROFESSIONAL CARE MEDICAL GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel S. Lee

  
	
   

  	
   

  	
  Name:
  Samuel S. Lee

  
	
   

  	
   

  	
  Title:
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STARCARE
  MEDICAL GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel S. Lee

  
	
   

  	
   

  	
  Name:
  Samuel S. Lee

  
	
   

  	
   

  	
  Title:
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  UPLAND
  MEDICAL GROUP, A PROFESSIONAL MEDICAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel S. Lee

  
	
   

  	
   

  	
  Name:
  Samuel S. Lee

  
	
   

  	
   

  	
  Title: Vice President 

  

 

{Registration Rights Agreement}

 

 

	
  Confirmed
  and accepted as of the date first above written:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  RBC
  CAPITAL MARKETS CORPORATION

  	
   

  
	
  JEFFERIES &
  COMPANY, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  For
  themselves and on behalf of

  	
   

  
	
  the
  several Initial Purchasers

  	
   

  
	
   

  	
   

  
	
  By:
  RBC Capital Markets Corporation

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ David Capaldi

  	
   

  
	
   

  	
  Name:
  David Capaldi

  	
   

  
	
   

  	
  Title:
  Managing Director

  	
   

  
	
   

  	
   

  
	
  By:
  Jefferies & Company, Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Christian Morris

  	
   

  
	
   

  	
  Name:
  Christian Morris

  	
   

  
	
   

  	
  Title: Managing Director

  	
   

  

 

{Registration Rights Agreement}

 

 

Schedule 1

 

GUARANTORS

 

Alta Hospitals System, LLC

 

Alta Hollywood Hospitals, Inc.

 

Alta Los Angeles Hospitals, Inc.

 

Genesis Healthcare of Southern California, Inc.,
a Medical Group

 

Pomona Valley Medical Group, Inc.

 

ProMed Health Care Administrators

 

ProMed Health Services Company

 

Prospect Hospital Advisory Services, Inc.

 

Prospect Health Source Medical Group, Inc.

 

Prospect Medical Group, Inc.

 

Prospect Medical Systems, Inc.

 

Prospect NWOC Medical Group, Inc.

 

Prospect Professional Care Medical Group, Inc.

 

StarCare Medical Group, Inc.

 

Upland Medical Group, a Professional Medical
CorporationExhibit 10.1

 

 

 

CREDIT
AGREEMENT

 

Dated
as of July 29, 2009

 

among

 

PROSPECT
MEDICAL HOLDINGS, INC.

as Borrower,

 

ROYAL
BANK OF CANADA,

as Administrative Agent,

 

JEFFERIES
FINANCE LLC,

as Syndication Agent

 

and

 

The
Other Lenders Party Hereto

 

RBC
CAPITAL MARKETS,

 

as
Sole Lead Arranger and Sole Book Manager

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
   

  
	
   

  	
   

  
	
  DEFINITIONS AND
  ACCOUNTING TERMS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01

  	
  Defined Terms

  	
  1

  
	
  SECTION 1.02

  	
  Other Interpretive
  Provisions

  	
  29

  
	
  SECTION 1.03

  	
  Accounting Terms

  	
  29

  
	
  SECTION 1.04

  	
  Rounding

  	
  30

  
	
  SECTION 1.05

  	
  Times of Day

  	
  30

  
	
  SECTION 1.06

  	
  Letter of Credit
  Amounts

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
   

  	
   

  
	
  THE COMMITMENTS
  AND CREDIT EXTENSIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01

  	
  The Loans

  	
  30

  
	
  SECTION 2.02

  	
  Borrowings, Conversions
  and Continuations of Loans

  	
  31

  
	
  SECTION 2.03

  	
  Letters of Credit

  	
  32

  
	
  SECTION 2.04

  	
  Prepayments

  	
  41

  
	
  SECTION 2.05

  	
  Termination or
  Reduction of Commitments

  	
  42

  
	
  SECTION 2.06

  	
  Repayment of Loans

  	
  43

  
	
  SECTION 2.07

  	
  Interest

  	
  43

  
	
  SECTION 2.08

  	
  Fees

  	
  43

  
	
  SECTION 2.09

  	
  Computation of Interest
  and Fees

  	
  44

  
	
  SECTION 2.10

  	
  Evidence of Debt

  	
  44

  
	
  SECTION 2.11

  	
  Payments Generally;
  Administrative Agent’s Clawback

  	
  45

  
	
  SECTION 2.12

  	
  Sharing of Payments by
  Lenders

  	
  47

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
   

  	
   

  
	
  TAXES, YIELD
  PROTECTION AND ILLEGALITY

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01

  	
  Taxes

  	
  48

  
	
  SECTION 3.02

  	
  Illegality

  	
  50

  
	
  SECTION 3.03

  	
  Inability to Determine
  Rates

  	
  50

  
	
  SECTION 3.04

  	
  Increased Costs;
  Reserves on Eurodollar Rate Loans

  	
  50

  
	
  SECTION 3.05

  	
  Compensation for Losses

  	
  52

  
	
  SECTION 3.06

  	
  Mitigation Obligations;
  Replacement of Lenders

  	
  53

  
	
  SECTION 3.07

  	
  Survival

  	
  53

  

 

i

 

	
  ARTICLE IV

  	
   

  
	
   

  	
   

  
	
  CONDITIONS
  PRECEDENT TO CREDIT EXTENSIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01

  	
  Conditions of Initial
  Credit Extension

  	
  53

  
	
  SECTION 4.02

  	
  Conditions to all
  Credit Extensions

  	
  58

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
   

  	
   

  
	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01

  	
  Existence,
  Qualification and Power

  	
  59

  
	
  SECTION 5.02

  	
  Authorization; No
  Contravention

  	
  59

  
	
  SECTION 5.03

  	
  Governmental
  Authorization; Other Consents

  	
  59

  
	
  SECTION 5.04

  	
  Binding Effect

  	
  59

  
	
  SECTION 5.05

  	
  Financial Statements; No
  Material Adverse Effect

  	
  60

  
	
  SECTION 5.06

  	
  Litigation

  	
  60

  
	
  SECTION 5.07

  	
  No Default

  	
  60

  
	
  SECTION 5.08

  	
  Ownership of Property;
  Liens; Investments

  	
  61

  
	
  SECTION 5.09

  	
  Environmental
  Compliance

  	
  61

  
	
  SECTION 5.10

  	
  Insurance

  	
  62

  
	
  SECTION 5.11

  	
  Taxes

  	
  63

  
	
  SECTION 5.12

  	
  ERISA Compliance

  	
  63

  
	
  SECTION 5.13

  	
  Subsidiaries; Equity
  Interests; Loan Parties

  	
  63

  
	
  SECTION 5.14

  	
  Margin Regulations;
  Investment Company Act

  	
  64

  
	
  SECTION 5.15

  	
  Disclosure

  	
  64

  
	
  SECTION 5.16

  	
  Compliance with Laws

  	
  64

  
	
  SECTION 5.17

  	
  Intellectual Property;
  Licenses, Etc.

  	
  65

  
	
  SECTION 5.18

  	
  Solvency

  	
  65

  
	
  SECTION 5.19

  	
  Casualty, Etc.

  	
  65

  
	
  SECTION 5.20

  	
  Health Care Matters

  	
  65

  
	
  SECTION 5.21

  	
  Labor Matters

  	
  67

  
	
  SECTION 5.22

  	
  Collateral Documents

  	
  67

  
	
  SECTION 5.23

  	
  Administration of
  Accounts

  	
  67

  
	
  SECTION 5.24

  	
  Physician Nominee

  	
  68

  
	
  SECTION 5.25

  	
  Indebtedness of Brotman

  	
  68

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  
	
   

  	
   

  
	
  AFFIRMATIVE
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01

  	
  Financial Statements

  	
  69

  
	
  SECTION 6.02

  	
  Certificates; Other
  Information

  	
  70

  
	
  SECTION 6.03

  	
  Notices

  	
  73

  
	
  SECTION 6.04

  	
  Payment of Obligations

  	
  75

  
	
  SECTION 6.05

  	
  Preservation of
  Existence, Etc.

  	
  75

  
	
  SECTION 6.06

  	
  Maintenance of
  Properties

  	
  75

  

 

ii

 

	
  SECTION 6.07

  	
  Maintenance of
  Insurance

  	
  75

  
	
  SECTION 6.08

  	
  Compliance with Laws

  	
  75

  
	
  SECTION 6.09

  	
  Books and Records

  	
  76

  
	
  SECTION 6.10

  	
  Inspection Rights

  	
  76

  
	
  SECTION 6.11

  	
  Use of Proceeds

  	
  76

  
	
  SECTION 6.12

  	
  Covenant to Guarantee
  Obligations and Give Security

  	
  77

  
	
  SECTION 6.13

  	
  Compliance with
  Environmental Laws

  	
  79

  
	
  SECTION 6.14

  	
  Preparation of
  Environmental/Seismic Reports

  	
  79

  
	
  SECTION 6.15

  	
  Further Assurances

  	
  79

  
	
  SECTION 6.16

  	
  Compliance with Terms
  of Leaseholds

  	
  80

  
	
  SECTION 6.17

  	
  Material Contracts

  	
  80

  
	
  SECTION 6.18

  	
  Replacement of
  Physician Designee

  	
  80

  
	
  SECTION 6.19

  	
  Post-Closing Covenants

  	
  80

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  
	
   

  	
   

  
	
  NEGATIVE
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.01

  	
  Liens

  	
  81

  
	
  SECTION 7.02

  	
  Indebtedness

  	
  82

  
	
  SECTION 7.03

  	
  Investments

  	
  84

  
	
  SECTION 7.04

  	
  Fundamental Changes

  	
  87

  
	
  SECTION 7.05

  	
  Dispositions

  	
  87

  
	
  SECTION 7.06

  	
  Restricted Payments

  	
  88

  
	
  SECTION 7.07

  	
  Change in Nature of
  Business

  	
  88

  
	
  SECTION 7.08

  	
  Transactions with
  Affiliates

  	
  89

  
	
  SECTION 7.09

  	
  Burdensome Agreements

  	
  89

  
	
  SECTION 7.10

  	
  Use of Proceeds

  	
  89

  
	
  SECTION 7.11

  	
  Financial Covenants

  	
  89

  
	
  SECTION 7.12

  	
  Capital Expenditures

  	
  90

  
	
  SECTION 7.13

  	
  Amendments of
  Organization Documents

  	
  90

  
	
  SECTION 7.14

  	
  Accounting Changes

  	
  90

  
	
  SECTION 7.15

  	
  Prepayments, Etc. of
  Indebtedness; Payments and Prepayments of the 2014 Notes

  	
  90

  
	
  SECTION 7.16

  	
  Amendment, Etc. of
  Related Documents and Indebtedness

  	
  91

  
	
  SECTION 7.17

  	
  Designation of Senior
  Debt

  	
  91

  
	
  SECTION 7.18

  	
  Responsibility for
  Brotman

  	
  91

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  
	
   

  	
   

  
	
  EVENTS OF
  DEFAULT AND REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.01

  	
  Events of Default

  	
  91

  
	
  SECTION 8.02

  	
  Remedies upon Event of
  Default

  	
  95

  
	
  SECTION 8.03

  	
  Application of Funds

  	
  95

  

 

iii

 

	
  ARTICLE IX

  	
   

  
	
   

  	
   

  
	
  ADMINISTRATIVE
  AGENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9.01

  	
  Appointment and
  Authority

  	
  96

  
	
  SECTION 9.02

  	
  Rights as a Lender

  	
  97

  
	
  SECTION 9.03

  	
  Exculpatory Provisions

  	
  97

  
	
  SECTION 9.04

  	
  Reliance by
  Administrative Agent

  	
  98

  
	
  SECTION 9.05

  	
  Delegation of Duties

  	
  98

  
	
  SECTION 9.06

  	
  Resignation of
  Administrative Agent

  	
  99

  
	
  SECTION 9.07

  	
  Non-Reliance on
  Administrative Agent and Other Lenders

  	
  100

  
	
  SECTION 9.08

  	
  Intercreditor Agreement
  and Collateral Agency Agreement

  	
  100

  
	
  SECTION 9.09

  	
  No Other Duties, Etc.

  	
  100

  
	
  SECTION 9.10

  	
  Administrative Agent
  May File Proofs of Claim

  	
  100

  
	
  SECTION 9.11

  	
  Collateral and Guaranty
  Matters

  	
  101

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  
	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.01

  	
  Amendments, Etc.

  	
  102

  
	
  SECTION 10.02

  	
  Notices; Effectiveness;
  Electronic Communications

  	
  103

  
	
  SECTION 10.03

  	
  No Waiver; Cumulative
  Remedies

  	
  105

  
	
  SECTION 10.04

  	
  Expenses; Indemnity;
  Damage Waiver

  	
  106

  
	
  SECTION 10.05

  	
  Payments Set Aside

  	
  108

  
	
  SECTION 10.06

  	
  Successors and Assigns

  	
  108

  
	
  SECTION 10.07

  	
  Treatment of Certain
  Information; Confidentiality

  	
  112

  
	
  SECTION 10.08

  	
  Right of Setoff.

  	
  113

  
	
  SECTION 10.09

  	
  Interest Rate Limitation

  	
  113

  
	
  SECTION 10.10

  	
  Counterparts;
  Integration; Effectiveness

  	
  114

  
	
  SECTION 10.11

  	
  Survival of
  Representations and Warranties

  	
  114

  
	
  SECTION 10.12

  	
  Severability

  	
  114

  
	
  SECTION 10.13

  	
  Replacement of Lenders

  	
  114

  
	
  SECTION 10.14

  	
  Governing Law;
  Jurisdiction; Etc.

  	
  115

  
	
  SECTION 10.15

  	
  Waiver of Jury Trial

  	
  116

  
	
  SECTION 10.16

  	
  No Advisory or
  Fiduciary Responsibility

  	
  116

  
	
  SECTION 10.17

  	
  USA PATRIOT Act Notice

  	
  117

  

 

iv

 

SCHEDULES

 

	
  1.01(a)

  	
  EBITDA Add Backs

  
	
  2.01

  	
  Commitments and Applicable
  Percentages

  
	
  4.01(a)(vi)

  	
  Pledged Real Property

  
	
  4.01(a)(xiii)

  	
  Exceptions to Audited
  Financial Statements

  
	
  5.06

  	
  Disclosed Litigation

  
	
  5.07

  	
  Material Contracts

  
	
  5.08(b)

  	
  Existing Liens

  
	
  5.08(c)

  	
  Owned Real Property

  
	
  5.08(d)(i)

  	
  Leased Real Property
  (Lessee)

  
	
  5.08(d)(ii)

  	
  Leased Real Property
  (Lessor)

  
	
  5.08(e)

  	
  Existing Investments

  
	
  5.09

  	
  Environmental
  Compliance

  
	
  5.11

  	
  Tax Returns

  
	
  5.12(c)

  	
  Past ERISA Events

  
	
  5.13

  	
  Subsidiaries and Other
  Equity Investments; Loan Parties

  
	
  5.21

  	
  Labor Matters

  
	
  7.02

  	
  Existing Indebtedness

  
	
  7.09

  	
  Burdensome Agreements

  
	
  10.02

  	
  Administrative Agent’s
  Office, Certain Addresses for Notices

  
	
   

  	
   

  
	
  EXHIBITS

  	
   

  
	
   

  	
   

  
	
   

  	
  Form of

  
	
   

  	
   

  
	
  A

  	
  Committed Loan Notice

  
	
  B-1

  	
  Collateral Agreement

  
	
  B-2

  	
  First Lien Security
  Agreement (Receivables)

  
	
  C

  	
  Note

  
	
  D

  	
  Compliance Certificate

  
	
  E

  	
  Assignment and
  Assumption

  
	
   

  	
   

  
			

 

v

 

CREDIT AGREEMENT

 

This CREDIT AGREEMENT (“Agreement”) is entered
into as of July 29, 2009,  among PROSPECT
MEDICAL HOLDINGS, INC., a Delaware corporation (“Borrower”), each lender
from time to time party hereto (collectively, the “Lenders” and
individually, a “Lender”), and ROYAL BANK OF CANADA (“Royal Bank”),
as Administrative Agent.

 

PRELIMINARY
STATEMENTS:

 

Borrower has requested that the Lenders provide a
revolving credit facility, and the Lenders have indicated their willingness to
lend and each L/C Issuer has indicated its willingness to issue letters of
credit, in each case, on the terms and subject to the conditions set forth
herein.

 

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

 

ARTICLE
I

DEFINITIONS AND ACCOUNTING TERMS

 

SECTION 1.01       Defined
Terms.  As used in this Agreement,
the following terms shall have the meanings set forth below:

 

“2014 Notes” means Borrower’s senior secured
notes due 2014 issued under the Indenture, in an initial principal amount of
$160,000,000.

 

“Account” has the
meaning ascribed to such term in the UCC, including all rights to payment for
goods sold or leased, or for services rendered and all rights to payment under
any Capitated Contract owing to a Loan Party.

 

“Account Debtor” has
the meaning ascribed to such term in the UCC.

 

“Additional Reserves”
means such reserves, in such amounts and with respect to such matters, as the
Administrative Agent at the direction of the Required Lenders in their
Permitted Discretion may elect to impose from time to time.

 

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

 

“Administrative Agent’s Office” means the Administrative
Agent’s address and, as appropriate, account as set forth on Schedule 10.02,
or such other address or account as the Administrative Agent may from time to
time notify to Borrower and the Lenders.

 

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

 

 

“Affiliate” means, with respect to any Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

 

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

 

“Agreement” means this Credit Agreement, as the same may be
amended, restated, supplemented or modified from time to time.

 

“AMVI/Prospect” means AMVI/Prospect Medical
Group, a California general partnership, also known as AMVI/Prospect Health
Network.

 

“Applicable Fee Rate”
means, at any time, 1.00%.

 

“Applicable Percentage” means with respect to any Lender at any time, the
percentage (carried out to the second decimal place) of the Facility
represented by such Lender’s Commitment at such time.  If the commitment of each Lender to make
Loans and the obligation of an L/C Issuer to make L/C Credit Extensions have
been terminated pursuant to Section 8.02, or if the Commitments
have expired, then the Applicable Percentage of each Lender shall be determined
based on the Applicable Percentage of such Lender most recently in effect,
giving effect to any subsequent assignments. 
The initial Applicable Percentage of each Lender is set forth opposite
the name of such Lender on Schedule 2.01 or in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable.

 

“Applicable Rate” means (i) with regard to the
Eurodollar Rate and Letter of Credit Fees, 7.00% and (ii) with regard to
the Base Rate, 6.00%.

 

“Appropriate Lender” means, at any time, (a) a Lender that
has a Commitment or holds a Loan at such time and (b) with respect to the
Letter of Credit Sublimit, (i) an L/C Issuer and (ii) if any Letters
of Credit have been issued pursuant to Section 2.03(a), the
Lenders.

 

“Approved Fund” means any Fund that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender
or (c) an entity or an Affiliate of an entity that administers or manages
a Lender.

 

“Arranger” means RBC Capital Markets, in its capacity as sole
lead arranger and sole book manager.

 

“Assignable Option Agreement” means that certain
Amendment to Fifth Amended and Restated Assignable Option Agreement dated as of
the Closing Date and executed by and among the Physician Nominee, PMS and PMG.

 

“Assignee Group” means two or more Eligible
Assignees that are Affiliates of one another or two or more Approved Funds
managed by the same investment advisor.

 

“Assignment and Assumption” means an assignment and
assumption entered into by a Lender and an Eligible Assignee (with the consent
of any party whose consent is required 

 

2

 

by Section 10.06(b)),
and accepted by the Administrative Agent, in substantially the form of Exhibit E
or any other form approved by the Administrative Agent.

 

“Attributable Indebtedness” means, on any date, (a) in respect
of any Capitalized Lease of any Person, the capitalized amount thereof that
would appear on a balance sheet of such Person prepared as of such date in
accordance with GAAP, (b) in respect of any Synthetic Lease Obligation,
the capitalized amount of the remaining lease or similar payments under the
relevant lease or other applicable agreement or instrument that would appear on
a balance sheet of such Person prepared as of such date in accordance with GAAP
if such lease or other agreement or instrument were accounted for as a
Capitalized Lease and (c) all Synthetic Debt of such Person.

 

“Audited Financial Statements” means, collectively, the
audited consolidated balance sheet of Borrower
and its Subsidiaries (including PMG and its Subsidiaries) for the fiscal
year ended September 30, 2008,
and the related consolidated statements of income or operations, shareholders’
equity and cash flows for such fiscal year of Borrower and its Subsidiaries (including PMG and its Subsidiaries),
including the notes thereto.

 

“Availability Period” means the period from and including the
Closing Date to the earliest of (a) the Maturity Date, (b) the date
of termination of the Commitments pursuant to Section 2.05, and (c) the
date of termination of the commitment of each Lender to make Loans and of the
obligation of an L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02.

 

“Base Rate” means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be equal to
the highest of:

 

(i)            the
Prime Rate; and

 

(ii)           1/2 of 1% per annum above the Federal Funds Rate
in effect on each date of determination; and

 

(iii) the Eurodollar Rate (as determined pursuant
to the definition thereof but without regard to the LIBOR Floor specified
therein) for an Interest Period of one month in effect on each date of
determination, plus 1%.

 

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

 

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

 

“Borrower Materials” has the meaning specified
in Section 6.02.

 

“Borrowing” means a borrowing consisting of simultaneous
Loans of the same Type and, in the case of Eurodollar Rate Loans, having the
same Interest Period made by each of the Lenders pursuant to Section 2.01.

 

“Borrowing Base” means on any date of
determination, an amount equal to (a) the product of (i) the
Net Collectible Value of Eligible Accounts times (ii) 0.70, minus (b) the L/C Reserve
and minus (c) Additional Reserves, if any, then in effect.

 

3

 

“Borrowing Base Certificate” means a
certificate, in form and substance satisfactory to the Administrative Agent, by
which Borrower certifies calculation of the Borrowing Base.

 

“Brotman” means Brotman Medical Center, Inc.,
a California corporation,

 

“Brotman Credit Extension Period” means any
fiscal quarter during which a loan to Brotman permitted by Section 7.03(i) is
at any time outstanding.

 

“Brotman/JHA Purchase Option Agreement” means
the Option Agreement, dated April 14, 2009, between Brotman and JHA West
16, LLC, pursuant to which Brotman has granted to JHA West 16, LLC an option to
purchase certain land and assets for an amount equal to the outstanding
principal balance under the JHA West 16 Loan Agreement.

 

“Business Day” means any day other than a Saturday, Sunday or
other day on which commercial banks are authorized to close under the Laws of
the State of New York or California and, if such day relates to any Eurodollar
Rate Loan, means any such day on which dealings in Dollar deposits are conducted
by and between banks in the London interbank eurodollar market.

 

“Capital Expenditures” means, for any Person for any period,
the sum of, without duplication, (a) all expenditures made, directly or
indirectly, by such Person or any of its Subsidiaries during such period for
equipment, fixed assets, real property or improvements, or for replacements or
substitutions therefor or additions thereto, that have been or should be, in
accordance with GAAP, reflected as additions to property, plant or equipment on
a consolidated balance sheet of such Person or have a useful life of more than
one year plus (b) without duplication, the aggregate principal amount of
all Indebtedness (including Capitalized Leases) assumed or incurred in
connection with any such expenditures (excluding normal replacements and
maintenance which are properly charged as current liabilities in accordance
with GAAP).

 

“Capitalized Leases” means all leases that have
been or should be, in accordance with GAAP, recorded as capitalized leases.

 

“Capitated Contracts” means, collectively, all
of the Loan Parties’ contracts whether presently existing or hereafter executed
between Loan Parties and various health maintenance organizations and all
proceeds therefrom.

 

“Capitated Contract Rights” means all of the
Loan Parties’ rights to payment of any kind arising from or out of Capitated
Contracts or any other contracts or rights to payment from health service
contracts whether presently existing or hereafter executed between Loan Parties
and various health maintenance organizations.

 

“Cash Collateralize” has the meaning specified in Section 2.03(g).

 

“Cash Equivalents” means any of the following types of
Investments, to the extent owned by Borrower or any of its Subsidiaries free
and clear of all Liens (other than Liens created under the Collateral Documents
and other Liens permitted hereunder):

 

4

 

(a)           readily
marketable obligations issued or directly and fully guaranteed or insured by
the United States of America or any agency or instrumentality thereof having
maturities of not more than 360 days from the date of acquisition thereof; provided that the full faith and
credit of the United States of America is pledged in support thereof;

 

(b)           time
deposits with, or insured certificates of deposit or bankers’ acceptances of,
any commercial bank that (i) (A) is a Lender or (B) is organized
under the laws of the United States of America, any state thereof or the
District of Columbia or is the principal banking subsidiary of a bank holding
company organized under the laws of the United States of America, any state
thereof or the District of Columbia, and is a member of the Federal Reserve
System, (ii) issues (or the parent of which issues) commercial paper rated
as described in clause (c) of this definition and (iii) has
combined capital and surplus of at least $500,000,000, in each case with
maturities of not more than 365 days from the date of acquisition thereof;

 

(c)           commercial
paper issued by any issuer and rated at least “Prime-1” (or the then equivalent
grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P,
in each case with maturities of not more than 180 days from the date of
acquisition thereof; and

 

(d)           Investments,
classified in accordance with GAAP as current assets of Borrower or any of its
Subsidiaries, in money market investment programs registered under the
Investment Company Act of 1940, which are administered by financial
institutions that have the highest rating obtainable from either Moody’s or
S&P, and the portfolios of which are limited solely to Investments of the
character, quality and maturity described in clauses (a), (b) and (c) of
this definition.

 

“Cash Management Agreement” means any agreement
to provide cash management services, including treasury, depository, overdraft,
credit or debit card, electronic funds transfer and other cash management
arrangements.

 

“Cash Management Bank” means any Person that, at the time it
enters into a Cash Management Agreement, is a Lender or an Affiliate of a
Lender, in its capacity as a party to such Cash Management Agreement.

 

“CERCLA” means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980.

 

“CERCLIS” means the Comprehensive Environmental Response, Compensation
and Liability Information System maintained by the U.S. Environmental
Protection Agency.

 

“CFC” means a Person that is a controlled
foreign corporation under Section 957 of the Code.

 

“Change in Law” means the occurrence, after the
date of this Agreement, of any of the following:  (a) the adoption or taking effect of any
law, rule, regulation or treaty, (b) any change in any law, rule,
regulation or treaty or in the administration, interpretation or application 

 

5

 

thereof by any
Governmental Authority or (c) the making or issuance of any request,
guideline or directive (whether or not having the force of law) by any
Governmental Authority.

 

“Change of Control” means:

 

(i) an event or series of events by which any
Person or group (within the meaning of Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934) (other than Samuel S. Lee, David Topper
and the David and Alexa Topper Family Trust U/D/T September 29, 1997 and
any Affiliate and Related Person thereof) becomes the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of
1934) of more than thirty-five percent (35%) of the Equity Interests
(based on voting power, in the event different classes of stock shall have
different voting powers) of Borrower;

 

(ii) such Person or group shall otherwise obtain
the power to control the election of a majority of the board of directors of
Borrower; or

 

(iii) during any period of twelve consecutive
calendar months, individuals who at the beginning of such period constituted
the board of directors of Borrower (together with any new directors whose
election by the board of directors of Borrower or whose nomination for election
by the stockholders of Borrower was approved by a vote of at least two-thirds
of the directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason other than death or disability to constitute
a majority of the directors then in office.

 

“Chattel Paper” has the meaning ascribed to
such term in the UCC.

 

“Closing Date” means the first date all the conditions
precedent in Section 4.01 are satisfied or waived in accordance
with Section 10.01.

 

“CMS” means Centers for Medicare and Medicaid
Services.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Collateral” means the First Priority Collateral, the Pari
Passu Collateral and all of the “Collateral” and “Mortgaged Property” referred to in the Collateral
Documents and all of the other property that is or is intended under the terms
of the Collateral Documents to be subject to Liens in favor of the
Administrative Agent or the Collateral Agent, as the case may be, for the
benefit of the Secured Parties.

 

“Collateral Agency Agreement” means the
Collateral Agency Agreement dated the date hereof among Borrower, certain
Subsidiaries of Borrower party thereto from time to time, U.S. Bank National
Association, as collateral agent, the Trustee, on behalf of itself and the
Noteholders, and the Administrative Agent, on behalf of itself and the Lenders,
as the same may be amended, supplemented or otherwise modified or replaced from
time to time.

 

“Collateral Agreement” means that certain Collateral Agreement
dated as of the date hereof from the Loan Parties, as grantors, in favor of the
Collateral Trustee for the equal and ratable benefit of (x) the
Administrative Agent and the Lenders to secure the Obligations and 

 

6

 

(y) the Trustee and
the Noteholders to secure the obligations of Borrower and certain of its
Subsidiaries under the Indenture and the 2014 Notes, as such Collateral
Agreement may be amended, supplemented or otherwise modified or replaced from
time to time.

 

“Collateral Documents” means, collectively, the Collateral
Agreement, the First Lien Security Agreement (Receivables), the Intercreditor
Agreement, the Collateral Agency Agreement, the Physician Nominee Pledge,  the Mortgages, and each other collateral assignment,
security agreement, pledge agreement or other similar agreement delivered to
the Administrative Agent pursuant to the terms hereof or pursuant to Section 6.12,
and each of the other agreements, instruments or documents that creates or
purports to create a Lien in favor of the Administrative Agent for the benefit
of the Secured Parties or the Collateral Trustee for the benefit of the Secured
Parties and the Noteholders.

 

“Collateral Trustee” means U.S. Bank National
Association, in its capacity as collateral agent under the Collateral Agency
Agreement, and any successor agent appointed in accordance with the terms
thereof.

 

“Collection Account Agreement” means each
agreement with a depositary bank holding a Deposit Account into which
Governmental Receivables are initially deposited, executed in accordance with Section 4.4(b) of
the First Lien Security Agreement (Receivables).

 

“Commitment” means, as to each Lender, its obligation to (a) make
Loans to Borrower pursuant to Section 2.01, and (b) purchase
participations in L/C Obligations, in an aggregate principal amount at any one
time outstanding not to exceed the amount set forth opposite such Lender’s name
on Schedule 2.01 under the caption “Commitment” or opposite such
caption in the Assignment and Assumption pursuant to which such Lender becomes
a party hereto, as applicable, as such amount may be adjusted from time to time
in accordance with this Agreement.

 

“Commitment Letter” means the letter agreement, dated June 30,
2009, between Borrower and Royal Bank.

 

“Committed Loan Notice” means a notice of (a)  a
Borrowing, (b) a conversion of Loans from one Type to the other, or (c) a
continuation of Eurodollar Rate Loans, pursuant to Section 2.02(a),
which, if in writing, shall be substantially in the form of Exhibit A.

 

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

 

“Consolidated
EBITDA” means, at any date of determination, an amount equal to
Consolidated Net Income of the Loan Parties and their Subsidiaries on a
consolidated basis for the most recently completed Measurement Period plus
(a) the following to the extent deducted in calculating such Consolidated
Net Income: (i) Consolidated Interest Charges, (ii) the provision for
Federal, state, local and foreign income taxes payable, (iii) depreciation
and amortization expense (iv) non-cash expenses arising from stock options
issued to employees as provided in ordinary course compensation arrangements in
accordance with FASB Statement 123R, (v) amortization of the original
issue discount with respect to the 2014 Notes to the extent credited to reduce
Consolidated Interest Charges as contemplated by the proviso in the
determination 

 

7

 

thereof and (vi) other
non-recurring  expenses reducing such
Consolidated Net Income which do not represent a cash item in such period or
any future period (in each case of or by Loan Parties and their Subsidiaries
for such Measurement Period) and minus (b) the following to the
extent included in calculating such Consolidated Net Income: (i) Federal,
state, local and foreign income tax credits, (ii) all non-cash items
increasing Consolidated Net Income (in each case of or by Loan Parties and
their Subsidiaries for such Measurement Period), (iii) gains (or plus
losses) from dispositions of capital assets (including any fixed assets,
whether tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets and all securities); and (iv) extraordinary
gains (or plus extraordinary losses) as defined under GAAP net of related tax
effects included in the determination of Consolidated Net Income.  For purposes of this Agreement, Consolidated
EBITDA shall be adjusted on a pro  forma basis, in a manner reasonably
acceptable to the Administrative Agent, to include, as of the first day of any
applicable period, any acquisitions and Dispositions of assets permitted under
this Agreement, including, without limitation, adjustments reflecting any
non-recurring costs and any extraordinary expenses of any such permitted
acquisitions and asset dispositions consummated during such period calculated
on a basis consistent with GAAP and Regulation S-X of the Securities Exchange
Act of 1934, as amended, or as approved by the Administrative Agent.  For purposes of this Agreement and the
calculation of Consolidated Leverage Ratio, Consolidated Total Leverage Ratio
and Consolidated Fixed Charge Coverage Ratio, the add backs identified on Schedule 1.01(a) shall
be permitted in the amounts and for the periods set forth on such Schedule to
the extent deducted in calculating Consolidated Net Income.

 

“Consolidated
Fixed Charge Coverage Ratio”
means, at any date of determination, the ratio of (a) (i) Consolidated
EBITDA, less (ii) the aggregate amount of all cash Capital
Expenditures to (b) the sum of (i) Consolidated Interest Charges, (ii) the
aggregate principal amount of all regularly scheduled principal payments or
redemptions or similar acquisitions for value of outstanding debt for borrowed
money, but excluding any such payments to the extent refinanced through the
incurrence of additional Indebtedness otherwise expressly permitted under Section 7.02,
and (iii) the aggregate amount of Federal, state, local and foreign income
taxes paid in cash, in each case, of or by Borrower and its Subsidiaries for
the most recently completed Measurement Period, provided, that for
purposes only of calculating the Consolidated Fixed Charge Coverage Ratio (A) as
of September 30, 2009, “Consolidated Interest Charges” shall be the
product of “Consolidated Interest Charges” for the three months ended September 30,
2009 multiplied by 4, (B) as of December 31, 2009, “Consolidated
Interest Charges” shall be the product of “Consolidated Interest Charges” for
the six months ended December 31, 2009 multiplied by 2 and (C) as of March 31,
2010, “Consolidated Interest Charges” shall be the product of “Consolidated
Interest Charges” for the nine months ended March 31, 2010 multiplied by
4/3.

 

“Consolidated
Interest Charges”
means, for any Measurement Period, the sum of (a) all interest, premium
payments, debt discount, fees, charges and related expenses in connection with
borrowed money (including capitalized interest) or in connection with the
deferred purchase price of assets, in each case to the extent treated as
interest in accordance with GAAP, (b) all interest paid or payable with
respect to discontinued operations and (c) the portion of rent expense
under Capitalized Leases that is treated as interest in accordance with GAAP,
in each case, of or by Borrower and its Subsidiaries on a consolidated basis
for the most recently completed Measurement Period; provided, however,
any amortization of the original issue 

 

8

 

discount with respect to
the 2014 Notes will be credited to reduce Consolidated Interest Charges unless,
pursuant to GAAP, such amortization has otherwise reduced Consolidated Interest
Charges.

 

“Consolidated
Leverage Ratio” means, as of any date of determination, the ratio of
(a) Consolidated Total Indebtedness as of such date to  (b) Consolidated EBITDA of
Borrower and its Subsidiaries on a consolidated basis for the most recently
completed Measurement Period.

 

“Consolidated
Net Income” means, at any date of determination, the net income (or
loss) of Borrower and its Subsidiaries on a consolidated basis for the most
recently completed Measurement Period; provided that Consolidated Net
Income shall exclude (a) extraordinary gains and extraordinary losses for
such Measurement Period, (b) the net income of any Subsidiary during such
Measurement Period to the extent that the declaration or payment of dividends
or similar distributions by such Subsidiary of such income is not permitted by
operation of the terms of its Organization Documents or any agreement, instrument
or Law applicable to such Subsidiary during such Measurement Period, except
that Borrower’s equity in any net loss of any such Subsidiary for such
Measurement Period shall be included in determining Consolidated Net Income,
and (c) any income (or loss) for such Period of any Person if such Person
is not a Subsidiary, except that Borrower’s equity in the net income of any
such Person for such Measurement Period shall be included in Consolidated Net
Income up to the aggregate amount of cash actually distributed by such Person
during such Period to Borrower or a Subsidiary as a dividend or other
distribution (and in the case of a dividend or other distribution to a
Subsidiary, such Subsidiary is not precluded from further distributing such
amount to Borrower as described in clause (b) of this proviso).

 

“Consolidated Total Indebtedness” means, as of
any date of determination, for Borrower and its Subsidiaries on a consolidated
basis, the sum of all Indebtedness of Borrower and its Subsidiaries.

 

“Consolidated Total Leverage Ratio” means, as of any date of determination, the ratio of
(a) Consolidated Total Indebtedness as of such date to  (b) Consolidated EBITDA of
Borrower, its Subsidiaries and Brotman and its Subsidiaries on a consolidated
basis for the most recently completed Measurement Period, provided that
to the extent restructuring charges of Brotman in any such period are deducted
in calculating such Consolidated EBITDA for such period, such restructuring
charges not in excess of 20% of such Consolidated EBITDA for such period
(before giving effect to this proviso) can be added back to Consolidated EBITDA
in such period.

 

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

 

“Control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise.  “Controlling” and “Controlled”
have meanings correlative thereto.

 

9

 

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

 

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

 

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

 

“Default Rate” means (a) when used with respect to
Obligations other than Letter of Credit Fees or Eurodollar Rate Loans, an
interest rate equal to (i) the Base Rate plus (ii) the
Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2%
per annum, (b) when used with respect to Obligations consisting of
Eurodollar Rate Loans, an interest rate equal to (i) the Eurodollar Rate plus
(ii) the Applicable Rate plus (iii) 2% per annum and (c) when
used with respect to Letter of Credit Fees, a rate equal to the Applicable Rate
plus 2% per annum.

 

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

 

“Deposit Account” has the meaning assigned
thereto in the UCC.

 

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

 

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

 

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

 

“Eligible Account” means all Accounts owing to
a Loan Party and reflected in the most recent Borrowing Base Certificate
delivered by the Borrower to the Administrative Agent, which satisfy all of the
criteria set forth below.  The
Administrative Agent may, and at the direction of the Required Lenders shall,
at any time and from time to time after the Closing Date, designate one or more
Accounts as not Eligible Accounts, in each case in its or their Permitted
Discretion.  The criteria as of the
Closing Date for an Account to be an Eligible Account are the following:

 

10

 

(a)  The Obligor of which is (i) a
Medicare/Medicaid Account Debtor, (ii) a commercial insurance company
reasonably acceptable to Administrative Agent, organized under the laws of any
jurisdiction in the United States and having its principal office in the United
States, (iii) a Blue Cross/Blue Shield Plan, (iv) a health
maintenance organization, preferred provider organization or an institutional
Obligor (including any hospital) reasonably acceptable to Administrative Agent,
(v) a physician or other duly licensed healthcare provider party to an
independent physician agreement with a Loan Party or (vi) any other type
of Obligor reasonably acceptable to Administrative Agent and not included in
the categories of Obligors listed in the foregoing clauses (i) through
(v), organized under the laws of any jurisdiction in the United States having
its principal office in the United States;

 

(b)   The
Obligor of which is not an Affiliate of such Loan Party;

 

(c)    As
to which representations and warranties in respect thereof of Section 5.23
are true;

 

(d)  
Which, if such account is in the form of a cost report receivable owing
from any governmental agency, Administrative Agent has agreed to include it in
the Borrowing Base;

 

(e)   Which
is not outstanding more than 90 days from the date of service;

 

(f)   Which
is not subject to dispute between the Obligor thereof and such Loan Party;

 

(g)  Which is not subject to a potential offset,
dispute, reserve or recoupment;

 

(h)  The Obligor thereof is not subject to an
Insolvency Proceeding;

 

(i)  Which is not an account to which
reimbursement has been denied by the Obligor;

 

(j)  Which is subject to a duly perfected, first
priority Lien in favor of the Administrative Agent, and is not subject to any
other Lien other than Liens permitted under Section 7.01(n), which
Liens shall be junior to the Administrative Agent’s Lien; and

 

(k)  Which is recorded as an “Account” on the
books and records of the applicable Loan Party.

 

“Eligible Assignee” means any Person that meets the requirements
to be an assignee under Section 10.06(b)(iii), (v) and (vi) (subject
to such consents, if any, as may be required under Section 10.06(b)(iii)).

 

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

 

11

 

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

 

“Environmental
Permit” means any permit, approval, identification number, license
or other authorization required under any Environmental Law.

 

“Equity Interests” means, with respect to any Person, all of
the shares of capital stock of (or other ownership or profit interests in) such
Person, all of the warrants, options or other rights for the purchase or
acquisition from such Person of shares of capital stock of (or other ownership
or profit interests in) such Person, all of the securities convertible into or
exchangeable for shares of capital stock of (or other ownership or profit
interests in) such Person or warrants, rights or options for the purchase or
acquisition from such Person of such shares (or such other interests), and all
of the other ownership or profit interests in such Person (including
partnership, member or trust interests therein), whether voting or nonvoting.

 

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

 

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

 

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

 

“Eurodollar Rate” means, for any Interest Period with respect
to any Eurodollar Rate Loan, the highest of:

 

(a)           2.0%
per annum (“Libor Floor”),

 

12

 

(b)           the
rate per annum equal to the offered rate that appears on the page of the
LIBOR01 screen (or any successor thereto) that displays an average British
Bankers Association Interest Settlement Rate for deposits in Dollars (for
delivery on the first day of such Interest Period) with a term equivalent to
such Interest Period, determined as of approximately 11:00 a.m. (London
time) two (2) Business Days prior to the first day of such Interest
Period, or

 

(c)           if
the rates referenced in the preceding subsection (b) are not
available, the rate per annum determined by the Administrative Agent as the
rate of interest (rounded upward to the next 1/100th of 1%) at which deposits
in Dollars for delivery on the first day of such Interest Period in same day
funds in the approximate amount of the Eurodollar Rate Loan being made,
continued or converted by the Administrative Agent and with a term equivalent
to such Interest Period would be offered by the Administrative Agent’s London
branch to major banks in the offshore Dollar market at their request at approximately
11:00 a.m. (London time) two (2) Business Days prior to the
first day of such Interest Period.

 

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

 

“Event of Default” has the meaning specified in Section 8.01.

 

“Excluded Subsidiary” means (i) any
Immaterial Subsidiary, (ii) Nuestra Familia Medical Group (for so long as
Nuestra Familia Medical Group is not wholly owned (directly or indirectly) by
Borrower or is not precluded by contractual restrictions binding on it at the
date of determination from becoming a Loan Party), (iii) AMVI/Prospect
(for so long as AMVI/Prospect is not wholly owned (directly or indirectly) by
Borrower or is not precluded by contractual restrictions binding on it at the
date of determination from becoming a Loan Party) and (iv) Brotman and
Subsidiaries of Brotman (for so long as Brotman is not wholly owned (directly
or indirectly) by Borrower or is not precluded by contractual restrictions
binding on it at the date of determination from becoming a Loan Party).

 

“Excluded Taxes” means, with respect to the
Administrative Agent, any Lender, an L/C Issuer or any other recipient of any
payment to be made by or on account of any obligation of Borrower hereunder, (a) taxes
imposed on or measured by its overall net income (however denominated), and
franchise taxes imposed on it (in lieu of net income taxes), by the
jurisdiction (or any political subdivision thereof) under the laws of which
such recipient is organized or in which its principal office is located or, in
the case of any Lender, in which its applicable Lending Office is located, (b) any
branch profits taxes imposed by the United States or any similar tax imposed by
any other jurisdiction in which Borrower is located and (c) in the case of
a Foreign Lender (other than an assignee pursuant to a request by Borrower
under Section 10.13), any withholding tax that is imposed on
amounts payable to such Foreign Lender at the time such Foreign Lender becomes
a party hereto (or designates a new Lending Office) or is attributable to such
Foreign Lender’s failure or inability (other than as a result of a Change in
Law) to comply with Section 3.01(e), except to the extent that such
Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new Lending Office (or assignment), to receive additional
amounts from Borrower with respect to such withholding tax pursuant to Section 3.01(a).

 

13

 

“Existing
Credit Agreements” means, collectively, (a) that certain First
Lien Credit Agreement dated as of August 8, 2007, as amended, among
Borrower, PMG, Bank of America, N.A. as agent, and a syndicate of lenders and (b) that
certain Second Lien Credit Agreement dated as of August 8, 2007, as
amended, among Borrower, PMG, Bank of America, N.A. as agent, and a syndicate
of lenders.

 

“Facility” means, at any time, the aggregate amount of the Lenders’
Commitments at such time.

 

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

 

“First Lien Security Agreement (Receivables)” means
that certain First Lien Collateral Agreement dated as of the date hereof from
the Loan Parties in favor of the Administrative Agent for the benefit of the
Lenders to secure the Obligations, as the same may be amended, supplemented or
otherwise modified or replaced from time to time.

 

“First Priority Collateral” means “Collateral”
as defined in the First Lien Security Agreement (Receivables) and all personal
property from time to time subject to security agreements for the benefit of
the Administrative Agent referred to in Section 6.12(a) which
purport to grant the Administrative Agent a first priority Lien.

 

“Foreign Lender” means any Lender that is organized under the
laws of a jurisdiction other than that in which Borrower is resident for tax
purposes.  For purposes of this
definition, the United States, each State thereof and the District of Columbia
shall be deemed to constitute a single jurisdiction.

 

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

 

“Fund” means any Person (other than a natural person) that is
(or will be) engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of its
activities.

 

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

 

14

 

“General Intangible” has the meaning ascribed
to such term in the UCC.

 

“Governmental Authority” means the government of the United
States or any other nation, or of any political subdivision thereof, whether
state or local, and any agency, authority, instrumentality, regulatory body,
court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government (including any supra-national bodies such as the European
Union or the European Central Bank).

 

“Governmental Receivable” means any Account
that is payable pursuant to any Government Reimbursement Program.

 

“Government Reimbursement Program” means any
program (a) relating to Medicare, (b) Medicaid, or (c) any other
state or federal programs as payor or program administrated by the Centers for
Medicare and Medicaid Services or any agent, administrator, intermediary or
carrier for any of the foregoing.

 

“Guarantee” means, as to any Person, any (a) any
obligation, contingent or otherwise, of such Person guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation payable or
performable by another Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of such Person, direct or
indirect, (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation, (ii) to
purchase or lease property, securities or services for the purpose of assuring
the obligee in respect of such Indebtedness or other obligation of the payment
or performance of such Indebtedness or other obligation, (iii) to maintain
working capital, equity capital or any other financial statement condition or
liquidity or level of income or cash flow of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered
into for the purpose of assuring in any other manner the obligee in respect of
such Indebtedness or other obligation of the payment or performance thereof or
to protect such obligee against loss in respect thereof (in whole or in part),
or (b) any Lien on any assets of such Person securing any Indebtedness or
other obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien).  The amount of any Guarantee shall be deemed
to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Guarantee is
made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by the guaranteeing Person in good
faith.  The term “Guarantee”
as a verb has a corresponding meaning.

 

“Guarantors” means, collectively, the wholly-owned domestic
Subsidiaries of Borrower (other than an Excluded Subsidiary) and each other
Subsidiary of Borrower that
shall be required to execute and deliver a guaranty or guaranty supplement
pursuant to Section 6.12.

 

“Guaranty” means, collectively, the Continuing Guaranty made
by the Guarantors in favor of
the Secured Parties, together with each other guaranty and guaranty supplement
delivered pursuant to Section 6.12.

 

15

 

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

 

“Health Care Laws” means (i) any and all
federal, state and local fraud and abuse and self-referral laws, including,
without limitation, the federal Anti-Kickback Statute (42 U.S.C.
§ 1320a-7b), the Stark Law (42 U.S.C. § 1395nn and § 1395x(q)), the
civil False Claims Act (31 U.S.C. § 3729 et seq.), the Emergency Medical
Treatment and Labor Act (42 U.S.C. § 1395dd), Sections 1320a-7 and
1320a-7a of Title 42 of the United States Code and the regulations promulgated
pursuant to such statutes; (ii) the federal Food, Drug & Cosmetic
Act (21 U.S.C. §§ 301 et seq.) and the regulations promulgated thereunder;
(iii) the Health Insurance Portability and Accountability Act of 1996
(Pub. L. No. 104-191) and the regulations promulgated thereunder; (iv) Medicare
and the regulations promulgated thereunder; (v) Medicaid and the
regulations promulgated thereunder; (vi) the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (Pub. L. No. 108-173) and the
regulations promulgated thereunder; (vii) quality, safety and
accreditation standards and requirements of all applicable state laws or
regulatory bodies; (viii) requirements of Law relating to the ownership or
operation of a health care facility or business, or assets used in connection
therewith; (ix) requirements of Law relating to the billing or submission
of claims, collection of Accounts, underwriting the cost of, or provision of
management or administrative services in connection with, any and all of the
foregoing, by any Loan Party and its Subsidiaries, including, but not limited
to, laws and regulations relating to practice of medicine and other health care
professions, professional fee splitting, tax-exempt organization and charitable
trust law applicable to health care organizations, certificates of need,
certificates of operations and authority; and (x) any and all other
applicable health care laws, regulations, manual provisions, policies and
administrative guidance, each of (i) through (x) as may be amended
from time to time.

 

“Healthcare Service Plan License” means a license
issued by the California Department of Corporations or the corresponding agency
of another state and/or any other applicable agency or successor.

 

“Immaterial Subsidiary” means, as of any date
of determination, any Subsidiary of Borrower that (a) has total assets as
of such date with a fair market value not in excess of $50,000, (b) conducted
no business during, and has no revenue for, the four most recently completed
fiscal quarters and (c) has no indebtedness as of such date.  As of the date hereof, Immaterial
Subsidiaries consist of APAC Medical Group, Inc., Pinnacle Health
Resources, Prospect Advantage Network, Inc., Prospect Physician Associates, Inc.
and Santa Ana/Tustin Physicians Group, Inc.

 

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

 

16

 

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

 

(b)           the
maximum amount of all direct or contingent obligations of such Person arising
under letters of credit, including standby and commercial, solely to the extent
that such letters of credit are not cash collateralized, bankers’ acceptances,
bank guaranties, surety bonds and similar instruments;

 

(c)           net
obligations of such Person under any Swap Contract;

 

(d)           all
obligations of such Person to pay the deferred purchase price of property or
services (other than trade accounts payable in the ordinary course of business
and not past due for more than 90 days after the date on which such trade
account was created);

 

(e)           indebtedness
(excluding prepaid interest thereon) secured by a Lien on property owned or
being purchased by such Person (including indebtedness arising under
conditional sales or other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is limited in recourse;

 

(f)            all
Attributable Indebtedness in respect of Capitalized Leases and Synthetic Lease
Obligations of such Person and all Synthetic Debt of such Person;

 

(g)           all
obligations of such Person to purchase, redeem, retire, defease or otherwise
make any payment in respect of any Equity Interest in such Person or any other
Person or any warrant, right or option to acquire such Equity Interest, valued,
in the case of a redeemable preferred interest, at the greater of its voluntary
or involuntary liquidation preference plus accrued and unpaid dividends;

 

(h)           all
Guarantees of such Person in respect of any of the foregoing; and

 

(i)            all
overpayment settlements or similar obligations of such Person owing in respect
of Medicare/Medicaid evidenced by a letter agreement executed by such Person or
other structured settlement.

 

For all purposes hereof, the Indebtedness of any
Person shall include the Indebtedness of any partnership or joint venture
(other than a joint venture that is itself a corporation or limited liability
company) in which such Person is a general partner or a joint venturer, unless
such Indebtedness is expressly made non-recourse to such Person.  The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date.

 

“Indemnified Taxes”  means Taxes
other than Excluded Taxes.

 

“Indemnitees” has the meaning specified in Section 10.04(b).

 

17

 

“Indenture” means the indenture dated the date
hereof among Borrower, certain subsidiary guarantors of Borrower and the
Trustee and under which the 2014 Notes are issued, as amended, restated,
supplemented or otherwise modified from time to time.

 

“Information” has the meaning specified in Section 10.07.

 

“Insolvency Proceeding” means any case or
proceeding commenced by or against a Person under any state, federal or foreign
law for, or any agreement of such Person to, (a) the entry of an order for
relief under Debtor Relief Laws, or any other insolvency, debtor relief or debt
adjustment law; (b) the appointment of a receiver, trustee, liquidator,
administrator, conservator or other custodian for such Person or any part of
its property; or (c) an assignment or trust mortgage for the benefit of
creditors.

 

“Instrument” has the meaning ascribed to such
term in the UCC.

 

“Intercreditor Agreement” means that certain
Intercreditor Agreement of even date herewith by and among the Administrative
Agent, the Trustee and each of the Loan Parties, as amended, restated,
supplemented or otherwise modified from time to time.

 

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

 

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

 

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

 

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

 

“Investment” means, as to any Person, any direct or indirect
acquisition or investment by such Person, whether by means of (a) the
purchase or other acquisition of Equity Interests of another Person, (b) a
loan, advance or capital contribution to, Guarantee or assumption of debt of,
or purchase or other acquisition of any other debt or interest in, another
Person, or (c) the purchase or other acquisition (in one transaction or a
series of transactions) of 

 

18

 

assets of another Person
that constitute a business unit or all
or a substantial part of the business of, such Person.  For purposes of covenant compliance, the
amount of any Investment shall be the amount actually invested, without
adjustment for subsequent increases or decreases in the value of such
Investment.

 

“IP Rights” has the meaning specified in Section 5.17.

 

“IRS” means the United States Internal Revenue Service.

 

“ISP” means, with respect to any Letter of
Credit, the “International Standby Practices 1998” published by the Institute
of International Banking Law & Practice, Inc. (or such later
version thereof as may be in effect at the time of issuance).

 

“Issuer Documents” means with respect to any
Letter of Credit, the Letter of Credit Application, and any other document,
agreement and instrument entered into by an L/C Issuer and Borrower (or any
Subsidiary) or in favor of such L/C Issuer and relating to such Letter of
Credit.

 

“JHA West 16 Loan Agreement” means the Loan
Agreement, dated as of July 9, 2008, as amended on April 14, 2009,
between Brotman and JHA West 16, LLC.

 

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

 

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

 

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

 

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

 

“L/C Issuer” means Royal Bank or any other Lender which from
time to time agrees to act as an issuer of Letters of Credit hereunder.

 

“L/C Obligations” means, as at any date of determination, the
aggregate amount available to be drawn under all outstanding Letters of Credit plus
the aggregate of all Unreimbursed Amounts, including all L/C Borrowings.  For purposes of computing the amount
available to be drawn under any Letter of Credit, the amount of such Letter of
Credit shall be determined in accordance with Section 1.06.  For all purposes of this Agreement, if on any
date 

 

19

 

of determination a Letter
of Credit has expired by its terms but any amount may still be drawn thereunder
by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit
shall be deemed to be “outstanding” in the amount so remaining available to be
drawn.

 

“L/C
Reserve” means the aggregate of all L/C Obligations, other than (a) those
that have been Cash Collateralized; and (b) if no Default or Event of
Default exists, those constituting charges owing to the applicable L/C Issuers.

 

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

 

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

 

“Letter of Credit” means any standby letter of credit issued hereunder.

 

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

 

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

 

“Letter of Credit Fee” has the meaning
specified in Section 2.03(i).

 

“Letter of Credit Sublimit” means an amount equal to $1,000,000.  The Letter of Credit Sublimit is part of, and
not in addition to, the Facility.

 

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

 

“Loan” has the meaning specified in Section 2.01.

 

“Loan Documents” means, collectively, (a) this
Agreement, (b) the Notes, (c) the Guaranty, (d) the Collateral
Documents, (e) the Commitment Letter, (f) each Issuer Document, (g) each
Secured Cash Management Agreement, (h) each Borrowing Base Certificate and
(i) each other document and agreement executed in connection herewith or
related hereto that identifies itself as a “Loan Document”; provided
that for purposes of the definition of “Material Adverse Effect” and Articles IV
through IX, “Loan Documents” shall not include Secured Cash Management
Agreements.

 

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

 

20

 

“Management Agreements” means, the agreements
identified as management agreements on Schedule 5.07.

 

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

 

“Material Contract” means, with respect to any
Person, each contract to which such Person is a party that is material to the
business, condition (financial or otherwise), operations, performance,
properties or prospects of such Person; and, in the case of Borrower and its
Subsidiaries, “Material Contracts” shall include, among other contracts, all Management
Agreements and all Capitated Contracts.

 

“Maturity Date” means the third anniversary of the Closing
Date; provided, however, that if such date is not a Business Day,
the Maturity Date shall be the next preceding Business Day.

 

“Measurement Period” means, at any date of
determination, the most recently completed four fiscal quarters of Borrower.

 

“Medicaid” means that government-sponsored
entitlement program under Title XIX, P.L. 89-97 of the Social Security Act,
which provides federal grants to states for medical assistance based on
specific eligibility criteria, as set forth at Section 1396, et seq. of
Title 42 of the United States Code.

 

“Medicare”
means that government-sponsored insurance program under Title XVIII, P.L.
89-97, of the Social Security Act, which provides for a health insurance system
for eligible elderly and disabled individuals, as set forth at Section 1395,
et seq. of Title 42 of the United States Code.

 

“Medicare/Medicaid
Account Debtor” means any Account Debtor which is (i) the
United States of America acting under the Medicaid or Medicare program
established pursuant to the Social Security Act or any other federal healthcare
program, including, without limitation, CHAMPUS, (ii) any state or
District of Columbia acting pursuant to a health plan adopted pursuant to Title
XIX of the Social Security Act or any other state health care program, or (iii) any
agent, carrier, administrator or intermediary for any of the foregoing.

 

“Moody’s” means Moody’s Investors Service, Inc. and any
successor thereto.

 

“Mortgage” has the meaning specified in Section 4.01(a)(vi).

 

“Mortgage Policy” has the meaning specified in Section 4.01(a)(vi)(B).

 

21

 

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

 

“Net Collectible Value” for an Account, shall
be its face amount, net of any rebates, discounts (calculated on the shortest
terms), credits or contractual allowances that would have been given or could
generally be claimed by or on behalf of the Account Debtor.

 

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

 

“Note Documents” means the Indenture and each
other document and agreement executed in connection therewith or related thereto.

 

“Noteholders” means the holders of the 2014
Notes.

 

“NPL” means the National Priorities List under CERCLA.

 

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

 

“Obligor” means any Person that is obligated to
make payment with respect to any Capitated Contract or other Account.

 

“Offset” means any amount, including any
overpayment made to a Loan Party or an Affiliate, with respect to any Obligor
that is to be repaid by offset against amounts then due to such Loan Party by
such Obligor.  Offsets shall include any
amounts constituting penalties or assessments due to any state or federal tax
authorities, amounts deemed by any Obligor to be recoupments, inter-agency or
inter-creditor offsets and recoupments and any other amounts withheld or paid
to any person or entity other than the Administrative Agent to offset against
any purported liability of any Loan Party.

 

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

 

22

 

organization and, if
applicable, any certificate or articles of formation or organization of such
entity.

 

“Other Taxes” means all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or under any other Loan Document
or from the execution, delivery or enforcement of, or otherwise with respect
to, this Agreement or any other Loan Document.

 

“Outstanding Amount” means (a) with respect to Loans on
any date, the aggregate outstanding principal amount thereof after giving
effect to any borrowings and prepayments or repayments of Loans occurring on
such date; and (b) with respect to any L/C Obligations on any date, the
amount of such L/C Obligations on such date after giving effect to any L/C
Credit Extension occurring on such date and any other changes in the aggregate
amount of the L/C Obligations as of such date, including as a result of any
reimbursements by Borrower of Unreimbursed Amounts.

 

“Pari Passu Collateral” means “Collateral” as
defined in the Collateral Agreement and the Mortgages and all personal and real
property subject from time to time to security agreements, mortgages and other
agreements for the benefit of the Collateral Trustee referred to in Section 6.12(a).

 

“Participant” has the meaning specified in Section 10.06(d).

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

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

 

“Perfection Certificate” means that certain
perfection certificate dated on or before the Closing Date and delivered by the
Loan Parties to the Administrative Agent in connection with this Agreement.

 

“Permits” means any permit, approval,
authorization, license, registration, certification, certificate of authority,
variance, permission, franchise, qualification, order, filing or consent
required from a Governmental Authority or other Person under an applicable
requirement of Law.

 

“Permitted Discretion” means a determination by
the Administrative Agent or the Required Lenders, as the case may be, made in
good faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment.

 

“Permitted
Encumbrances” has
the meaning specified in the Mortgages.

 

23

 

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

 

“Physician Nominee” means (i) Arthur
Lipper, M.D. or (ii) such other licensed physician selected by Borrower;
provided, that (a) the Administrative Agent shall have received at least
thirty (30) days prior written notice of any such replacement or within three (3) Business
Days after Borrower receives a notice of termination form the current Physician
Nominee and (b) such replacement and the applicable Loan Parties shall
have executed and delivered to Administrative Agent an amendment or restatement
of the Assignable Option Agreement and the Physician Nominee Pledge in
substantially the same form as delivered on the Closing Date prior to such
replacement becoming the Physician Nominee.

 

“Physician Nominee Pledge” means that certain
First Lien Pledge Agreement dated as of the Closing Date by the Physician
Nominee in favor of the Collateral Trustee, for the equal and ratable benefit
of the Administrative Agent and the Lenders and the Trustee and the
Noteholders, as such agreement may be amended, restated, supplemented or
otherwise modified form time to time.

 

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

 

“Platform” has the meaning specified in Section 6.02.

 

“Pledged Subsidiary” means any Subsidiary of
Borrower whose Equity Interests constitute Collateral, but which is not a
Guarantor.

 

“PMG” means Prospect Medical Group, Inc.,
a California professional corporation.

 

“PMG Parties” means PMG, each direct or
indirect Subsidiary of PMG and each future direct or indirect subsidiary of PMG
(other than Excluded Subsidiaries).

 

“PMS” means Prospect Medical Systems, Inc.,
a Delaware corporation.

 

“Prime Rate” means the rate of interest per
annum announced by the Administrative Agent from time to time as its prime
commercial lending rate for United States Dollar loans in the United States for
such day.  The Prime Rate is not
necessarily the lowest rate that Royal Bank is charging any corporate customer.

 

“Public Lender” has the meaning specified in Section 6.02.

 

“Real Property” means, collectively, all real
property together with all buildings and improvements thereon and all
appurtenances and rights pertaining thereto, currently or formerly held by any
of the Loan Parties that is or was used or held for use in the operation of the
Business.

 

“Register” has the meaning specified in Section 10.06(c).

 

24

 

“Related
Documents” means the Assignable Option Agreement and
the Management Agreements.

 

“Related Parties” means, with respect to any
Person, such Person’s Affiliates and the partners, directors, officers,
employees, agents and advisors of such Person and of such Person’s Affiliates.

 

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

 

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

 

“Required Lenders” means, as of any date of determination,
two or more unaffiliated Lenders holding more than 50%  of the
sum of the (a) Total Outstandings (with the aggregate amount of each
Lender’s risk participation and funded participation in L/C Obligations being
deemed “held” by such Lender for purposes of this definition) and (b) aggregate
unused Commitments; provided that the unused Commitment of, and the
portion of the Total Outstandings held or deemed held by, any Defaulting Lender
shall be excluded for purposes of making a determination of Required Lenders.

 

“Responsible Officer” means the chief executive officer,
president, chief financial officer or treasurer of a Loan Party and any other officer of the applicable Loan
Party so designated by any of the foregoing officers in a notice to the
Administrative Agent.  Any
document delivered hereunder that is signed by a Responsible Officer of a Loan
Party shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Loan Party and
such Responsible Officer shall be conclusively presumed to have acted on behalf
of such Loan Party.

 

“Restricted Payment” means any dividend or other distribution
(whether in cash, securities or other property) with respect to any capital
stock or other Equity Interest of any Person or any of its Subsidiaries, or any
payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
defeasance, acquisition, cancellation or termination of any such capital stock
or other Equity Interest, or on account of any return of capital to any
Person’s stockholders, partners or members (or the equivalent of any thereof),
or any option, warrant or other right to acquire any such dividend or other
distribution or payment.

 

“Royal Bank” has the meaning specified in the
preamble and shall include Royal Bank of Canada in its individual capacity, and
any successor corporation thereto by merger, consolidation or otherwise.

 

“S&P” means Standard & Poor’s Ratings Services,
a division of The McGraw-Hill Companies, Inc., and any successor thereto.

 

“Seismic Compliance Laws” means all Federal and
state statutes (including California State Senate Bill 1953), rules,
guidelines, regulations, ordinances, codes and 

 

25

 

administrative or
judicial precedents or authorities related to seismic evaluation, retrofit
requirements, and disaster preparedness for hospitals (including any
requirements to assure the provision of services to the public and continuity
of care, structural soundness, maintenance of building contents, and integrity
of nonstructural systems).

 

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

 

“Secured
Cash Management Agreement”
means any Cash Management Agreement that is entered into by and between
Borrower and any Cash Management Bank.

 

“Secured Parties” means, collectively, the Administrative
Agent, the Lenders, the L/C Issuers, the Cash Management Banks that are Lenders,
each co-agent or sub-agent appointed by the Administrative Agent from time to
time pursuant to Section 9.05, and the other Persons the
Obligations owing to which are or are purported to be secured by the Collateral
under the terms of the Collateral Documents.

 

“Significant Adverse Effect” means an adverse
effect on the business, financial condition, operations or performance of the
Borrower, the other Loan Parties and the Pledged  Subsidiaries, taken as a whole, that results
in a loss equal to 10% of Consolidated EBITDA of the Borrower for the most
recently completed Measurement Period.

 

“Social
Security Act” means the Social Security Act of 1965.

 

“Solvent” and “Solvency” mean, with respect to any Person on
any date of determination, that on such date (a) the fair value of the
property of such Person is greater than the total amount of liabilities,
including contingent liabilities, of such Person, (b) the present fair
salable value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute and matured, (c) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such Person’s
ability to pay such debts and liabilities as they mature, (d) such Person
is not engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Person’s property would constitute an
unreasonably small capital, and (e) such Person is able to pay its debts
and liabilities, contingent obligations and other commitments as they mature in
the ordinary course of business.  The
amount of contingent liabilities at any time shall be computed as the amount
that, in the 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.

 

“Subsidiary” of a Person means a corporation, partnership,
joint venture, limited liability company or other business entity of which a
majority of the shares of securities or other interests having ordinary voting
power for the election of directors or other governing body (other than
securities or interests having such power only by reason of the happening of a
contingency) are at the time beneficially owned, or the management of which is
otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person. 
Unless otherwise specified or the context otherwise requires, all
reference herein to a “Subsidiary” or to “Subsidiaries” shall
refer to a Subsidiary or Subsidiaries of Borrower and shall include the PMG
Parties.  Notwithstanding the foregoing,
neither Brotman nor any of its 

 

26

 

Subsidiaries shall be
deemed to be a Subsidiary of Borrower (or required to become a Loan Party) for
any purpose under this Agreement or any other Loan Document (except to the
extent set forth in Section 6.12 and the proviso to this sentence)
for so long as Brotman is not wholly-owned (directly or indirectly) by Borrower
or is not precluded by contractual restrictions binding on it at the date of
determination from becoming a Loan Party; provided, however, that
Brotman and its Subsidiaries shall each be deemed to be a Subsidiary of the
Borrower for the purposes of  calculating
Consolidated Total Leverage Ratio, including the calculation of Consolidated
Total Indebtedness and Consolidated EBITA therein, mutatis
mutandis.

 

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

 

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

 

“Synthetic Debt” means, with respect to any Person as of any
date of determination thereof, all obligations of such Person in respect of
transactions entered into by such Person that are intended to function
primarily as a borrowing of funds but are not otherwise included in the
definition of “Indebtedness” or as a liability on the consolidated balance
sheet of such Person and its Subsidiaries in accordance with GAAP.

 

“Synthetic Lease Obligation” means the monetary obligation of
a Person under (a) a so-called synthetic, off-balance sheet or tax
retention lease, or (b) an agreement for the use or possession of property
(including sale and leaseback transactions), in each case, creating obligations
that do not appear on the balance sheet of such Person but which, upon the
application of any Debtor Relief Laws to such Person, would be characterized as
the indebtedness of such Person (without regard to accounting treatment).

 

27

 

“Taxes” means all present or future taxes, levies, imposts,
duties, deductions, withholdings, assessments, fees or other charges imposed by
any Governmental Authority, including any interest, additions to tax or
penalties applicable thereto.

 

“Third
Party Payor” means
Medicare, Medicaid, TRICARE, Blue Cross and/or Blue Shield, state government
insurers, private insurers and any other person or entity which presently or in
the future maintains Third Party Payor Programs.

 

“Third Party Payor Programs”  means all third party payor programs in which any of
the Loan Parties or their respective Subsidiaries participates (including,
without limitation, Medicare, Medicaid, TRICARE or any other federal, state or
other public health care programs, as well as Blue Cross and/or Blue Shield,
managed care plans, or any other private insurance programs).

 

“Threshold
Amount” means $4,000,000.

 

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

 

“Transaction”
means, collectively, (a) the entering into by the Loan Parties and their
applicable Subsidiaries of the Loan Documents, the Note Documents and the
Related Documents to which they are or are intended to be a party, (b) the
refinancing of certain outstanding Indebtedness of Borrower and its
Subsidiaries evidenced by the Existing Credit Agreements (and related
documents) and the termination of all commitments with respect thereto and (c) the
payment of the fees and expenses incurred in connection with the consummation
of the foregoing.

 

“Trustee” means U.S. Bank National Association,
in its capacity as trustee for the benefit of the Noteholders under the Indenture,
and any successor trustee appointed in accordance with the terms of the
Indenture.

 

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

 

“UCC” means the Uniform Commercial Code as in
effect in the State of New York;
provided that, if perfection or the effect of perfection or
non-perfection or the priority of any security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, “UCC”
means the Uniform Commercial Code as in effect from time to time in such other
jurisdiction for purposes of the provisions hereof relating to such perfection,
effect of perfection or non-perfection or priority.

 

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

 

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

 

28

 

“Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).

 

“U.S. Loan Party” means any Loan Party that is
organized under the laws of one of the states of the United States of America
and that is not a CFC.

 

SECTION 1.02       Other Interpretive Provisions.  With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan
Document:

 

(a)           The
definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words “include,”
“includes” and “including” shall be deemed to be followed by the
phrase “without limitation.”  The word “will”
shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (i) any
definition of or reference to any agreement, instrument or other document
(including any Organization Document) shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document), (ii) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (iii) the words “herein,”
“hereof” and “hereunder,” and words of similar import when used
in any Loan Document, shall be construed to refer to such Loan Document in its
entirety and not to any particular provision thereof, (iv) all references
in a Loan Document to Articles, Sections, Preliminary Statements, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and
Preliminary Statements, Exhibits and Schedules to, the Loan Document in which
such references appear, (v) any reference to any law shall include all
statutory and regulatory provisions consolidating, amending, replacing or
interpreting such law and any reference to any law or regulation shall, unless
otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time, and (vi) the words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.

 

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

 

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

 

SECTION 1.03       Accounting Terms.

 

(a)           Generally. 
All accounting terms not specifically or completely defined herein shall
be construed in conformity with, and all financial data (including financial
ratios and other financial calculations) required to be submitted pursuant to
this Agreement shall be

 

29

 

prepared in conformity with, GAAP applied on
a consistent basis, as in effect from time to time, applied in a manner
consistent with that used in preparing the Audited Financial Statements, except
as otherwise specifically prescribed herein.

 

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

 

(c)           Consolidation of Variable Interest Entities.  All references herein to consolidated
financial statements of Borrower and its Subsidiaries or to the determination
of any amount for Borrower and its Subsidiaries on a consolidated basis or any
similar reference shall, in each case, be deemed to include each variable
interest entity that Borrower is required to consolidate pursuant to FASB
Interpretation No. 46 — Consolidation of Variable Interest Entities:  an interpretation of ARB No. 51 (January 2003)
as if such variable interest entity were a Subsidiary as defined herein.

 

SECTION 1.04       Rounding.  Any
financial ratios required to be maintained by Borrower pursuant to this
Agreement shall be calculated by dividing the appropriate component by the
other component, carrying the result to one place more than the number of
places by which such ratio is expressed herein and rounding the result up or
down to the nearest number (with a rounding-up if there is no nearest number).

 

SECTION 1.05       Times of Day. 
Unless otherwise specified, all references herein to times of day shall
be references to Eastern time (daylight or standard, as applicable).

 

SECTION 1.06       Letter of Credit Amounts.  Unless otherwise specified herein, the amount
of a Letter of Credit at any time shall be deemed to be the stated amount of
such Letter of Credit in effect at such time; provided, however,
that with respect to any Letter of Credit that, by its terms or the terms of
any Issuer Document related thereto, provides for one or more automatic
increases in the stated amount thereof, the amount of such Letter of Credit
shall be deemed to be the maximum stated amount of such Letter of Credit after
giving effect to all such increases, whether or not such maximum stated amount
is in effect at such time.

 

ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

 

SECTION 2.01       The Loans. 
Subject to the terms and conditions set forth herein, each Lender
severally agrees to make loans (each such loan, a “Loan”) to Borrower
from

 

30

 

time to time, on any Business Day during the Availability Period, in an
aggregate amount not to exceed at any time outstanding the amount of such
Lender’s Commitment; provided, however, that after giving effect
to any Borrowing, (i) the Total Outstandings shall not exceed the lesser of (1) the Facility minus
the L/C Reserve and (2) the Borrowing Base and (ii) the
aggregate Outstanding Amount of the Loans of any Lender, plus such
Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations
shall not exceed such Lender’s Commitment. 
Within the limits of each Lender’s Commitment, and subject to the other
terms and conditions hereof, Borrower may borrow under this Section 2.01,
prepay under Section 2.04, and reborrow under this Section 2.01.  Loans may be Base Rate Loans or Eurodollar
Rate Loans, as further provided herein.

 

SECTION 2.02       Borrowings, Conversions and Continuations of Loans.  (a)  Each Borrowing, each conversion of
Loans from one Type to the other, and each continuation of Eurodollar Rate
Loans shall be made upon Borrower’s irrevocable notice to the Administrative
Agent, which may be given by telephone. 
Each such notice must be received by the Administrative Agent not later
than (i) 12:00 noon three Business Days prior to the requested date of any
Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any
conversion of Eurodollar Rate Loans to Base Rate Loans, and (ii) 2:00 p.m.
one Business Day prior to the requested date of any Borrowing of Base Rate
Loans.  Each telephonic notice by
Borrower pursuant to this Section 2.02(a) must be confirmed
promptly by delivery to the Administrative Agent of a written Committed Loan
Notice, appropriately completed and signed by a Responsible Officer of
Borrower.  Each Borrowing of, conversion
to or continuation of Eurodollar Rate Loans shall be in a principal amount of
$1,000,000 or a whole multiple of $500,000 in excess thereof.  Except as provided in Sections 2.03(c),
each Borrowing of or conversion to Base Rate Loans shall be in a principal
amount of $500,000 or a whole multiple of $100,000 in excess thereof.  Each Committed Loan Notice  (whether telephonic or written) shall specify
(i) whether Borrower is requesting a Borrowing, a conversion of Loans from
one Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the
requested date of the Borrowing, conversion or continuation, as the case may be
(which shall be a Business Day), (iii) the principal amount of Loans to be
borrowed, converted or continued, (iv) the Type of Loans to be borrowed or
to which existing Loans are to be converted, and (v) if applicable, the
duration of the Interest Period with respect thereto.  If Borrower fails to specify a Type of Loan
in a Committed Loan Notice or if Borrower fails to give a timely notice
requesting a conversion or continuation, then the applicable Loans shall be
made as, or converted to, Base Rate Loans. 
Any such automatic conversion to Base Rate Loans shall be effective as
of the last day of the Interest Period then in effect with respect to the
applicable Eurodollar Rate Loans.  If
Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar
Rate Loans in any such Committed Loan Notice, but fails to specify an Interest
Period, Borrower will be deemed to have specified an Interest Period of one
month.

 

(b)           Following receipt of a Committed Loan Notice, the
Administrative Agent shall promptly notify each Lender of the amount of its
Applicable Percentage of the Loans, and if no timely notice of a conversion or
continuation is provided by Borrower, the Administrative Agent shall notify
each Lender of the details of any automatic conversion to Base Rate Loans
described in Section 2.02(a). 
Each Appropriate Lender shall make the amount of its Loan available to
the Administrative Agent in immediately available funds at the Administrative
Agent’s Office not later than 2:00 p.m. on the Business Day specified in
the applicable 

 

31

 

Committed Loan Notice.  Upon satisfaction of the applicable
conditions set forth in Section 4.02 (and, if such Borrowing is the
initial Credit Extension, Section 4.01), the Administrative Agent
shall make all funds so received available to Borrower in like funds as
received by the Administrative Agent either by (i) crediting the account
of Borrower on the books of the Administrative Agent with the amount of such
funds or (ii) wire transfer of such funds, in each case in accordance with
instructions provided to (and reasonably acceptable to) the Administrative
Agent by Borrower; provided, however, that if, on the date a
Committed Loan Notice with respect to a Borrowing is given by Borrower, there
are L/C Borrowings outstanding, then the proceeds of such Borrowing, first,
shall be applied to the payment in full of any such L/C Borrowings, and second,
shall be made available to Borrower as provided above.

 

(c)           Except as otherwise provided herein, a Eurodollar Rate
Loan may be continued or converted only on the last day of an Interest Period
for such Eurodollar Rate Loan.  During
the existence of a Default, no Loans may be requested as, converted to or
continued as Eurodollar Rate Loans without the consent of the Required Lenders.

 

(d)           The Administrative Agent shall promptly notify Borrower
and the Lenders of the interest rate applicable to any Interest Period for
Eurodollar Rate Loans upon determination of such interest rate.  At any time that Base Rate Loans are
outstanding, the Administrative Agent shall notify Borrower and the Lenders of
any change in the Prime Rate used in determining the Base Rate promptly
following the public announcement of such change.

 

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

 

SECTION 2.03       Letters of Credit.

 

(a)           The Letter of Credit Commitment.  (i)  Subject to the terms and conditions
set forth herein, (A) each L/C Issuer agrees, in reliance upon the
agreements of the Lenders set forth in this Section 2.03, (1) with
the consent of the Administrative Agent from time to time on any Business Day
during the period from the Closing Date until the Letter of Credit Expiration
Date, to issue Letters of Credit for the account of Borrower or any of its
Subsidiaries, and to amend or extend Letters of Credit previously issued by it,
in accordance with Section 2.03(b), and (2) to honor drawings
under the Letters of Credit; and (B) the Lenders severally agree to
participate in Letters of Credit issued for the account of Borrower or any of
its Subsidiaries and any drawings thereunder; provided that after giving
effect to any L/C Credit Extension with respect to any Letter of Credit, (x) the
Total Outstandings shall not exceed the lesser of (1) the
Facility minus the L/C Reserve and (2) the Borrowing Base, (y) the
aggregate Outstanding Amount of the Loans of any Lender, plus such
Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations
shall not exceed such Lender’s Commitment, and (z) the Outstanding Amount
of the L/C Obligations shall not exceed the Letter of Credit Sublimit.  Each request by Borrower for the issuance or
amendment of a Letter of Credit shall be deemed to be a representation by
Borrower that the L/C Credit Extension so requested complies with the
conditions set forth in the proviso to the preceding sentence.  Within the foregoing limits, and subject to
the terms and conditions hereof, Borrower’s ability to obtain Letters of Credit
shall be fully revolving, and accordingly Borrower may, during the foregoing
period, 

 

32

 

obtain Letters of Credit to replace Letters
of Credit that have expired or that have been drawn upon and reimbursed.

 

(ii)           The
L/C Issuer shall not issue any Letter of Credit if:

 

(A)          subject
to Section 2.03(b)(iii), the expiry date of such requested Letter
of Credit would occur more than twelve months after the date of issuance or
last extension, unless the Required Lenders have approved such expiry date; or

 

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

 

(iii)          An
L/C Issuer shall not be under any obligation to issue any Letter of Credit if:

 

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

 

(B)           the
issuance of such Letter of Credit would violate one or more policies of such
L/C Issuer applicable to letters of credit generally;

 

(C)           except
as otherwise agreed by the Administrative Agent and such L/C Issuer, such
Letter of Credit is in an initial stated amount less than $50,000;

 

(D)          such
Letter of Credit is to be denominated in a currency other than Dollars;

 

(E)           such
Letter of Credit contains any provisions for automatic reinstatement of the
stated amount after any drawing thereunder; or

 

(F)           a
default of any Lender’s obligations to fund under Section 2.03(c) exists
or any Lender is at such time a Defaulting Lender hereunder, unless such L/C
Issuer has entered into satisfactory 

 

33

 

arrangements with Borrower or such Lender to eliminate such L/C
Issuer’s risk with respect to such Lender.

 

(iv)          No
L/C Issuer shall amend any Letter of Credit if such L/C Issuer would not be
permitted at such time to issue such Letter of Credit in its amended form under
the terms hereof.

 

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

 

(vi)          Each
L/C Issuer shall act on behalf of the Lenders with respect to any Letters of
Credit issued by it and the documents associated therewith, and each L/C Issuer
shall have all of the benefits and immunities (A) provided to the
Administrative Agent in Article IX with respect to any acts taken
or omissions suffered by the applicable L/C Issuer in connection with Letters
of Credit issued by it or proposed to be issued by it and Issuer Documents
pertaining to such Letters of Credit as fully as if the term “Administrative
Agent” as used in Article IX included the applicable L/C Issuer
with respect to such acts or omissions, and (B) as additionally provided
herein with respect to the L/C Issuers.

 

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

 

(i)            Each
Letter of Credit shall be issued or amended, as the case may be, upon the
request of Borrower delivered to the applicable L/C Issuer (with a copy to the
Administrative Agent) in the form of a Letter of Credit Application,
appropriately completed and signed by a Responsible Officer of Borrower.  Such Letter of Credit Application must be
received by the applicable L/C Issuer and the Administrative Agent not later
than 12:00 noon at least two Business Days (or such later date and time as the
Administrative Agent and the applicable L/C Issuer may agree in a particular
instance in their sole discretion) prior to the proposed issuance date or date
of amendment, as the case may be.  In the
case of a request for an initial issuance of a Letter of Credit, such Letter of
Credit Application shall specify in form and detail satisfactory to the
applicable L/C Issuer:  (A) the
proposed issuance date of the requested Letter of Credit (which shall be a
Business Day); (B) the amount thereof; (C) the expiry date thereof;
(D)the purpose and nature of the requested Letter of Credit; (E) the name
and address of the beneficiary thereof; (F) the documents to be presented
by such beneficiary in case of any drawing thereunder; (G) the full text
of any certificate to be presented by such beneficiary in case of any drawing
thereunder; and (H) such other matters as the applicable L/C Issuer may
require.  In the case of a request for an
amendment of any outstanding Letter of Credit, such Letter of Credit
Application shall specify in form and detail satisfactory to the applicable L/C
Issuer (1) the Letter of Credit to be amended; (2) the proposed date
of amendment thereof

 

34

 

(which shall be a Business Day); (3) the nature of the proposed
amendment; and (4) such other matters as the applicable L/C Issuer may
require.  Additionally, Borrower shall
furnish to the applicable L/C Issuer and the Administrative Agent such other
documents and information pertaining to such requested Letter of Credit
issuance or amendment, including any Issuer Documents, as the applicable L/C
Issuer or the Administrative Agent may require.

 

(ii)           Promptly
after receipt of any Letter of Credit Application, the applicable L/C Issuer
will confirm with the Administrative Agent (by telephone or in writing) that
the Administrative Agent has received a copy of such Letter of Credit
Application from Borrower and, if not, the applicable L/C Issuer will provide
the Administrative Agent with a copy thereof. 
Unless the applicable L/C Issuer has received written notice from any
Lender, the Administrative Agent or any Loan Party, at least one Business Day
prior to the requested date of issuance or amendment of the applicable Letter
of Credit, that one or more applicable conditions contained in Article IV
shall not then be satisfied, then, subject to the terms and conditions hereof,
the applicable L/C Issuer shall, on the requested date, issue a Letter of
Credit for the account of Borrower (or the applicable Subsidiary) or enter into
the applicable amendment, as the case may be, in each case in accordance with
the applicable L/C Issuer’s usual and customary business practices.  Immediately upon the issuance of each Letter
of Credit, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the applicable L/C Issuer a risk
participation in such Letter of Credit in an amount equal to the product of such
Lender’s Applicable Percentage times the amount of such Letter of
Credit.

 

(iii)          If
Borrower so requests in any applicable Letter of Credit Application, the
applicable L/C Issuer may, in its sole and absolute discretion, agree to issue
a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension
Letter of Credit”); provided that any such Auto-Extension Letter of
Credit must permit the applicable L/C Issuer to prevent any such extension at
least once in each twelve-month period (commencing with the date of issuance of
such Letter of Credit) by giving prior notice to the beneficiary thereof not
later than a day (the “Non-Extension Notice Date”) in each such
twelve-month period to be agreed upon at the time such Letter of Credit is
issued.  Unless otherwise directed by the
applicable L/C Issuer, Borrower shall not be required to make a specific
request to the applicable L/C Issuer for any such extension.  Once an Auto-Extension Letter of Credit has
been issued, the Lenders shall be deemed to have authorized (but may not
require) the applicable L/C Issuer to permit the extension of such Letter of
Credit at any time to an expiry date not later than the Letter of Credit
Expiration Date; provided, however, that the applicable L/C
Issuer shall not permit any such extension if (A) the applicable L/C
Issuer has determined that it would not be permitted, or would have no
obligation at such time to issue such Letter of Credit in its revised
form (as extended) under the terms hereof (by reason of the provisions of
clause (ii) or (iii) of Section 2.03(a) or
otherwise), or (B) it has received notice (which may be by telephone or in
writing) on or before the day that is seven Business Days before the

 

35

 

Non-Extension Notice Date (1) from the Administrative Agent that
the Required Lenders have elected not to permit such extension or (2) from
the Administrative Agent, any Lender or Borrower that one or more of the
applicable conditions specified in Section 4.02 is not then
satisfied, and in each such case directing the applicable L/C Issuer not to
permit such extension.

 

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

 

(c)           Drawings and Reimbursements; Funding of Participations.

 

(i)            Upon
receipt from the beneficiary of any Letter of Credit of any notice of a drawing
under such Letter of Credit, the applicable L/C Issuer shall notify Borrower
and the Administrative Agent thereof. 
Not later than 12:00 noon on the date of any payment by the applicable
L/C Issuer under a Letter of Credit (each such date, an “Honor Date”),
Borrower shall reimburse the applicable L/C Issuer through the Administrative
Agent in an amount equal to the amount of such drawing.  If Borrower fails to so reimburse the
applicable L/C Issuer by such time, the Administrative Agent shall promptly
notify each Lender of the Honor Date, the amount of the unreimbursed drawing
(the “Unreimbursed Amount”), and the amount of such Lender’s Applicable
Percentage thereof.  In such event, Borrower
shall be deemed to have requested a Borrowing of Base Rate Loans to be
disbursed on the Honor Date in an amount equal to the Unreimbursed Amount,
without regard to the minimum and multiples specified in Section 2.02
for the principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the Commitments and the conditions set forth in Section 4.02
(other than the delivery of a Committed Loan Notice).  Any notice given by the applicable L/C Issuer
or the Administrative Agent pursuant to this Section 2.03(c)(i) may
be given by telephone if immediately confirmed in writing; provided that
the lack of such an immediate confirmation shall not affect the conclusiveness
or binding effect of such notice.

 

(ii)           Each
Lender shall upon any notice pursuant to Section 2.03(c)(i) make
funds available to the Administrative Agent for the account of the applicable
L/C Issuer at the Administrative Agent’s Office in an amount equal to its
Applicable Percentage of the Unreimbursed Amount not later than 2:00 p.m.
on the Business Day specified in such notice by the Administrative Agent,
whereupon, subject to the provisions of Section 2.03(c)(iii), each
Lender that so makes funds available shall be deemed to have made a Base Rate
Loan to Borrower in such amount.  The
Administrative Agent shall remit the funds so received to the applicable L/C
Issuer.

 

(iii)          With
respect to any Unreimbursed Amount that is not fully refinanced by a Borrowing
of Base Rate Loans because the conditions set forth in

 

36

 

Section 4.02 cannot be satisfied or for any other reason,
Borrower shall be deemed to have incurred from the applicable L/C Issuer an L/C
Borrowing in the amount of the Unreimbursed Amount that is not so refinanced,
which L/C Borrowing shall be due and payable on demand (together with interest)
and shall bear interest at the Default Rate. 
In such event, each Lender’s payment to the Administrative Agent for the
account of the applicable L/C Issuer pursuant to Section 2.03(c)(ii) shall
be deemed payment in respect of its participation in such L/C Borrowing and
shall constitute an L/C Advance from such Lender in satisfaction of its
participation obligation under this Section 2.03.

 

(iv)          Until
each Lender funds its Loan or L/C Advance pursuant to this Section 2.03(c) to
reimburse the applicable L/C Issuer for any amount drawn under any Letter of
Credit, interest in respect of such Lender’s Applicable Percentage of such
amount shall be solely for the account of the applicable L/C Issuer.

 

(v)           Each
Lender’s obligation to make Loans or L/C Advances to reimburse the applicable
L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c),
shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any setoff, counterclaim, recoupment, defense
or other right which such Lender may have against the applicable L/C Issuer,
Borrower or any other Person for any reason whatsoever; (B) the occurrence
or continuance of a Default; or (C) any other occurrence, event or
condition, whether or not similar to any of the foregoing; provided, however,
that each Lender’s obligation to make Loans pursuant to this Section 2.03(c) is
subject to the conditions set forth in Section 4.02 (other than
delivery by Borrower of a Committed Loan Notice ).  No such making of an L/C Advance shall
relieve or otherwise impair the obligation of Borrower to reimburse the
applicable L/C Issuer for the amount of any payment made by the applicable L/C
Issuer under any Letter of Credit, together with interest as provided herein.

 

(vi)          If
any Lender fails to make available to the Administrative Agent for the account
of the applicable L/C Issuer any amount required to be paid by such Lender
pursuant to the foregoing provisions of this Section 2.03(c) by
the time specified in Section 2.03(c)(ii), the applicable L/C
Issuer shall be entitled to recover from such Lender (acting through the
Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to the applicable L/C Issuer at a rate per annum equal
to the greater of the Federal Funds Rate and a rate determined by the
applicable L/C Issuer in accordance with banking industry rules on
interbank compensation, plus any administrative, processing or similar fees
customarily charged by the applicable L/C Issuer in connection with the
foregoing.  If such Lender pays such
amount (with interest and fees as aforesaid), the amount so paid shall
constitute such Lender’s Committed Loan included in the relevant Committed
Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case
may be.  A certificate of the applicable
L/C Issuer submitted to any Lender (through the Administrative Agent)

 

37

 

with respect to any amounts owing under this Section 2.03(c)(vi) shall
be conclusive absent manifest error.

 

(d)           Repayment of Participations.

 

(i)            At
any time after the applicable L/C Issuer has made a payment under any Letter of
Credit and has received from any Lender such Lender’s L/C Advance in respect of
such payment in accordance with Section 2.03(c), if the
Administrative Agent receives for the account of the applicable L/C Issuer any
payment in respect of the related Unreimbursed Amount or interest thereon
(whether directly from Borrower or otherwise, including proceeds of Cash
Collateral applied thereto by the Administrative Agent), the Administrative
Agent will distribute to such Lender its Applicable Percentage thereof in the
same funds as those received by the Administrative Agent.

 

(ii)           If
any payment received by the Administrative Agent for the account of the
applicable L/C Issuer pursuant to Section 2.03(c)(i) is
required to be returned under any of the circumstances described in Section 10.05
(including pursuant to any settlement entered into by the applicable L/C Issuer
in its discretion), each Lender shall pay to the Administrative Agent for the
account of the applicable L/C Issuer its Applicable Percentage thereof on
demand of the Administrative Agent, plus interest thereon from the date
of such demand to the date such amount is returned by such Lender, at a rate
per annum equal to the Federal Funds Rate from time to time in effect.  The obligations of the Lenders under this
clause shall survive the payment in full of the Obligations and the termination
of this Agreement.

 

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

 

(i)            any
lack of validity or enforceability of such Letter of Credit, this Agreement, or
any other Loan Document;

 

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

 

(iii)          any
draft, demand, certificate or other document presented under such Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect; or

 

38

 

any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under such Letter of Credit;

 

(iv)          any
payment by the applicable L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by the applicable L/C
Issuer under such Letter of Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any beneficiary
or any transferee of such Letter of Credit, including any arising in connection
with any proceeding under any Debtor Relief Law; or

 

(v)           any
other circumstance or happening whatsoever, whether or not similar to any of
the foregoing, including any other circumstance that might otherwise constitute
a defense available to, or a discharge of, Borrower or any of its Subsidiaries.

 

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

 

(f)            Role of L/C Issuer.  Each Lender and Borrower agrees that, in
paying any drawing under a Letter of Credit, the applicable L/C Issuer shall
not have any responsibility to obtain any document (other than any sight draft,
certificates and documents expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document.  None of the L/C Issuers, the Administrative
Agent, any of their respective Related Parties nor any correspondent,
participant or assignee of any L/C Issuer shall be liable to any Lender for (i) any
action taken or omitted in connection herewith at the request or with the
approval of the Lenders or the Required Lenders, as applicable; (ii) any
action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any document or instrument related to any Letter of Credit or
Issuer Document.  Borrower hereby assumes
all risks of the acts or omissions of any beneficiary or transferee with
respect to its use of any Letter of Credit; provided, however,
that this assumption is not intended to, and shall not, preclude Borrower’s
pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. 
None of the L/C Issuers, the Administrative Agent, any of their
respective Related Parties nor any correspondent, participant or assignee of
the L/C Issuers shall be liable or responsible for any of the matters described
in clauses (i) through (v) of Section 2.03(e); provided,
however, that anything in such clauses to the contrary notwithstanding,
Borrower may have a claim against an L/C Issuer, and such L/C Issuer may be
liable to Borrower, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by Borrower which
Borrower proves were caused by such L/C Issuer’s willful misconduct or gross
negligence or such L/C Issuer’s willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a
Letter of Credit.  In

 

39

 

furtherance and not in limitation of the
foregoing, each L/C Issuer may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary, and such L/C Issuer shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason.

 

(g)           Cash Collateral. 
Upon the request of the Administrative Agent, (i) if the applicable
L/C Issuer has honored any full or partial drawing request under any Letter of
Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as
of the Letter of Credit Expiration Date, any L/C Obligation for any reason
remains outstanding, Borrower shall, in each case, immediately Cash
Collateralize the then Outstanding Amount of all L/C Obligations.  Sections 2.04 and 8.02(c) set
forth certain additional requirements to deliver Cash Collateral
hereunder.  Borrower may use funds from
Loans to satisfy its obligations to Cash Collateralize hereunder subject to the
terms and conditions herein with respect to requesting Loans.  For purposes of this Section 2.03,
Section 2.04 and Section 8.02(c), “Cash Collateralize” means to
pledge and deposit with or deliver to the Administrative Agent, for the benefit
of the applicable L/C Issuer and the Lenders, as collateral for the L/C
Obligations, cash or deposit account balances pursuant to documentation in form
and substance satisfactory to the Administrative Agent and the applicable L/C
Issuer (which documents are hereby consented to by the Lenders).  Derivatives of such term have corresponding
meanings.  Borrower hereby grants to the
Administrative Agent (or any representative of the Administrative Agent
designated by it), for the benefit of the L/C Issuers and the Lenders, a
security interest in all such cash, deposit accounts and all balances therein
and all proceeds of the foregoing.  Cash
Collateral shall be maintained in blocked, non-interest bearing deposit
accounts with the Administrative Agent or with a bank acceptable to the
Administrative Agent.  If at any time the
Administrative Agent determines that any funds held as Cash Collateral are
subject to any right or claim of any Person other than the Administrative Agent
or that the total amount of such funds is less than the aggregate Outstanding
Amount of all L/C Obligations, Borrower will, forthwith upon demand by the
Administrative Agent to Borrower, pay to the Administrative Agent, as
additional funds to be deposited as Cash Collateral, an amount equal to the
excess of (x) such aggregate Outstanding Amount over (y) the total
amount of funds, if any, then held as Cash Collateral that the Administrative
Agent determines to be free and clear of any such right and claim.  Upon the drawing of any Letter of Credit for
which funds are on deposit as Cash Collateral, such funds shall be applied, to
the extent permitted under applicable Laws, to reimburse the applicable L/C
Issuer.

 

(h)           Applicability of ISP.  Unless otherwise expressly agreed by the
applicable L/C Issuer and Borrower when a Letter of Credit is issued, the rules of
the ISP shall apply to each standby Letter of Credit.

 

(i)            Letter of Credit Fees.  Borrower shall pay to the Administrative
Agent for the account of each Lender in accordance with its Applicable
Percentage a Letter of Credit fee (the “Letter of Credit Fee”) for each
Letter of Credit equal to the Applicable Rate times the daily amount
available to be drawn under such Letter of Credit.  For purposes of computing the daily amount
available to be drawn under any Letter of Credit, the amount of such Letter of
Credit shall be determined in accordance with Section 1.06.  Letter of Credit Fees shall be (i) due
and

 

40

 

payable on the first Business Day after the
end of each March, June, September and December, commencing with the first
such date to occur after the issuance of such Letter of Credit, on the Letter
of Credit Expiration Date and thereafter on demand and (ii) computed on a
quarterly basis in arrears. 
Notwithstanding anything to the contrary contained herein, upon the
request of the Required Lenders, while any Event of Default exists, all Letter
of Credit Fees shall accrue at the Default Rate.

 

(j)            Fronting Fee and Documentary and Processing Charges
Payable to L/C Issuer.  Borrower
shall pay directly to the applicable L/C Issuer for its own account a fronting
fee with respect to each Letter of Credit, at a rate of 1.000%, computed on the
daily amount available to be drawn under such Letter of Credit on a quarterly
basis in arrears; provided that such fronting fee shall be in a minimum
amount of $500.  Such fronting fee shall
be due and payable on the tenth Business Day after the end of each March, June,
September and December in respect of the most recently-ended
quarterly period (or portion thereof, in the case of the first payment),
commencing with the first such date to occur after the issuance of such Letter
of Credit, on the Letter of Credit Expiration Date and thereafter on
demand.  For purposes of computing the
daily amount available to be drawn under any Letter of Credit, the amount of
such Letter of Credit shall be determined in accordance with Section 1.06.  In addition, Borrower shall pay directly to the
applicable L/C Issuer for its own account the customary issuance, presentation,
amendment and other processing fees, and other standard costs and charges, of
the applicable L/C Issuer relating to letters of credit as from time to time in
effect.  Such customary fees and standard
costs and charges are due and payable on demand and are nonrefundable.

 

(k)           Conflict with Issuer Documents.  In the event of any conflict between the
terms hereof and the terms of any Issuer Document, the terms hereof shall control.

 

(l)            Letters of Credit Issued for Subsidiaries.  Notwithstanding that a Letter of Credit
issued or outstanding hereunder is in support of any obligations of, or is for
the account of, a Subsidiary, Borrower shall be obligated to reimburse the
applicable L/C Issuer hereunder for any and all drawings under such Letter of
Credit.  Borrower hereby acknowledges
that the issuance of Letters of Credit for the account of any of its
Subsidiaries inures to the benefit of Borrower, and that Borrower’s business
derives substantial benefits from the businesses of such Subsidiaries.

 

SECTION 2.04       Prepayments.

 

(a)           Optional. 
Subject to the last sentence of this Section 2.04(a),
Borrower may, upon notice to the Administrative Agent, at any time or from time
to time voluntarily prepay the Loans in whole or in part without premium or
penalty; provided that (A) such notice must be received by the
Administrative Agent not later than 12:00 noon (1) three Business Days
prior to any date of prepayment of Eurodollar Rate Loans and (2) on the
date of prepayment of Base Rate Loans; (B) any prepayment of Eurodollar
Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of
$500,000 in excess thereof; and (C) any prepayment of Base Rate Loans
shall be in a principal amount of $500,000 or a whole multiple of $100,000 in
excess thereof or, in each case, if less, the entire principal amount thereof
then outstanding.  Each such notice shall
specify the date and amount of such prepayment and the Type(s) of Loans to
be prepaid and, if Eurodollar Rate Loans are to be prepaid, the Interest Period(s) of
such Loans.  

 

41

 

The Administrative Agent will promptly notify each Lender of its
receipt of each such notice, and of the amount of such Lender’s ratable portion
of such prepayment (based on such Lender’s Applicable Percentage).  If such notice is given by Borrower, it shall
make such prepayment and the payment amount specified in such notice shall be
due and payable on the date specified therein. 
Any prepayment of a Eurodollar Rate Loan shall be accompanied by all
accrued interest on the amount prepaid, together with any additional amounts
required pursuant to Section 3.05.

 

(b)                                 Mandatory.  (i) If for any reason the Total
Outstandings at any time exceed the lesser of (1) the Facility minus
the L/C Reserve and (2) the Borrowing Base at such time, Borrower shall
immediately prepay Loans and L/C Borrowings and/or Cash Collateralize the L/C
Obligations (other than the L/C Borrowings) in an aggregate amount equal to
such excess; and (ii) if for any reason the Total Outstandings at any time
exceed the Facility at such time, Borrower shall immediately prepay Loans and
L/C Borrowings and/or Cash Collateralize the L/C Obligations (other than the
L/C Borrowings) in an aggregate amount equal to such excess.

 

SECTION 2.05                    Termination or Reduction of
Commitments.

 

(a)                                  Optional.  Borrower may, upon notice to the
Administrative Agent, terminate the Facility or the Letter of Credit Sublimit,
or from time to time permanently reduce the Facility or the Letter of Credit
Sublimit; provided that (i) any such notice shall be received by
the Administrative Agent not later than 12:00 noon five Business Days prior to
the date of termination or reduction, (ii) any such partial reduction
shall be in an aggregate amount of $1,000,000 or any whole multiple of $500,000
in excess thereof and (iii) Borrower shall not terminate or reduce
(A) the Facility if, after giving effect thereto and to any concurrent
prepayments hereunder, the Total Outstandings would exceed the lesser of
(1) the Facility minus the L/C Reserve and (2) the Borrowing
Base or (B) the Letter of Credit Sublimit if, after giving effect thereto,
the Outstanding Amount of L/C Obligations not fully Cash Collateralized
hereunder would exceed the Letter of Credit Sublimit.

 

(b)                                 Mandatory.

 

(i)                                     If after giving effect to any reduction or
termination of Commitments under this Section 2.05, the Letter of
Credit Sublimit exceeds the Facility at such time, the Letter of Credit
Sublimit shall be automatically reduced by the amount of such excess.

 

(ii)                                  In the event there occurs any mandatory
redemption of the 2014 Notes, then the Facility will be reduced by a percent
equal to the percent of the 2014 Notes which are mandatorily redeemed relative
to the total principal amount of 2014 Notes originally issued.

 

(c)                                  Application of Commitment Reductions; Payment
of Fees.  The Administrative Agent will promptly notify
the Lenders of any termination or reduction of the Letter of Credit Sublimit or
the Commitments under this Section 2.05.  Upon any reduction of the Commitments, the
Commitment of each Lender shall be reduced by such Lender’s Applicable
Percentage of such reduction amount.  All
fees in respect of the Facility accrued until

 

42

 

the
effective date of any termination of the Facility shall be paid on the
effective date of such termination.

 

SECTION 2.06                    Repayment of Loans.  Borrower shall repay to the Lenders on the
Maturity Date the aggregate principal amount of all Loans outstanding on such
date.

 

SECTION 2.07                    Interest.  (a)  Subject to the provisions of Section 2.07(b),
(i) each Eurodollar Rate Loan shall bear interest on the outstanding
principal amount thereof for
each Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Rate; and (ii) each Base Rate
Loan shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate plus
the Applicable Rate.

 

(b)                                 (i)  If any amount of principal of any
Loan is not paid when due (without regard to any applicable grace periods),
whether at stated maturity, by acceleration or otherwise, such amount shall
thereafter bear interest at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

(ii)                                  If any amount (other than principal of any
Loan) payable by Borrower under any Loan Document is not paid when due (without
regard to any applicable grace periods), whether at stated maturity, by
acceleration or otherwise, then upon the request of the Required Lenders such
amount shall thereafter bear interest at a fluctuating interest rate per annum
at all times equal to the Default Rate to the fullest extent permitted by
applicable Laws.

 

(iii)                               Upon the request of the Required Lenders, while any Event of Default
exists, Borrower shall pay interest on the principal amount of all outstanding
Obligations hereunder at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

(iv)                              Accrued and unpaid interest on past due amounts (including interest on
past due interest) shall be due and payable upon demand.

 

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

 

SECTION 2.08                    Fees.  In addition to certain fees described in Sections 2.03(i) and
(j):

 

(a)                                  Commitment Fee. 
Borrower shall pay to the Administrative Agent for the account of each
Lender in accordance with its Applicable Percentage, a commitment fee equal to
the Applicable Fee Rate times the actual daily amount by which the
Facility exceeds the sum of (i) the Outstanding Amount of Loans and
(ii) the Outstanding Amount of L/C Obligations.  The commitment fee shall accrue at all times
during the Availability Period, including at any time during which one or more
of the conditions in

 

43

 

Article IV
is not met, and shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December, commencing with
the first such date to occur after the Closing Date, and on the last day of the
Availability Period.  The commitment fee
shall be calculated quarterly in arrears, and if there is any change in the
Applicable Fee Rate during any quarter, the actual daily amount shall be
computed and multiplied by the Applicable Fee Rate separately for each period
during such quarter that such Applicable Fee Rate was in effect.

 

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

 

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

 

SECTION 2.09                    Computation of Interest and Fees.  All computations of interest for Base Rate
Loans when the Base Rate is determined by the Prime Rate shall be made on the
basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed.  All other computations of fees
and interest shall be made on the basis of a 360-day year and actual days
elapsed (which results in more fees or interest, as applicable, being paid than
if computed on the basis of a 365-day year). 
Interest shall accrue on each Loan for the day on which the Loan is
made, and shall not accrue on a Loan, or any portion thereof, for the day on
which the Loan or such portion is paid, provided that any Loan that is
repaid on the same day on which it is made shall, subject to Section 2.11(a),
bear interest for one day.  Each
determination by the Administrative Agent of an interest rate or fee hereunder
shall be conclusive and binding for all purposes, absent manifest error.

 

SECTION 2.10                    Evidence of Debt.  (a)  The Credit Extensions made by each
Lender shall be evidenced by one or more accounts or records maintained by such
Lender and by the Administrative Agent in the ordinary course of business.  The accounts or records maintained by the
Administrative Agent and each Lender shall be conclusive absent manifest error
of the amount of the Credit Extensions made by the Lenders to Borrower and the
interest and payments thereon.  Any
failure to so record or any error in doing so shall not, however, limit or otherwise
affect the obligation of Borrower hereunder to pay any amount owing with
respect to the Obligations.  In the event
of any conflict between the accounts and records maintained by any Lender and
the accounts and records of the Administrative Agent in respect of such
matters, the accounts and records of the Administrative Agent shall control in
the absence of manifest error.  Upon the
request of any Lender made through the Administrative Agent, Borrower shall
execute and deliver to such Lender (through the Administrative Agent) a Note,
which shall evidence such Lender’s Loans in addition to such accounts or
records.  Each Lender may attach
schedules to its Note and endorse thereon the date, Type (if applicable),
amount and maturity of its Loans and payments with respect thereto.

 

44

 

(b)                                 In addition to the accounts and records
referred to in Section 2.10(a), each Lender and the Administrative
Agent shall maintain in accordance with its usual practice accounts or records
evidencing the purchases and sales by such Lender of participations in Letters
of Credit.  In the event of any conflict
between the accounts and records maintained by the Administrative Agent and the
accounts and records of any Lender in respect of such matters, the accounts and
records of the Administrative Agent shall control in the absence of manifest
error.

 

SECTION 2.11                    Payments
Generally; Administrative Agent’s Clawback.

 

(a)                                  General.  All payments to be made by
Borrower shall be made without condition or deduction for any counterclaim,
defense, recoupment or setoff.  Except as
otherwise expressly provided herein, all payments by Borrower hereunder shall
be made to the Administrative Agent, for the account of the respective Lenders
to which such payment is owed, at the Administrative Agent’s Office in Dollars
and in immediately available funds not later than 3:00 p.m. on the date
specified herein.  The Administrative
Agent will promptly distribute to each Lender its Applicable Percentage (or
other applicable share as provided herein) of such payment in like funds as
received by wire transfer to such Lender’s Lending Office.  All payments received by the Administrative
Agent after 3:00 p.m. shall be deemed received on the next succeeding
Business Day and any applicable interest or fee shall continue to accrue.  If any payment to be made by Borrower shall
come due on a day other than a Business Day, payment shall be made on the next
following Business Day, and such extension of time shall be reflected on
computing interest or fees, as the case may be.

 

(b)                                 Presumptions by Administrative Agent.

 

(i)                                     Funding by Lenders; Presumption by
Administrative Agent.  Unless the Administrative Agent shall have
received notice from a Lender prior to the proposed date of any Borrowing of
Eurodollar Rate Loans (or, in the case of any Borrowing of Base Rate Loans,
prior to 1:00 p.m. on the date of such Borrowing) that such Lender will
not make available to the Administrative Agent such Lender’s share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with Section 2.02 (or,
in the case of a Borrowing of Base Rate Loans, that such Lender has made such
share available in accordance with and at the time required by Section 2.02)
and may, in reliance upon such assumption, make available to Borrower a
corresponding amount.  In such event, if
a Lender has not in fact made its share of the applicable Borrowing available
to the Administrative Agent, then the applicable Lender on the one hand and
Borrower on the other severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount in immediately available funds
with interest thereon, for each day from and including the date such amount is
made available to Borrower to but excluding the date of payment to the
Administrative Agent, at (A) in the case of a payment to be made by such
Lender, the greater of the Federal Funds Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on
interbank compensation, plus any administrative, processing or similar fees
customarily charged by the Administrative Agent in 

 

45

 

connection with the foregoing, and (B) in the case of a payment to
be made by Borrower, the interest rate applicable to Base Rate Loans.  If Borrower and such Lender shall pay such
interest to the Administrative Agent for the same or an overlapping period, the
Administrative Agent shall promptly remit to Borrower the amount of such
interest paid by Borrower for such period. 
If such Lender pays its share of the applicable Borrowing to the
Administrative Agent, then the amount so paid shall constitute such Lender’s
Loan included in such Borrowing.  Any
payment by Borrower shall be without prejudice to any claim Borrower may have
against a Lender that shall have failed to make such payment to the
Administrative Agent.

 

(ii)                                  Payments by Borrower; Presumptions by
Administrative Agent.  Unless the Administrative Agent shall have
received notice from Borrower prior to the time at which any payment is due to
the Administrative Agent for the account of the Lenders or an L/C Issuer
hereunder that Borrower will not make such payment, the Administrative Agent
may assume that Borrower has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the
Appropriate Lenders or the applicable L/C Issuer, as the case may be, the
amount due.  In such event, if Borrower
has not in fact made such payment, then each of the Appropriate Lenders or the
applicable L/C Issuer, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or the applicable L/C Issuer, in immediately available funds with
interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Administrative
Agent, at the greater of the Federal Funds Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on
interbank compensation.

 

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

 

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

 

(d)                                 Obligations of Lenders Several.  The
obligations of the Lenders hereunder to make Loans, to fund participations in
Letters of Credit and to make payments pursuant to Section 10.04(c) are
several and not joint.  The failure of
any Lender to make any Loan, to fund any such participation or to make any
payment under Section 10.04(c) on any date required hereunder
shall not relieve any other Lender of its corresponding obligation to do so on
such date, and no Lender shall be responsible for the failure of any other
Lender to so make its Loan, to purchase its participation or to make its
payment under Section 10.04(c).

 

46

 

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

 

(f)                                    Insufficient Funds.  If
at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, L/C Borrowings,
interest and fees then due hereunder, such funds shall be applied (i) first,
toward payment of interest and fees then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (ii) second, toward payment of
principal and L/C Borrowings then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and L/C Borrowings
then due to such parties.

 

SECTION 2.12                    Sharing of Payments by Lenders.  If
any Lender shall, by exercising any right of setoff or counterclaim or
otherwise, obtain payment in respect of (a) Obligations due and payable to
such Lender hereunder and under the other Loan Documents at such time in excess
of its ratable share (according to the proportion of (i) the amount of
such Obligations due and payable to such Lender at such time to (ii) the
aggregate amount of the Obligations due and payable to all Lenders hereunder
and under the other Loan Documents at such time) of payments on account of the
Obligations due and payable to all Lenders hereunder and under the other Loan
Documents at such time obtained by all the Lenders at such time or
(b) Obligations owing (but not due and payable) to such Lender hereunder
and under the other Loan Documents at such time in excess of its ratable share
(according to the proportion of (i) the amount of such Obligations owing
(but not due and payable) to such Lender at such time to (ii) the
aggregate amount of the Obligations owing (but not due and payable) to all
Lenders hereunder and under the other Loan Documents at such time) of payment
on account of the Obligations owing (but not due and payable) to all Lenders
hereunder and under the other Loan Documents at such time obtained by all of
the Lenders at such time then the Lender receiving such greater proportion
shall (a) notify the Administrative Agent of such fact, and
(b) purchase (for cash at face value) participations in the Loans and
subparticipations in L/C Obligations of the other Lenders, or make such other
adjustments as shall be equitable, so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of Obligations then due and payable to the Lenders or owing (but not due and
payable) to the Lenders, as the case may be, provided that:

 

(i)                                     if any such participations or
subparticipations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations or subparticipations shall be
rescinded and the purchase price restored to the extent of such recovery,
without interest; and

 

(ii)                                  the provisions of this Section shall not
be construed to apply to (A) any payment made by Borrower pursuant to and
in accordance with the express terms of this Agreement or (B) any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or subparticipations in L/C Obligations to
any assignee or participant, other than to Borrower or any Subsidiary or
Affiliate thereof (as to which the provisions of this Section shall
apply).

 

47

 

ARTICLE III

 

TAXES, YIELD PROTECTION AND
ILLEGALITY

 

SECTION 3.01                    Taxes.

 

(a)                                  Payments Free of Taxes.  Any
and all payments by or on account of any obligation of Borrower hereunder or
under any other Loan Document shall be made free and clear of and without
reduction or withholding for any Indemnified Taxes or Other Taxes, provided
that if Borrower shall be required by applicable law to deduct any Indemnified
Taxes (including any Other Taxes) from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) the Administrative Agent, any Lender or any L/C Issuer, as the
case may be, receives an amount equal to the sum it would have received had no
such deductions been made, (ii) Borrower shall make such deductions and
(iii) Borrower shall timely pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.

 

(b)                                 Payment of Other Taxes by Borrower. 
Without limiting the provisions of subsection (a) above,
Borrower shall timely pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.

 

(c)                                  Indemnification by Borrower.  Borrower
shall indemnify the Administrative Agent, each Lender and each L/C Issuer,
within 10 days after demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) paid by the
Administrative Agent, such Lender or such L/C Issuer, as the case may be, and
any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate as to the
amount of such payment or liability delivered to Borrower by a Lender or an L/C
Issuer (with a copy to the Administrative Agent), or by the Administrative
Agent on its own behalf or on behalf of a Lender or an L/C Issuer, shall be
conclusive absent manifest error.

 

(d)                                 Evidence of Payments.  As
soon as practicable after any payment of Indemnified Taxes or Other Taxes by
Borrower to a Governmental Authority, Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

 

(e)                                  Status of Lenders.  Any
Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which Borrower is resident
for tax purposes, or any treaty to which such jurisdiction is a party, with
respect to payments hereunder or under any other Loan Document shall deliver to
Borrower (with a copy to the Administrative Agent), at the time or times
prescribed by applicable law or reasonably requested by Borrower or the
Administrative Agent, such properly completed and executed documentation
prescribed by applicable law as will permit such payments to be made without

 

48

 

withholding
or at a reduced rate of withholding.  In
addition, any Lender, if requested by Borrower or the Administrative Agent,
shall deliver such other documentation prescribed by applicable law or
reasonably requested by Borrower or the Administrative Agent as will enable
Borrower or the Administrative Agent to determine whether or not such Lender is
subject to backup withholding or information reporting requirements.

 

Without limiting the
generality of the foregoing, if Borrower is resident for tax purposes in the
United States, any Foreign Lender shall deliver to Borrower and the
Administrative Agent (in such number of copies as shall be requested by the
recipient) on or prior to the date on which such Foreign Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the request
of Borrower or the Administrative Agent, but only if such Foreign Lender is
legally entitled to do so), whichever of the following is applicable:

 

(i)                                     duly completed copies of Internal Revenue
Service Form W-8BEN claiming eligibility for benefits of an income tax
treaty to which the United States is a party,

 

(ii)                                  duly completed copies of Internal Revenue
Service Form W-8ECI,

 

(iii)                               in the case of a Foreign Lender claiming the benefits of the exemption
for portfolio interest under section 881(c) of the Code, (A) a
certificate to the effect that such Foreign Lender is not (1) a “bank”
within the meaning of section 881(c)(3)(A) of the Code, (2) a
“10 percent shareholder” of 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 and
(B) duly completed copies of Internal Revenue Service Form W-8BEN, or

 

(iv)                              any other form prescribed by applicable law as a basis for claiming
exemption from or a reduction in United States Federal withholding tax duly
completed together with such supplementary documentation as may be prescribed
by applicable law to permit Borrower to determine the withholding or deduction
required to be made.

 

(f)                                    Treatment of Certain Refunds.  If
the Administrative Agent, any Lender or any L/C Issuer determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by Borrower or with respect to which Borrower has
paid additional amounts pursuant to this Section, it shall pay to Borrower an
amount equal to such refund (but only to the extent of indemnity payments made,
or additional amounts paid, by Borrower under this Section with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative Agent, such Lender or such L/C Issuer, as the
case may be, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), provided that
Borrower, upon the request of the Administrative Agent, such Lender or such L/C
Issuer, agrees to repay the amount paid over to Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental Authority)
to the Administrative Agent, such Lender or such L/C Issuer if the
Administrative Agent, such Lender or such L/C Issuer is required to repay such
refund to such Governmental Authority. 
This subsection shall not be construed to require the Administrative
Agent, any

 

49

 

Lender
or any L/C Issuer to make available its tax returns (or any other information
relating to its taxes that it deems confidential) to Borrower or any other
Person.

 

SECTION 3.02                    Illegality.  If any Lender determines that any Law has
made it unlawful, or that any Governmental Authority has asserted that it is
unlawful, for any Lender or its applicable Lending Office to make, maintain or
fund Eurodollar Rate Loans, or to determine or charge interest rates based upon
the Eurodollar Rate, or any Governmental Authority has imposed material
restrictions on the authority of such Lender to purchase or sell, or to take
deposits of, Dollars in the London interbank market, then, on notice thereof by
such Lender to Borrower through the Administrative Agent, any obligation of
such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate
Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies
the Administrative Agent and Borrower that the circumstances giving rise to
such determination no longer exist.  Upon
receipt of such notice, Borrower shall, upon demand from such Lender (with a
copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar
Rate Loans of such Lender to Base Rate Loans, either on the last day of the
Interest Period therefore, if such Lender may lawfully continue to maintain
such Eurodollar Rate Loans to such day, or immediately, if such Lender may not
lawfully continue to maintain such Eurodollar Rate Loans.  Upon any such prepayment or conversion,
Borrower shall also pay accrued interest on the amount so prepaid or converted.

 

SECTION 3.03                    Inability to Determine Rates.  If the Required Lenders determine that for
any reason in connection with any request for a Eurodollar Rate Loan or a
conversion to or continuation thereof that (a) Dollar deposits are not
being offered to banks in the London interbank eurodollar market for the
applicable amount and Interest Period of such Eurodollar Rate Loan,
(b) adequate and reasonable means do not exist for determining the
Eurodollar Rate for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan, or (c) the Eurodollar Rate for any requested
Interest Period with respect to a proposed Eurodollar Rate Loan does not
adequately and fairly reflect the cost to such Lenders of funding such Loan,
the Administrative Agent will promptly so notify Borrower and each Lender.  Thereafter, the obligation of the Lenders to
make or maintain Eurodollar Rate Loans shall be suspended until the
Administrative Agent (upon the instruction of the Required Lenders) revokes
such notice.  Upon receipt of such
notice, Borrower may revoke any pending request for a Borrowing of, conversion
to or continuation of Eurodollar Rate Loans or, failing that, will be deemed to
have converted such request into a request for a Committed Borrowing of Base
Rate Loans in the amount specified therein.

 

SECTION 3.04                    Increased
Costs; Reserves on Eurodollar Rate Loans.

 

(a)                                  Increased Costs Generally.  If
any Change in Law shall:

 

(i)                                     impose, modify or deem applicable any
reserve, special deposit, compulsory loan, insurance charge or similar
requirement against assets of, deposits with or for the account of, or credit
extended or participated in by, any Lender (except any reserve requirement
contemplated by Section 3.04(e)) or any L/C Issuer;

 

50

 

(ii)                                  subject any Lender or any L/C Issuer to any
tax of any kind whatsoever with respect to this Agreement, any Letter of
Credit, any participation in a Letter of Credit or any Eurodollar Rate Loan
made by it, or change the basis of taxation of payments to such Lender or such
L/C Issuer in respect thereof (except for Indemnified Taxes or Other Taxes
covered by Section 3.01 and the imposition of, or any change in the
rate of, any Excluded Tax payable by such Lender or such L/C Issuer); or

 

(iii)                               impose on any Lender or any L/C Issuer or the London interbank market
any other condition, cost or expense affecting this Agreement or Eurodollar
Rate Loans made by such Lender or any Letter of Credit or participation
therein;

 

and the result of any of
the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Rate Loan (or of maintaining its obligation to make
any such Loan), or to increase the cost to such Lender or such L/C Issuer of
participating in, issuing or maintaining any Letter of Credit (or of
maintaining its obligation to participate in or to issue any Letter of Credit),
or to reduce the amount of any sum received or receivable by such Lender or
such L/C Issuer hereunder (whether of principal, interest or any other amount)
then, upon request of such Lender or such L/C Issuer, Borrower will pay to such
Lender or such L/C Issuer, as the case may be, such additional amount or
amounts as will compensate such Lender or such L/C Issuer, as the case may be,
for such additional costs incurred or reduction suffered.

 

(b)                                 Capital Requirements.  If
any Lender or any L/C Issuer determines that any Change in Law affecting such
Lender or such L/C Issuer or any Lending Office of such Lender or such Lender’s
or such L/C Issuer’s holding company, if any, regarding capital requirements
has or would have the effect of reducing the rate of return on such Lender’s or
such L/C Issuer’s capital or on the capital of such Lender’s or such L/C
Issuer’s holding company, if any, as a consequence of this Agreement, the
Commitments of such Lender or the Loans made by, or participations in Letters
of Credit held by, such Lender, or the Letters of Credit issued by such L/C
Issuer, to a level below that which such Lender or such L/C Issuer or such
Lender’s or such L/C Issuer’s holding company could have achieved but for such Change
in Law (taking into consideration such Lender’s or such L/C Issuer’s policies
and the policies of such Lender’s or such L/C Issuer’s holding company with
respect to capital adequacy), then from time to time Borrower will pay to such
Lender or such L/C Issuer, as the case may be, such additional amount or
amounts as will compensate such Lender or such L/C Issuer or such Lender’s or
such L/C Issuer’s holding company for any such reduction suffered.

 

(c)                                  Certificates for Reimbursement.  A
certificate of a Lender or an L/C Issuer setting forth the amount or amounts
necessary to compensate such Lender or such L/C Issuer or its holding company,
as the case may be, as specified in subsection (a) or (b) of
this Section and delivered to Borrower shall be conclusive absent manifest
error.  Borrower shall pay such Lender or
such L/C Issuer, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.

 

(d)                                 Delay in Requests. 
Failure or delay on the part of any Lender or any L/C Issuer to demand
compensation pursuant to the foregoing provisions of this Section shall
not

 

51

 

constitute
a waiver of such Lender’s or such L/C Issuer’s right to demand such
compensation, provided that Borrower shall not be required to compensate
a Lender or an L/C Issuer pursuant to the foregoing provisions of this
Section for any increased costs incurred or reductions suffered more than
nine months prior to the date that such Lender or such L/C Issuer, as the case
may be, notifies Borrower of the Change in Law giving rise to such increased
costs or reductions and of such Lender’s or such L/C Issuer’s intention to
claim compensation therefore (except that, if the Change in Law giving rise to
such increased costs or reductions is retroactive, then the nine-month period
referred to above shall be extended to include the period of retroactive effect
thereof).

 

(e)                                  Reserves on Eurodollar Rate Loans. 
Borrower shall pay to each Lender, as long as such Lender shall be
required to maintain reserves with respect to liabilities or assets consisting
of or including Eurocurrency funds or deposits (currently known as
“Eurocurrency liabilities”), additional interest on the unpaid principal amount
of each Eurodollar Rate Loan equal to the actual costs of such reserves
allocated to such Loan by such Lender (as determined by such Lender in good
faith, which determination shall be conclusive), which shall be due and payable
on each date on which interest is payable on such Loan, provided
Borrower shall have received at least 10 days’ prior notice (with a copy to the
Administrative Agent) of such additional interest from such Lender.  If a Lender fails to give notice 10 days
prior to the relevant Interest Payment Date, such additional interest shall be
due and payable 10 days from receipt of such notice.

 

SECTION 3.05                    Compensation for Losses.  Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, Borrower shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:

 

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

 

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

 

(c)                                  any assignment of a Eurodollar Rate Loan on a
day other than the last day of the Interest Period therefore as a result of a
request by Borrower pursuant to Section 10.13;

 

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

 

For purposes of
calculating amounts payable by Borrower to the Lenders under this Section 3.05,
each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it
at the Eurodollar Rate for such Loan by a matching deposit or other borrowing
in the London interbank

 

52

 

eurodollar market for a
comparable amount and for a comparable period, whether or not such Eurodollar
Rate Loan was in fact so funded.

 

SECTION 3.06                    Mitigation
Obligations; Replacement of Lenders.

 

(a)                                  Designation of a Different Lending Office.  If
any Lender requests compensation under Section 3.04, or Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 3.01,
or if any Lender gives a notice pursuant to Section 3.02, then such
Lender shall use reasonable efforts to designate a different Lending Office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the
judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04,
as the case may be, in the future, or eliminate the need for the notice
pursuant to Section 3.02, as applicable, and (ii) in each
case, would not subject such Lender to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender.  Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.

 

(b)                                 Replacement of Lenders.  If
any Lender requests compensation under Section 3.04, or if Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 3.01,
Borrower may replace such Lender in accordance with Section 10.13.

 

SECTION 3.07                    Survival.  All of Borrower’s obligations under this
Article III shall survive termination of the Aggregate Commitments and
repayment of all other Obligations hereunder.

 

ARTICLE IV

 

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

SECTION 4.01                    Conditions of Initial Credit Extension.  The obligation of each L/C Issuer and each
Lender to make its initial Credit Extension hereunder is subject to
satisfaction of the following conditions precedent:

 

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

 

(i)                                     executed counterparts of this Agreement and
the Guaranty, sufficient in number for distribution to the Administrative
Agent, each Lender and Borrower, together with a Note or Notes executed by
Borrower in favor of each Lender requesting a Note;

 

53

 

(ii)                                  the
Physician Nominee Pledge executed by the Physician Nominee;

 

(iii)                               the
Assignable Option Agreement duly executed by PMS, PMG and the Physician
Nominee;

 

(iv)                              evidence
that the Collateral Agreement in the form of Exhibit B-1 to the Collateral
Trustee has been duly executed by each Loan Party, together with evidence
satisfactory to the Administrative Agent that all actions it may deem necessary
or desirable in order to create valid and perfected first priority Liens in
favor of the Collateral Trustee on the property described in the Collateral
Agreement have been taken;

 

(v)                                 the
First Lien Security Agreement (Receivables) in the form of Exhibit B-2,
duly executed by each Loan Party, together with:

 

(A)                              results
of Lien searches (including a search as to judgments, pending litigation and
tax matters), in form and substance reasonably satisfactory thereto, made
against the Loan Parties under the Uniform Commercial Code (or applicable
judicial docket) as in effect in any state in which any of the assets of such
Loan Party are located, indicating among other things that its assets are free
and clear of any Lien except Liens permitted under the Loan Documents,

 

(B)                                proper
Financing Statements in form appropriate for filing under the Uniform
Commercial Code of all jurisdictions that the Administrative Agent may deem
necessary or desirable in order to perfect the Liens created under the First
Lien Security Agreement (Receivables), covering the Collateral described in the
First Lien Security Agreement (Receivables),

 

(C)                                completed
requests for information, dated on or before the date of the initial Credit
Extension, listing all effective financing statements filed in the
jurisdictions referred to in clause (A) above that name any Loan
Party as debtor, together with copies of such other financing statements,

 

(D)                               the
deposit account control agreements as referred to in the First Lien Security
Agreement (Receivables) and duly executed by the applicable Loan Party and
depository bank, in each case perfecting Liens against such accounts in
accordance with the First Lien Security Agreement (Receivables), and the
Administrative Agent shall be satisfied with the Loan Parties’ cash management
system with respect to Medicaid/Medicare receivables, and

 

(E)                                 evidence
that all other action that the Administrative Agent may deem necessary or
desirable in order to perfect the Liens created under the First Lien Security
Agreement (Receivables) has been taken

 

54

 

(including receipt of duly executed payoff
letters and UCC-3 termination statements) and all filing and recording fees and
taxes shall have been duly paid,

 

(vi)                              evidence
that first lien deeds of trust, trust deeds, deeds to secure debt, and
mortgages covering the properties listed on Schedule 4.01(a)(vi) (as
such deeds of trust, trust deeds, deeds to secure debt and mortgages may be
amended, supplemented or otherwise modified or replaced form time to time, the “Mortgages”),
have been duly executed, acknowledged and delivered to the Collateral Trustee
and are in form suitable for filing or recording in all filing or recording
offices that the Collateral Trustee or the Administrative Agent may deem
necessary or desirable in order to create a valid first and subsisting Lien on the
property described therein in favor of the Collateral Trustee for the benefit
of the secured parties referred to therein and that all filing, documentary,
stamp, intangible and recording taxes and fees have been paid together with all
of the following to the satisfaction of the Administrative Agent:  fully paid title insurance policies, or
binding marked commitments to issue such policies (the “Mortgage Policies”),
with endorsements and in amounts reasonably acceptable to the Collateral
Trustee and the Administrative Agent, issued, coinsured and reinsured by title
insurers reasonably acceptable to the Collateral Trustee and the Administrative
Agent, insuring the Mortgages to be valid first and subsisting Liens on the
property described therein, free and clear of all defects (including, but not
limited to, mechanics’ and materialmen’s Liens) and encumbrances, excepting
only Permitted Encumbrances, and providing for such other affirmative insurance
(including endorsements for future advances under the Loan Documents, for
mechanics’ and materialmen’s Liens and for zoning of the applicable property)
and such coinsurance and direct access reinsurance as the Collateral Trustee
and the Administrative Agent may deem reasonably necessary or desirable,
including evidence of the insurance required by the terms of the Mortgages;

 

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

 

(viii)                        such
documents and certifications as the Administrative Agent may reasonably require
to evidence that each Loan Party is duly organized or formed, and that Borrower
and each Loan Party is validly existing, in good standing and qualified to
engage in business in each jurisdiction where its ownership, lease or operation
of properties or the conduct of its business requires such qualification,
except to the extent that failure to do so could not reasonably be expected to
have a Material Adverse Effect;

 

55

 

(ix)                                a
favorable opinion of Milbank, Tweed, Hadley & McCloy LLP, counsel to
the Loan Parties, addressed to the Administrative Agent and each Lender, as to
such matters concerning the Loan Parties and the Loan Documents as the
Administrative Agent or the Required Lenders may reasonably request;

 

(x)                                   the
Collateral Agency Agreement, duly executed by the parties thereto;

 

(xi)                                the
Intercreditor Agreement, duly executed by the parties thereto;

 

(xii)                             a
certificate of a Responsible Officer of each Loan Party either (A) attaching
copies of all consents, licenses and approvals required in connection with the
consummation by such Loan Party of the Transaction and the execution, delivery
and performance by such Loan Party and the validity against such Loan Party of
the Loan Documents to which it is a party, and such consents, licenses and
approvals shall be in full force and effect, or (B) stating that no such
consents, licenses or approvals are so required;

 

(xiii)                          a
certificate signed by a Responsible Officer of Borrower certifying (A) that
the conditions specified in Sections 4.02(a) and (b) have
been satisfied and (B) except as set forth on Schedule 4.01(a)(xiii),
that there has been no event or circumstance since the date of the Audited
Financial Statements that has had or could be reasonably expected to have,
either individually or in the aggregate, a Material Adverse Effect on Borrower
and the Guarantors, taken as a whole; and including a pro forma Compliance
Certificate demonstrating compliance with the financial covenants listed in Section 7.11
calculated as of March 31, 2009 giving effect to the Transaction and in
respect of the Consolidated Fixed Charge Coverage Ratio only, Consolidated
Interest Expense on a pro forma basis as if the 2014 Notes, this Agreement, and
obligations under existing capitalized leases had been outstanding during the
twelve month period ending March 31, 2009;

 

(xiv)                         pro forma
consolidated financial statements of Borrower and its Subsidiaries, together
with Brotman, dated as of July 8, 2009, as amended by the final offering
memorandum, and forecasts prepared by management of Borrower, each in form
reasonably satisfactory to the Administrative Agent, of balance sheets, income
statements and cash flow statements on an annual basis for each year through
2013;

 

(xv)                            (A) the
annual (or other audited) financial statements of each of Borrower and its
Subsidiaries for the fiscal years ended 2006, 2007, and 2008, (B) the
annual (or other audited) financial statements of Brotman for the fiscal year
ended 2008, and (C) interim unaudited financial statements of each of
Borrower and its Subsidiaries dated as of the end of the most recent fiscal
quarter for which financial statements are available;

 

56

 

(xvi)                         certificates
attesting to the Solvency of the Loan Parties on a consolidated basis before
and after giving effect to the Transaction, from Borrower’s chief financial
officer;

 

(xvii)                      evidence
that all insurance required to be maintained pursuant to the Loan Documents has
been obtained and is in effect, together with the certificates of insurance,
naming U.S. Bank National Association, on behalf of the Lenders, as an
additional insured or loss payee, as the case may be, under all insurance
policies maintained with respect to the assets and properties of the Loan
Parties that constitutes Collateral;

 

(xviii)                   certified
copies of each of the Related Documents, duly executed by the parties thereto,
together with all agreements, instruments and other documents delivered in
connection therewith as the Administrative Agent shall request;

 

(xix)                           the
Perfection Certificate, duly executed by the parties thereto;

 

(xx)                              a
Borrowing Base Certificate prepared as of June 30, 2009 demonstrating the
maximum amount of Loans available to Borrower; and

 

(xxi)                           evidence
that each Existing Credit Agreement has been, or concurrently with the Closing
Date is being, terminated and all obligations thereon satisfied in full and all
Liens securing obligations under each Existing Credit Agreement have been, or
concurrently with the Closing Date are being, released.

 

(b)                                 (i) 
All fees required to be paid to the Administrative Agent and the Arranger on or
before the Closing Date shall have been paid, including as contemplated by the
Commitment Letter, and (ii) all fees required to be paid to the Lenders on
or before the Closing Date shall have been paid.

 

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

 

(d)                                 (i) 
in connection with any and all judgment liens shown of record as a Lien against
any real or personal property of any Loan Party, Borrower shall have provided
the Administrative Agent evidence reasonably acceptable to the Administrative
Agent that such judgment lien has been satisfied or that the applicable Loan
Party has, or is diligently pursuing, a release of lien to be filed in all
public records, lien; and (ii) in connection with any and all state and
federal tax liens shown of record as a Lien against any Loan Party’s personal
or real property, Borrower shall have delivered to the

 

57

 

Administrative Agent evidence acceptable to
the Administrative Agent that each such tax lien has been satisfied and that
the applicable Loan Party has, or is diligently pursuing, a release of lien to
be filed in all public records.

 

(e)                                  concurrent
with the closing of the Facility, Borrower shall have issued the 2014 Notes in
an aggregate principal amount of $160,000,000 pursuant to, and in accordance
with, the Indenture.

 

Without limiting the generality of the provisions of
the last paragraph of Section 9.03, for purposes of determining
compliance with the conditions specified in this Section 4.01, each
Lender that has signed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

 

SECTION 4.02                    Conditions to all Credit
Extensions.  The obligation of each
Lender to honor any Request for Credit Extension (other than a Committed Loan
Notice requesting only a conversion of Loans to the other Type, or a
continuation of Eurodollar Rate Loans) is subject to the following conditions
precedent:

 

(a)                                  The
representations and warranties of Borrower contained in Article V
or any other Loan Document, or which are contained in any document furnished at
any time under or in connection herewith or therewith, shall be true and
correct in all material respects (to the extent any such representation or
warranty is not otherwise qualified by the concept of “materiality”) on and as
of the date of such Credit Extension, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct as of such earlier date, and except that
for purposes of this Section 4.02, the representations and
warranties contained in Sections 5.05(a) and (b) shall
be deemed to refer to the most recent statements furnished pursuant to Sections 6.01(a) and
(b), respectively.

 

(b)                                 No
Default shall exist, or would result from such proposed Credit Extension or
from the application of the proceeds thereof.

 

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

 

(d)                                 After
giving effect to such Credit Extension, the Total Outstandings shall not exceed
the lesser of (1) the Facility minus
the L/C Reserve and (2) the Borrowing Base.

 

Each Request for Credit Extension (other than a
Committed Loan Notice requesting only a conversion of Loans to the other Type
or a continuation of Eurodollar Rate Loans) submitted by Borrower shall be
deemed to be a representation and warranty that the conditions specified in Sections 4.02(a) and
(b) have been satisfied on and as of the date of the applicable
Credit Extension.

 

58

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES

 

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

 

SECTION 5.01                    Existence, Qualification and
Power.  Each Loan Party and each
Pledged Subsidiary (a) is duly organized or formed, validly existing and,
as applicable, in good standing under the Laws of the jurisdiction of its incorporation
or organization, (b) has all requisite power and authority and all
requisite governmental licenses, authorizations, consents and approvals to (i) own
or lease its assets and carry on its business and (ii) execute, deliver
and perform its obligations under the Loan Documents and Related Documents to
which it is a party and consummate the Transaction, and (c) is duly
qualified and is licensed and, as applicable, in good standing under the Laws
of each jurisdiction where its ownership, lease or operation of properties or
the conduct of its business requires such qualification or license; except in
each case referred to in clause (b)(i) or (c), to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect.

 

SECTION 5.02                    Authorization;
No Contravention.  The execution,
delivery and performance by each Loan Party of each Loan Document and Related
Document to which such Person is or is to be a party have been duly authorized
by all necessary corporate or other organizational action, and do not and will
not (a) contravene the terms of any of such Person’s Organization
Documents; (b) conflict with or result in any breach or contravention of,
or the creation of any Lien under, or require any payment to be made under (i) any
Contractual Obligation to which such Person is a party or affecting such Person
or the properties of such Person or any of its Subsidiaries or (ii) any
order, injunction, writ or decree of any Governmental Authority or any arbitral
award to which such Person or its property is subject; or (c) violate any
Law.

 

SECTION 5.03                    Governmental
Authorization; Other Consents.  No
approval, consent, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person is necessary or
required in connection with (a) the execution, delivery or performance by,
or enforcement against, any Loan Party of this Agreement or any other Loan
Document or Related Document, or for the consummation of the Transaction, (b) the
grant by any Loan Party of the Liens granted by it pursuant to the Collateral
Documents, (c) the perfection or maintenance of the Liens created under
the Collateral Documents (including the first priority nature thereof) or (d) the
exercise by the Administrative Agent or any Lender of its rights under the Loan
Documents or the remedies in respect of the Collateral pursuant to the
Collateral Documents, except filings under the UCC and/or the Assignment of
Claims Act and/or informational filings with Governmental Authorities under
applicable Healthcare Laws.

 

SECTION 5.04                    Binding
Effect.  This Agreement has been, and
each other Loan Document, when delivered hereunder, will have been, duly
executed and delivered by each Loan Party that is party thereto.  This Agreement constitutes, and each other
Loan Document

 

59

 

when so delivered will constitute, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is
party thereto in accordance with its terms.

 

SECTION 5.05                    Financial
Statements; No Material Adverse Effect. 
(a)  The Audited Financial Statements (i) were prepared in
accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein; (ii) fairly present
the financial condition of Borrower and its Subsidiaries as of the date thereof
and their results of operations for the period covered thereby in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; and (iii) show all material
indebtedness and other liabilities, direct or contingent, of Borrower and its
Subsidiaries as of the date thereof, including liabilities for taxes, material
commitments and Indebtedness.

 

(b)                                 The
unaudited consolidated balance sheet of Borrower and its Subsidiaries dated March 31,
2009, and the related consolidated statements of income or operations,
shareholders’ equity and cash flows for the fiscal quarter ended on that date (i) were
prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein, and (ii) fairly
present the financial condition of Borrower and its Subsidiaries as of the date
thereof and their results of operations for the period covered thereby,
subject, in the case of clauses (i) and (ii), to the absence of
footnotes and to normal year-end audit adjustments.

 

(c)                                  Except
as set forth on Schedule 4.01(a)(xv), since the date of the Audited
Financial Statements, there has been no event or circumstance, either
individually or in the aggregate, that has had or could reasonably be expected
to have a Material Adverse Effect.

 

(d)                                 The
consolidated and consolidating forecasted balance sheet, statements of income
and cash flows of Borrower and its Subsidiaries delivered pursuant to Section 4.01
or Section 6.01(d) were prepared in good faith on the basis of
the assumptions stated therein, which assumptions were fair in light of the
conditions existing at the time of delivery of such forecasts, and represented,
at the time of delivery, Borrower’ best estimate of its future financial
condition and performance.

 

SECTION 5.06                    Litigation.  There are no actions, suits, proceedings,
claims or disputes pending or, to the knowledge of Borrower after due and
diligent investigation, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, by or against Borrower, any
other Loan Party or any Pledged Subsidiary or against any of their properties
or revenues that (a) purport to affect or pertain to this Agreement, any
other Loan Document, or any Related Document, (b) except as disclosed on Schedule 5.06(b),
purport to affect or pertain to the consummation of the Transaction or (c) except
as specifically disclosed in Schedule 5.06(c), either individually
or in the aggregate, if determined adversely, could reasonably be expected to
have a Material Adverse Effect.

 

SECTION 5.07                    No Default.  Schedule 5.07 sets forth a
complete and accurate list of all Material Contracts to which any Loan Party is
a party.  Neither any Loan Party nor any
Pledged Subsidiary thereof is in default under or with respect to, or a party
to, any Contractual Obligation that could, either individually or in the aggregate,
reasonably be expected

 

60

 

to have a Material Adverse Effect, other than the assertion of certain
events of default under the Existing Credit Agreements.  No Default has occurred and is continuing or
would result from the consummation of the transactions contemplated by this
Agreement or any other Loan Document.

 

SECTION 5.08                    Ownership
of Property; Liens; Investments.  (a) 
Each Loan Party and each Pledged Subsidiary has good record and marketable
title in fee simple to, or valid leasehold interests in, all real property
necessary or used in the ordinary conduct of its business, except for such
defects in title as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

(b)                                 Schedule 5.08(b) sets
forth a complete and accurate list of all Liens on the property or assets of
each Loan Party and each Pledged Subsidiary, showing as of the date hereof the
lienholder thereof, the principal amount of the obligations secured thereby and
the property or assets of such Loan Party or such Pledged Subsidiary subject
thereto.  The property of each Loan Party
and each Pledged Subsidiary is subject to no Liens, other than Liens set forth
on Schedule 5.08(b), and as otherwise permitted by Section 7.01.

 

(c)                                  Schedule 5.08(c) sets
forth a complete and accurate list of all real property owned by each Loan
Party and each Pledged Subsidiary, showing as of the date hereof the street
address, county or other relevant jurisdiction, state and record owner
thereof.  Each Loan Party and each
Pledged Subsidiary has good, marketable and insurable fee simple title to the
real property owned by such Loan Party or such Pledged Subsidiary, free and
clear of all Liens, other than Liens created or permitted by the Loan
Documents.

 

(d)                                 (i) 
Schedule 5.08(d)(i) sets forth a complete and accurate list of
all leases of real property under which any Loan Party or any Pledged
Subsidiary is the lessee, showing as of the date hereof the street address,
county or other relevant jurisdiction, state, lessor, lessee, expiration date
and annual rental cost thereof.  Each
such lease is the legal, valid and binding obligation of the lessor thereof,
enforceable in accordance with its terms.

 

(ii)                                  Schedule 5.08(d)(ii) sets
forth a complete and accurate list of all leases of real property under which
any Loan Party or any Pledged Subsidiary is the lessor, showing as of the date
hereof the street address, county or other relevant jurisdiction, state,
lessor, lessee, expiration date and annual rental cost thereof.  Except as set forth on Schedule
5.08(d)(ii), each such lease is the legal, valid and binding obligation of
the lessee thereof, enforceable in accordance with its terms.

 

(e)                                  Schedule 5.08(e) sets
forth a complete and accurate list of all Investments held by any Loan Party or
any Pledged Subsidiary on the date hereof, showing as of the date hereof the
amount, obligor or issuer and maturity, if any, thereof.

 

SECTION 5.09                    Environmental
Compliance.  (a) (i) each
of the Loan Parties and each Pledged Subsidiary is in compliance with all
Environmental Laws except where non-compliance would not, individually or in
the aggregate, have a Material Adverse Effect; and (ii) all operations or
activities upon, or any use, occupancy or operation of the Real Property, are

 

61

 

in compliance with all Environmental Laws except where non-compliance
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

(b)                                 No
Loan Party has stored, manufactured, used, generated or dumped any Hazardous
Materials on, in, under or upon any of the Real Property, except for uses and
temporary storage of Hazardous Materials reasonably necessary to the customary
operation of a general acute care hospital in material compliance with
applicable Environmental Laws.

 

(c)                                  None
of the Real Property is listed or proposed for listing on the NPL or on the
CERCLIS or any analogous foreign, state or local list or is adjacent to any
such property.

 

(d)                                 No
Loan Party has ever received any written communication from a Governmental
Authority or any other Person that alleges that such Loan Party is not in
material compliance with Environmental Laws or is otherwise subject to liability
relating to Environmental Laws;

 

(e)                                  There
is no claim pending or, to Borrower’s knowledge, threatened against any Loan
Party or any of the Real Property, and no material work, repairs, remedy,
remediation, clean-up, construction or capital expenditures are required by any
Environmental Laws with respect to the Real Property in order for the continued
lawful use of the Real Property operated by any Loan Party as of the Closing
Date, as it has been and is currently used, subject to such exceptions that
would not have a Material Adverse Effect;

 

(f)                                    Each
of the Loan Parties is in compliance with OSHA requirements respecting friable
asbestos, if any, located on the Real Property, or any portion thereof, except
where non-compliance would not have a Material Adverse Effect; and in this
regard, each Loan Party has properly implemented an operations and maintenance
training program where required for certain of its employees in the proper
handling and removal of asbestos in compliance with OSHA requirements except
where non-compliance would not have a Material Adverse Effect;

 

(g)                                 There
are no above or underground storage tanks located on or beneath the Real
Property except as disclosed on Schedule 5.09.  All above or underground storage tanks
currently operated on any of the Real Property by any Loan Party, if any, are
in compliance with applicable Environmental Laws, except where non-compliance
would not have a Material Adverse Effect. 
For any underground storage tanks which were formerly located on any
Real Property, and of which any Loan Party has knowledge, such tanks were
removed or closed in place in compliance with applicable Environmental Laws
except where non-compliance would not have a Material Adverse Effect, and any
remediation work required as a result of any release, leakage or discharge of
Hazardous Materials from such tanks or related lines has been fully completed
in accordance with Environmental Laws and accepted by the applicable
Governmental Authority, subject to such exceptions that would not have a
Material Adverse Effect.

 

SECTION 5.10                    Insurance.  The properties of Borrower, each other Loan
Party and each Pledged Subsidiary are insured with financially sound and
reputable insurance companies not Affiliates of Borrower, in such amounts, with
such deductibles and covering such risks as are customarily carried by
companies engaged in similar businesses and owning similar

 

62

 

properties in localities where Borrower or the applicable Loan Party or
Pledged Subsidiary operates.

 

SECTION 5.11                    Taxes.  Other than as set forth on Schedule 5.11,
Borrower, each other Loan Party and each Pledged Subsidiary have filed all
Federal, state and other material tax returns and reports required to be filed,
and have paid all Federal, state and other material taxes, assessments, fees
and other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings diligently conducted and for
which adequate reserves have been provided in accordance with GAAP.  There is no proposed tax assessment against
Borrower, any other Loan Party or any Pledged Subsidiary that would, if made,
have a Material Adverse Effect.  Neither
any Loan Party nor any Pledged Subsidiary is party to any tax sharing
agreement.

 

SECTION 5.12                    ERISA
Compliance.  (a)  Each Plan is
in compliance in all material respects with the applicable provisions of ERISA,
the Code and other Federal or state Laws. 
Each Plan that is intended to qualify under Section 401(a) of
the Code has received a favorable determination letter from the IRS or an
application for such a letter is currently being processed by the IRS with
respect thereto and, to the best knowledge of Borrower, nothing has occurred
which would prevent, or cause the loss of, such qualification.  Borrower and each ERISA Affiliate have made
all required contributions to each Plan subject to Section 412 of the
Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan.

 

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

 

(c)                                  (i) 
Except as set forth on Schedule 5.12(c), no ERISA Event has
occurred or is reasonably expected to occur; (ii) no Pension Plan has any
Unfunded Pension Liability; (iii) neither Borrower nor any ERISA Affiliate
has incurred, or reasonably expects to incur, any liability under Title IV of
ERISA with respect to any Pension Plan (other than premiums due and not
delinquent under Section 4007 of ERISA); (iv) neither Borrower nor any
ERISA Affiliate has incurred, or reasonably expects to incur, any liability
(and no event has occurred which, with the giving of notice under Section 4219
of ERISA, would result in such liability) under Section 4201 or 4243 of
ERISA with respect to a Multiemployer Plan; and (v) neither Borrower nor
any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069
or 4212(c) of ERISA.

 

SECTION 5.13                    Subsidiaries;
Equity Interests; Loan Parties.  No
Loan Party has any Subsidiaries other than those specifically disclosed in Part (a) of
Schedule 5.13, and all of the outstanding Equity Interests in such
Subsidiaries have been validly issued, are fully paid and non-assessable and
are owned by a Loan Party in the amounts specified on Part (a) of Schedule 5.13
free and clear of all Liens except those created under the Collateral
Documents.  No Loan Party has any equity
investments in any other corporation or entity other than those

 

63

 

specifically disclosed in Part (b) of Schedule 5.13.  All of the outstanding Equity Interests in
Borrower have been validly issued, are fully paid and non-assessable and
Borrower’s authorized Equity Interests are set forth on Part (c) of Schedule 5.13.  Set forth on Part (d) of Schedule 5.13
is a complete and accurate list of all Loan Parties, showing as of the Closing
Date (as to each Loan Party) the jurisdiction of its incorporation, the address
of its principal place of business and its U.S. taxpayer identification number
or, in the case of any non-U.S. Loan Party that does not have a U.S. taxpayer
identification number, its unique identification number issued to it by the
jurisdiction of its incorporation.  The
copy of the charter of each Loan Party and each amendment thereto provided
pursuant to Section 4.01(a)(viii) is a true and correct copy
of each such document, each of which is valid and in full force and effect.

 

SECTION 5.14                    Margin
Regulations; Investment Company Act. 
(a)  Borrower is not engaged nor will it engage, principally or as
one of its important activities, in the business of purchasing or carrying
margin stock (within the meaning of Regulation U issued by the FRB), or
extending credit for the purpose of purchasing or carrying margin stock.

 

(b)                                 None
of Borrower, any Person Controlling Borrower, or any Subsidiary of Borrower is
or is required to be registered as an “investment company” under the Investment
Company Act of 1940.

 

SECTION 5.15                    Disclosure.  Borrower has disclosed to the Administrative Agent
and the Lenders all agreements, instruments and corporate or other restrictions
to which it or any Pledged Subsidiary or any Loan Party is subject, and all
other matters known to it, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.  No report, financial statement, certificate
or other information furnished (whether in writing or orally) by or on behalf
of any Loan Party to the Administrative Agent or any Lender in connection with
the transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan Document (in each case as modified
or supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected
information, Borrower represents only that such information was prepared in good
faith based upon assumptions believed to be reasonable at the time; it being
understood that such projections may vary from actual results and that such
variations may be material.

 

SECTION 5.16                    Compliance
with Laws.  Each Loan Party and each
Pledged Subsidiary is in compliance in all respects with the requirements of
all Laws (including all Health Care Laws and Seismic Compliance Laws (giving
effect to any extensions or exemptions then in existence), all applicable
Medicare and Medicaid rules and regulations, and to the extent applicable,
the California Department of Managed Care financial solvency regulations) and
all orders, writs, injunctions and decrees applicable to it or to its
properties, except in such instances in which (a) such requirement of Law
or order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. 
No material Offsets have been asserted against any Loan Party by any
Obligor (including but not limited to amounts due to Medicare or the IRS).  No condition exists and no event has occurred
which, in itself or with the giving of notice or lapse of time or both,

 

64

 

would result in the suspension, revocation, impairment, forfeiture or
non-renewal of any material governmental consent or permit applicable to any
Loan Party or any facility owned or operated by it.

 

SECTION 5.17                    Intellectual
Property; Licenses, Etc.  Each Loan
Party and each Pledged Subsidiary owns, or possesses the right to use, all of
the trademarks, service marks, trade names, copyrights, patents, patent rights,
franchises, licenses and other intellectual property rights (collectively, “IP
Rights”) that are reasonably necessary for the operation of their
respective businesses, without conflict with the rights of any other
Person.  To the best knowledge of
Borrower, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by any Loan Party or any Pledged Subsidiary infringes upon any rights
held by any other Person.  No claim or
litigation regarding any of the foregoing is pending or, to the best knowledge
of Borrower, threatened, which, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

 

SECTION 5.18                    Solvency.  Each Loan Party is, together with its
Pledged  Subsidiaries on a consolidated
basis, Solvent.

 

SECTION 5.19                    Casualty,
Etc.  Neither the businesses nor the
properties of any Loan Party or any Pledged Subsidiary are affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance) that, either individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

SECTION 5.20                    Health Care
Matters.

 

(a)                                  Permits. 
Each Loan Party and each Pledged Subsidiary has in
effect all material Permits, including, without limitation, all material
Permits necessary for it to own, lease or operate its properties and other assets
and to carry on its business and operations, including its provision of
professional services, as presently conducted. 
All such material Permits are in full force and effect and there has
occurred no default under, or violation of, any such material Permit.

 

(b)                                 Filings. 
All material reports,
documents, claims, notices or approvals required to be filed, obtained,
maintained or furnished to any Governmental Authority in connection with each
Loan Party’s and each Pledged Subsidiary’s healthcare operations, as currently
conducted, have been so filed, obtained, maintained or furnished, and all such
reports, documents, claims and notices were complete and correct in all
material respects on the date filed (or were corrected in or supplemented by a
subsequent filing).

 

(c)                                  Material Statements.  No Loan Party nor any
Pledged Subsidiary, nor any officer, affiliate, employee or agent of any Loan
Party or any Pledged Subsidiary, has made an untrue statement of a material
fact or fraudulent statement to any Governmental Authority, failed to disclose
a material fact required to any Governmental Authority, or committed an act,
made a statement, or failed to make a statement that, at the time such
disclosure was made, would reasonably be expected to constitute a violation of
any Health Care Law.  No Loan Party nor
any

 

65

 

Pledged Subsidiary, nor any
officer, affiliate or employee of any Loan Party, nor to any Loan Party’s
knowledge, any agent of any Loan Party or any Pledged Subsidiary, has made any
untrue statement of fact regarding material claims incurred but not reported.

 

(d)                                 Billing. 
Each Loan Party and each Pledged Subsidiary has the
requisite provider number or other Permit to bill the Medicare program (to the
extent such entity participates in the Medicare program), the respective
Medicaid program in the state or states in which such entity operates, and all
other Third Party Payor Programs, including but not limited to Capitated
Contracts with managed care organizations, that each Loan Party and each of its
Subsidiaries currently bill.  There is no
investigation, audit, claim review, or other action pending, or to the
knowledge of any Loan Party or Pledged Subsidiary, threatened which could
result in a revocation, suspension, termination, probation, restriction,
limitation, or non-renewal of any Third Party Payor provider number or result
in any Loan Party’s or any Pledged Subsidiary’s exclusion from any Third Party
Payor Program.  No Loan Party nor any
Pledged Subsidiary has billed or received any payment or reimbursement in
excess of amounts allowed by any Health Care Law or other Law, except
overpayments received and refunded in the ordinary course of business.

 

(e)                                  Proceedings.  There are no facts,
circumstances or conditions that would reasonably be expected to form the basis
for any material investigation, suit, claim, audit, action (legal or
regulatory) or proceeding (legal or regulatory) by a Governmental Authority
against or affecting any Loan Party or any Pledged Subsidiary relating to any
of the Health Care Laws.

 

(f)                                    Prohibited Transactions.  Neither
the Loan Parties nor any Pledged Subsidiary is a party to any contract, lease
agreement or other arrangement (including any joint venture or consulting
agreement) with any physician, health care facility, hospital, nursing
facility, home health agency or other person who is in a position to make or
influence referrals to or otherwise generate business to provide services,
lease space, lease equipment or engage in any other venture or activity, other
than agreements which are in material compliance with all applicable Health
Care Laws except as could not reasonably be expected to result in a Significant
Adverse Effect.  Neither the Loan Parties
nor any Pledged Subsidiary, directly or indirectly:  (1) offered, paid or received any
remuneration, in cash or in kind, to, or made any financial arrangements with,
any past, present or potential patient, supplier, medical staff member,
referral source, contractor or Third Party Payor of the Loan Parties and/or any
Pledged Subsidiary in order to illegally obtain or refer business or receive
payments from such person; (2) given, received or agreed to give or
receive any illegal gift or gratuitous payment of any kind, nature or
description (whether in money, property or services) to any past, present or
potential patient, supplier, contractor, Third Party Payor or any other person;
(3) made or agreed to make any contribution, payment or gift of funds or
property to, or for the private use of, any governmental official, employee or
agent where either the contribution, payment or gift or the purpose of such
contribution, payment or gift is or was illegal under the laws of any
government entity having jurisdiction over such payment, contribution or gift; (4) established
or maintained any unrecorded fund or asset for any purpose or made any
misleading, false or artificial entries on any of its books or records for any
reason; or (5) made, or agreed to make any payment to any person with the
intention or understanding that any part of such payment would be used or was
given for any purpose other than that described in the documents supporting
such payment, except in all cases as could not reasonably be expected to result
in a Significant Adverse Effect.

 

66

 

(g)           Medicare/Medicaid.  To the actual knowledge of
Borrower, there are no Medicare or Medicaid termination proceedings
underway with respect to any  of
the Loan Parties, each applicable entity meets the Medicare conditions of
participation and no employee or independent contractor to any of the Loan
Parties has been excluded from participating in Medicare or Medicaid or any
similar federal programs.

 

(h)           Compliance.  Each Loan Party possesses
and implements all requisite policies and procedures to ensure that all aspects
of Loan Parties’ operations, their employees, and all healthcare providers
under contract with any Loan Party,  comply
in all material respects with all applicable Health Care Laws.

 

SECTION 5.21       Labor Matters.  Except as set forth on Schedule 5.21,
there are no collective bargaining agreements or Multiemployer Plans covering
the employees of Borrower, any other Loan Party or any Pledged Subsidiary as of
the Closing Date and neither Borrower, any other Loan Party nor any Pledged
Subsidiary has suffered any strikes, walkouts, work stoppages or other
material labor difficulty within the last five years.

 

SECTION 5.22       Collateral Documents.  The provisions of the Collateral Agreement
and the Mortgages are effective to create in favor of the Collateral Agent, for
the benefit of the respective Secured Parties referred to therein a legal,
valid and enforceable first priority Lien (subject to certain Liens permitted
by Section 7.01) on all right, title and interest of the respective
Loan Parties in the respective Pari Passu Collateral.  The provisions of the First Lien Security
Agreement (Receivables) are effective to create in favor of the Administrative
Agent, for the benefit of the Secured Parties a legal, valid and enforceable
first priority Lien on all right, title and interest of the respective Loan
Parties in the First Priority Collateral. 
Except for filings completed prior to the Closing Date and as
contemplated hereby and by the Collateral Documents, no filing or other action
will be necessary to perfect or protect the Liens referred to in the preceding
two sentences.

 

SECTION 5.23       Administration of Accounts.  The Administrative Agent may rely, in
determining which Accounts are Eligible Accounts, on all statements and
representations made by the Loan Parties with respect thereto.  Borrower warrants, with respect to each
Account at the time it is shown as an Eligible Account in a Borrowing Base
Certificate, that:

 

(a)           it
is genuine and in all respects what it purports to be, and is not evidenced by
a judgment;

 

(b)           it
arises out of a completed, bona fide sale and delivery of goods or rendition of
services in the ordinary course of business consistent with past practice, and
substantially in accordance with any purchase order, contract or other document
relating thereto;

 

(c)           it
is for a sum certain, maturing as stated in the invoice covering such sale or
rendition of services, a copy of which has been furnished or is available to
the Administrative Agent on request;

 

67

 

(d)           it
is not (i) subject to any Lien (other than the Administrative Agent’s Lien
or Liens permitted under Section 7.01(l) (which Liens shall be
junior to the Administrative Agent’s Lien)) or (ii) subject to any offset,
deduction, defense, dispute, counterclaim or other adverse condition except in
the case of subclause (ii) as arising in the ordinary course of business
consistent with past practice and which in the aggregate are not material;

 

(e)           the
applicable Loan Party is the sole payee or remittance party shown on the
invoice and except with regard to Governmental Receivables, no purchase order,
agreement, document or Law restricts assignment of the Account to the
Administrative Agent (regardless of whether, under the UCC, the restriction is
ineffective);

 

(f)            no
extension, compromise, settlement, modification, credit, deduction or return
has been authorized with respect to the Account, except discounts or allowances
granted in the ordinary course of business consistent with past practice for
prompt payment that are reflected on the face of the invoice related thereto
and in the reports submitted to the Administrative Agent hereunder; and

 

(g)           to
the Borrower’s actual knowledge, (i) there are no facts or circumstances
that are reasonably likely to impair the enforceability or collectibility of
such Account; (ii) the Account Debtor had the capacity to contract when
the Account arose, continues to meet the applicable Loan Party’s customary
credit standards, is Solvent, is not contemplating or subject to an Insolvency
Proceeding, and has not failed, or suspended or ceased doing business; and (iii) there
are no proceedings or actions threatened or pending against any Account Debtor
that could reasonably be expected to have a material adverse effect on the
Account Debtor’s financial condition.

 

SECTION 5.24       Physician Nominee.  Borrower has verified that the Physician
Nominee is a physician licensed by the State of California and that he
maintains malpractice insurance. 
Borrower has performed a background check on the Physician Nominee and
the results of such background check were satisfactory to Borrower. To
Borrower’s knowledge, the Physician Nominee has no judgments and has never
defaulted any loans or other obligations that would be expected to be
discovered in Borrower’s original background search.

 

SECTION 5.25       Indebtedness of Brotman.  All Indebtedness of Brotman is without
recourse to Borrower or any other Loan Party.

 

ARTICLE VI

AFFIRMATIVE COVENANTS

 

So long as any Lender shall have any Commitment
hereunder, any Loan or other Obligation hereunder shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, Borrower shall, and shall (except in
the case of the covenants set forth in Sections 6.01, 6.02, 6.03
and 6.11) cause each other Loan Party and each Pledged Subsidiary to:

 

68

 

SECTION 6.01       Financial Statements.  Deliver to the Administrative Agent and each
Lender, in form and detail satisfactory to the Administrative Agent and the
Required Lenders:

 

(a)           as
soon as available, but in any event within 120 days after the end of each
fiscal year of Borrower (commencing with the fiscal year ended September 30,
2009), a consolidated and consolidating balance sheet of Borrower and its
Subsidiaries as at the end of such fiscal year, and the related consolidated
and consolidating statements of income or operations, shareholders’ equity and
cash flows for such fiscal year, setting forth in each case in comparative form
the figures for the previous fiscal year, all in reasonable detail and prepared
in accordance with GAAP, such consolidated statements to be audited and
accompanied by a report and opinion of an independent certified public
accountant of nationally recognized standing reasonably acceptable to the
Required Lenders, which report and opinion shall be prepared in accordance with
generally accepted auditing standards and shall not be subject to any “going
concern” or like qualification or exception or any qualification or exception
as to the scope of such audit, and together with any letters from such
accountants to the board of directors or management of Borrower;

 

(b)           as
soon as available, but in any event within 60 days after the end of each of the
first three fiscal quarters of each fiscal year of Borrower (commencing with
the fiscal quarter ended June 30, 2009), a consolidated and consolidating
balance sheet of Borrower and its Subsidiaries as of the end of such fiscal
quarter, and the related consolidated and consolidating statements of income or
operations, shareholders’ equity and cash flows for such fiscal quarter and for
the portion of Borrower’s fiscal year then ended, setting forth in each case in
comparative form the figures for (i) the corresponding fiscal quarter of
the previous fiscal year and the corresponding portion of the previous fiscal
year and (ii) the corresponding fiscal quarter and corresponding portion
of the fiscal year set forth in the annual business plan and budget delivered
for such fiscal year, all in reasonable detail, such consolidated statements to
be certified by the chief executive officer, chief financial officer, treasurer
or controller of Borrower as fairly presenting the financial condition, results
of operations, shareholders’ equity and cash flows of Borrower and its
Subsidiaries in accordance with GAAP, subject only to normal year-end audit
adjustments and the absence of footnotes;

 

(c)           as
soon as available, but in any event within 30 days after the end of each of the
first 11 months of each fiscal year of Borrower (commencing with the fiscal
month ended June 30, 2009), a consolidated and consolidating balance sheet
of Borrower and its Subsidiaries as of the end of such month, and the related
consolidated and consolidating statements of income or operations,
shareholders’ equity and cash flows for such month and for the portion of
Borrower’s fiscal year then ended setting forth in each case in comparative
form the figures (i) for the corresponding month of the previous fiscal year
and the corresponding portion of the previous fiscal year and (ii) the
corresponding month and corresponding portion of the fiscal year set forth in
the annual business plan and budget delivered for such fiscal year, all in
reasonable detail, duly certified by the chief executive officer, chief
financial officer, treasurer or controller of Borrower;

 

69

 

(d)           as
soon as available, but in any event at least 10 days before the beginning of
each fiscal year of Borrower, commencing on and after September 30, 2010,
an annual budget of Borrower and its Subsidiaries on a consolidated and
consolidating basis, including a financial (cash flow) budget (i.e., a schedule
of anticipated revenue and expenditures) prepared on a monthly basis for the
immediately following fiscal year; and

 

(e)           by
the 15th day of each month, a Borrowing Base Certificate prepared as of the
close of business of the previous month, and at such other times as the
Administrative Agent may request.  The
Administrative Agent may from time to time review and, with written notice to
Borrower, adjust any calculation in a Borrowing Base Certificate to the extent
the calculation is not made in accordance with this Agreement or does not
accurately reflect the L/C Reserve.

 

All consolidated financial information required to be
delivered by Borrower pursuant to this Section 6.01 shall be
provided in the following two forms: (a) consolidated information of
Borrower and its Subsidiaries and (b) commencing with the fiscal quarter
ending June 30, 2009, consolidated information of Borrower, its
Subsidiaries and Brotman.

 

SECTION 6.02       Certificates; Other Information.  Deliver to the Administrative Agent and each
Lender (except that the items described in clauses (e), (f),
(j), (l), (m), and (n) of this Section 6.02
shall be delivered only upon the request of the Administrative Agent or any
Lender), in form and detail satisfactory to the Administrative Agent and the
Required Lenders:

 

(a)           concurrently
with the delivery of the financial statements referred to in Section 6.01(a) (commencing
with the delivery of the financial statements for the fiscal year ended September 30,
2009), a certificate of its independent certified public accountants certifying
such financial statements and stating that in making the examination necessary
therefore no knowledge was obtained of any Default under the financial
covenants set forth in Section 7.11 or, if any such Default shall
exist, stating the nature and status of such event;

 

(b)           concurrently
with the delivery of the financial statements referred to in Sections 6.01(a) and
(b) (commencing with the delivery of the financial statements for
the fiscal quarter ended September 30, 2009), a duly completed Compliance
Certificate signed by the chief executive officer, chief financial officer,
treasurer or controller of Borrower;

 

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

 

(d)           monthly,
on or prior to the thirtieth (30th) day after the end of each calendar month,
Borrower shall provide a report of incurred but not reported items for such
month, which report shall include, but not be limited to, the claims lag
analysis

 

70

 

prepared by Borrower for PMG and each of its Subsidiaries.  Such reports shall be in form and substance
satisfactory to the Administrative Agent and shall be prepared using the
per-member-per-month  method, and
will include all medical expenses;

 

(e)           promptly upon receipt thereof, copies
of actuarial reports as of March 31 and September 30 of each year;

 

(f)            as
soon as available, but in any event within 30 days after the end of each fiscal
year of Borrower, a report summarizing the insurance coverage (specifying type,
amount and carrier) in effect for each Loan Party and the Pledged Subsidiaries
and containing such additional information as the Administrative Agent, or any
Lender through the Administrative Agent, may reasonably specify;

 

(g)           promptly,
and in any event within seven Business Days after receipt thereof by any Loan
Party or any Pledged Subsidiary thereof, copies of each notice or other
correspondence received from the SEC (or comparable agency in any applicable
non-U.S. jurisdiction) concerning any investigation or possible investigation
or other inquiry by such agency regarding financial or other operational
results of any Loan Party or any Pledged Subsidiary thereof;

 

(h)           not
later than five Business Days after receipt thereof by any Loan Party or any
Pledged Subsidiary thereof, copies of all notices, requests and other documents
(including amendments, waivers and other modifications) (i) alleging that
a default or an event of default has occurred or (ii) pertaining to any
matter that is otherwise prohibited under the terms of any Loan Document, in
each case so received under or pursuant to any Related Document or instrument,
indenture, loan or credit or similar agreement and, from time to time upon
request by the Administrative Agent, such information and reports regarding the
Related Documents and such instruments, indentures and loan and credit and
similar agreements as the Administrative Agent may reasonably request;

 

(i)            promptly
after the assertion or occurrence thereof, notice of any action or proceeding
against or of any noncompliance by any Loan Party or any Pledged Subsidiary
with any Environmental Law or Environmental Permit that could reasonably be
expected to have a Material Adverse Effect;

 

(j)            copies
of all required operating, medical or provider licenses required under
applicable Healthcare Laws of the operations of any Loan Party or Pledged
Subsidiary, as they are renewed;

 

(k)           copies
of the results of any licensing survey or other Governmental Authority inspection
report for any Loan Party or Pledged Subsidiary, which have not been corrected
within applicable timeframes, and delivered to the board of directors of the
Borrower noting any deficiency within seven (7) Business Days of its
delivery to such board;

 

(l)            quarterly,
on or prior to the thirtieth (30th) day following the end of each fiscal
quarter, Borrower shall provide the Administrative Agent with a schedule
listing the revenue for such quarter of each existing Capitated Contract and
the corresponding

 

71

 

expiration date and renewal period for each such Capitated Contract and
a listing of each terminated Capitated Contract.

 

(m)          as soon as available but not later
than thirty (30) days after submission thereof to the California Department of
Managed Health Care or the corresponding agency of another state and/or any
other applicable or successor state agency or body, each Loan Party will
provide the Administrative Agent (a) written notice of any application
for, or the grant of, any Healthcare Service Plan License and (b) all  reports and/or financial statements
required under any such Loan Party’s Healthcare Service Plan License, if any;
and

 

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

 

Documents required to be delivered pursuant to Section 6.01(a) or
(b) or Section 6.02(c) (to the extent any such
documents are included in materials otherwise filed with the SEC) may be
delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which Borrower posts such documents, or
provides a link thereto on Borrower’s website on the Internet at the website
address listed on Schedule 10.02; or (ii) on which such
documents are posted on Borrower’s behalf on an Internet or intranet website,
if any, to which each Lender and the Administrative Agent have access (whether
a commercial, third-party website or whether sponsored by the Administrative
Agent); provided that:  (i) Borrower
shall deliver paper copies of such documents to the Administrative Agent or any
Lender that requests Borrower to deliver such paper copies until a written
request to cease delivering paper copies is given by the Administrative Agent
or such Lender and (ii) Borrower shall notify the Administrative Agent and
each Lender (by telecopier or electronic mail) of the posting of any such
documents and provide to the Administrative Agent by electronic mail electronic
versions of such documents. 
Notwithstanding anything contained herein, in every instance Borrower
shall be required to provide paper copies of the Compliance Certificates
required by Section 6.02(b) to the Administrative Agent.  Except for such Compliance Certificates, the
Administrative Agent shall have no obligation to request the delivery or to
maintain copies of the documents referred to above, and in any event shall have
no responsibility to monitor compliance by Borrower with any such request for
delivery, and each Lender shall be solely responsible for requesting delivery
to it or maintaining its copies of such documents.

 

Borrower hereby acknowledges that (a) the
Administrative Agent and/or the Arranger will make available to the Lenders and
the L/C Issuers materials and/or information provided by or on behalf of
Borrower hereunder (collectively, “Borrower Materials”) by posting the
Borrower Materials on IntraLinks or another similar electronic system (the “Platform”)
and (b) certain of the Lenders (each, a “Public Lender”) may have
personnel who do not wish to receive material non-public information with
respect to Borrower or its Affiliates, or the respective securities of any of
the foregoing, and who may be engaged in investment and other market-related
activities with respect to such Persons’ securities.  Borrower hereby agrees that it will use
commercially reasonable efforts to identify that portion of the Borrower
Materials that may be distributed to the Public Lenders and that (w) all
such Borrower Materials shall be

 

72

 

clearly and conspicuously
marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall
appear prominently on the first page thereof; (x) by marking Borrower
Materials “PUBLIC,” Borrower shall be deemed to have authorized the
Administrative Agent, the Arranger, the L/C Issuers and the Lenders to treat
such Borrower Materials as not containing any material non-public information
(although it may be sensitive and proprietary) with respect to Borrower or its
securities for purposes of United States Federal and state securities laws (provided,
however, that to the extent such Borrower Materials constitute
Information, they shall be treated as set forth in Section 10.07); (y) all
Borrower Materials marked “PUBLIC” are permitted to be made available through a
portion of the Platform designated “Public Investor;” and (z) the
Administrative Agent and the Arranger shall be entitled to treat any Borrower
Materials that are not marked “PUBLIC” as being suitable only for posting on a
portion of the Platform not designated “Public Investor.”

 

SECTION 6.03       Notices.  Promptly notify the Administrative Agent and
each Lender:

 

(a)           of
the occurrence of any Default; provided that any notice delivered
pursuant to this Section 6.03(a) shall describe with
particularity any and all provisions of this Agreement and any other Loan
Document that have been breached;

 

(b)           of
any notice delivered to any Loan Party (other than any notice that is purely
administrative), or sent by or on behalf of any Loan Party, with respect to the
Note Documents (including a copy of each such notice);

 

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

 

(d)           of
the occurrence of any ERISA Event;

 

(e)           of
any material change in accounting policies or financial reporting practices by
any Loan Party or any Pledged Subsidiary;

 

(f)            of
any prepayment, redemption, defeasance or repurchase of the 2014 Notes;

 

(g)           of
any investigation or audit, or pending proceedings relating to any violation or
potential violation by any Loan Party, any Pledged Subsidiary, or any health
care facility to which a Loan Party or any Pledged Subsidiary provides
services, of any Health Care Laws (including, without limitation, any
investigation or audit or proceeding involving violation of any of the Medicare
and/or Medicaid fraud and abuse provisions) which could reasonably be expected
to have a Material Adverse Effect, in each case promptly after Borrower has
notice thereof;

 

73

 

(h)           copies
of any written recommendation from any Governmental Authority or other
regulatory body that any Loan Party or any Pledged Subsidiary, or any Obligor
to which any Loan Party or any Pledged Subsidiary provides services should have
its licensure, provider or supplier number, or accreditation suspended, revoked,
or limited in any material way, or have its  eligibility to participate in
TRICARE, Medicare or Medicaid or to accept assignments or rights to
reimbursement under TRICARE, Medicaid or Medicare regulations suspended,
revoked, or materially limited in any way which could reasonably be expected to
have a Material Adverse Effect, in each case promptly after Borrower has notice
thereof;

 

(i)            of
any claim to recover any alleged material overpayments, including by way of
Offset, with respect to any receivables including, without limitation, payments
received from TRICARE, Medicare, Medicaid or from any private insurance
carrier;

 

(j)            of
termination of eligibility of any Loan Party, any Pledged Subsidiary, or any
health care facility to which any Loan Party provides services to participate
in any reimbursement program of any private insurance carrier, managed care or
similar organization, or other Obligor applicable to it which could reasonably
be expected to have a Material Adverse Effect, in each case promptly after
Borrower has notice thereof;

 

(k)           of
any reduction in the level of
reimbursement expected to be received with respect to any Accounts which could
reasonably be expected to have a Material Adverse Effect, promptly after
Borrower has notice thereof;

 

(l)            of
any reimbursement payment contract or process that results or is reasonably
expected to result in any material claim against a Loan Party or any Pledged
Subsidiary (including on account of overpayments, settlement payments, appeals,
repayment plan requests); and

 

(m)          of
any complaint, order, citation or notice of violation with respect to, or if
any Loan Party becomes aware of, (i) the existence or alleged existence of
which any Loan Party becomes aware, of a violation of any applicable
Environmental Law, (ii) any release of any Hazardous Material into the
environment in an amount or a concentration for which reporting, investigation,
or remediation is required under any applicable Environmental Law, (iii) the
commencement of any cleanup pursuant to or in accordance with any applicable
Environmental Law of any Hazardous Materials, (iv) any pending legislative
or threatened proceeding for the termination, suspension or non-renewal of any
permit required under any applicable Environmental Law, and (v) any Real
Property that is or will be subject to a Lien imposed pursuant to any
Environmental Law, which in each of cases (i) through (v) above,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

Each notice pursuant to Section 6.03
(other than Section 6.03(e)) shall be accompanied by a statement of
a Responsible Officer of Borrower setting forth details of the occurrence
referred to therein and stating what action it has taken and proposes to take
with respect thereto.  Each notice
pursuant to Section 6.03(a) shall describe with particularity
any and all provisions of this Agreement and any other Loan Document that have
been breached.

 

74

 

SECTION 6.04       Payment of Obligations.  Pay and discharge as the same shall become
due and payable, all its obligations and liabilities, including (a) all
tax liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings diligently conducted and adequate reserves in
accordance with GAAP are being maintained by Borrower, any other Loan Party or
such Pledged Subsidiary; (b) all lawful claims which, if unpaid, would by
law become a Lien upon its property unless the same are being contested in good
faith by appropriate proceedings diligently conducted and adequate reserves in
accordance with GAAP are being maintained by Borrower, any other Loan Party or
such Pledged Subsidiary; and (c) all Indebtedness, as and when due and
payable, but subject to any subordination provisions contained in any
instrument or agreement evidencing such Indebtedness.

 

SECTION 6.05       Preservation of Existence, Etc.  (a)  Preserve, renew and maintain in
full force and effect its legal existence and good standing under the Laws of
the jurisdiction of its organization except in a transaction permitted by Section 7.04
or 7.05; (b) take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect; and (c) preserve
or renew all of its registered patents, trademarks, trade names and service
marks, the non-preservation of which could reasonably be expected to have a
Material Adverse Effect.

 

SECTION 6.06       Maintenance of Properties.  (a) Maintain, preserve and protect all
of its material properties and equipment necessary in the operation of its
business in good working order and condition, ordinary wear and tear excepted; (b) make
all necessary repairs thereto and renewals and replacements thereof except
where the failure to do so could not reasonably be expected to have a Material
Adverse Effect; and (c) use the standard of care typical in the industry
in the operation and maintenance of its facilities.

 

SECTION 6.07       Maintenance of Insurance.  Maintain with financially sound and reputable
insurance companies not Affiliates of Borrower, insurance with respect to its
properties and business against loss or damage of the kinds customarily insured
against by Persons engaged in the same or similar business, of such types and
in such amounts as are customarily carried under similar circumstances by such
other Persons and providing for not less than 30 days’ prior notice to the
Administrative Agent of termination, lapse or cancellation of such insurance.

 

SECTION 6.08       Compliance with Laws.  (a)  Comply in all respects with the requirements
of all Laws (including all Health Care Laws, Seismic Compliance Laws (giving
effect to any extensions or exemptions then in existence), all applicable
Medicare and Medicaid rules and regulations, and to the extent applicable,
the California Department of Managed Care financial solvency regulations) and
all orders, writs, injunctions and decrees applicable to it or to its business
or property, except in such instances in which (i) such requirement of Law
or order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted; or (ii) the failure to
comply therewith could not reasonably be expected to have a Material Adverse
Effect.  Notwithstanding anything in this
Agreement to the contrary, for purposes of compliance with this Section 6.08
Brotman shall be deemed subject to the requirements of this Section 6.08(a) (provided,
that solely for purposes of determining Brotman’s

 

75

 

compliance with this Section 6.08(a) (and
not for the purpose of determining compliance by any other Person with such
Section), “Material Adverse Effect” as used in Section 6.08(a)(ii) shall
mean (a) a material adverse change in, or a material adverse effect upon,
the operations, business, assets, properties, liabilities (actual or
contingent) or condition (financial (as determined based on the consolidated
financial statements of Borrower and its Subsidiaries (including Brotman)) or
otherwise) of Borrower and its Subsidiaries (including Brotman) taken as a
whole and (b) the additional meanings assigned to the term “Material
Adverse Effect” in clauses (b) and (c) in the definition
thereof).

 

(b)           Regularly review and revise the policies and procedures of
the Loan Parties and the Pledged Subsidiaries to ensure continuing compliance
by all Loan Parties and the Pledged Subsidiaries, their employees and all
healthcare providers under contract with any Loan Party or any Pledged
Subsidiary with all applicable Health Care Laws and maintain appropriate
programs and procedures for communicating such policies and procedures to all
employees of any Loan Party or any Pledged Subsidiary and healthcare providers
under contract with any Loan Party or any Pledged Subsidiary and for making
sure that all employees of any Loan Party or any Pledged Subsidiary are able to
report violations of any Health Care Laws and have such reports adequately
addressed and corrected as soon as practicable.

 

SECTION 6.09       Books and Records.  (a) Maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of each Loan Party or each Pledged
Subsidiary, as the case may be; and (b) maintain such books of record and
account in material conformity with all applicable requirements of any
Governmental Authority having regulatory jurisdiction over each Loan Party or
each Pledged Subsidiary, as the case may be.

 

SECTION 6.10       Inspection Rights.  Permit representatives and independent
contractors of the Administrative Agent and each Lender to visit and inspect
any of its properties, and, to the extent legally permitted, to examine its
corporate, financial and operating records, and make copies thereof or
abstracts therefrom, and to discuss its affairs, finances and accounts with its
directors, officers, and independent public accountants, all at the expense of
Borrower and at such reasonable times during normal business hours and as often
as may be reasonably desired, upon reasonable advance notice to Borrower; provided,
however, that when an Event of Default exists, the Administrative Agent
or any Lender (or any of their respective representatives or independent
contractors) may do any of the foregoing at the expense of Borrower at any time
during normal business hours and without advance notice.  If Administrative Agent or any Lender seeks,
as part of its inspection or information rights hereunder or under any other
Loan Documents, access to or copies of any patient health information or other
private information protected by applicable Law or contractual confidentiality
provisions, such private or confidential information shall be provided only in
accordance with applicable confidentiality safeguards, in compliance with
applicable Law and any applicable contractual confidentiality  commitments.

 

SECTION 6.11       Use of Proceeds.  Use the proceeds of the Credit Extensions to (i) refinance
existing Indebtedness, (ii) fund working capital, (iii) fund
permitted Investments and Restricted Payments and (iv) for general
corporate purposes (other than for

 

76

 

redemption of the 2014 Notes),
in each case, not in contravention of any Law or of any Loan Document.

 

SECTION 6.12       Covenant to Guarantee Obligations and
Give Security.  (a)  Upon the
formation or acquisition of any new direct or indirect Subsidiary (including
Brotman or AMVI/Prospect, as contemplated by the definition of “Subsidiary”) if
wholly-owned by any Loan Party, or in the event that after the Closing Date any
Immaterial Subsidiary ceases to be an Immaterial Subsidiary, then Borrower
shall, at Borrower’s expense:

 

(i)            within
15 days after such formation, acquisition or occurrence, cause such
Subsidiary, and cause each direct and indirect parent of such Subsidiary (if it
has not already done so), to duly execute and deliver to the Administrative
Agent a guaranty, guaranty supplement, or joinder in form and substance
reasonably satisfactory to the Administrative Agent, guaranteeing the other
Loan Parties’ obligations under the Loan Documents,

 

(ii)           within
10 days after such formation, acquisition or occurrence, furnish to the
Administrative Agent a description of the personal properties and fee interests
in real properties of such Subsidiary, in detail satisfactory to the
Administrative Agent,

 

(iii)          within
30 days after such formation, acquisition or occurrence, cause such Subsidiary
and each direct and indirect parent of such Subsidiary (if it has not already
done so) to duly execute and deliver to the Administrative Agent in respect of
such personal property of the type subject to the First Lien Security Agreement
(Receivables) and to the Collateral Trustee in respect of such real property and
all other such personal property, deeds of trust, trust deeds, deeds to secure
debt, mortgages, joinders, and other security and pledge agreements, as
specified by and in form and substance reasonably satisfactory to the
Administrative Agent and the Collateral Trustee (including delivery of all
pledged Equity Interests in and of such Subsidiary to the Collateral Trustee,
and other instruments of the type specified in Section 4.01(a)),
securing payment of all the Obligations of such Subsidiary or such parent, as
the case may be, under the Loan Documents (as well as its obligations in
respect of the 2014 Notes) and constituting first priority Liens on all First
Priority Collateral and constituting first priority liens (pari passu with the
Indenture Trustee for its benefit and the benefit of the Noteholders) on all
Pari Passu Collateral,

 

(iv)          within
45 days after such formation, acquisition or occurrence, cause such Subsidiary
and each direct and indirect parent of such Subsidiary (if it has not already
done so) to take whatever action (including the recording of mortgages, the
filing of Uniform Commercial Code financing statements, the giving of notices
and the endorsement of notices on title documents) may be necessary or
advisable in the opinion of the Administrative Agent and the Collateral
Trustee, respectively, to vest in (i) the Administrative Agent valid and
subsisting first

 

77

 

priority Liens and (ii) the Collateral Trustee (or in any
representative of the Collateral Trustee designated by it) valid and subsisting
first priority Liens, in each case on the respective properties purported to be
subject to the deeds of trust, trust deeds, deeds to secure debt, mortgages and
security and pledge agreements delivered pursuant to this Section 6.12,
in each case enforceable against all third parties in accordance with their
terms,

 

(v)           upon
the request of the Administrative Agent or the Collateral Trustee, within 60
days after such formation, acquisition or occurrence, deliver to the
Administrative Agent, upon the request of the Administrative Agent in its sole
discretion, a signed copy of a favorable opinion, addressed to the
Administrative Agent and the other Secured Parties, of counsel for the Loan
Parties acceptable to the Administrative Agent as to the matters contained in
clauses (i), (iii) and (iv) above, and as to such other matters
as the Administrative Agent may reasonably request, and

 

(vi)          as
promptly as practicable after such formation, acquisition or occurrence,
deliver, upon the request of the Administrative Agent or the Collateral
Trustee, in each case in its sole discretion, to the Administrative Agent or
the Collateral Trustee, as the case may be, with respect to each parcel of real
property owned by the entity that is the subject of such formation or
acquisition title reports, surveys and engineering, soils and other reports,
property condition assessments and environmental assessment reports, each in
scope, form and substance satisfactory to the Administrative Agent or the
Collateral Trustee, as the case may be, provided, however, that to the extent that any Loan Party
shall have otherwise received any of the foregoing items with respect to such
real property, such items shall, promptly after the receipt thereof, be
delivered to the Administrative Agent or the Collateral Trustee, as the case
may be.

 

(b)           Upon the acquisition of any property by any Loan Party, if
such property, in the reasonable judgment of the Administrative Agent, shall
not already be subject to a perfected first priority security interest (subject
to Liens permitted pursuant to Section 7.01(i)) in favor of the
Administrative Agent (for the benefit of the Secured Parties) with respect to
First Priority Collateral or in favor of the Collateral Trustee (for the
benefit of the secured parties referred to in the Collateral Agency Agreement)
with respect to Pari Passu Collateral, then Borrower shall, at Borrower’s
expense:  within 10 days after such acquisition,
furnish to the Administrative Agent and the Collateral Trustee a description of
the property so acquired in detail satisfactory to the Administrative Agent and
the Collateral Trustee, and thereafter within the respective time periods set
forth in Section 6.12(a)(iii)-(a)(vi), take all respective actions
set forth in each such subsection with respect to such property to the extent
such Loan Party is able to do so without violating the agreement evidencing the
Capitalized Leases, Synthetic Lease Obligations and purchase money obligations
referred to in Section 7.01(i),

 

(c)           At any time upon request of the Administrative Agent,
promptly execute and deliver any and all further instruments and documents and
take all such other action as the Administrative Agent may deem necessary or
desirable in obtaining the full benefits of, or (as applicable) in perfecting
and preserving the Liens of, such guaranties, deeds of trust, trust deeds,
deeds to secure debt, mortgages, leasehold mortgages, leasehold deeds of trust,
and other security and pledge agreements.

 

78

 

SECTION 6.13       Compliance with Environmental Laws.  Comply, and cause all lessees and other
Persons operating or occupying its properties to comply, in all material
respects, with all applicable Environmental Laws and Environmental Permits;
obtain and renew all Environmental Permits necessary for its operations and
properties; and conduct any investigation, study, sampling and testing, and
undertake any cleanup, removal, remedial or other action necessary to remove
and clean up all Hazardous Materials from any of its properties, in accordance
with the requirements of all Environmental Laws; provided, however,
that neither Borrower nor any of its Subsidiaries shall be required to
undertake any such cleanup, removal, remedial or other action to the extent
that its obligation to do so is being contested in good faith and by proper
proceedings and appropriate reserves are being maintained with respect to such
circumstances in accordance with GAAP.

 

SECTION 6.14       Preparation of Environmental/Seismic Reports.  (a)  At the request of the Required
Lenders from time to time (which request shall occur no more than once in any
18-month period), provide to the Lenders within 90 days after such
request, at the expense of Borrower, an environmental site assessment report
for any of its properties described in such request, prepared by an
environmental consulting firm acceptable to the Administrative Agent,
indicating the presence or absence of Hazardous Materials and the estimated
cost of any compliance, removal or remedial action in connection with any
Hazardous Materials on such properties; without limiting the generality of the
foregoing, if the Administrative Agent determines at any time that a material
risk exists that any such report will not be provided within the time referred
to above, the Administrative Agent may retain an environmental consulting firm
to prepare such report at the expense of Borrower, and Borrower hereby grants
and agrees to cause any Loan Party that owns any property described in such
request to grant at the time of such request to the Administrative Agent, the
Lenders, such firm and any agents or representatives thereof an irrevocable
non-exclusive license, subject to the rights of tenants, to enter onto their
respective properties to undertake such an assessment.

 

(b)           Within 60 days following its request therefore (which
request shall occur no more than once in any 18-month period), Borrower shall
deliver to the Administrative Agent a written evaluation and report with a
current cost estimate to bring the real properties described in the Mortgages
into compliance with Seismic Compliance Laws.

 

SECTION 6.15       Further Assurances. 
(a)  Promptly upon request by the Administrative Agent, or any
Lender through the Administrative Agent, (i) correct any material defect
or error that may be discovered in any Loan Document or in the execution,
acknowledgment, filing or recordation thereof and (ii) do, execute,
acknowledge, deliver, record, re-record, file, re-file, register and
re-register any and all such further acts, deeds, certificates, assurances and
other instruments as the Administrative Agent, or any Lender through the
Administrative Agent, may reasonably require from time to time in order to (A) carry
out more effectively the purposes of the Loan Documents, (B) to the
fullest extent permitted by applicable law, subject any Loan Party’s
properties, assets, rights or interests to the Liens now or hereafter intended
to be covered by any of the Collateral Documents (it being understood that such
Liens are not intended to cover leasehold interests in real property, to the
extent no Lien on such leasehold interest secures any other Indebtedness of the
Borrower or any Loan Party), (C) perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents and any of the
Liens intended to be created thereunder and (D) assure, convey, grant,
assign, transfer,

 

79

 

preserve, protect and confirm more effectively unto the Administrative
Agent and the Collateral Trustee the rights granted or now or hereafter
intended to be granted to the Administrative Agent or the Collateral Trustee
under any Collateral Document or under any other instrument executed in
connection with any Collateral Document to which any Loan Party or any Pledged
Subsidiary is or is to be a party, and cause each Loan Party and each Pledged
Subsidiary to do so.

 

(b)           In the event that the 2014 Notes are
redeemed or defeased in full or are no longer required to have the benefit of a
Lien in the Pari Passu Collateral, Borrower will take all actions and cause all
Loan Parties to take all actions as the Administrative Agent may request for
the Administrative Agent to obtain the sole perfected first priority Lien on
the property constituting the Pari Passu Collateral.

 

SECTION 6.16       Compliance with Terms of Leaseholds.  Make all payments and otherwise perform all
obligations in respect of all leases of real property to which any Loan Party
or Pledged Subsidiary is a party, keep such leases in full force and effect and
not allow such leases to lapse or be terminated or any rights to renew such
leases to be forfeited or cancelled, notify the Administrative Agent of any
default by any party with respect to such leases and cooperate with the Administrative
Agent in all respects to cure any such default, and cause each Loan Party and
each Pledged Subsidiary to do so, except, in any case, where the failure to do
so, either individually or in the aggregate, could not be reasonably likely to
have a Material Adverse Effect.

 

SECTION 6.17       Material Contracts. 
Perform and observe all the terms and provisions of each Material
Contract to be performed or observed by it, maintain each such Material
Contract in full force and effect, enforce each such Material Contract in
accordance with its terms, take all such action to such end as may be from time
to time requested by the Administrative Agent and, upon request of the
Administrative Agent, make to each other party to each such Material Contract
such demands and requests for information and reports or for action as any Loan
Party or any Pledged Subsidiary is entitled to make under such Material
Contract, and cause each Loan Party and each Pledged Subsidiary to do so.

 

SECTION 6.18       Replacement of Physician Designee.  In the event that at any time (a) Borrower
or any Subsidiary obtains actual knowledge that the Physician Nominee is not
Solvent, (b) the Physician Nominee institutes or consents to the
institution of any proceeding against him or his estate under any Debtor Relief
Law, or makes an assignment for the benefit of creditors, (c) the
Physician Nominee ceases to be duly licensed to practice in the medical
industry in the State of California or (d) the Physician Nominee ceases to
be designated as a licensed professional in accordance with the California
Professional Corporation Act, Borrower shall take all actions as are necessary
to replace the Physician Nominee with a licensed physician in the State of
California who is a licensed professional in accordance with the California
Professional Corporation Act, who is Solvent and who has not consented to any
proceeding against him under any Debtor Relief Law or made an assignment for
the benefit of Creditors.

 

SECTION 6.19       Post-Closing Covenants. 
The Borrower shall take, and cause each other applicable Loan Party to
take, all actions set forth in Section 4.15 of the Collateral Agreement
and in Section 4.9 of the First Lien Security Agreement (Receivables).

 

80

 

ARTICLE VII

NEGATIVE COVENANTS

 

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

 

SECTION 7.01       Liens.  Create,
incur, assume or suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, or sign or file or suffer to
exist under the Uniform Commercial Code of any jurisdiction a financing
statement that names Borrower, any other Loan Party or any Pledged Subsidiary
as debtor, or assign any accounts or other right to receive income, other than
the following:

 

(a)           Liens
pursuant to any Collateral Document;

 

(b)           Liens
existing on the date hereof and listed on Schedule 5.08(b) (but
not including any Liens referred to in clause (m) below) and any
renewals or extensions thereof, provided that (i) the property covered
thereby is not changed, (ii) the amount secured or benefited thereby is
not increased except as contemplated by Section 7.02(d), (iii) the
direct or any contingent obligor with respect thereto is not changed, and (iv) any
renewal or extension of the obligations secured or benefited thereby is
permitted by Section 7.02(d);

 

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

 

(d)           carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens
arising in the ordinary course of business which are not overdue for a period
of more than 30 days or which are being contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves with respect
thereto are maintained on the books of the applicable Person;

 

(e)           pledges
or deposits in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other social security legislation,
other than any Lien imposed by ERISA that could reasonably be expected to have
a Material Adverse Effect;

 

(f)            deposits
to secure the performance of bids, trade contracts and leases (other than
Indebtedness), statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary course of
business;

 

(g)           survey exceptions, encumbrances, ground leases,
easements or reservations of, or rights of others for, licenses, rights of way,
sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning, building codes or other restrictions (including, without
limitation, minor defects or irregularities in title and

 

81

 

similar encumbrances) as to the use of real
properties or Liens incidental to the conduct of the business of such Person or
to the ownership of its properties which do not individually or in the
aggregate materially adversely affect the value of said properties or
materially impair their use in the operation of the business of such Person;

 

(h)           judgment
Liens not giving rise to an Event of Default under Section 8.01(h);

 

(i)            Liens
securing Indebtedness permitted under Section 7.02(f); provided
that (i) such Liens do not at any time encumber any property other than
the property financed by such Indebtedness and (ii) the Indebtedness
secured thereby does not exceed the cost or fair market value, whichever is
lower, of the property being acquired on the date of acquisition;

 

(j)            other
Liens securing Indebtedness (other than letters of credit) permitted under Section 7.02
outstanding in an aggregate principal amount not to exceed $3,000,000, provided
that no such Lien shall extend to or cover any Collateral (as defined in the
First Lien Security Agreement (Receivables));

 

(k)           Liens
in favor of any lender to Brotman on the shares held by Prospect Hospital
Advisory Services, Inc. in Brotman;

 

(l)            Liens
securing Indebtedness permitted under Section 7.02(i);

 

(m)          Liens
securing Indebtedness permitted under Section 7.02(j);

 

(n)           Subject
to the terms of the Intercreditor Agreement and the Collateral Agency
Agreement, Liens in respect of the Collateral in favor of the Noteholders; and

 

(o)           So
long as the 2014 Notes are outstanding, without duplication of the Liens listed
above, Liens in respect of Pari Passu Collateral included in “Permitted Liens”
as defined in the Indenture as in effect on the date hereof.

 

SECTION 7.02       Indebtedness.  Create, incur, assume or suffer to exist any
Indebtedness, except:

 

(a)           obligations
(contingent or otherwise) existing or arising under any Swap Contract, provided
that (i) such obligations are (or were) entered into by such Person in the
ordinary course of business for the purpose of directly mitigating risks
associated with fluctuations in interest rates or foreign exchange rates and (ii) such
Swap Contract does not contain any provision exonerating the non-defaulting
party from its obligation to make payments on outstanding transactions to the
defaulting party;

 

(b)           Indebtedness
of a Guarantor owed to Borrower or another Guarantor, or owed by Borrower to a
Guarantor, which Indebtedness shall be subordinated in right of payment;

 

(c)           Indebtedness
under the Loan Documents;

 

82

 

(d)           Indebtedness
(exclusive of letters of credit referred to in clause (j) below)
outstanding on the date hereof and listed on Schedule 7.02 and any
refinancings, refundings, renewals or extensions thereof; provided that
the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses
reasonably incurred, in connection with such refinancing and by an amount equal
to any existing commitments unutilized thereunder and the direct or any
contingent obligor with respect thereto is not changed, as a result of or in
connection with such refinancing, refunding, renewal or extension; and provided,
still  further, that the terms relating to principal amount,
amortization, maturity, collateral (if any) and subordination (if any), and
other material terms taken as a whole, of any such refinancing, refunding,
renewing or extending Indebtedness, and of any agreement entered into and of
any instrument issued in connection therewith, are no less favorable in any
material respect to the Loan Parties or Pledged Subsidiaries, as applicable, or
the Lenders than the terms of any agreement or instrument governing the
Indebtedness being refinanced, refunded, renewed or extended and the interest
rate applicable to any such refinancing, refunding, renewing or extending
Indebtedness does not exceed the then applicable market interest rate;

 

(e)           Guarantees
of Borrower, any other Loan Party or any Pledged Subsidiary in respect of
Indebtedness otherwise permitted hereunder of any Loan Party or Pledged
Subsidiary;

 

(f)            Indebtedness
in respect of Capitalized Leases, Synthetic Lease Obligations and purchase
money obligations for fixed or capital assets within the limitations set forth
in Section 7.01(i); provided, however, that the
aggregate amount of all such Indebtedness at any one time outstanding shall not
exceed $5,000,000;

 

(g)           Indebtedness
of any Person that becomes a Subsidiary of Borrower after the date hereof in
accordance with the terms of Section 7.03(h), which Indebtedness is
existing at the time such Person becomes a Subsidiary of Borrower (other than
Indebtedness incurred solely in contemplation of such Person’s becoming a
Subsidiary of Borrower);

 

(h)           Indebtedness
of Borrower and the Guarantors under the Note Documents in a principal amount
not to exceed at any time $160,000,000 and any refinancing, refunding, renewal
or extension thereof, subject to the terms in the provisos in clause (d) above;

 

(i)            cash
collateralized letters of credit in an aggregate undrawn amount not to exceed
at any time $2,000,000;

 

(j)            Swap
Contracts entered into to hedge risks arising in the ordinary course of
business and not for speculative purposes; and

 

(k)           Indebtedness
(other than letters of credit or guarantees of Indebtedness of Brotman or any
of its Subsidiaries, unless Brotman is a Loan Party) in an aggregate

 

83

 

principal amount not to exceed (i) $7,500,000, to the extent
Consolidated Leverage Ratio on a pro forma basis after giving effect to the
incurrence of such Indebtedness (or portion thereof) was greater than 2.00:1.00
or (ii) $15,000,000 to the extent Consolidated Leverage Ratio on a pro
forma basis after giving effect to the incurrence of such Indebtedness (or
portion thereof) was less than or equal to 2.00:1.00.

 

SECTION 7.03       Investments. 
Make or hold any Investments, except:

 

(a)           Investments
held by any Loan Party or any Pledged Subsidiary in the form of Cash
Equivalents;

 

(b)           (i) Investments
by any Loan Party or any Pledged Subsidiary in their respective Subsidiaries
(other than an Excluded Subsidiary) outstanding on the date hereof and (ii) additional
Investments by any Loan Party or any Pledged Subsidiary in Loan Parties (other
than Borrower);

 

(c)           Investments
consisting of extensions of credit in the nature of Accounts or notes
receivable arising from the grant of trade credit in the ordinary course of
business, and Investments received in satisfaction or partial satisfaction
thereof from financially troubled account debtors to the extent reasonably
necessary in order to prevent or limit loss;

 

(d)           Guarantees
permitted by Section 7.02;

 

(e)           Investments
existing on the date hereof (other than those referred to in Section 7.03(b)(i))
and set forth on Schedule 5.08(e);

 

(f)            Investments
by Borrower in Swap Contracts permitted under Section 7.02(a);

 

(g)           the
purchase or other acquisition of all of the Equity Interests in, or all or
substantially all of the property of, any Person that, upon the consummation
thereof, will be wholly-owned directly by Borrower or one or more of the Loan
Parties (including as a result of a merger or consolidation); provided
that, with respect to each purchase or other acquisition made pursuant to this Section 7.03(g):

 

(i)            any
such newly-created or acquired Subsidiary shall comply with the requirements of
Section 6.12;

 

(ii)           the
lines of business of the Person to be (or the property of which is to be) so
purchased or otherwise acquired shall be substantially the same lines of
business as one or more of the principal businesses of Borrower or its Subsidiaries
in the ordinary course;

 

(iii)          such
purchase or other acquisition shall not include or result in any contingent
liabilities that could reasonably be expected to be material to the business,
financial condition, operations or prospects of Borrower and its Subsidiaries,
taken as a whole pro forma for such purchase or other acquisition (as

 

84

 

determined in good faith by the board of directors (or the persons
performing similar functions) of Borrower or such Subsidiary if the board of
directors is otherwise approving such transaction and, in each other case, by a
Responsible Officer);

 

(iv)          the
total cash and noncash consideration (including all indemnities, earnouts and
other contingent payment obligations to, and the aggregate amounts paid or to
be paid under noncompete, consulting and other affiliated agreements with, the
sellers thereof, all write-downs of property and reserves for liabilities with
respect thereto and all assumptions of debt, liabilities and other obligations
in connection therewith but excluding all Equity Interests permitted to be
issued under the terms of this Agreement issued or transferred to the sellers
thereof) paid by or on behalf of Borrower and such Loan Parties for any such purchase
or other acquisition, when aggregated with the total cash and noncash
consideration paid by or on behalf of Borrower and such Loan Parties for all
other purchases and other acquisitions made by Borrower and such Loan Parties
pursuant to this Section 7.03(g) during the term of this
Agreement, shall not exceed $5,000,000;

 

(v)           (A) immediately
before and immediately after giving pro forma effect to any such purchase or
other acquisition, no Default shall have occurred and be continuing and (B) immediately
after giving effect to such purchase or other acquisition, Borrower and its
Subsidiaries shall be in pro forma compliance with all of the covenants set
forth in Section 7.11, such compliance to be determined on the
basis of the financial information most recently delivered to the
Administrative Agent and the Lenders pursuant to Section 6.01(a) or
(b) as though such purchase or other acquisition had been
consummated as of the first day of the fiscal period covered thereby;

 

(vi)          at
the time such purchase or other acquisition is initially announced, such
purchase or other acquisition is made with the permission of the Board of
Directors of the Person from whom such purchase or other acquisition is being
made; and

 

(vii)         Borrower
shall have delivered to the Administrative Agent and each Lender, at least five
Business Days prior to the date on which any such purchase or other acquisition
is to be consummated, a certificate of a Responsible Officer, in form and
substance reasonably satisfactory to the Administrative Agent and the Required
Lenders, certifying that all of the requirements set forth in this
subsection (g) have been satisfied or will be satisfied on or prior
to the consummation of such purchase or other acquisition;

 

(h)           Investments
by Loan Parties and any Pledged Subsidiary (other than an Excluded Subsidiary)
not otherwise permitted under this Section 7.03 in an aggregate
amount not to exceed $3,000,000 (with the fair market value of such Investment
being measured at the time made and without giving effect to subsequent changes
in value); provided that, with respect to each Investment made pursuant
to this Section 7.03(h):

 

85

 

(i)            such
Investment shall not include or result in any contingent liabilities that could
reasonably be expected to be material to the business, financial condition,
operations or prospects of Borrower and its Subsidiaries, taken as a whole (as
determined in good faith by the board of directors (or persons performing
similar functions) of Borrower or such Subsidiary if the board of directors is
otherwise approving such transaction and, in each other case, by a Responsible
Officer);

 

(ii)           such
Investment shall be in property that is part of, or in lines of business that
are, substantially the same lines of business as one or more of the principal
businesses of Borrower and its Subsidiaries in the ordinary course;

 

(iii)          any
determination of the amount of such Investment shall include all cash and
noncash consideration (including the fair market value of all Equity Interests
issued or transferred to the sellers thereof, all indemnities, earnouts and
other contingent payment obligations to, and the aggregate amounts paid or to
be paid under noncompete, consulting and other affiliated agreements with the
sellers thereof, all write-downs of property and reserves for liabilities with
respect thereto and all assumptions of debt, liabilities and other obligations
in connection therewith) paid by or on behalf of the respective Loan Party or such
Pledged Subsidiary in connection with such Investment; and

 

(iv)          (A) immediately
before and immediately after giving pro forma effect to any such purchase or
other acquisition, no Default shall have occurred and be continuing and (B) immediately
after giving effect to such purchase or other acquisition, Borrower and the
other Loan Parties shall be in pro forma compliance with all of the covenants
set forth in Section 7.11, such compliance to be determined on the
basis of the financial information most recently delivered to the
Administrative Agent and the Lenders pursuant to Section 6.01(a) or
(b) as though such Investment had been consummated as of the first
day of the fiscal period covered thereby;

 

(i)            Investments
by the Borrower in Brotman in the form of one or more senior unsecured loans in
an aggregate principal amount not exceeding $10,000,000; provided that
such Investments can exceed $10,000,000 if such Investments in excess of
$10,000,000 are funded solely with the proceeds of Equity Interests of the
Borrower issued after the date hereof, and provided, further,
that in each case such Investments are evidenced by a promissory note that has
been duly pledged and delivered to the Collateral Trustee pursuant to the
Collateral Agreement;

 

(j)            Investments
in Nuestra Familia Medical Group and AMVI/Prospect in the ordinary course of
business consistent with past practices; and

 

(k)           other
Investments not exceeding $3,000,000 in the aggregate in any fiscal year of
Borrower.

 

86

 

SECTION 7.04       Fundamental Changes. 
Merge, dissolve, liquidate, consolidate with or into another Person, or
Dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except that, so long as no Default exists or would
result therefrom:

 

(a)           other
than where prohibited under applicable Law (including Health Care Law), any
Subsidiary (other than an Excluded Subsidiary) may merge with (i) Borrower,
provided that Borrower shall be the continuing or surviving Person, or (ii) any
one or more other Subsidiaries, provided that when any Loan Party (other
than Borrower) is merging with another Subsidiary, such Loan Party shall be the
continuing or surviving Person;

 

(b)           to
the extent permitted under all applicable Law, any Subsidiary may Dispose of
all or substantially all of its assets (upon voluntary liquidation or
otherwise) to Borrower or to another Loan Party;

 

(c)           in
connection with any acquisition permitted under Section 7.03, any
Subsidiary of Borrower (other than an Excluded Subsidiary) may merge into or
consolidate with any other Person or permit any other Person to merge into or
consolidate with it; provided that (i) the Person surviving such
merger shall be a wholly-owned Subsidiary of Borrower and (ii) in the case
of any such merger to which any Loan Party (other than Borrower) is a party,
such Loan Party is the surviving Person; and

 

(d)           so
long as no Default has occurred and is continuing or would result therefrom,  any Subsidiary of Borrower  (other than PMG or an Excluded Subsidiary)  may merge into or consolidate with any
other Person or permit any other Person to merge into or consolidate with it; provided,
however, that in each case, immediately after giving effect thereto in
the case of any such merger to which any Loan Party is a party, such Loan Party
is the surviving corporation.

 

SECTION 7.05       Dispositions. 
Make any Disposition or enter into any agreement to make any
Disposition, except:

 

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

 

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

 

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

 

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

 

87

 

(e)           Dispositions permitted by Section 7.04;  and

 

(f)            As long as the 2014 Notes are outstanding, Dispositions
of Pari Passu Collateral to the extent permitted by the Indenture as in effect
on the date hereof;

 

(g)           Dispositions (other than of real property) by Borrower and
any of its Subsidiaries not otherwise permitted under this Section 7.05;
provided that (i) at the time of such Disposition, no Default shall
exist or would result from such Disposition and (ii) the aggregate book
value of all property Disposed of in reliance on this clause (g) in
any fiscal year shall not exceed $5,000,000;

 

provided, however, that any Disposition pursuant to Section 7.05(a) through
Section 7.05(g) shall be for fair market value.

 

SECTION 7.06       Restricted Payments. 
Declare or make, directly or indirectly, any Restricted Payment, or
incur any obligation (contingent or otherwise) to do so, or issue or sell any
Equity Interests or accept any capital contributions, except that, so long as
no Default shall have occurred and be continuing at the time of any action
described below or would result therefrom:

 

(a)           each Subsidiary may make Restricted Payments to (i) Borrower
and (ii) any Subsidiaries of Borrower that are Guarantors;

 

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

 

(c)           Restricted Payments by any Loan Party or its Subsidiary to
any other Loan Party in an amount necessary to fund federal and state income
taxes attributable to the taxable income of such Loan Party for the sole
purpose of funding such tax payments;

 

(d)           Borrower may issue and sell its common Equity Interests;

 

(e)           Borrower may issue preferred Equity Interests; provided,
that such preferred equity may not (i) require
the payment of any dividends (other than dividends payable solely in shares of
Borrower’s common stock or additional Borrower’s preferred stock meeting the
requirements of this Section 7.06(e)), (ii) mature or be mandatorily
redeemable or subject to mandatory repurchase or redemption or repurchase, in
each case in whole or in part and whether upon the occurrence of any event,
pursuant to a sinking fund obligation on a fixed date or otherwise (including
as the result of a failure to maintain or achieve any financial performance
standards) or (c) be convertible or exchangeable, automatically or at the
option of any holder thereof, into any Indebtedness or other assets, other than
Borrower’s common stock or additional Borrower’s preferred stock meeting the
requirements of this Section 7.06(e)).

 

SECTION 7.07       Change in Nature of Business.  Engage in any material line of business
substantially different from those lines of business conducted by the Loan
Parties and

 

88

 

the Pledged Subsidiaries on the date hereof or any business
substantially related or incidental thereto.

 

SECTION 7.08       Transactions with Affiliates.  Enter into any transaction of any kind with
any Affiliate of Borrower, whether or not in the ordinary course of business,
other than on fair and reasonable terms substantially as favorable to the
respective Loan Party or Pledged Subsidiary as would be obtainable by such Loan
Party or such Pledged Subsidiary at the time in a comparable arm’s length
transaction with a Person other than an Affiliate; provided that the
foregoing restriction shall not apply to transactions between or among the Loan
Parties and provided, further, that the foregoing restriction
shall not apply to the sale of certain land and assets of Brotman to JHA West
16, LLC pursuant to the exercise of any purchase option by JHA West 16, LLC in
accordance with the terms of the Brotman/JHA Purchase Option Agreement as in
effect on the Closing Date and to Investments in Brotman permitted under Section 7.03(g),
(h), (i) and (k).

 

SECTION 7.09       Burdensome Agreements. 
Except where required under applicable Laws, enter into or permit to
exist any Contractual Obligation (other than this Agreement, any other Loan
Document or any Note Document) that (a) limits the ability (i) of any
such Loan Party or Pledged Subsidiary to make Restricted Payments to Borrower
or any Guarantor or to otherwise transfer property to or invest in Borrower or
any Guarantor, except for any agreement in effect (A) on the date hereof
and set forth on Schedule 7.09 or (B) at the time any such
Loan Party or Pledged Subsidiary becomes a Subsidiary of Borrower, so long as
such agreement was not entered into solely in contemplation of such Person
becoming a Subsidiary of Borrower, (ii) of any such Loan Party or Pledged
Subsidiary to Guarantee the Indebtedness of Borrower or (iii) of Borrower
or any such Loan Party or Pledged Subsidiary to create, incur, assume or suffer
to exist Liens on property of such Person; provided, however,
that this clause (iii) shall not prohibit any negative pledge
incurred or provided in favor of any holder of Indebtedness permitted under Section 7.02(f) solely
to the extent any such negative pledge relates to the property financed by or
the subject of such Indebtedness; or (b) requires the grant of a Lien to
secure an obligation of such Person if a Lien is granted to secure another
obligation of such Person.

 

SECTION 7.10       Use of Proceeds. 
Use the proceeds of any Credit Extension, whether directly or
indirectly, and whether immediately, incidentally or ultimately, to purchase or
carry margin stock (within the meaning of Regulation U of the FRB) or to extend
credit to others for the purpose of purchasing or carrying margin stock or to
refund indebtedness originally incurred for such purpose.

 

SECTION 7.11       Financial Covenants.

 

(a)           Consolidated Leverage Ratio.  Permit the Consolidated Leverage Ratio for
the immediately prior four fiscal quarters of Borrower as of the end of any
fiscal quarter of Borrower set forth below to be greater than the ratio set
forth below opposite such period:

 

	
  Four
  Fiscal Quarters Ending

  	
   

  	
  Maximum Consolidated

  Leverage Ratio

  
	
  June 30, 2010

  	
   

  	
  4.00:1.00

  
	
  September 30, 2010
  through June 30, 2011

  	
   

  	
  3.75:1.00

  
	
  September 30, 2011
  and each fiscal quarter ending thereafter

  	
   

  	
  3.50:1.00

  

 

89

 

(b)           Consolidated Fixed Charge Coverage Ratio.  Permit the Consolidated Fixed Charge Coverage
Ratio for the immediately prior four fiscal quarters of Borrower as of the end
of any fiscal quarter of Borrower to be less than 1.40:1.00.

 

(c)           Consolidated Total Leverage Ratio.  Permit the Consolidated Total Leverage Ratio
for the immediately prior four fiscal quarters of Borrower as of the end of any
fiscal quarter of Borrower set forth below during each Brotman Credit Extension
Period to be greater than the ratio set forth below opposite such period:

 

	
  Four
  Fiscal Quarters Ending

  	
   

  	
  Maximum Consolidated

  Total Leverage Ratio

  
	
  June 30, 2010

  	
   

  	
  4.00:1.00

  
	
  September 30, 2010
  through June 30, 2011

  	
   

  	
  3.75:1.00

  
	
  September 30, 2011
  and each fiscal quarter ending thereafter

  	
   

  	
  3.50:1.00

  

 

SECTION 7.12       Capital Expenditures. 
Make or become legally obligated to make any Capital Expenditure, except
for Capital Expenditures in the ordinary course of business not exceeding (i) $2,500,000
for the fiscal year of Borrower ending September 30, 2009, (ii) $3,000,000
for the fiscal year of Borrower ending September 30, 2010 and (iii) $3,500,000
for the fiscal year of Borrower ending September 30, 2011 (such amount for
each such fiscal year, the “Maximum Capital Expenditure”), in the
aggregate for Borrower, the other Loan Parties and such Pledged Subsidiaries
during such fiscal year; provided, however, that so long as no
Default has occurred and is continuing or would result from such expenditure,
any portion of the Maximum Capital Expenditure, if not expended in the fiscal
year for which it is permitted, may be carried over for expenditure in the next
following fiscal year; and provided, further, if any such amount
is so carried over, it will be deemed used in the applicable subsequent fiscal
year before the Maximum Capital Expenditure allocated for such fiscal year.

 

SECTION 7.13       Amendments of Organization Documents.  Amend any of its Organization Documents in
any manner adverse to the Administrative Agent or the Lenders.

 

SECTION 7.14       Accounting Changes. 
Make any change in (a) accounting policies or reporting practices,
except as required by GAAP, or (b) fiscal year.

 

SECTION 7.15       Prepayments, Etc. of Indebtedness; Payments and Prepayments
of the 2014 Notes.  Prepay, redeem,
purchase, defease or otherwise satisfy prior to the scheduled maturity thereof
in any manner, or make any payment in violation of any subordination terms of,
any Indebtedness, except (i) the prepayment of the Credit Extensions in
accordance with the terms of this Agreement, (ii) regularly scheduled or
required repayments or redemptions of Indebtedness set forth in Schedule 7.02
in accordance with any applicable

 

90

 

Subordination Agreement and refinancings and refundings of such
Indebtedness in compliance with Section 7.02(d); and (iii) voluntary
redemptions of the 2014 Notes, provided that there are no outstanding
Borrowings both before and after giving effect to such voluntary redemption.

 

SECTION 7.16       Amendment, Etc. of Related Documents and Indebtedness.  (a) Cancel or terminate any Related
Document or consent to or accept any cancellation or termination thereof, (b) amend,
modify or change in any manner any term or condition of any Related Document or
give any consent, waiver or approval thereunder in any manner materially
adverse to the Lenders or the Administrative Agent, (c) waive any default under
or any breach of any term or condition of any Related Document, (d) take
any other action in connection with any Related Document that would materially
impair the value of the interest or rights of any Loan Party thereunder or that
would impair the rights or interests of the Administrative Agent or any Lender,
(e) amend, modify or change in any manner any term or condition of any
Indebtedness set forth in Schedule 7.02 in any manner materially
adverse to the Lenders or the Administrative Agent except for any refinancing,
refunding, renewal or extension thereof permitted by Section 7.02,
or (f) amend, modify, supplement or otherwise change, or consent to any
amendment, modification, supplement or change to, any Note Document if it would
be materially adverse to the interests of the Lenders.

 

SECTION 7.17       Designation of Senior Debt.  Designate any Indebtedness (other than the
Indebtedness under the Loan Documents or the Indebtedness under the Indenture)
of Borrower or any other Loan Parties as “Designated Senior Debt” (or
any similar term) under any agreement.

 

SECTION 7.18       Responsibility for Brotman.  Guarantee any Indebtedness or other
liabilities of Brotman, including, without limitation, tax liabilities,
environmental liabilities or ERISA liabilities.

 

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

 

SECTION 8.01       Events of Default. 
Any of the following shall constitute an Event of Default:

 

(a)           Non-Payment. 
Borrower or any other Loan Party fails to (i) pay when and as
required to be paid herein, any amount of principal of any Loan or any L/C
Obligation or deposit any funds as Cash Collateral in respect of L/C
Obligations, or (ii) pay within three days after the same becomes due, any
interest on any Loan or on any L/C Obligation, or any fee due hereunder, or (iii) pay
within five days after the same becomes due, any other amount payable hereunder
or under any other Loan Document; or

 

(b)           Specific Covenants. 
(i) Borrower fails to perform or observe (or fails to cause any
other Loan Party or Pledged Subsidiary to perform and observe) any term,
covenant or agreement contained in any of Section 6.03, 6.05,
6.08, 6.10, 6.11, 6.12, 6.14, 6.18,
or Article VII, (ii) Borrower fails to cause Brotman to
perform or observe any covenant contained in Section 6.08(a), (iii) any
of the Guarantors fails to perform or

 

91

 

observe any term, covenant or agreement
contained in the Guaranty or (iv) any of the Loan Parties fails to perform
or observe any term, covenant or agreement contained in the Collateral
Agreement or the respective Mortgages to which it is a party; or

 

(c)           Other Defaults. 
Any Loan Party fails to perform or observe (i) any covenant or
agreement contained in Section 6.01(b), (c), (d), (e) or
Section 6.02(m) on its part to be performed or observed and
such failure continues for 15 days or (ii) any other covenant or agreement
(not specified in Section 8.01(a) or (b) above)
contained in any Loan Document on its part to be performed or observed and such
failure continues for 30 days; or

 

(d)           Representations and Warranties.  Any representation, warranty, certification
or statement of fact made or deemed made herein by or on behalf of Borrower,
any other Loan Party or any Pledged Subsidiary in any other Loan Document, or
in any document delivered in connection herewith or therewith shall be
incorrect or misleading in any material respect (to the extent any such
representation or warranty is not otherwise qualified by the concept of
“materiality”) when made or deemed made; or

 

(e)           Cross-Default.

 

(i)            Any
Loan Party or any Pledged Subsidiary (A) fails to make any payment when
due after giving effect to any applicable notice and cure periods (whether by
scheduled maturity, required prepayment, acceleration, demand, or otherwise) in
respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and
Indebtedness under Swap Contracts) having an aggregate principal amount
(including undrawn committed or available amounts and including amounts owing
to all creditors under any combined or syndicated credit arrangement) of more
than the Threshold Amount or (B) fails to observe or perform any other
agreement or condition relating to any such Indebtedness or Guarantee or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event occurs after giving effect to any applicable notice
and cure period, the effect of which default or other event is to cause, or to
permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries
of such Guarantee (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if required,
such Indebtedness to be demanded or to become due or to be repurchased,
prepaid, defeased or redeemed (automatically or otherwise), or an offer to
repurchase, prepay, defease or redeem such Indebtedness to be made, prior to
its stated maturity, or such Guarantee to become payable or cash collateral in
respect thereof to be demanded;

 

(ii)           there
occurs under any Swap Contract an Early Termination Date (as defined in such
Swap Contract) resulting from (A) any event of default under such Swap
Contract as to which a Loan Party or any Pledged Subsidiary is the Defaulting
Party (as defined in such Swap Contract) or (B) any Termination Event (as
so defined) under such Swap Contract as to which a Loan Party or any Pledged
Subsidiary is an Affected Party (as so defined) and, in either event, the

 

92

 

Swap Termination Value owed by such Loan Party or such Pledged
Subsidiary as a result thereof is greater than the Threshold Amount; or

 

(iii)          any
“Event of Default” as defined in the Indenture shall have occurred; or

 

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

 

(g)           Inability to Pay Debts; Attachment.  (i) Any Loan Party or any Pledged
Subsidiary becomes unable or admits in writing its inability or fails generally
to pay its debts as they become due, or (ii) any writ or warrant of
attachment or execution or similar process is issued or levied against all or
any material part of the property of any such Person and is not released,
vacated or fully bonded within 60 days after its issue or levy; or

 

(h)           Judgments. 
There is entered against any Loan Party or any Pledged Subsidiary (i) one
or more final judgments or orders for the payment of money in an aggregate
amount (as to all such judgments and orders) exceeding the Threshold Amount (to
the extent not covered by independent third-party insurance as to which
the insurer (1) is rated at least “A” by A.M. Best Company, (2) has
been notified of the potential claim and (3) does not dispute coverage),
or (ii) any one or more non-monetary final judgments that have, or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect and, in either case, (A) enforcement proceedings are
commenced by any creditor upon such judgment or order, or (B) there is a
period of 10 consecutive days during which a stay of enforcement of such
judgment, by reason of a pending appeal or otherwise, is not in effect; or

 

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

 

93

 

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

 

(k)           Change of Control. 
There occurs any Change of Control; or

 

(l)            Collateral Documents.  Any Collateral Document after delivery
thereof pursuant to Section 4.01 or 6.12 shall for any
reason (other than pursuant to the terms thereof) cease to create a valid and
perfected first priority Lien (subject to Liens permitted by Section 7.01)
on the Collateral purported to be covered thereby; or

 

(m)          Material Permits and Licenses.  The loss, suspension or revocation of, or
failure to renew, any license, accreditation or Permit now held or hereafter
acquired by any Loan Party or any Pledged Subsidiary if such loss, suspension,
revocation or failure to renew would have a Material Adverse Effect; or

 

(n)           Material Contracts. 
Any Material Contract the loss of which could reasonably be expected to
have a Material Adverse Effect is terminated or fails to be in full force and
effect for any reason without being replaced by a Material Contract at the time
of its termination or failure to be in full force and effect, or any breach, a
default or an event of default occurs under any Material Contract which is not
remedied within thirty days after its occurrence; or

 

(o)           Subordination. 
(i)  The subordination provisions of the documents evidencing or
governing any subordinated Indebtedness (collectively, the “Subordinated
Provisions”) shall, in whole or in part, terminate, cease to be effective
or cease to be legally valid, binding and enforceable against any holder of the
applicable subordinated Indebtedness; or (ii) Borrower or any other Loan
Party shall, directly or indirectly, disavow or contest in any manner (A) the
effectiveness, validity or enforceability of any of the Subordination
Provisions, (B) that the Subordination Provisions exist for the benefit of
the Administrative Agent, the Lenders and the L/C Issuers or (C) that all
payments of principal of or premium and interest on the applicable subordinated
Indebtedness, or realized from the liquidation of any property of any Loan
Party, shall be subject to any of the Subordination Provisions; or

 

(p)           Indictment. 
The indictment by any Governmental Authority of any Loan Party or any
Pledged Subsidiary or Affiliate of a Loan Party as to which there is a
reasonable probability of an adverse determination under any criminal statute,
or commencement of criminal or civil proceedings against a Loan Party or any
Pledged Subsidiary or Affiliate of a Loan Party, pursuant to which statute or
proceeding the penalties or remedies sought or available include forfeiture of (i) any
material portion of

 

94

 

the Collateral, or (ii) any other assets
of a Loan Party that are necessary or material to the conduct of its business;
or

 

(q)           Material Adverse Effect.  A Material Adverse Effect shall have
occurred; or

 

(r)            Assignable Option Agreement.  The Physician Nominee shall fail to perform
or observe any term or condition of Section 7.2 of the Assignable Option
Agreement as in effect on the date hereof.

 

SECTION 8.02       Remedies upon Event of Default.  If any Event of Default occurs and is
continuing, the Administrative Agent shall, at the request of, or may, with the
consent of, the Required Lenders, take any or all of the following actions:

 

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

 

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

 

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

 

(d)           make any adjustment to the Borrowing Base in respect of
the applicable Event of Default; and

 

(e)           exercise on behalf of itself, the Lenders and the L/C
Issuers all rights and remedies legally available to it, the Lenders and the
L/C Issuers under the Loan Documents;

 

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

 

SECTION 8.03       Application of Funds. 
Upon the occurrence and during the continuance of an Event of Default,
and/or after the exercise of any remedies provided for in Section 8.02
(or after the Loans have automatically become immediately due and payable and
the L/C Obligations have automatically been required to be Cash Collateralized
as set forth in the

 

95

 

proviso to Section 8.02), any amounts received on account
of the Obligations shall be applied by the Administrative Agent in the
following order:

 

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

 

Second, to payment of that portion of the
Obligations constituting fees, indemnities and other amounts (other than
principal, interest and Letter of Credit Fees) payable to the Lenders and the
L/C Issuers (including fees, charges and disbursements of counsel to the
respective Lenders and the L/C Issuers (including fees and time charges for
attorneys who may be employees of any Lender or any L/C Issuer) and amounts
payable under Article III, ratably among them in proportion to the
respective amounts described in this clause Second payable to them;

 

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

 

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

 

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

 

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

 

Subject to Section 2.03(c), amounts used
to Cash Collateralize the aggregate undrawn amount of Letters of Credit
pursuant to clause Fifth above shall be applied to satisfy drawings
under such Letters of Credit as they occur. 
If any amount remains on deposit as Cash Collateral after all Letters of
Credit have either been fully drawn or expired, such remaining amount shall be
applied to the other Obligations, if any, in the order set forth above.

 

ARTICLE IX

ADMINISTRATIVE AGENT

 

SECTION 9.01       Appointment and Authority.  (a)  Each of the Lenders and L/C Issuers
hereby irrevocably appoints Royal Bank to act on its behalf as the
Administrative Agent hereunder and under the other Loan Documents and
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the

 

96

 

Administrative Agent by the terms hereof or thereof, together with such
actions and powers as are reasonably incidental thereto.  The provisions of this Article are
solely for the benefit of the Administrative Agent, the Lenders and the L/C
Issuers, and neither Borrower nor any other Loan Party shall have rights as a
third party beneficiary of any of such provisions.

 

(b)           The Administrative Agent shall also act as the “collateral agent” and/or “control
agent” under the Loan Documents, and each of the Lenders (in its capacities as
a Lender and potential Cash Management Bank) and the L/C Issuers hereby
irrevocably appoints and authorizes the Administrative Agent to act as the
agent of such Lender and such L/C Issuer for purposes of acquiring, holding and
enforcing any and all Liens on Collateral granted by any of the Loan Parties to
secure any of the Obligations, together with such powers and discretion as are
reasonably incidental thereto.  In this
connection, the Administrative Agent, as “collateral agent” and/or “control
agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the
Administrative Agent pursuant to Section 9.05 for purposes of
holding or enforcing any Lien on the Collateral (or any portion thereof)
granted under the Collateral Documents, or for exercising any rights and
remedies thereunder at the direction of the Administrative Agent), shall be
entitled to the benefits of all provisions of this Article IX and Article X
(including Section 10.04(c), as though such co-agents, sub-agents
and attorneys-in-fact were the “collateral agent” or “control agent” under the
Loan Documents) as if set forth in full herein with respect thereto.

 

SECTION 9.02       Rights as a Lender. 
The Person serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent and the term
“Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the
context otherwise requires, include the Person serving as the Administrative
Agent hereunder in its individual capacity. 
Such Person and its Affiliates may accept deposits from, lend money to,
act as the financial advisor or in any other advisory capacity for and
generally engage in any kind of business with Borrower or any Subsidiary or
other Affiliate thereof as if such Person were not the Administrative Agent
hereunder and without any duty to account therefore to the Lenders.

 

SECTION 9.03       Exculpatory Provisions. 
The Administrative Agent shall not have any duties or obligations except
those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the
foregoing, the Administrative Agent:

 

(a)           shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing;

 

(b)           shall not have any duty to take any discretionary action
or exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or by the other Loan Documents that the
Administrative Agent is required to exercise as directed in writing by the Required
Lenders (or such other number or percentage of the Lenders as shall be
expressly provided for herein or in the other Loan Documents), provided
that the Administrative Agent shall not be required to take any action that, in
its opinion or the opinion of its counsel, may expose the Administrative Agent
to liability or that is contrary to any Loan Document or applicable law; and

 

97

 

(c)           shall not, except as expressly set forth herein and in the
other Loan Documents, have any duty to disclose, and shall not be liable for
the failure to disclose, any information relating to Borrower or any of its
Affiliates that is communicated to or obtained by the Person serving as the
Administrative Agent or any of its Affiliates in any capacity.

 

The Administrative Agent shall not be liable for any
action taken or not taken by it (i) with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as
shall be necessary, or as the Administrative Agent shall believe in good faith
shall be necessary, under the circumstances as provided in Sections 10.01
and 8.02) or (ii) in the absence of its own gross negligence or
willful misconduct.  The Administrative
Agent shall be deemed not to have knowledge of any Default unless and until
notice describing such Default is given to the Administrative Agent by
Borrower, a Lender or an L/C Issuer.

 

The Administrative Agent shall not be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty
or representation made in or in connection with this Agreement or any other
Loan Document, (ii) the contents of any certificate, report or other
document delivered hereunder or thereunder or in connection herewith or
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any
other agreement, instrument or document, or the creation, perfection or
priority of any Lien purported to be created by the Collateral Documents, (v) the
value or the sufficiency of any Collateral, or (v) the satisfaction of any
condition set forth in Article IV or elsewhere herein, other than
to confirm receipt of items expressly required to be delivered to the
Administrative Agent.

 

SECTION 9.04       Reliance by Administrative Agent.  The Administrative Agent shall be entitled to
rely upon, and shall not incur any liability for relying upon, any notice,
request, certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or
other distribution) believed by it to be genuine and to have been signed, sent
or otherwise authenticated by the proper Person.  The Administrative Agent also may rely upon
any statement made to it orally or by telephone and believed by it to have been
made by the proper Person, and shall not incur any liability for relying
thereon.  In determining compliance with
any condition hereunder to the making of a Loan, or the issuance of a Letter of
Credit, that by its terms must be fulfilled to the satisfaction of a Lender or
an L/C Issuer, the Administrative Agent may presume that such condition is
satisfactory to such Lender or such L/C Issuer unless the Administrative Agent
shall have received notice to the contrary from such Lender or such L/C Issuer
prior to the making of such Loan or the issuance of such Letter of Credit.  The Administrative Agent may consult with
legal counsel (who may be counsel for Borrower), independent accountants and
other experts selected by it, and shall not be liable for any action taken or
not taken by it in accordance with the advice of any such counsel, accountants
or experts.

 

SECTION 9.05       Delegation of Duties. 
The Administrative Agent may perform any and all of its duties and
exercise its rights and powers hereunder or under any other Loan Document by or
through any one or more sub-agents appointed by the Administrative

 

98

 

Agent.  The Administrative Agent
and any such sub-agent may perform any and all of its duties and exercise its
rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article shall
apply to any such sub-agent and to the Related Parties of the Administrative
Agent and any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Administrative Agent.

 

SECTION 9.06       Resignation of Administrative Agent.  The Administrative Agent may at any time give
notice of its resignation to the Lenders, the L/C Issuers and Borrower.  Upon receipt of any such notice of
resignation, the Required Lenders shall have the right, in consultation with
Borrower, to appoint a successor, which shall be a bank or commercial lending
institution with an office in the United States, or an Affiliate of any such
bank or commercial lending institution with an office in the United
States.  In the event that the
Administrative Agent becomes the subject of a bankruptcy or insolvency
proceeding or that applicable regulatory authorities have assumed control of
the management, operations and assets of the Administrative Agent, the Required
Lenders shall have the right, in consultation with the Borrower, to appoint a
successor, which shall be a bank or other commercial lending institution win an
office in the United States, or an Affiliate of any such bank or commercial
lending institution with an office in the United States.  If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment within
30 days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may on behalf of the
Lenders and the L/C Issuers, appoint a successor Administrative Agent meeting
the qualifications set forth above; provided that if the Administrative
Agent shall notify Borrower and the Lenders that no qualifying Person has
accepted such appointment, then such resignation shall nonetheless become
effective in accordance with such notice and (a) the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder and under
the other Loan Documents (except that in the case of any collateral security
held by the Administrative Agent on behalf of the Lenders or the L/C Issuers
under any of the Loan Documents, the retiring Administrative Agent shall
continue to hold such collateral security until such time as a successor
Administrative Agent is appointed) and (b) all payments, communications
and determinations provided to be made by, to or through the Administrative
Agent shall instead be made by or to each Lender and each L/C Issuer directly,
until such time as the Required Lenders appoint a successor Administrative
Agent as provided for above in this Section. 
Upon the acceptance of a successor’s appointment as Administrative Agent
hereunder, such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring (or retired or removed)
Administrative Agent, and the retiring 
(or removed) Administrative Agent shall be discharged from all of its
duties and obligations hereunder or under the other Loan Documents (if not
already discharged therefrom as provided above in this Section).  The fees payable by Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between Borrower and such successor.  After the retiring (or removed)
Administrative Agent’s resignation or removal hereunder and under the other
Loan Documents, the provisions of this Article and Section 10.04
shall continue in effect for the benefit of such retiring (or removed)
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while the
retiring (or removed) Administrative Agent was acting as Administrative Agent.

 

99

 

SECTION 9.07       Non-Reliance
on Administrative Agent and Other Lenders. 
Each Lender and each L/C Issuer acknowledges that it has, independently
and without reliance upon the Administrative Agent or any other Lender or any
of their Related Parties and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement.  Each Lender and each L/C
Issuer also acknowledges that it will, independently and without reliance upon
the Administrative Agent or any other Lender or any of their Related Parties
and based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or any related
agreement or any document furnished hereunder or thereunder.

 

SECTION 9.08       Intercreditor
Agreement and Collateral Agency Agreement. 
Each of the Lenders hereby acknowledges that it has received and
reviewed the Intercreditor Agreement and the Collateral Agency Agreement and
agrees to be bound by the terms thereof. 
Each Lender (and each person that becomes a Lender hereunder pursuant to
Section 10.06) hereby (i) acknowledges that Royal Bank is acting
under the Intercreditor Agreement in multiple capacities as the Administrative
Agent and the Control Agent (as defined in the Intercreditor Agreement) and
(ii) waives any conflict of interest, now contemplated or arising
hereafter, in connection therewith and agrees not to assert against Royal Bank
any claims, cause of action, damages or liabilities of whatever kind or nature
relating thereto.  Each Lender (and each
Person that becomes a Lender hereunder pursuant to Section 10.06)
hereby authorizes and directs Royal Bank to enter into the Intercreditor
Agreement and the Collateral Agency Agreement on behalf of such Lender, and
each such Lender agrees that Royal Bank, in its various capacities, may take
such actions on its behalf as is contemplated by the terms of the Intercreditor
Agreement.

 

SECTION 9.09       No
Other Duties, Etc.  Anything herein
to the contrary notwithstanding, none of the Arranger, Syndication Agent or
other titled entities listed on the cover page hereof shall have any
powers, duties or responsibilities under this Agreement or any of the other
Loan Documents, except in its capacity, as applicable, as the Administrative
Agent, a Lender or an L/C Issuer hereunder.

 

SECTION 9.10       Administrative
Agent May File Proofs of Claim. 
In case of the pendency of any proceeding under any Debtor Relief Law or
any other judicial proceeding relative to any Loan Party, the Administrative
Agent (irrespective of whether the principal of any Loan or L/C Obligation
shall then be due and payable as herein expressed or by declaration or
otherwise and irrespective of whether the Administrative Agent shall have made
any demand on Borrower) shall be entitled and empowered, by intervention in
such proceeding or otherwise:

 

(a)           to
file and prove a claim for the whole amount of the principal and interest owing
and unpaid in respect of the Loans, L/C Obligations and all other Obligations
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders, the L/C Issuers and the
Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders, the L/C Issuers and the
Administrative Agent and their respective agents and counsel and all other
amounts due the Lenders, the L/C Issuers and the Administrative Agent under Sections 2.03(i) and
(j), 2.08 and 10.04) allowed in such judicial proceeding;
and

 

100

 

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

 

and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Lender and each L/C Issuer to make such
payments to the Administrative Agent and, if the Administrative Agent shall
consent to the making of such payments directly to the Lenders and the L/C
Issuers, to pay to the Administrative Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of the Administrative Agent
and its agents and counsel, and any other amounts due the Administrative Agent
under Sections 2.08 and 10.04.

 

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

 

SECTION 9.11       Collateral
and Guaranty Matters.  The Lenders
and the L/C Issuers irrevocably authorize the Administrative Agent at its
option and in its discretion:

 

(a)           to
release any Lien (or to authorize the Collateral Trustee to release any Lien)
on any property granted to or held by or on behalf of the Administrative Agent
or the Collateral Trustee under any Collateral Document (i) upon
termination of the Aggregate Commitments and payment in full of all Obligations
(other than contingent indemnification obligations) and the expiration or
termination of all Letters of Credit, (ii) that is sold or to be sold as
part of or in connection with any sale permitted hereunder or under any other
Loan Document, (iii) in accordance with the terms of the Intercreditor
Agreement or the Collateral Agency Agreement or (iv) if approved,
authorized or ratified in writing in accordance with Section 10.01;

 

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

 

(c)           to
authorize the Collateral Trustee to subordinate any Lien on any property
granted to or held by or on behalf of the Collateral Trustee under any
Collateral Document to the holder of any Lien on such property that is
permitted by Section 7.01(i).

 

Upon request by the Administrative Agent at any time,
the Required Lenders will confirm in writing the Administrative Agent’s
authority to release or subordinate (or authorize the release or subordination
of) its interest (or the interest of the Collateral Trustee, as the case may
be) in particular types or items of property, or to release any Guarantor from
its obligations under the Guaranty pursuant to this Section 9.11.  In each case as specified in this Section 9.11,
the Administrative Agent will, at Borrower’s expense, execute and deliver to
the applicable Loan Party such documents as such Loan Party may reasonably
request to evidence the release of such item of Collateral from the assignment
and security interest granted under the Collateral Documents or to subordinate
its interest in such item, or to release such Guarantor from its

 

101

 

obligations under the
Guaranty, in each case in accordance with the terms of the Loan Documents and
this Section 9.11.

 

ARTICLE X

 

MISCELLANEOUS

 

SECTION 10.01     Amendments,
Etc.  No amendment or waiver of any
provision of this Agreement or any other Loan Document (other than the Loan
Documents referred to in clauses (b), (e), (f), (g), (h) and (i) of
the definition thereof, which may be amended by agreement of the parties
thereto), and no consent to any departure by Borrower or any other Loan Party
therefrom, shall be effective unless in writing signed by the Required Lenders
and Borrower or the applicable Loan Party, as the case may be, and acknowledged
by the Required Lenders (or consented to by the Required Lenders in the case of
the Loan Documents referred to in clause (c) and (d) of the
definition thereof) and by the Administrative Agent, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such
amendment, waiver or consent shall:

 

(a)           waive
any condition set forth in Section 4.01 (other than Section 4.01(b)(i) or
(c)), or, in the case of the initial Credit Extension, Section 4.02,
without the written consent of each Lender;

 

(b)           without
limiting the generality of clause (a) above, waive any condition set
forth in Section 4.02 as to any Credit Extension under the Facility
without the written consent of the Required Lenders;

 

(c)           extend
or increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 8.02) without the written consent of
such Lender;

 

(d)           postpone
any date fixed by this Agreement or any other Loan Document for any payment  (excluding mandatory prepayments) of
principal, interest, fees or other amounts due to the Lenders (or any of them)
hereunder or under such other Loan Document without the written consent of each
Lender entitled to such payment;

 

(e)           reduce
the principal of, or the rate of interest specified herein on, any Loan or L/C
Borrowing, or any fees or other amounts payable hereunder or under any other
Loan Document without the written consent of each Lender entitled to such
amount; provided, however, that only the consent of the Required
Lenders shall be necessary to amend the definition of “Default Rate” or to
waive any obligation of Borrower to pay interest or Letter of Credit Fees at
the Default Rate;

 

(f)            change
Section 8.03 in a manner that would alter the pro rata sharing of
payments required thereby without the written consent of each Lender;

 

(g)           change
any provision of this Section 10.01 or the definition of “Required
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify any rights hereunder or
make any 

 

102

 

determination or grant any consent hereunder, without the written
consent of each Lender;

 

(h)           except
as otherwise provided herein in respect of the release of Collateral, release
any material portion of the Collateral in any transaction or series of related
transactions, without the written consent of each Lender;

 

(i)            release
any material Guarantor from its obligations under the Guaranty, without the
written consent of each Lender, except to the extent the release of any
Subsidiary from the Guaranty is permitted pursuant to Section 9.11
(in which case such release may be made by the Administrative Agent acting
alone); or

 

(j)            amend
any term of the Intercreditor Agreement without the written consent of two or
more unaffiliated Lenders holding more than 662/3% of the sum of the (a) Total Outstandings (with the aggregate
amount of each Lender’s risk participation and funded participation in L/C
Obligations being deemed “held” by such Lender for purposes of this definition)
and (b) aggregate unused Commitments; provided that the unused
Commitment of, and the portion of the Total Outstandings held or deemed held
by, any Defaulting Lender shall be excluded for purposes of making such
determination;

 

(k)           amend
Section 10.06 in a manner that would restrict assignments by any
Lender without the written consent of each Lender;

 

(l)            amend
the definition of “Borrowing Base” (and the defined terms used in such
definitions) without the written consent of each Lender;

 

and provided, further, that (i) no
amendment, waiver or consent shall, unless in writing and signed by the L/C
Issuers in addition to the Lenders required above, affect the rights or duties
of the L/C Issuers under this Agreement or any Issuer Document relating to any
Letter of Credit issued or to be issued by it; (ii) no amendment, waiver
or consent shall, unless in writing and signed by the Administrative Agent in
addition to the Lenders required above, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document; and (iii) the Commitment Letter
may be amended, or rights or privileges thereunder waived, in a writing
executed only by the parties thereto. 
Notwithstanding anything to the contrary herein, the portion of the
Commitment of a Defaulting Lender in respect of which it is in default shall
not be included for the purpose of voting on any amendment, waiver or consent
hereunder, except that in any event the Commitment of such Lender may not be
increased or extended without the consent of such Lender.

 

SECTION 10.02     Notices; Effectiveness; Electronic Communications.

 

(a)           Notices Generally. 
Except in the case of notices and other communications expressly
permitted to be given by telephone (and except as provided in subsection (b) below),
all notices and other communications provided for herein shall be in writing
and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopier as follows, and all notices
and other communications expressly permitted hereunder to be given by telephone
shall be made to the applicable telephone number, as follows:

 

103

 

(i)            if
to Borrower, the Administrative Agent or an L/C Issuer, to the address,
telecopier number, electronic mail address or telephone number specified for
such Person on Schedule 10.02; and

 

(ii)           if
to any other Lender, to the address, telecopier number, electronic mail address
or telephone number specified in its Administrative Questionnaire.

 

Notices sent by hand or overnight courier service, or
mailed by certified or registered mail, shall be deemed to have been given when
received; notices sent by telecopier shall be deemed to have been given when
sent (except that, if not given during normal business hours for the recipient,
shall be deemed to have been given at the opening of business on the next
business day for the recipient).  Notices
delivered through electronic communications to the extent provided in subsection (b) below
shall be effective as provided in such subsection (b).

 

(b)           Electronic Communications.  Notices and other communications to the
Lenders and the L/C Issuers hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by the Administrative Agent, provided
that the foregoing shall not apply to notices to any Lender or any L/C Issuer
pursuant to Article II if such Lender or such L/C Issuer, as
applicable, has notified the Administrative Agent that it is incapable of
receiving notices under such Article by electronic communication.  The Administrative Agent or Borrower may, in
its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it, provided
that approval of such procedures may be limited to particular notices or
communications.

 

Unless the Administrative Agent otherwise prescribes, (i) notices
and other communications sent to an e-mail address shall be deemed received
upon the sender’s receipt of an acknowledgement from the intended recipient
(such as by the “return receipt requested” function, as available, return
e-mail or other written acknowledgement), provided that if such notice
or other communication is not sent during the normal business hours of the
recipient, such notice or communication shall be deemed to have been sent at
the opening of business on the next business day for the recipient, and (ii) notices
or communications posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (i) of notification that
such notice or communication is available and identifying the website address
therefore.

 

(c)           The Platform. 
THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.”  THE AGENT PARTIES (AS DEFINED BELOW) DO NOT
WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY
OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS
FROM THE BORROWER MATERIALS.  NO WARRANTY
OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY
AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM.  In no event shall the Administrative Agent or
any of its Related Parties (collectively, the “Agent Parties”) have any
liability to

 

104

 

Borrower, any Lender, any L/C Issuer or any
other Person for losses, claims, damages, liabilities or expenses of any kind
(whether in tort, contract or otherwise) arising out of Borrower’s or the
Administrative Agent’s transmission of Borrower Materials through the Internet,
except to the extent that such losses, claims, damages, liabilities or expenses
are determined by a court of competent jurisdiction by a final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Agent Party; provided, however, that in no event shall any
Agent Party have any liability to Borrower, any Lender, any L/C Issuer or any
other Person for indirect, special, incidental, consequential or punitive
damages (as opposed to direct or actual damages).

 

(d)           Change of Address, Etc.  Each of Borrower, the Administrative Agent
and the L/C Issuers may change its address, telecopier or telephone number for
notices and other communications hereunder by notice to the other parties
hereto.  Each other Lender may change its
address, telecopier or telephone number for notices and other communications
hereunder by notice to Borrower, the Administrative Agent and the L/C Issuers.  In addition, each Lender agrees to notify the
Administrative Agent from time to time to ensure that the Administrative Agent
has on record (i) an effective address, contact name, telephone number,
telecopier number and electronic mail address to which notices and other
communications may be sent and (ii) accurate wire instructions for such
Lender.  Furthermore, each Public Lender
agrees to cause at least one individual at or on behalf of such Public Lender
to at all times have selected the “Private Side Information” or similar
designation on the content declaration screen of the Platform in order to
enable such Public Lender or its delegate, in accordance with such Public
Lender’s compliance procedures and applicable Law, including United States
Federal and state securities Laws, to make reference to Borrower Materials that
are not made available through the “Public Side Information” portion of the
Platform and that may contain material non-public information with respect to
Borrower or its securities for purposes of United States Federal or state
securities laws.

 

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

 

SECTION 10.03     No
Waiver; Cumulative Remedies.  No
failure by any Lender, any L/C Issuer or the Administrative Agent to exercise,
and no delay by any such Person in exercising, any right, remedy, power or
privilege hereunder or under any other Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and

 

105

 

privileges herein provided, and provided under each other Loan
Document, are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

 

SECTION 10.04     Expenses; Indemnity; Damage Waiver.

 

(a)           Costs and Expenses. 
Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent and its Affiliates (including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent), in connection with the syndication of the credit facilities provided
for herein, the preparation, negotiation, execution, delivery and
administration of this Agreement and the other Loan Documents or any
amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated and as contemplated by the Commitment Letter), (ii) all
reasonable out-of-pocket expenses incurred by the applicable L/C Issuer in
connection with the issuance, amendment, renewal or extension of any Letter of
Credit or any demand for payment thereunder and (iii) all reasonable
out-of-pocket expenses incurred by the Administrative Agent, any Lender or any
L/C Issuer (including the reasonable fees, charges and disbursements of any
counsel for the Administrative Agent, any Lender or any L/C Issuer), and shall
pay all fees and time charges for attorneys who may be employees of the
Administrative Agent, any Lender or any L/C Issuer, in connection with the
enforcement or protection of its rights (A) in connection with this
Agreement and the other Loan Documents, including its rights under this
Section, or (B) in connection with Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.

 

(b)           Indemnification by Borrower.  Borrower shall indemnify the Administrative
Agent (and any sub-agent thereof), each Lender and each L/C Issuer, and each
Related Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and
all losses, claims, damages, liabilities and related expenses (including the
reasonable fees, charges and disbursements of any counsel for any Indemnitee),
and shall indemnify and hold harmless each Indemnitee from all fees and time
charges and disbursements for attorneys who may be employees of any Indemnitee,
incurred by any Indemnitee or asserted against any Indemnitee by any third
party or by Borrower or any other Loan Party arising out of, in connection
with, or as a result of (i) the execution or delivery of this Agreement, any
other Loan Document or any agreement or instrument contemplated hereby or
thereby, the performance by the parties hereto of their respective obligations
hereunder or thereunder or the consummation of the transactions contemplated
hereby or thereby, or, in the case of the Administrative Agent (and any
sub-agent thereof) and its Related Parties only, the administration of this
Agreement and the other Loan Documents, (ii) any Loan or Letter of Credit
or the use or proposed use of the proceeds therefrom (including any refusal by
the applicable L/C Issuer to honor a demand for payment under a Letter of
Credit if the documents presented in connection with such demand do not strictly
comply with the terms of such Letter of Credit), (iii) any actual or
alleged presence or release of Hazardous Materials on or from any property
owned or operated by Borrower or any of its Subsidiaries, or any Environmental
Liability related in any way to Borrower or any of its Subsidiaries, or (iv) any
actual or prospective claim, litigation, investigation or proceeding relating
to any of the foregoing, whether based on contract, tort or any other theory,
whether brought by a third party or by Borrower or any other Loan Party or any
of Borrower’s or such Loan Party’s directors,

 

106

 

shareholders or creditors, and regardless of
whether any Indemnitee is a party thereto; provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses (x) are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted primarily from the gross negligence or willful misconduct of such
Indemnitee or (y) result from a claim brought by Borrower or any other
Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s
obligations hereunder or under any other Loan Document, if Borrower or such
Loan Party has obtained a final and nonappealable judgment in its favor on such
claim as determined by a court of competent jurisdiction.

 

(c)           Reimbursement by Lenders.  To the extent that Borrower for any reason
fails to indefeasibly pay any amount required under subsection (a) or
(b) of this Section to be paid by it to the Administrative Agent (or
any sub-agent thereof), the L/C Issuers or any Related Party of any of the
foregoing, each Lender severally agrees to pay to the Administrative Agent (or
any such sub-agent), the applicable L/C Issuer or such Related Party, as the case
may be, such Lender’s Applicable Percentage (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount, provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred
by or asserted against the Administrative Agent (or any such sub-agent) or the
applicable L/C Issuer in its capacity as such, or against any Related Party of
any of the foregoing acting for the Administrative Agent (or any such
sub-agent) or the applicable L/C Issuer in connection with such capacity.  The obligations of the Lenders under this
subsection (c) are subject to the provisions of Section 2.11(d).

 

(d)           Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable
law, Borrower shall not assert, and Borrower hereby waives, any claim against
any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any
other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or Letter of Credit or
the use of the proceeds thereof.  No
Indemnitee referred to in subsection (b) above shall be liable for
any damages arising from the use by unintended recipients of any information or
other materials distributed to such unintended recipients by such Indemnitee
through telecommunications, electronic or other information transmission
systems in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby other than for direct or actual
damages resulting from the gross negligence or willful misconduct of such
Indemnitee as determined by a final and nonappealable judgment of a court of
competent jurisdiction.

 

(e)           Payments. 
All amounts due under this Section shall be payable promptly after
demand therefore.

 

(f)            Survival. 
The agreements in this Section shall survive the resignation of the
Administrative Agent and any L/C Issuer, the replacement of any Lender, the
termination of the Aggregate Commitments and the repayment, satisfaction or
discharge of all the other Obligations.

 

107

 

SECTION 10.05     Payments
Set Aside.  To the extent that any
payment by or on behalf of Borrower is made to the Administrative Agent, any
L/C Issuer or any Lender, or the Administrative Agent, any L/C Issuer or any
Lender exercises its right of setoff, and such payment or the proceeds of such
setoff or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent, such L/C Issuer or such
Lender in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any proceeding under any Debtor Relief Law or
otherwise, then (a) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such setoff had
not occurred, and (b) each Lender and each L/C Issuer severally agrees to
pay to the Administrative Agent upon demand its applicable share (without
duplication) of any amount so recovered from or repaid by the Administrative
Agent, plus interest thereon from the date of such demand to the date such
payment is made at a rate per annum equal to the Federal Funds Rate from time
to time in effect.  The obligations of
the Lenders and the L/C Issuers under clause (b) of the preceding
sentence shall survive the payment in full of the Obligations and the
termination of this Agreement.

 

SECTION 10.06     Successors
and Assigns.

 

(a)           Successors and Assigns Generally.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of the Administrative Agent and each Lender
and no Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an assignee in accordance with the provisions of Section 10.06(b),
(ii) by way of participation in accordance with the provisions of Section 10.06(d),
or (iii) by way of pledge or assignment of a security interest subject to
the restrictions of Section 10.06(f) (and any other attempted
assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in subsection (d) of this Section and, to
the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the L/C Issuers and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

 

(b)           Assignments by Lenders.  Any Lender may at any time assign to one or
more assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment(s) and the Loans
(including for purposes of this Section 10.06(b), participations in
L/C Obligations) at the time owing to it); provided that any such
assignment shall be subject to the following conditions:

 

(i)            Minimum
Amounts.

 

(A)          in
the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitment and the Loans at the time owing to it or in the case of an
assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no
minimum amount need be assigned; and

 

108

 

(B)           in
any case not described in subsection (b)(i)(A) of this Section, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the Commitment is not then in effect, the
principal outstanding balance of the Loans of the assigning Lender subject to
each such assignment, determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent or, if
“Trade Date” is specified in the Assignment and Assumption, as of the Trade
Date, shall not be less than $1,000,000, unless each of the Administrative
Agent and, so long as no Event of Default has occurred and is continuing,
Borrower otherwise consents (each such consent not to be unreasonably withheld
or delayed); provided, however, that concurrent assignments to
members of an Assignee Group and concurrent assignments from members of an
Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and
members of its Assignee Group) will be treated as a single assignment for
purposes of determining whether such minimum amount has been met;

 

(ii)           Proportionate
Amounts.  Each partial assignment
shall be made as an assignment of a proportionate part of all the assigning
Lender’s rights and obligations under this Agreement with respect to the Loans
or the Commitment assigned.

 

(iii)          Required
Consents.  No consent shall be
required for any assignment except to the extent required by
subsection (b)(i)(B) of this Section and, in addition:

 

(A)          the
consent of Borrower (such consent not to be unreasonably withheld or delayed)
shall be required unless (1) an Event of Default has occurred and is
continuing at the time of such assignment or (2) such assignment is to a
Lender, an Affiliate of a Lender or an Approved Fund;

 

(B)           the
consent of the Administrative Agent (such consent not to be unreasonably
withheld or delayed) shall be required for any Assignment if such assignment is
to a Person that is not a Lender, an Affiliate of such Lender or an Approved
Fund with respect to such Lender; and

 

(C)           the
consent of each L/C Issuer (such consent not to be unreasonably withheld or
delayed) shall be required for any assignment if such assignment is to a Person
that is not a Lender, an Affiliate of such Lender or an Approved Fund with
respect to such Lender.

 

(iv)          Assignment
and Assumption.  The parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Assumption, together with a processing and recordation fee in the amount of
$3,500; provided, however, that the Administrative Agent may, in
its sole discretion, elect to waive

 

109

 

such processing and recordation fee in the case of any assignment; and provided,
further, that such processing and recordation fee shall be waived in the
case of an assignment to an Affiliate of a Lender.  The assignee, if it is not a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire.

 

(v)           No
Assignment to Borrower.  No such
assignment shall be made to Borrower or any of its Affiliates or Subsidiaries.

 

(vi)          No
Assignment to Natural Persons.  No
such assignment shall be made to a natural person.

 

Subject to acceptance and recording thereof by the
Administrative Agent pursuant to subsection (c) of this Section, from
and after the effective date specified in each Assignment and Assumption, the
assignee thereunder shall be a party to this Agreement and, to the extent of
the interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto) but shall continue to be entitled to the benefits of Sections 3.01,
3.04, 3.05 and 10.04 with respect to facts and
circumstances occurring prior to the effective date of such assignment.  Upon request, Borrower (at its expense) shall
execute and deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance
with Section 10.06(d).

 

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

 

(d)           Participations. 
Any Lender may at any time, without the consent of, or notice to,
Borrower or the Administrative Agent, sell participations to any Person (other
than a natural person or Borrower or any of Borrower’s Affiliates or
Subsidiaries) (each, a “Participant”)
in all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its Commitment and/or the Loans
(including such Lender’s participations in L/C Obligations) owing to it); provided
that (i) such Lender’s obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) Borrower,
the Administrative Agent, the Lenders and the L/C Issuers shall continue to
deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement.

 

110

 

Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, waiver or other
modification described in the first proviso to Section 10.01 that
affects such Participant.  Subject to subsection (e) of
this Section, Borrower agrees that each Participant shall be entitled to the
benefits of Sections 3.01, 3.04 and 3.05  to the same extent as if it were a Lender and had acquired
its interest by assignment pursuant to Section 10.06(b).

 

(e)           Limitations upon Participant Rights.  A Participant shall not be entitled to
receive any greater payment under Section 3.01 or 3.04  than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with Borrower’s prior
written consent.  A Participant that
would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 3.01 unless Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of Borrower, to comply with Section 3.01(e) as though
it were a Lender.

 

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

 

(g)           Electronic Execution of Assignments.  The words “execution,” “signed,” “signature,”
and words of like import in any Assignment and Assumption shall be deemed to
include electronic signatures or the keeping of records in electronic form,
each of which shall be of the same legal effect, validity or enforceability as
a manually executed signature or the use of a paper-based recordkeeping system,
as the case may be, to the extent and as provided for in any applicable law,
including the Federal Electronic Signatures in Global and National Commerce
Act, the New York State Electronic Signatures and Records Act, or any other
similar state laws based on the Uniform Electronic Transactions Act.

 

(h)           Resignation as L/C Issuer after Assignment.  Notwithstanding anything to the contrary
contained herein, if at any time any Lender that is an L/C Issuer assigns all
of its Commitment and Loans pursuant to Section 10.06(b), such
Lender may, upon 30 days’ notice to Borrower and the other Lenders, resign as
an L/C Issuer.  In the event of any such
resignation as L/C Issuer, Borrower shall be entitled to appoint from among the
Lenders a successor L/C Issuer hereunder; provided, however, that
no failure by Borrower to appoint any such successor shall affect the
resignation of such Lender as L/C Issuer. 
If a Lender resigns as an L/C Issuer, it shall retain all the rights,
powers, privileges and duties of an L/C Issuer hereunder with respect to all
Letters of Credit issued by it outstanding as of the effective date of its
resignation as L/C Issuer and all L/C Obligations with respect thereto
(including the right to require the Lenders to make Base Rate Loans or fund
risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)).  Upon the appointment of a successor L/C
Issuer, (a) such successor shall

 

111

 

succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring L/C Issuer and (b) the
successor L/C Issuer shall issue letters of credit in substitution for the
Letters of Credit, if any, outstanding at the time of such succession or make
other arrangements satisfactory to the resigning Lender to effectively assume
the obligations of the resigning Lender with respect to such Letters of Credit.

 

SECTION 10.07     Treatment
of Certain Information; Confidentiality. 
Each of the Administrative Agent, the Lenders and the L/C Issuers agrees
to maintain the confidentiality of the Information (as defined below), except
that Information may be disclosed (a) to its Affiliates and to its and its
Affiliates’ respective partners, directors, officers, employees, agents,
advisors and representatives (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to
the extent requested by any regulatory authority purporting to have
jurisdiction over it (including any self-regulatory authority, such as the
National Association of Insurance Commissioners), (c) to the extent
required by applicable laws or regulations or by any subpoena or similar legal
process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this
Section, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement or (ii) any actual or prospective counterparty (or its advisors)
to any swap or derivative transaction relating to Borrower and its obligations,
(g) with the consent of Borrower, (h) to the extent such Information
(i) becomes publicly available other than as a result of a breach of this
Section or (ii) becomes available to the Administrative Agent, any
Lender, any L/C Issuer or any of their respective Affiliates on a nonconfidential
basis from a source other than Borrower or (i) subject to each such Person
being informed of the confidential nature of the Information and to their
agreement to keep such Information confidential on substantially the same terms
as required by this Section, to (A) an investor or prospective investor in
securities issued by an Approved Fund that also agrees that the Information
shall be used solely for the purpose of evaluating an investment in such
securities issued by the Approved Fund, (B) a trustee, collateral manager,
servicer, backup servicer, noteholder or secured party in securities issued by
an Approved Fund in connection with the administration, servicing and reporting
on the assets serving as collateral for securities issued by an Approved Fund,
or (C) a nationally recognized rating agency that requires access to
information regarding the Loan Parties, the Loans and Loan Documents in
connection with rating issued in respect of securities issued by an Approved
Fund.

 

For purposes of this Section, “Information” means
all information received from any Loan Party or any Subsidiary thereof relating
to any Loan Party or any Subsidiary thereof or their respective businesses,
other than any such information that is available to the Administrative Agent,
any Lender or any L/C Issuer on a nonconfidential basis prior to disclosure by
any Loan Party or any Subsidiary thereof, provided that, in the case of
information received from a Loan Party or any such Subsidiary after the date
hereof, such information is clearly identified at the time of delivery as
confidential.  Any Person required to
maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the

 

112

 

confidentiality of such
Information as such Person would accord to its own confidential information.

 

Each of the Administrative Agent, the Lenders and the
L/C Issuers acknowledges that (a) the Information may include material
non-public information concerning Borrower or a Subsidiary, as the case may be,
(b) it has developed compliance procedures regarding the use of material
non-public information and (c) it will handle such material non-public
information in accordance with applicable Law, including United States Federal
and state securities Laws.

 

Upon the written request of the Borrower to the
Administrative Agent and the respective Lender for information as to such
Lender required by 42 U.S.C § 1320a-3(a)(3), such Lender will provide Borrower,
with a copy to the Agent, with its address and taxpayer identification number
and such other information as is legally required under such section and the
applicable regulations.

 

SECTION 10.08     Right
of Setoff.  If an Event of Default
shall have occurred and be continuing, each Lender, each L/C Issuer and each of
their respective Affiliates is hereby authorized at any time and from time to
time, after obtaining the prior written
consent of the Administrative Agent, to the fullest extent permitted by
applicable law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final, in whatever currency) at any time held
and other obligations (in whatever currency) at any time owing by such Lender,
such L/C Issuer or any such Affiliate to or for the credit or the account of
Borrower against any and all of the obligations of Borrower now or hereafter
existing under this Agreement or any other Loan Document to such Lender or such
L/C Issuer, irrespective of whether or not such Lender or such L/C Issuer shall
have made any demand under this Agreement or any other Loan Document and
although such obligations of Borrower may
be contingent or unmatured or are owed to a branch or office of such Lender or
such L/C Issuer different from the branch or office holding such deposit or
obligated on such indebtedness.  The
rights of each Lender, each L/C Issuer and their respective Affiliates under
this Section are in addition to other rights and remedies (including other
rights of setoff) that such Lender, such L/C Issuer or their respective
Affiliates may have.  Each Lender and
each L/C Issuer agrees to notify Borrower and the Administrative Agent promptly
after any such setoff and application, provided that the failure to give
such notice shall not affect the validity of such setoff and application.  Notwithstanding the provisions of this Section 10.08,
if at any time any Lender, any L/C Issuer or any of their respective Affiliates
maintains one or more deposit accounts for Borrower or any other Loan Party
into which Medicare and/or Medicaid receivables are deposited, such Person
shall waive the right of setoff set forth herein.

 

SECTION 10.09     Interest Rate Limitation. 
Notwithstanding anything to the contrary contained in any Loan Document,
the interest paid or agreed to be paid under the Loan Documents shall not
exceed the maximum rate of non-usurious interest permitted by applicable Law
(the “Maximum Rate”).  If the
Administrative Agent or any Lender shall receive interest in an amount that
exceeds the Maximum Rate, the excess interest shall be applied to the principal
of the Loans or, if it exceeds such unpaid principal, refunded to
Borrower.  In determining whether the
interest contracted for, charged, or received by the Administrative Agent or a
Lender exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than

 

113

 

interest, (b) exclude voluntary prepayments and the effects
thereof, and (c) amortize, prorate, allocate, and spread in equal or
unequal parts the total amount of interest throughout the contemplated term of
the Obligations hereunder.

 

SECTION 10.10     Counterparts; Integration; Effectiveness.  This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts),
each of which shall constitute an original, but all of which when taken
together shall constitute a single contract. 
This Agreement and the other Loan Documents constitute the entire
contract among the parties relating to the subject matter hereof and supersede
any and all previous agreements and understandings, oral or written, relating
to the subject matter hereof.  Except as
provided in Section 4.01, this Agreement shall become effective
when it shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof that, when taken
together, bear the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a
signature page of this Agreement by telecopy or other electronic means of
communication shall be effective as delivery of a manually executed counterpart
of this Agreement.

 

SECTION 10.11     Survival of Representations and Warranties.  All representations and warranties made
hereunder and in any other Loan Document or other document delivered pursuant
hereto or thereto or in connection herewith or therewith shall survive the
execution and delivery hereof and thereof. 
Such representations and warranties have been or will be relied upon by
the Administrative Agent and each Lender, regardless of any investigation made
by the Administrative Agent or any Lender or on their behalf and
notwithstanding that the Administrative Agent or any Lender may have had notice
or knowledge of any Default at the time of any Credit Extension, and shall
continue in full force and effect as long as any Loan or any other Obligation
hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall
remain outstanding.

 

SECTION 10.12     Severability.  If
any provision of this Agreement or the other Loan Documents is held to be
illegal, invalid or unenforceable, (a) the legality, validity and enforceability
of the remaining provisions of this Agreement and the other Loan Documents
shall not be affected or impaired thereby and (b) the parties shall
endeavor in good faith negotiations to replace the illegal, invalid or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable
provisions.  The invalidity of a
provision in a particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

SECTION 10.13     Replacement of Lenders. 
If any Lender requests compensation under Section 3.04, or
if Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 3.01,
any Lender becomes a Non-Consenting Lender (as defined below), or if any Lender
is a Defaulting Lender, then Borrower may, at its sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in, and consents required by, Section 10.06),
all of its interests, rights and obligations under this Agreement and the
related Loan Documents to an assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment), provided
that:

 

114

 

(a)           Borrower
shall have paid to the Administrative Agent the assignment fee specified in Section 10.06(b);

 

(b)           such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and L/C Advances, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder and under the other Loan
Documents (including any amounts under Section 3.05) from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or Borrower (in the case of all other amounts);

 

(c)           in
the case of any such assignment resulting from a claim for compensation under Section 3.04
or payments required to be made pursuant to Section 3.01, such
assignment will result in a reduction in such compensation or payments
thereafter; and

 

(d)           such
assignment does not conflict with applicable Laws.

 

A Lender shall not be required to make any such
assignment or delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling Borrower to require such
assignment and delegation cease to apply.

 

In the event that (i) the Borrower or the
Administrative Agent has requested that the Lenders consent to a departure or
waiver of any provisions of the Loan Documents or agree to any amendment
thereto, (ii) the consent, waiver or amendment in question requires the
agreement of all affected Lenders in accordance with the terms of Section 10.01
and (iii) the Required Lenders have agreed to such consent, waiver or
amendment, then any Lender who does not agree to such consent, waiver or
amendment shall be deemed a “Non-Consenting Lender”.

 

SECTION 10.14     Governing Law; Jurisdiction; Etc.

 

(a)           GOVERNING LAW. 
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK.

 

(b)           SUBMISSION TO JURISDICTION.  BORROWER IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK SITTING IN BOROUGH OF MANHATTAN AND OF THE
UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY
APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER

 

115

 

JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN
ANY OTHER MANNER PROVIDED BY LAW. 
NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY
RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY L/C ISSUER MAY OTHERWISE
HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AGAINST BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.

 

(c)           WAIVER OF VENUE. 
BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO
IN PARAGRAPH (B) OF THIS SECTION. 
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(d)           SERVICE OF PROCESS. 
EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE
MANNER PROVIDED FOR NOTICES IN SECTION 10.02.  NOTHING IN THIS AGREEMENT WILL AFFECT THE
RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW.

 

SECTION 10.15     Waiver of Jury Trial. 
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON 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 THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

 

SECTION 10.16     No Advisory or Fiduciary Responsibility.  In connection with all aspects of each
transaction contemplated hereby (including in connection with any amendment,
waiver or other modification hereof or of any other Loan Document), Borrower
acknowledges and agrees, and acknowledges its Affiliates’ understanding,
that:  (i) (A) the arranging
and other services regarding this Agreement provided by the Administrative
Agent and the Arranger are arm’s-length commercial transactions between
Borrower and its Affiliates, on the one hand, and the Administrative Agent and
the Arranger, on the other hand, (B) Borrower has consulted its own legal,
accounting, regulatory and tax advisors to the extent it has deemed

 

116

 

appropriate, and (C) Borrower is capable of evaluating, and
understands and accepts, the terms, risks and conditions of the transactions
contemplated hereby and by the other Loan Documents; (ii) (A) the
Administrative Agent and the Arranger each is and has been acting solely as a
principal and, except as expressly agreed in writing by the relevant parties,
has not been, is not, and will not be acting as an advisor, agent or fiduciary
for Borrower or any of its Affiliates, or any other Person and (B) neither
the Administrative Agent nor the Arranger has any obligation to Borrower or any
of its Affiliates with respect to the transactions contemplated hereby except
those obligations expressly set forth herein and in the other Loan Documents;
and (iii) the Administrative Agent and the Arranger and their respective
Affiliates may be engaged in a broad range of transactions that involve
interests that differ from those of Borrower and its Affiliates, and neither
the Administrative Agent nor the Arranger has any obligation to disclose any of
such interests to Borrower or any of its Affiliates.  To the fullest extent permitted by law,
Borrower hereby waives and releases any claims that it may have against the
Administrative Agent and the Arranger with respect to any breach or alleged breach
of agency or fiduciary duty in connection with any aspect of any transaction
contemplated hereby.

 

SECTION 10.17     USA PATRIOT Act Notice. 
Each Lender that is subject to the Act (as hereinafter defined) and the
Administrative Agent (for itself and not on behalf of any Lender) hereby
notifies Borrower that pursuant to the requirements of the USA Patriot Act
(Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”),
it is required to obtain, verify and record information that identifies each
Loan Party, which information includes the name and address of each Loan Party and
other information that will allow such Lender or the Administrative Agent, as
applicable, to identify each Loan Party in accordance with the Act.

 

117

 

IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed as of the date first
above written.

 

	
   

  	
  PROSPECT MEDICAL
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel S. Lee

  
	
   

  	
   

  	
  Name: Samuel S. Lee

  
	
   

  	
   

  	
  Title: Chief
  Executive Officer

  

 

[Prospect Medical
Holdings Inc. Credit Agreement]

 

 

	
   

  	
  ROYAL BANK OF CANADA,
  as

  
	
   

  	
  Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ann Hurley

  
	
   

  	
   

  	
  Name: Ann Hurley

  
	
   

  	
   

  	
  Title: Manager,
  Agency

  

 

[Prospect Medical
Holdings Inc. Credit Agreement]

 

 

	
   

  	
  ROYAL BANK OF CANADA,
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gordon MacArthur

  
	
   

  	
   

  	
  Name: Gordon MacArthur

  
	
   

  	
   

  	
  Title:
  Authorized Signatory

  

 

[Prospect Medical
Holdings Inc. Credit Agreement]

 

 

	
   

  	
  JEFFERIES FINANCE LLC,
  as a Lender and Syndication Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ E.J. Hess

  
	
   

  	
   

  	
  Name: E.J. Hess

  
	
   

  	
   

  	
  Title: Managing
  Director

  

 

[Prospect Medical
Holdings Inc. Credit Agreement]

 

 

Schedule 1.01(a)

 

Certain EBITDA Add-Backs

 

For purposes of
calculating Consolidated Leverage Ratio, Consolidated Total Leverage Ratio and
Consolidated Fixed Charge Coverage Ratio, the following add-backs to
Consolidated EBITDA shall be permitted during the noted fiscal quarter:

 

(a) expenses incurred during the fiscal quarter
ending September 30, 2009 for prepayment penalties or premiums in connection
with the prepayment of Indebtedness in such quarter up to an aggregate amount
for all such expenses not to exceed $3,000,000;

 

(b) expenses incurred during the fiscal quarter
ending September 30, 2009 for mark-to-market and breakage costs arising
from the termination of interest hedge agreements in such quarter up to an
aggregate amount for all such expenses not to exceed $15,000,000; and

 

(c) other expenses
incurred during the fiscal quarter ending September 30, 2009 in connection
with the consummation of the Transaction.

 

[Prospect Medical
Holdings Inc. Credit Agreement]

 

 

Schedule 2.01

 

Commitments and Applicable Percentages

 

Lenders and Commitments

 

	
  Name of Lender

  	
   

  	
  Amount of Revolving

  Credit Commitment

  	
   

  	
  Commitment Percentage

  	
   

  
	
  Royal
  Bank of Canada

  	
   

  	
  $

  	
  9,000,000

  	
   

  	
  60

  	
  %

  
	
  Jefferies
  Finance LLC

  	
   

  	
  $

  	
  6,000,000

  	
   

  	
  40

  	
  %

  
	
  Totals

  	
   

  	
  $

  	
  15,000,000

  	
   

  	
  100

  	
  %

  

 

[Prospect Medical
Holdings Inc. Credit Agreement]

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