8-K

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): December 13, 2010

HCP, INC.

(Exact Name of Registrant as Specified in its Charter)

Maryland	1-08895	33-0091377
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
3760 Kilroy Airport Way, Suite 300Long Beach, California		90806
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number including area code: (562) 733-5100

No change since last report

(Former Name or Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01.             Entry Into a Material Definitive Agreement.

Purchase Agreement

On December 13, 2010, HCP, Inc. (the “Company”) entered into a Purchase Agreement (the “Purchase Agreement”) with HCP 2010 REIT LLC, a Delaware limited liability company and an indirect subsidiary of the Company (“Buyer”), HCR ManorCare, Inc., a Delaware corporation (“HCR ManorCare”), HCR Properties, LLC, a Delaware limited liability company and an indirect, wholly owned subsidiary of HCR ManorCare (“PropCo”), and HCR Healthcare, LLC, a Delaware limited liability company and an indirect, wholly owned subsidiary of HCR ManorCare. Pursuant to the terms and subject to the conditions set forth in the Purchase Agreement, Buyer will acquire all of the outstanding interests in PropCo (the “Purchase”).  PropCo, through its subsidiaries, owns 338 post-acute, skilled nursing and assisted living centers (the “Facilities”) principally located in Ohio, Pennsylvania, Florida, Illinois and Michigan.  Following the closing of the Purchase (the “Closing”), the Facilities will be leased to a subsidiary of HCR ManorCare pursuant to a long-term, triple-net master lease (as described below) under which HCR ManorCare will operate the Facilities.  HCR ManorCare is owned by private equity funds managed by The Carlyle Group.

The Purchase Agreement places an enterprise value on PropCo of $6.1 billion.  At the Closing, HCR ManorCare will receive, subject to adjustment, consideration consisting of $852 million of Company common stock, $200 million of cash, the reinvestment of the proceeds from the repayment of the Company’s existing debt investments and the assumption or repayment of $4.6 billion of HCR ManorCare’s debt, including the approximately $1.7 billion of HCR ManorCare’s debt held by the Company.  If the Closing has not occurred prior to April 15, 2011, then the purchase price will decrease by an amount equal to $675,000 multiplied by a fraction (which shall not be greater than one) equal to the gross financing proceeds (including equity and debt) raised by the Company after the date of the Purchase Agreement divided by $4.1 billion for each day thereafter until the Closing.  The Company can elect to fund some or all of the stock portion of the consideration with cash.

In addition, in conjunction with the Purchase and the terms of the Purchase Agreement, the Company will either (i) have the option to purchase a 9.9% equity interest in HCR ManorCare for $95 million at the Closing or (ii) be granted a warrant to purchase a 9.9% equity interest, subject to dilution, in HCR ManorCare exercisable between the second and seventh anniversaries of the consummation of the Closing for $100 million.

The Closing is subject to receipt of regulatory approvals, the completion of a pre-Closing reorganization of HCR ManorCare and its subsidiaries and other customary closing conditions.  The Company expects the Closing to occur in the first quarter of 2011, although there can be no assurance that the Purchase will close or, if it does, when the Closing will occur.

The parties have made customary representations, warranties and convenants to each other in the Purchase Agreement. In addition, subject to certain limitations, the Company and the Stockholders have agreed to indemnify each other for losses arising out of breaches of its representations, warranties and covenants and HCR ManorCare will indemnify the Company against liabilities relating to HCR ManorCare’s pre-closing operations.

2

The Purchase Agreement may be terminated under certain circumstances, including by either party if the consummation of the Purchase has not occurred by June 13, 2011 (subject to extension to September 13, 2011 if all regulatory approvals have not been obtained), by either party if an order is entered prohibiting or disapproving the transaction and the order has become final and non-appealable, by either party upon a material uncured breach by the other party that would cause the closing conditions not to be satisfied, or by HCR ManorCare if the Company fails to consummate the Purchase when all of the conditions to Closing have been satisfied or are capable of being satisfied.

In the event that HCR ManorCare terminates the Purchase Agreement because of the Company’s failure to close the Purchase when all conditions to closing are satisfied or are capable of being satisfied (other than conditions not satisfied because of the Company’s breach or default), then the Company will be required to pay HCR ManorCare $500 million as HCR ManorCare’s sole and exclusive remedy.

The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, which is filed as Exhibit 2.1 hereto and is incorporated herein by reference.

The Purchase Agreement has been provided solely to inform investors of its terms.  The representations, warranties and covenants contained in the Purchase Agreement were made only for the purposes of such agreement and as of specific dates, were made solely for the benefit of the parties to the Purchase Agreement and may be intended not as statements of fact, but rather as a way of allocating risk to one of the parties if those statements prove to be inaccurate.  In addition, such representations, warranties and covenants may have been qualified by certain disclosures not reflected in the text of the Purchase Agreement, and may apply standards of materiality in a way that is different from what may be viewed as material by shareholders of, or other investors in, the Company.  The Company’s shareholders and other investors are not third-party beneficiaries under the Purchase Agreement and sho uld not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or conditions of the Company or any of its subsidiaries or affiliates.

Stockholders Agreement

In connection with the Purchase, the Company entered into a Stockholders Agreement (the “Stockholders Agreement”) with certain stockholders of HCR ManorCare (the “Stockholders”), which will entitle the Stockholders, for so long as they own, in the aggregate, at least 5% of the then-outstanding shares of Company common stock after the Closing, to designate Paul A. Ormond, the Chairman, President and Chief Executive Officer of HCR ManorCare, to serve on the Company’s board of directors.  The Stockholders Agreement also contains customary registration rights provisions relating to resales of the shares of Company common stock issued as consideration in the Purchase.

The foregoing description of the Stockholders Agreement does not purport to be complete and is qualified in its entirety by reference to the Stockholders Agreement, which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.

3

Bridge Facility

On December 13, 2010 (the “Effective Date”), the Company entered into a credit agreement with UBS AG, Stamford Branch, as administrative agent, UBS Securities LLC, as joint lead arranger and joint bookrunner, Citigroup Global Markets Inc., as joint lead arranger and joint bookrunner, Citibank, N.A., as co-syndication agent, Wells Fargo Securities, LLC, as joint lead arranger and joint bookrunner, Wells Fargo Bank, National Association, as co-syndication agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint lead arranger and joint bookrunner, Bank of America, N.A., as co-syndication agent, J.P. Morgan Securities, LLC, as joint lead arranger and joint bookrunner, and JPMorgan Chase Bank, N.A., as co-syndication agent, providing for a 364-day bridge loan facility (the “Bridge Facility”) to the Company in an aggregate amount of up to $3.3 billion upon the terms and co nditions set forth therein.  The Bridge Facility is undrawn today, and the commitments thereunder are available until June 13, 2011, subject to extension until September 13, 2011 if all regulatory approvals under the Purchase Agreement have not been obtained. The commitments (and any outstanding loans) under the Bridge Facility will be reduced (and any outstanding loans shall be required to be prepaid) by an amount equal to the net cash proceeds from any offering of debt or equity securities by the Company after the Effective Date, excluding up to $575 million raised in any equity offering after the Effective Date, and from any asset sale by the Company after the Effective Date, subject to customary exclusions and reinvestment rights, including up to $100 million in asset sales over the term of the Bridge Facility. Proceeds from the Bridge Facility, if drawn, will be used to fund (in part) the consideration for the Purchase, to refinance certain existing indebtedness of the Company and HCR Man orCare and to pay related fees and expenses. 

Availability under the Bridge Facility is subject to the satisfaction of certain conditions precedent including but not limited to (a) the absence of any material adverse effect with respect to the business of HCR ManorCare (defined in a manner consistent with the conditions in the Purchase agreement relating to the absence of a material adverse effect on HCR ManorCare), (b) substantially concurrent consummation of the Purchase and (c) the making of certain representations customary for transactions of this type, including representations with respect to corporate power and authority, enforceability, Federal Reserve margin regulations, and the Investment Company Act.  In addition, the lenders are not obligated to make loans on the Closing if certain events of default have occurred and are continuing that would result in a material adverse effect on the Company (as defined in the Bridge Facil ity). Loans outstanding under the Bridge Facility will bear interest at a rate per annum equal to LIBOR plus a margin ranging from 2.0% to 3.5%. 

The Bridge Facility contains a package of covenants and events of default that is substantially similar to the covenants and events of default in the Company’s existing revolving credit agreement, dated August 1, 2007, with Bank of America, N.A., as administrative agent and the other agents and lenders party thereto.  If an event of default occurs and is continuing under the Bridge Facility, the Company may be required immediately to repay the loans and all other amounts outstanding under the Bridge Facility.  Lenders holding more than 50% of the loans and commitment under the Bridge Facility may elect to accelerate the maturity of the loans outstanding under the Bridge Facility upon the occurrence and during the continuation of an event of default.  Events of default include, but are not limited, to nonpayment of principal when due, nonpayment of interest, fees or other amounts, violat ion of covenants, bankruptcy and a change of control.  The Company’s obligations under the Bridge Facility are senior unsecured obligations of the Company, ranking pari passu with other unsecured, unsubordinated general obligations of the Company.

The foregoing description of the Bridge Facility does not purport to be complete and is qualified in its entirety by reference to the Bridge Facility, which is filed as Exhibit 10.2 hereto and is incorporated herein by reference.

Lease

Immediately after the Closing, certain wholly-owned subsidiaries of PropCo will lease the Facilities to a wholly-owned subsidiary of HCR ManorCare pursuant to a triple-net master lease (the “Master Lease”). All obligations under the Master Lease will be guaranteed by HCR ManorCare with HCR ManorCare being subject to a fixed charge coverage ratio on a debt incurrence basis and dividend payment limitations tied to a fixed charge coverage ratio and a percentage of available cash flow after funding maintenance capital expenditures and mandatory debt amortization.

4

The Facilities will be divided into four pools with initial lease terms of between 13 and 17 years.  HCR ManorCare will have a one-time lease extension option with respect to each pool for varying extension terms which could extend the total lease terms to between 23 and 35 years in length.  The pools are designed to have a comparable mix of Facilities based on location, asset type, and performance.

The Master Lease will provide for minimum rent in the first year of $472.5 million, with minimum rent to increase by 3.5% per year after each of the first five years of the term and by 3% per year for the remaining portion of the initial term.  The minimum rent may also increase by 25% for a period of 18 months in the event that the stockholders of HCR ManorCare elect to sell certain portions of their shares in the Company prior to various fixed dates measured from the commencement date of the Master Lease.  Upon the exercise of an extension option, minimum rent will reset to the greater of fair market value rent or 103% of the minimum rent for the prior year. Thereafter, minimum rent will increase by the greater of the annual increase in the consumer price index or 3%.

The Master Lease is structured so that HCR ManorCare will be responsible for all operating costs associated with the Facilities, including the repayment of taxes, insurance, and all repairs.  HCR ManorCare will also provide indemnities against liabilities associated with the operation of the Facilities.

On an annual basis, HCR ManorCare is required to make capital improvements to the Facilities equal to a minimum of $1,250/bed for the first three years of the Master Lease and a minimum of $800/bed commencing in year four of the Master Lease, subject to annual escalations.  Capital expenditures will be assessed in years 10 and 20 of the Master Lease term with HCR ManorCare being responsible for certain deferred maintenance and capital expenditure requirements based on such assessments.

PropCo will have the right of first refusal to provide sale-leaseback or other financing for any purchase options on facilities HCR ManorCare currently leases, any owned facilities not included in the transaction, and any development projects currently in HCR ManorCare’s pipeline.

Item 7.01.             Regulation FD Disclosure.

On December 13, 2010, the Company issued a press release announcing the Purchase.  A copy of the Company’s press release is furnished as Exhibit 99.1 and is incorporated herein by reference.

The information disclosed under this Item 7.01, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

5

Item 9.01              Financial Statements and Exhibits.

Exhibit No.	Exhibit
2.1	Purchase Agreement, dated as of December 13, 2010, by and among HCP, Inc., HCP 2010 REIT LLC, HCR ManorCare, Inc., HCR Properties, LLC and HCR Healthcare, LLC
10.1	Stockholders Agreement, dated as of December 13, 2010, among HCP, Inc., HCR ManorCare, Inc. and certain stockholders of HCR ManorCare, Inc.
10.2	Credit Agreement, dated as of December 13, 2010, among HCP, Inc., the lending institutions party hereto from time to time, UBS AG, Stamford Branch, as administrative agent, UBS Securities LLC, as joint lead arranger and joint bookrunner, Citibank, N.A., as joint lead arranger and joint bookrunner, Citicorp North America, Inc., as co-syndication agent, Wells Fargo Securities, LLC, as joint lead arranger and joint bookrunner, Wells Fargo Bank, National Association, as co-syndication agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint lead arranger and joint bookrunner, Bank of America, N.A., as co-syndication agent, J.P. Morgan Securities, LLC, as joint lead arranger and joint bookrunner, and JPMorgan Chase Bank, N.A., as co-syndication agent.
99.1	Press Release of HCP, Inc.

6

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	HCP, INC.
	By:	/s/ Thomas M. Herzog
	Name:	Thomas M. Herzog
	Title:	Executive Vice President – Chief
		Financial Officer
Dated: December 14, 2010

7

Exhibit Index

Exhibit No.	Exhibit
2.1	Purchase Agreement, dated as of December 13, 2010, by and among HCP, Inc., HCP 2010 REIT LLC, HCR ManorCare, Inc., HCR Properties, LLC and HCR Healthcare, LLC
10.1	Stockholders Agreement, dated as of December 13, 2010, among HCP, Inc., HCR ManorCare, Inc. and certain stockholders of HCR ManorCare, Inc.
10.2	Credit Agreement, dated as of December 13, 2010, among HCP, Inc., the lending institutions party hereto from time to time, UBS AG, Stamford Branch, as administrative agent, UBS Securities LLC, as joint lead arranger and joint bookrunner, Citibank, N.A., as joint lead arranger and joint bookrunner, Citicorp North America, Inc., as co-syndication agent, Wells Fargo Securities, LLC, as joint lead arranger and joint bookrunner, Wells Fargo Bank, National Association, as co-syndication agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint lead arranger and joint bookrunner, Bank of America, N.A., as co-syndication agent, J.P. Morgan Securities, LLC, as joint lead arranger and joint bookrunner, and JPMorgan Chase Bank, N.A., as co-syndication agent.
99.1	Press Release of HCP, Inc.

8

EX-2.1

Exhibit 2.1

PURCHASE AGREEMENT

BY AND AMONG

HCP, INC.,

HCP 2010 REIT LLC,

HCR MANORCARE, INC.,

HCR PROPERTIES, LLC

AND

HCR HEALTHCARE, LLC

DATED AS OF DECEMBER 13, 2010

TABLE OF CONTENTS

		Page
Article 1. Certain Definitions		5
Article 2. The Closing		20
Section 2.1	Closing Date	20
Article 3. Purchase and Sale of Equity Interests		20
Section 3.1	Purchase and Sale of the PropCo Interests	20
Section 3.2	Payment/Delivery of Purchase Consideration	22
Section 3.3	FIRPTA Certificate	22
Section 3.4	Withholding Rights	22
Section 3.5	Escrowed Shares	22
Section 3.6	Tax Amount and Net Debt Adjustment	22
Section 3.7	Dividends	25
Section 3.8	Purchase and Sale of Company Interests	26
Article 4. Representations and Warranties of the Company		27
Section 4.1	Organization, Standing and Power	27
Section 4.2	Capital Structure; Subsidiaries	28
Section 4.3	Authority; Noncontravention; Consents	30
Section 4.4	Financial Statements; Undisclosed Liabilities	31
Section 4.5	Absence of Certain Changes or Events	32
Section 4.6	Litigation	32
Section 4.7	Properties	32
Section 4.8	Environmental Matters	35
Section 4.9	Affiliate Transactions; Intercompany Liabilities	35
Section 4.10	Employee Benefits	36
Section 4.11	Employment and Labor Matters	37
Section 4.12	Intellectual Property	37
Section 4.13	Taxes	38
Section 4.14	No Brokers	39
Section 4.15	Compliance with Laws; Permits	39
Section 4.16	Contracts	40
Section 4.17	Guarantees; Letters of Credit	42
Section 4.18	Insurance	42
Section 4.19	Required Vote	42
Section 4.20	Solvency	43
Section 4.21	Books and Records	43
Section 4.22	Investment Company Act of 1940	43
Section 4.23	OFAC	43
Article 5. Representations and Warranties of Parent		44
Section 5.1	Organization, Standing and Power	44
Section 5.2	Capital Structure	44
Section 5.3	Authority; Noncontravention; Consents	45
Section 5.4	SEC Filings; Financial Statements	46
Section 5.5	Absence of Certain Changes or Events	47
Section 5.6	Litigation	47
Section 5.7	Affiliate Transactions; Intercompany Liabilities	47
Section 5.8	Taxes	47
Section 5.9	No Brokers	48
Section 5.10	Compliance with Laws; Permits	48
Section 5.11	Contracts	48
Section 5.12	Insurance	49
Section 5.13	Bridge Financing	49
Article 6. Covenants		50
Section 6.1	Conduct of the Company Pending the Closing	50

Section 6.2	Control of Other Party’s Business	52
Section 6.3	Access to Information; Confidentiality	52
Section 6.4	Appropriate Action; Consents; Filings	53
Section 6.5	Certain Notices	53
Section 6.6	Public Announcements	53
Section 6.7	Stock Exchange Listing	54
Section 6.8	Ancillary Agreements	54
Section 6.9	Lease Agreement and Guaranty	54
Section 6.10	Bridge Financing	54
Section 6.11	Cooperation with Financing	56
Section 6.12	Section 16 Matters	57
Section 6.13	Delivery of Financial Statements	57
Section 6.14	Ground Lease Estoppels	58
Section 6.15	Transfer Taxes	58
Section 6.16	Tax Matters.	58
Section 6.17	Formation of New Parties	64
Section 6.18	Distribution of Parent Common Stock	64
Section 6.19	No Solicitation	64
Section 6.20	Title Insurance Coverage	64
Section 6.21	Name Changes	64
Section 6.22	Books and Records	65
Section 6.23	Valuation Opinion	65
Article 7. Closing Conditions		65
Section 7.1	Conditions to Obligations of Each Party Under This Agreement	65
Section 7.2	Additional Conditions to Obligations of Parent and Buyer	65
Section 7.3	Additional Conditions to Obligations of the Company, PropCo and OpCo	66
Article 8. Termination, Amendment and Waiver		68
Section 8.1	Termination	68
Section 8.2	Effect of Termination	69
Section 8.3	Amendment	70
Section 8.4	Waiver	70
Section 8.5	Fees and Expenses	70
Article 9. Indemnification		72
Section 9.1	Survival of Representations, Warranties and Covenants	72
Section 9.2	Indemnification	72
Section 9.3	Indemnification Claim Procedures	74
Section 9.4	Limitations on Indemnification Liability	76
Section 9.5	Mitigation of Damages	78
Section 9.6	Indemnification Escrow Amount	78
Section 9.7	Release of Indemnification Escrow	78
Section 9.8	Tax Indemnification	79
Section 9.9	Indemnification Sole and Exclusive Remedy	79
Article 10. RESERVED		80
Article 11. General Provisions		80
Section 11.1	Notices	80
Section 11.2	Headings	81
Section 11.3	Severability	81
Section 11.4	Entire Agreement	81
Section 11.5	Successors and Assigns	81
Section 11.6	Third Party Beneficiaries	82
Section 11.7	Mutual Drafting	82
Section 11.8	Governing Law; Jurisdiction	82
Section 11.9	Interpretation	83
Section 11.10	Counterparts	84
Section 11.11	Specific Performance	84
Section 11.12	REIT Savings Clause	84

2

EXHIBITS

Exhibit A — Reorganization Agreement

Exhibit B — Stockholders Agreement

Exhibit C — Guaranty of Obligations

Exhibit D — Lease Agreement

Exhibit E — Escrow Agreement

Exhibit F — Form of Warrant

Exhibit G — Terms of HCR ManorCare Equityholders Agreement

Exhibit H — Terms of NewCo 1 LLC Agreement

3

PURCHASE AGREEMENT

This PURCHASE AGREEMENT, dated as of December 13, 2010 (this “Agreement”), by and among HCP, Inc., a Maryland corporation (“Parent”), HCP 2010 REIT LLC, a Delaware limited liability company and an indirect subsidiary of Parent (“Buyer”), HCR ManorCare, Inc., a Delaware corporation (including as converted to a limited liability company pursuant to the Reorganization Agreement, the “Company”), HCR Properties, LLC, a Delaware limited liability company and an indirect, wholly owned subsidiary of the Company (“PropCo”), and HCR Healthcare, LLC, a Delaware limited liability company (“OpCo”).

WHEREAS, concurrently with the execution of this Agreement, the Company and OpCo are entering into that certain Reorganization Agreement, dated as of the date of this Agreement and in the form attached hereto as Exhibit A (the “Reorganization Agreement”), pursuant to which the Company and its Subsidiaries will effect the transactions contemplated in the Reorganization Agreement;

WHEREAS, as of immediately prior to the Closing, Seller shall own all of the Equity Interests of PropCo (the “PropCo Interests”);

WHEREAS, Buyer desires to acquire, and the Company desires to cause Seller to sell, all of the PropCo Interests;

WHEREAS, the respective Boards of Directors (or members, as applicable) of Parent, Buyer, the Company and PropCo have approved and declared advisable the acquisition by Buyer of the PropCo Interests (the “Purchase”) immediately following the consummation of the transactions that the Reorganization Agreement requires to occur prior to the Closing and upon the terms and subject to the conditions of this Agreement and in accordance with the Limited Liability Company Act of the State of Delaware (the “DLLCA”) and the General Corporation Law of the State of Delaware (the “DGCL”);

WHEREAS, the respective Boards of Directors (or members, as applicable) of Parent, Buyer, PropCo and the Company have determined that the Purchase is in furtherance of and consistent with their respective business strategies and is in the best interest of their respective stockholders or unitholders, as the case may be, and prior to the Closing, Seller will have approved this Agreement and the Purchase as the sole holder of the PropCo Interests; and

WHEREAS, concurrently with the execution of this Agreement, Parent and certain holders of the Company Common Stock have entered into that certain Stockholders Agreement, dated the date of this Agreement and in the form attached hereto as Exhibit B (the “Stockholders Agreement”).

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement and intending to be legally bound hereby, the parties hereto agree as follows:

4

Article 1.
Certain Definitions

Capitalized terms when used in this Agreement have the following meanings:

“Action” means any claim, action, suit, audit, assessment, arbitration or inquiry, or any proceeding or investigation, by or before any Governmental Entity.

“Acquisition Transaction” has the meaning set forth in Section 6.19.

“Adjustment Amount” has the meaning set forth in Section 3.6.4.

“Adjustment Excess Dividend Amount” has the meaning set forth in Section 3.7.

“Adjustment Share Number” has the meaning set forth in Section 3.6.5.

“Affiliate” means a person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the first-mentioned person.

“Aggregate Purchase Consideration” has the meaning set forth in Section 3.1.2.1.

“Agreement” has the meaning set forth in the Preamble.

“Ancillary Agreements” means the Reorganization Agreement, the Stockholders Agreement, the Escrow Agreement, the Lease Agreement, the Guaranty, the Warrant (if required under Section 3.8.2) and all other documents required to be delivered on or prior to the Closing Date by any party pursuant to this Agreement or any of the foregoing agreements.

“Assets” means all assets, properties, claims, Contracts and businesses of every kind, character and description, whether real, personal or mixed, tangible or intangible, whether accrued, contingent or otherwise, and wherever located, in each case whether or not recorded or reflected on the books and records or financial statements of any person.

“Audited Financial Statements” has the meaning set forth in Section 4.4.1.

“Auditor” has the meaning set forth in Section 3.6.3.

“Average Parent Common Stock Price” means, with respect to any date, the price equal to the average VWAP per share of Parent Common Stock for a period of ten (10) consecutive trading days ending on such date, subject to appropriate adjustment in respect of any stock split, subdivision, stock dividend, recapitalization or merger (if Parent Common Stock is converted in such merger) involving the Parent Common Stock after the beginning of such period.

“Bad Acts Guaranty” means that certain Guaranty, dated as of December 21, 2007, from HCR ManorCare, Inc. to JPMorgan Chase Bank, N.A., as lender (together with its successors and assigns) under the Mortgage Loan Agreement referred to therein, as amended, restated, replaced, supplemented or otherwise modified from time to time, and (ii) those certain Guarantees, each dated as of December 21, 2007, from HCR ManorCare, Inc. to the applicable

5

lender under each Mezzanine Loan Agreement referred to therein, each as amended, restated, replaced, supplemented or otherwise modified from time to time.

“Base Cash Consideration” has the meaning set forth in Section 3.1.2.2.

“Basket Amount” has the meaning set forth in Section 9.4.2.

“Blue Sky Laws” means state securities or “blue sky” laws.

“Bridge Credit Agreement” has the meaning set forth in Section 5.13.

“Bridge Financing” has the meaning set forth in Section 5.13.

“Business Day” means any day other than a Saturday, Sunday or a day on which banking institutions are generally authorized or required by law to close in the United States or New York, New York.

“Buyer” has the meaning set forth in the Preamble.

“Buyer Certificate” has the meaning set forth in Section 5.1.1.

“Buyer Limited Liability Company Agreement” has the meaning set forth in Section 5.1.2.

“Capital Markets Financing” has the meaning set forth in Section 6.10.

“Carlyle Funds” means Carlyle Partners V MC, L.P., a Delaware limited partnership, Carlyle MC Partners, L.P., a Delaware limited partnership, Carlyle Partners V-A MC, L.P., a Delaware limited partnership, CP V Coinvestment A, L.P., a Delaware limited partnership, and CP V Coinvestment B, L.P., a Delaware limited partnership.

“Cash and Cash Equivalents” of any person as of any date means the cash and cash equivalents, required to be reflected as cash and cash equivalents, on a consolidated balance sheet of such person and its Subsidiaries as of such date prepared in accordance with GAAP, other than any such cash and cash equivalents as to which such person has declared a dividend that has not been paid on or prior to such date; provided, that, for purposes of calculating Closing Date Cash pursuant to Section 3.6.2, Cash and Cash Equivalents shall also include all cash that is restricted pursuant to the REIT Indebtedness so long as, upon payment in full of the applicable REIT Indebtedness, the applicable restrictions would be released effective immediately.

“Cash Consideration” has the meaning set forth in Section 3.1.2.2.

“Closing” has the meaning set forth in Section 2.1.

“Closing Balance Sheet” has the meaning set forth in Section 3.6.2.

“Closing Date” has the meaning set forth in Section 2.1.

“Closing Date Cash” has the meaning set forth in Section 3.6.2.

6

“Closing Date Indebtedness” has the meaning set forth in Section 3.6.2.

“Closing Date Tax Amount” has the meaning set forth in Section 3.6.2.

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

“Company” has the meaning set forth in the Preamble.

“Company Approval” has the meaning set forth in Section 4.19.

“Company Audited Financial Statements” has the meaning set forth in Section 4.4.1.

“Company Bylaws” has the meaning set forth in Section 4.1.2.

“Company Certificate” has the meaning set forth in Section 4.1.1.

“Company Common Stock” has the meaning set forth in Section 4.2.7.

“Company Cure Period” has the meaning set forth in Section 8.1.4.

“Company Employee Plans” means all material written Employee Plans sponsored, maintained, contributed to or required to be contributed to by the Company or any of its Subsidiaries for the benefit of employees of the Company or any of its Subsidiaries and under which the Company or any of its Subsidiaries may have any liability, including any multiemployer plan.

“Company Material Adverse Effect” means any change, event, condition, circumstance or development that, individually or in the aggregate, (a) is or is reasonably likely to be material and adverse to the business, operations or financial condition of the Company and its Subsidiaries, taken as a whole; provided, however, that in no event would any of the following (or the effect of any of the following), alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or will be, a “Company Material Adverse Effect”: (i) any change in applicable Laws or GAAP or any interpretation thereof, (ii) any change in interest rates or economic, political, business or financial market conditions generally, (iii) any change generally affecting any of the industries in which the Company and its Subsidia ries operate or the U.S. economy as a whole, (iv) the announcement or the execution of this Agreement or any change, event or occurrence resulting from, or reasonably necessary for, the taking of any action expressly required by this Agreement (provided that the exclusion set forth in this clause (iv) shall not apply to Section 4.3.2 hereof), (v) any action of, or on behalf of, Parent or any of its Affiliates, (vi) any natural disaster, (vii) any acts of terrorism or war or the outbreak or escalation of hostilities or change in geopolitical conditions or (viii) any failure of the Company or any of its Subsidiaries to meet any projections or forecasts, provided that clause (viii) shall not prevent a determination that any change or effect underlying such failure to meet projections or forecasts has resulted in a Company Material Adverse Effect (to the extent such change or effect is not otherwise excluded from this definition of Company Materia l Adverse Effect); provided, further, however, that with respect to clauses (i), (ii), (iii), (vi) and (vii), such change, effect, event, circumstance, occurrence or state of facts shall be taken into account in the determination of whether or not there has been a “Company Material Adverse

7

Effect” to the extent such circumstance, occurrence or state of facts affects the Company and its Subsidiaries, taken as a whole, in a disproportionate manner relative to other companies operating in the industry in which they operate or (b) could reasonably be expected to materially impair the ability of the Company or its Subsidiaries to timely perform their obligations hereunder or under any Ancillary Agreement or to timely consummate the transactions contemplated by this Agreement or prevent or materially delay the consummation of the transactions contemplated by this Agreement.

“Company Material Contract” has the meaning set forth in Section 4.16.1.

“Company Options” means all unexercised and unexpired options to purchase Company Common Stock.

“Confidentiality Agreement” has the meaning set forth in Section 6.3.2.

“Construction Projects” has the meaning set forth in Section 4.7.5.

“Conversion Approval” has the meaning set forth in Section 4.19.

“Contracts” means any legally binding agreements, contracts, leases, powers of attorney, notes, purchase orders and letters of credit.

“control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of stock or as trustee or executor, by Contract or credit arrangement or otherwise.

“Damages” means any and all losses, damages, costs, expenses, liabilities, Actions, orders, judgments, fines (including interest, penalties and experts’, consultants’ and attorneys’ fees and disbursements and costs of enforcement).

“Deemed Parent Common Stock Price” means, with respect to any date, $33.1399, subject to appropriate adjustment in respect of any stock split, subdivision, stock dividend, recapitalization or merger (if Parent Common Stock is converted in such merger) involving Parent Common Stock after the date of this Agreement, and through the close of business on such date.

“Deferral Conditions” has the meaning set forth in Section 8.1.2.

“Deficit Amount” has the meaning set forth in Section 3.6.5.

“Delayed Closing” has the meaning set forth in Section 2.1.

“Determination Date” has the meaning set forth in Section 3.6.3.

“Distribution of OpCo” means, if applicable, the distribution, prior to the Closing, by NewCo or the applicable Subsidiary of the Company, of the Equity Interests in OpCo pursuant to

8

and in accordance with the Reorganization Transactions set forth in Section 2.04 of the Reorganization Agreement.

“Dividends” means one or more dividends or distributions of cash declared by the Company to the holders of Company Common Stock; provided that the total amount of the Dividends declared between September 30, 2010 and the Closing Date shall not exceed $433,000,000.00.

“DGCL” has the meaning set forth in the Recitals.

“DLLCA” has the meaning set forth in the Recitals.

“Employee Plan” means any pension, retirement, savings, disability, medical, dental, health, life, death benefit,  executive compensation, change of control benefit, savings, group insurance, profit sharing, deferred compensation, equity compensation, bonus, incentive, vacation pay, tuition reimbursement, severance pay, fringe benefit or other employee benefit plan, trust, Contract, agreement, policy or commitment (including any employee benefit plan, as defined in Section 3(3) of ERISA, and any welfare plan as defined in Section 3(1) of ERISA, whether or not covered by ERISA), whether any of the foregoing is funded, insured or self-funded, written or oral.

“Encumbrance” means any pledge, claim, lien, security interest, hypothecation, privilege, charge, option, mortgage, deed of trust, deed to secure debt, claim against title, right-of-way, easement, covenant, condition or restriction, lease, license, right to occupy, right of first refusal or offer or similar preemptive right, encroachment, building or use restriction, conditional sales agreement, license, restriction on transfer of title or voting, or any other encumbrance of any nature whatsoever.

“Environmental Laws” means any federal, state, local or foreign Law, including any judicial or administrative order, consent decree, judgment, stipulation, injunction, permit, authorization, policy, opinion, or agency requirement, in each case having the force and effect of law, relating to the protection of human health or to the pollution, protection, investigation or restoration of the environment, including, without limitation, those relating to the use, handling, presence, transportation, treatment, storage, disposal, Release or threatened Release of Hazardous Materials.

“Environmental Permits” has the meaning set forth in Section 4.8.

“Equity Interest” means any share, capital stock, partnership, member or similar interest in any entity, and any option, warrant, right or security (including debt securities) convertible, exchangeable or exercisable therefor.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

“ERISA Affiliate” has the meaning set forth in Section 4.10.3.

9

“Escrow Account” means the account into which the Escrow Shares and any Escrow Cash shall be deposited by Parent in accordance with the terms of the Escrow Agreement.

“Escrow Agent” has the meaning set forth in Section 3.5.

“Escrow Agreement” has the meaning set forth in Section 3.5.

“Escrow Cash” has the meaning set forth in Section 3.5.

“Escrow Expiration Date” has the meaning set forth in Section 9.7.

“Escrow Property” means the Escrow Shares and the Escrow Cash.

“Escrow Shares” means a number of shares of Parent Common Stock, otherwise issuable as Purchase Consideration, equal to the lesser of (x) the Stock Consideration and (y) the highest whole number that is no greater than (i) the Indemnification Escrow Amount divided by (ii) the Deemed Parent Common Stock Price immediately prior to the Closing.

“Estimated Closing Date Cash” has the meaning set forth in Section 3.6.1.

“Estimated Closing Date Indebtedness” has the meaning set forth in Section 3.6.1.

“Estimated Closing Date Tax Amount” has the meaning set forth in Section 3.6.1.

“Estimated Company Equity Value” has the meaning set forth in Section 3.1.2.4.

“Exchange” means the New York Stock Exchange.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Existing Title Policies” means those certain existing owner’s policies of title insurance from Chicago Title Insurance Company issued on or around the period from December 21, 2007 to January 31, 2008 and insuring the applicable Subsidiaries of PropCo fee simple title or leasehold estates, as the case may be, to REIT Real Property, prior to the date of this Agreement.

“FF&E and Tangible Personal Property” means all furniture, furnishings, fixtures, fittings, rugs, mats, draperies, carpeting, appliances, signage, devices, telephone and other communications equipment, artwork, televisions and other audio and video equipment, computers, electrical, mechanical, HVAC and plumbing fixtures and cabling and other equipment and other tangible personal property located in or used in the operation of the REIT Real Property.

“Final E&P Report” has the meaning set forth in Section 6.16.7.1.

“GAAP” means generally accepted accounting principles as consistently applied in the United States.

10

“Governmental Entity” means any national, federal, state, provincial, municipal, local or foreign government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court, tribunal, arbitrator or self-regulatory organization.

“Ground Leases” has the meaning set forth in Section 4.7.6.

“Guaranty” means the Guaranty of Obligations, in all material respects in the form of Exhibit C, to be executed by the Company immediately following the Closing.

“Hazardous Materials” means substances, wastes, radiation or materials (whether solids, liquids or gases) (i) which have been determined, pursuant to Environmental Law, to be hazardous, toxic, infectious, explosive, radioactive, carcinogenic, or mutagenic, (ii) which are listed, regulated or defined under any Environmental Law, and shall include “hazardous wastes,” “hazardous substances,” “hazardous materials,” “pollutants,” “contaminants,” “toxic substances,” “radioactive materials” or “solid wastes,” (iii) the presence of which on property cause or, in their current form or condition, threaten to cause a nuisance pursuant to applicable Law upon the property or to adjacent properties or (iv) which contain without limitation polychlorinated biphenyls (PCBs), asbestos or asbestos- containing materials, lead-based paints, urea-formaldehyde foam insulation, or petroleum or petroleum products (including crude oil or any fraction thereof).

“HCP Mezzanine Loans” has the meaning set forth in Section 6.10.

“HCR ManorCare Equityholders Agreement” means the equityholders agreement to be entered into by and among the holders of Equity Interests in the Company and NewCo 1 (or, in the event the Company has implemented the transaction contemplated by Schedule 3.8.2 hereto and Section 2.04 of the Reorganization Agreement, the holders of Equity Interests in the Company), which shall be in a form reasonably acceptable to the parties thereto and contain the terms set forth in Exhibit G.

“HCR ManorCare LLC Agreement” means (in the event the Company implements the transactions contemplated by Schedule 3.8.2 hereto and Section 2.04 of the Reorganization Agreement) the limited liability company agreement of the Company, which shall be in a form reasonably acceptable to the parties thereto and contain the terms set forth in Exhibit H.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder.

“Income Taxes” means any federal, state or local Tax based on, measured by, or with respect to income or profits.

“Increase Amount” has the meaning set forth in Section 3.6.5.

“Indebtedness” of any person shall mean (a) (i) indebtedness for borrowed money or for the deferred purchase price of property or services (other than current liabilities for trade payables incurred and payable in the ordinary course of business consistent with past practice), whether secured or unsecured, (ii) obligations under notes, mortgages, bonds, debentures or

11

similar instruments, (iii) obligations under conditional sale or other title retention agreements relating to property purchased by any person (excluding ordinary course accounts payable), (iv) capitalized lease obligations (other than under any existing lease agreements between the OpCo Entities and the REIT Entities or the Lease Agreement), (v) obligations under interest rate cap, swap, collar or similar transaction or currency hedging transaction (valued at the termination value thereof), (vi) all obligations in respect of acceptances, letters of credit, surety bonds or similar facilities issued or created for the account of such person, provided, that, for purposes of calculating Closing Date Indebtedness pursuant to Section 3.6, obligations described in this clause shall be considered but only to the extent reimbursement obligations exist for draws made with respect t hereto prior to Closing, (vii) all obligations payable pursuant to sale-leaseback transactions, (viii) guarantees by such person of obligations described in the foregoing clauses (i)-(vii) of third parties whether or not such person has assumed or otherwise become directly liable for the payment thereof and (ix) any principal, interest (including default interest), premiums, penalties (including prepayment and early termination penalties and default penalties or judgments), breakage fees and other amounts owing in respect of the items described in the foregoing clauses (i) through (viii); and (b) Liabilities of the type required to be reflected or reserved against on a balance sheet of such person in accordance with GAAP, excluding from this clause (b) (for the purposes of calculating Closing Date Indebtedness pursuant to Section 3.6) Liabilities for which Parent is entitled to indemnification, reimbursement or payment under this Agreement or any Ancilla ry Agreement and excluding (for the purposes of calculating Closing Date Indebtedness) Liabilities that are included in the definition of Tax Amount; provided, that, for purposes of calculating Closing Date Indebtedness pursuant to Section 3.6, Indebtedness shall be reduced by (x) any asset balance with respect to accrued interest and (y) any assets with respect to interest rate cap, swap, collar or similar transaction or currency hedging transaction (valued at the termination value thereof), in each case, of the REIT Entities.

“Indebtedness for Borrowed Money” means the items included in clause (a) of the definition of “Indebtedness”.

“Indemnifiable Amount” has the meaning set forth in Section 11.12.

“Indemnification Claim” has the meaning set forth in Section 9.3.1.

“Indemnification Escrow Amount” means an amount equal to $150,000,000.

“Indemnified Party” has the meaning set forth in Section 9.3.1.

“Indemnitor” means the party required to provide indemnification pursuant to Section 9.2; provided, however, that solely for the purposes of Section 9.3 and subject to Section 9.6, OpCo shall be considered the Indemnitor with respect to claims for indemnification pursuant to Section 9.2.1 against the Remaining Escrow Property.

“Insurance Policies” has the meaning set forth in Section 4.18.

“Intellectual Property” means all intellectual property or other proprietary rights of every kind, foreign or domestic, including all patents, patent applications, inventions (whether or not patentable), and all related continuations, continuations-in-part, divisionals, reissues, reexaminations and substitutions thereof, processes, products, technologies, discoveries,

12

copyrights and copyrightable subject matter, apparatus, trade secrets, trademarks, trademark registrations and applications, service marks, service mark registrations and applications, trade names, trade dress and similar designations of source or origin, together with the goodwill symbolized by the foregoing, domain names and other Internet addresses or identifiers, customer lists, confidential marketing and customer information, licenses, trade secrets, know-how, confidential technical information, software, and all documentation thereof, all rights in the foregoing and in other similar intangible assets, all applications and registrations for the foregoing, and any other proprietary or intellectual property rights of any kind or nature.

“IRS” means the United States Internal Revenue Service.

“IRS Ruling” has the meaning set forth in Section 6.16.8.1.

“JPMorgan Entities” has the meaning set forth in Section 8.5.5.

“Knowledge” will be deemed to be present when the matter in question was known, after reasonable inquiry, by the individuals listed on Schedule 1.1 (with respect to the Knowledge of the Company) and Schedule 1.2 (with respect to the Knowledge of Parent).

“Law” means any law, statute, code, ordinance, rule, regulation, order, judgment, writ, stipulation, award, injunction, decree or arbitration award or finding of any Governmental Entity.

“Lease Agreement” means the Master Lease and Security Agreement, in all material respects in the form of Exhibit D, to be entered into between HCR III Healthcare, LLC, as lessee, and the parties contemplated by Exhibit D, as lessors, immediately following the Closing.

“Leased REIT Real Property” has the meaning set forth in Section 4.7.1.

“Lenders” has the meaning set forth in Section 5.13.

“Liabilities” means any and all Indebtedness, liabilities and obligations, whether accrued, fixed or contingent, mature or inchoate, asserted or unasserted, liquidated or unliquidated, known or unknown, reflected on a balance sheet or otherwise.

“Management Equity” has the meaning set forth in Section 3.8.1.2.

“Manor Care” has the meaning set forth in Section 4.2.1.

“Manor Care Bylaws” has the meaning set forth in Section 4.1.2.

“Manor Care Certificate” has the meaning set forth in Section 4.1.1.

“Material Lease” is a lease or sublease that would, if effective after the execution and delivery of the Lease Agreement, be a Material Sublease (as such term is defined in the Lease Agreement).

“NewCo” means a company formed by the Company as a Delaware corporation for the purposes set forth in this Agreement and the Reorganization Agreement and which, prior to the

13

Closing, will convert to a Delaware limited liability company and will be a direct wholly owned Subsidiary of the Company.

“NewCo 1” means a company formed by the Company as a Delaware limited liability company for the purposes set forth in this Agreement and the Reorganization Agreement and which, prior to the Closing, will be a wholly owned Subsidiary of the Company.

“NewCo 1 LLC Agreement” means the limited liability company agreement of NewCo 1, which shall be in a form reasonably acceptable to the parties thereto and contain the terms set forth in Exhibit H.

“NewCo 3” means a company to be formed by the Company as a Delaware limited liability company following the date of this Agreement for the purposes set forth in this Agreement and the Reorganization Agreement and which, prior to the Closing, (i) will own the OpCo Interests and (ii) will be an indirect wholly owned Subsidiary of NewCo 1.

“New Commitment” has the meaning set forth in Section 6.10.

“New Title Insurance Policies” has the meaning set forth in Section 6.20.

“OpCo” has the meaning set forth in the Recitals.

“OpCo Business” means the businesses of the Company and its Subsidiaries other than the REIT Business.

“OpCo Entities” has the meaning set forth in the Reorganization Agreement.

“OpCo FF&E and Tangible Personal Property” has the meaning set forth in Section 4.7.7.

“OpCo Interest Election” has the meaning set forth in Section 3.8.1.1.

“OpCo Subsidiaries” means the Subsidiaries of OpCo.

“Outside Date” has the meaning set forth in Section 8.1.2.

“Parent” has the meaning set forth in the Preamble.

“Parent Bylaws” has the meaning set forth in Section 5.1.2.

“Parent Certificate” has the meaning set forth in Section 5.1.1.

“Parent Common Stock” means the common stock, par value $1.00 per share, of Parent.

“Parent Cure Period” has the meaning set forth in Section 8.1.5.

“Parent Financial Statements” has the meaning set forth in Section 5.4.2.

“Parent Financial Statement Date” has the meaning set forth in Section 5.5.

14

“Parent Indemnified Parties” has the meaning set forth in Section 9.2.1.

“Parent Material Adverse Effect” means any change, event, condition, circumstance or development that, individually or in the aggregate, (a) is or is reasonably likely to be material and adverse to the business, operations or financial condition of Parent and its Subsidiaries, taken as a whole; provided, however, that in no event would any of the following (or the effect of any of the following), alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or will be, a “Parent Material Adverse Effect”: (i) any change in applicable Laws or GAAP or any interpretation thereof, (ii) any change in interest rates or economic, political, business or financial market conditions generally, (iii) any change generally affecting any of the industries in which Parent or its Subsidiaries operates or the U.S. economy as a whole, (iv) the announcement or the execution of this Agreement or any change, event or occurrence resulting from, or reasonably necessary for, the taking of any action expressly required by this Agreement (provided that the exclusion set forth in this clause (iv) shall not apply to Section 5.3.2 hereof), (v) any action of, or on behalf of, the Company or any of its Affiliates, (vi) any natural disaster, (vii) any acts of terrorism or war or the outbreak or escalation of hostilities or change in geopolitical conditions or (viii) any failure of Parent or its Subsidiaries to meet any projections or forecasts, provided that clause (viii) shall not prevent a determination that any change or effect underlying such failure to meet projections or forecasts has resulted in a Parent Material Adverse Effect (to the extent such change or effect is not otherwise excluded from this definition of Parent Material Adverse Effect); prov ided, further, however, that with respect to clauses (i), (ii), (iii), (vi) and (vii), such change, effect, event, circumstance, occurrence or state of facts shall be taken into account in the determination of whether or not there has been a “Parent Material Adverse Effect” to the extent such circumstances, occurrence or state of facts affects Parent and its Subsidiaries taken as a whole, in a materially disproportionate manner relative to other companies operating in the industry in which they operate or (b) could reasonably be expected to materially impair the ability of Parent or its Subsidiaries to timely perform their obligations hereunder or under any Ancillary Agreement or to timely consummate the transactions contemplated by this Agreement or prevent or materially delay the consummation of the transactions contemplated by this Agreement.

“Parent Material Contract” means each Contract or agreement in effect as of the date of this Agreement to which Parent or any of its Subsidiaries is a party that is required to be filed as an exhibit to the Parent SEC Documents pursuant to Items 601(b)(2), (4), (9) or (10) of Regulation S-K of 17 C.F.R. Part 229).

“Parent OpCo Interest” has the meaning set forth in Section 3.8.1.2.

“Parent Preferred Stock” has the meaning set forth in Section 5.2.1.

“Parent SEC Documents” has the meaning set forth in Section 5.4.1.

“Parent Termination Fee” has the meaning set forth in Section 8.5.1.

“Payoff Letter” means one or more payoff letters in customary form reflecting all amounts required to be paid under, or in connection with, Indebtedness for Borrowed Money outstanding under the Indebtedness for Borrowed Money of REIT Entities (other than any such

15

Indebtedness for Borrowed Money that Parent has notified the Company it intends to have assumed or remain outstanding), to (i) discharge such Indebtedness for Borrowed Money in full, including any penalties, default judgments or otherwise or any other obligation on behalf of the REIT Entities in respect of such Indebtedness for Borrowed Money and (ii) release all Encumbrances on the REIT Entities with respect to such Indebtedness for Borrowed Money.

“Pending Claim” has the meaning set forth in Section 9.7.

“Per-Claim Basket” has the meaning set forth in Section 9.4.2.

“Permits” has the meaning set forth in Section 4.15.

“Permitted Encumbrances” means (i) Encumbrances for current Taxes (A) not yet due and payable or (B) the validity or amount of which is being contested in good faith in appropriate proceedings and for which, in the case of clause (B), the OpCo Entities have adequate reserves in accordance with GAAP; (ii) Encumbrances for Indebtedness for Borrowed Money, including the REIT Indebtedness, all of which shall be satisfied in full and released at or prior to Closing (subject only to required ministerial filings necessary to satisfy in full and release such Encumbrances following Closing), except to the extent Parent elects to retain any or all of the REIT Indebtedness and as a result, elects not to have the PropCo Entities pay the entire amounts required by the Payoff Letter related to such retained REIT Indebtedness; (iii) Encumbrances, rights or obl igations created by or resulting from the acts or omission of Parent, Buyer or any of their Affiliates and their respective lenders, employees, officers, directors, agents, representatives, contractors, invitees or licensees or any person claiming by, through or under any of the foregoing; (iv) Encumbrances created by (A) any of the existing leases or subleases between the REIT Entities and the OpCo Entities, all of which shall be terminated at Closing or (B) any of the documents to be executed in connection with this Agreement or any of the Ancillary Agreements; (v) Encumbrances disclosed in the Existing Title Policies made available to Parent, but which, individually or in the aggregate, do not interfere in any material respect with the current use, occupancy or operation of such REIT Facility and which do not materially reduce the value thereof and expressly excluding any Encumbrances set forth thereon which secure Indebtedness; (vi) any Encumbrance for which either title insuranc e coverage (included in the Existing Title Policies or otherwise in connection with the New Title Insurance Policies) or an indemnification reasonably satisfactory to Parent and Buyer has been obtained; (vii) any other restrictions on land use promulgated by Law (including zoning and building Laws and related regulations); (viii) any mechanic’s, workmen’s, repairmen’s, carrier’s, warehousemen’s or other like liens (A) which do not secure any Indebtedness for Borrowed Money, (B) for amounts not yet due or (C) which are being contested in good faith (if then appropriate) and by appropriate proceedings for which the OpCo Entities have adequate reserves in accordance with GAAP and which do not place such encumbered property, or any part or interest therein, in any danger of being sold, forfeited, attached or lost pending the outcome of such proceeding; (ix) Permitted Lease Agreement Subleases; (x) any landlord liens which are permitted pursuant to the t erms of the applicable Ground Lease or otherwise in place as of the date hereof; and (xi) any Encumbrances which are not otherwise included under clauses (i) through (x) of this definition, but which, individually or in the aggregate, do not interfere in any material respect with the current use, occupancy or operation of such REIT Facility and which do not materially reduce the value thereof.

16

“Permitted Lease Agreement Sublease” has the meaning set forth in Section 4.7.1.

“person” means an individual, corporation, limited liability company, partnership, association, trust, unincorporated organization, other entity or group (as defined in Section 13(d) of the Exchange Act).

“Pre-Closing Excess Dividend Amount” has the meaning set forth in Section 3.7.

“Pre-Closing Tax Period” means any Tax period ending on or before the Closing Date.

“PropCo” has the meaning set forth in the preamble.

“PropCo Audited Financial Statements” has the meaning set forth in Section 4.4.1.

“PropCo Audited 2010 Financial Statements” has the meaning set forth in Section 6.13.

“PropCo Certificate” has the meaning set forth in Section 4.1.1.

“PropCo Interests” has the meaning set forth in the Recitals.

“PropCo LLC Agreement” means the Amended and Restated Limited Liability Company agreement of PropCo, dated as of December 21, 2007.

“Purchase” has the meaning set forth in the Recitals.

“Purchase Consideration” has the meaning set forth in Section 3.1.2.6.

“Qualifying Income” has the meaning set forth in Section 11.12.

“Reference Balance Sheet” has the meaning set forth in Section 4.4.2.

“Reference Balance Sheet Date” has the meaning set forth in Section 4.5.

“REIT Assets” means the Assets of the REIT Entities.

“REIT Business” means the business of owning the REIT Real Property as of, or prior to, the Closing, but excluding the business of operating the REIT Facilities.

“REIT Entities” means PropCo and its Subsidiaries.

“REIT Facilities” means those Senior Living Facilities directly or indirectly owned, leased or subleased by any of REIT Entities.

“REIT Indebtedness” means the Indebtedness of the REIT Entities set forth on Schedule 1.3.

“REIT Real Property” means all Real Property of the REIT Entities.

“REIT Subsidiaries” means the Subsidiaries of PropCo.

17

“Real Property” means all land, buildings and other structures, facilities or improvements located thereon, all fixtures permanently affixed thereto, and all easement, licenses, rights, hereditaments and appurtenances related to the foregoing.

“REIT Requirements” has the meaning set forth in Section 11.12.

“Release” means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching, or migration at, into or onto the environment, including movement or migration through or in the environment, or any release, emission or discharge as those terms are defined in any applicable Environmental Law.

“Remaining Escrow Property” means, at any given time after Closing, the Escrow Property then held by the Escrow Agent in accordance with the Escrow Agreement (and, in the case of Escrow Shares, any securities issued to the Escrow Agent in respect of such shares in connection with any stock split, dividend or combination, or any reclassification, recapitalization, merger, consolidation, exchange or other similar reorganization).

“Reorganization Agreement” has the meaning set forth in the Recitals.

“Reorganization Transactions” has the meaning set forth in the Reorganization Agreement.

“Sarbanes-Oxley Act” has the meaning set forth in Section 5.4.1.

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Seller” means a company to be incorporated as a Delaware corporation following the date of this Agreement and which, prior to Closing will own the PropCo Interests and will convert into a limited liability company pursuant to the DGCL and the DLLCA and will be a direct or indirect, wholly owned Subsidiary of the Company.

“Seller Indemnified Parties” has the meaning set forth in Section 9.2.2.

“Senior Living Facility” means an independent living, assisted living, skilled nursing, or other similar facility.

“Series E Preferred Stock” has the meaning set forth in Section 5.2.1.

“Series F Preferred Stock” has the meaning set forth in Section 5.2.1.

“Specified Person” has the meaning set forth in Section 8.5.2.

“Stock Consideration” has the meaning set forth in Section 3.1.2.7.

“Stock Replacement Adjustment Cash” has the meaning set forth in Section 3.6.5.

18

“Stock Replacement Cash Consideration” has the meaning set forth in Section 3.1.2.3.

“Stockholders Agreement” has the meaning set forth in the Recitals.

“Straddle Period” means any taxable period that includes but does not end on the Closing Date.

“Subsidiary” or “Subsidiaries” of any person means any corporation, partnership, joint venture or other legal entity of which such person, as the case may be (either alone or through or together with any other subsidiary), owns, directly or indirectly, a majority of the stock or other Equity Interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity.  For the avoidance of doubt, references to subsidiaries of the Company shall include, when formed, Seller, and any other entities formed by the Company or one of its Subsidiaries after the date hereof and prior to the Closing (including any entities formed pursuant to the Reorganization  Agreement), that are Subsidiaries pursuant the preceding sentence.

“Survival Expiration Date” has the meaning set forth in Section 9.1.

“Tax Amount” means accrued for tax purposes and unpaid (i) Income Taxes and (ii) gross receipts, franchise, value added, commercial activities and capital Taxes, in each case, of the Company and its Subsidiaries with respect to Tax periods (or portions of Straddle Periods) ending on or before the Closing Date.

“Tax Proceeding” means any audit, assessment, proposed adjustment, notice of deficiency, litigation, dispute or other proceeding with respect to Taxes.

“Tax Returns” means any report, return, document, declaration or other information or filing supplied or required to be supplied to any taxing authority, jurisdiction (foreign or domestic) or other person with respect to Taxes, including any schedule or attachment thereto and any amendment thereof, any information returns, any documents with respect to or accompanying payments of estimated Taxes, or with respect to or accompanying requests for the extension of time in which to file any such report, return, document, declaration or other information.

“Taxes” means (A) all taxes, charges, fees, levies and other assessments, including income, gross receipts, excise, real or personal property, sales, withholding (including dividend withholding and withholding required pursuant to Sections 1441, 1442, 1445 and 1446 of the Code), social security, occupation, use, service, license, payroll, franchise, escheat, unclaimed property, transfer and recording taxes, fees and charges, including estimated taxes, imposed by the United States or any taxing authority (domestic or foreign), whether computed on a separate, consolidated, unitary, combined or any other basis, and any interest, fines, penalties or additional amounts attributable to, or imposed upon, or with respect to any such taxes, charges, fees, levies or other assessments and (B) any liability for amounts described in clause (A) of another person under Tre asury Regulation Section 1.1502-6 (or any similar provision of Law), as a result of transferee liability, by Law, by Contract or otherwise.

“Terminating Company Breach” has the meaning set forth in Section 8.1.4.

19

“Terminating Parent Breach” has the meaning set forth in Section 8.1.5.

“Transfer Taxes” has the meaning set forth in Section 6.15.

“Unaudited Q1 2011 Financial Statements” has the meaning set forth in Section 6.13.

“Valuation Opinion” has the meaning set forth in Section 3.6.6.

“VWAP” per share of Parent Common Stock on any trading day means the per share volume-weighted average price of the Parent Common Stock as displayed under the heading Bloomberg VWAP on Bloomberg (or, if Bloomberg ceases to publish such price, any successor service reasonably chosen by Parent) page “HCP.N<Equity> VAP” (or the equivalent successor if such page is not available), in respect of the period from the open of trading on the relevant trading day until the close of trading on such trading day (or if such volume-weighted average price is unavailable, the market price of one share of Parent Common Stock on such trading day determined, using a volume-weighted average method, by a nationally recognized investment banking firm (unaffiliated with Parent or the Company) retained for this purpose by the Company).

Article 2.
The Closing

Section 2.1Closing Date.  Subject to the terms and conditions of this Agreement, the closing of the Purchase (the “Closing”) shall take place at the offices of Latham & Watkins LLP, 885 Third Avenue, New York, NY 10022, at 10:00 a.m. on the date that is three (3) Business Days after the date on which all conditions set forth in Article 7 shall have been satisfied or waived (other than those conditions that by their terms are to be satisfied at the Closing) or such other time and place as Parent and the Company may mutually agree; provided, that Parent may, by written notice to the Company at least two (2) Business Days prior to the then-scheduled Closing Date, defer the Closing by up to (but not more than) twenty (20) Business Days (such deferred Closing, a “Delayed Closing”) as necessary to enable the Closing to coincide with the closing of the Capital Markets Financing and/or the Bridge Financing; provided, further, however, that the date of the Delayed Closing shall not be deferred later than the Outside Date.  The “Closing Date” shall mean the date on which the Closing occurs.

Article 3.
Purchase and Sale of Equity Interests

Section 3.1Purchase and Sale of the PropCo Interests.

Section 3.1.1Generally.

Section 3.1.1.1Upon the terms and subject to satisfaction or waiver of the conditions set forth in this Agreement, at the Closing, Seller will sell, transfer and deliver to Buyer, and Buyer will purchase from Seller, the PropCo Interests, free and clear of all Encumbrances.

20

Section 3.1.1.2Effective as of the Closing, Seller hereby withdraws as a member of PropCo, and Buyer hereby consents to and approves such withdrawal.  Following the Closing, Seller shall not be subject to any of the terms or provisions of the PropCo LLC Agreement.

Section 3.1.1.3Buyer shall, effective as of the Closing, amend the PropCo LLC Agreement to reflect Buyer as the sole member of PropCo and to make such other amendments to the PropCo LLC Agreement as it determines in its sole discretion.

Section 3.1.2Purchase Consideration Definitions.  For the purposes of this Agreement:

Section 3.1.2.1“Aggregate Purchase Consideration” means the aggregate amount of consideration payable under this Agreement to Seller or the Company or their respective successors, designees or permitted assignees;

Section 3.1.2.2“Cash Consideration” means (i) $200,000,000.00 plus the excess, if any, of the Estimated Company Equity Value over $1,052,000,000.00 (the “Base Cash Consideration”), plus (ii) the Stock-Replacement Cash Consideration, if any, plus the Pre-Closing Excess Dividend Amount, if any;

Section 3.1.2.3“Stock-Replacement Cash Consideration” means, at the written election of Parent in its sole discretion (which election shall be delivered to the Company no less than two (2) Business Days prior to the Closing Date), any cash amount specified in Parent’s written notice to the Company of such election;

Section 3.1.2.4“Estimated Company Equity Value” means $6,100,000,000.00 minus (i) the Estimated Closing Date Tax Amount, minus (ii) the Estimated Closing Date Indebtedness, plus (iii) the Estimated Closing Date Cash, minus (iv) if the Closing Date is after April 15, 2011, the sum of the Daily Carrying Costs for each calendar day during the period beginning on, and including, April 16, 2011 and ending on, and including, the Closing Date.

Section 3.1.2.5“Daily Carrying Cost” means, for each calendar day during the period, if any, beginning on, and including, April 16, 2011 and ending on, and including, the Closing Date, the cash amount equal to $675,000.00 multiplied by the lesser of (i) one (1); and (ii) that fraction the numerator of which is the sum of all financing gross proceeds (including proceeds from both debt and equity financings) raised by Parent after the date of this Agreement through and including such date, and the denominator of which is $4,100,000,000.00.

Section 3.1.2.6“Purchase Consideration” means the Cash Consideration and the Stock Consideration; and

Section 3.1.2.7“Stock Consideration” means a number of fully paid and non-assessable shares of Parent Common Stock equal to the quotient of (i) the Estimated Company Equity Value, minus the amount equal to the sum of the Base Cash

21

Consideration and the Stock-Replacement Cash Consideration divided by (ii) the Deemed Parent Common Stock Price immediately prior to the Closing.

Section 3.2Payment/Delivery of Purchase Consideration.  At the Closing, Buyer shall, and Parent shall cause Buyer to, deliver to Seller or its designee(s), as payment of the Purchase Consideration, (i) one or more certificates issued in the name of Seller or Seller’s designee(s) (and in denominations requested by Seller) representing a number of shares of Parent Common Stock equal to the Stock Consideration, minus the Escrow Shares and (ii) by wire transfer of immediately available funds to an account designated in writing by Seller prior to the Closing Date, cash in an amount equal to the Cash Consideration minus the Escrow Cash, if any.

Section 3.3FIRPTA Certificate.  The Company, as sole owner of Seller (which shall be treated as a disregarded entity for U.S. federal income tax purposes immediately prior to the Closing), shall deliver to Buyer a certificate, pursuant to Treasury Regulation Section 1.1445-2(b)(2), dated no more than ten (10) days prior to the Closing Date and signed by an officer of the Company under penalties of perjury, stating (i) that the Company is not a foreign person and (ii) the Company’s name, employer identification number and office address.  Such certificate shall be reasonably acceptable to Pare nt.

Section 3.4Withholding Rights.  Buyer shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to Seller such amounts as Buyer is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local, or foreign Tax Law.  To the extent the amounts are so withheld and paid over to the appropriate Tax authority by Buyer, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to Seller.

Section 3.5Escrowed Shares.  On the Closing Date, Parent shall deliver a portion of the Purchase Consideration equal to the Escrow Shares (and cash (the “Escrow Cash”) in the amount of the excess, if any) of the Indemnification Escrow Amount over the product of (i) the Stock Consideration multiplied by (ii) the Deemed Parent Common Stock Price immediately prior to the Closing) to the escrow agent identified in the Escrow Agreement (the “Escrow Agent”), to be held in escrow.  The Escrow Shares and Escrow Cash shall be held by the Escrow Agent in accordance with the te rms of an Escrow Agreement in the form attached hereto as Exhibit E (the “Escrow Agreement”).

Section 3.6Tax Amount and Net Debt Adjustment.

Section 3.6.1Not less than five (5) Business Days prior to the Closing Date and in no event more than ten (10) Business Days prior to the Closing Date, the Company shall deliver to Buyer a written statement setting forth (a) its good faith estimate of (i) the Closing Date Tax Amount (“Estimated Closing Date Tax Amount”), (ii) Closing Date Indebtedness (“Estimated Closing Date Indebtedness”), and (iii) Closing Date Cash (“Estimated Closing Date Cash”) and (b) the Company’s calculation of the Estimated Company Equity Value and, in each case, reasonable supporting docume ntation, including an unaudited, estimated consolidated balance sheet of PropCo and its subsidiaries estimated as of the Closing Date from which the foregoing items have been calculated.

22

Section 3.6.2As soon as reasonably practicable following the Closing Date, and in any event within sixty (60) calendar days thereof, Buyer shall prepare and deliver to the Company (i) an unaudited consolidated balance sheet of PropCo and its Subsidiaries (the “Closing Balance Sheet”),  (ii) a calculation of the aggregate amount of all Indebtedness of the REIT Entities (“Closing Date Indebtedness”), and (iii) a calculation of Cash and Cash Equivalents of the REIT Entities (“Closing Date Cash”), in each case, calculated as of the close of business on the Closing Date and as reflected on th e Closing Balance Sheet, and (iv) a calculation of the Tax Amount (“Closing Date Tax Amount”).  Subject to the following sentences, the Closing Balance Sheet shall be prepared in a manner consistent with the principles, practices, policies, judgments and methodologies applied in connection with the preparation of the Reference Balance Sheet.  The Closing Balance Sheet and the Closing Date Tax Amount shall be prepared in accordance with Section 3.6.6 which shall control as to any conflict as to the principles, practices, policies, judgments or methodologies to be applied in the preparation of the Closing Balance Sheet and the determination of the Closing Date Tax Amount, Closing Date Indebtedness and Closing Date Cash.  The Closing Balance Sheet and the Closing Date Tax Amount shall give effect to the Reorganization Transactions and the transactions contemplated by this Agreement, but shall not give effect to the financing transactions effected by Parent or its Subsidiaries in connection with the Purchase, the repayment, modification or cancelation of any REIT Indebtedness or any other action or omission, after the Closing, by Parent, Buyer, PropCo or any of its Subsidiaries that is not in the ordinary course of business consistent with past practice, except that all amounts determined by reference to any existing interest rate cap, swap, collar or similar transaction, currency hedging transaction or breakage fee or other early termination amounts with respect thereto shall be taken into account on the Closing Date Balance Sheet for Seller’s account.  Following the Closing, Buyer shall provide the Company and its representatives reasonable access to the records, properties, personnel and (subject to the execution of customary work paper access letters if requested) auditors of Parent and PropCo during regular business hours relating to the preparation of the Closing Balance Sheet and the Closing Date Tax Amount and shall cause the personnel of Parent, Bu yer and their respective Subsidiaries to reasonably cooperate with the Company in connection with its review of the Closing Balance Sheet and the Closing Date Tax Amount.

Section 3.6.3If the Company shall disagree with the calculation of the Closing Date Tax Amount, Closing Date Indebtedness, and/or Closing Date Cash, it shall notify Buyer of such disagreement in writing, setting forth in reasonable detail the particulars of such disagreement, within thirty (30) days after its receipt of the Closing Balance Sheet.  In the event that the Company does not provide such a notice of disagreement within such thirty (30)-day period, the Company shall be deemed to have accepted the Closing Balance Sheet and the calculation of the Closing Date Tax Amount, Closing Date Indebtedness and Closing Date Cash delivered by Buyer, which shall be final, binding and conclusive for all purposes hereunder.  In the event any such notice of disagreement is timely provided, Buyer and the Company shall seek in good faith for a period of twenty (20) days (or such longer period as they may mutually agree) to resolve any such disagreements.  If, at the end of such period, they are unable to resolve such disagreements, then KPMG LLP (or such independent accounting or financial consulting firm of recognized national standing as may be mutually selected by Buyer and the Company) (the “Auditor”) shall resolve any remaining disagreements that were included in the Company’s written notice of disagreement.  Each of Buyer and the Company shall promptly submit to each

23

other and the Auditor in writing their respective proposal for resolution of the dispute regarding the Closing Date Tax Amount, Closing Date Indebtedness, and/or Closing Date Cash and, to the extent relevant thereto, the Closing Balance Sheet.  The Auditor shall establish the timing and process of reviewing any disagreement and shall be instructed to provide its final determination with respect to any disagreement as soon as practicable and in any event within forty-five (45) days following the date on which the disagreement is referred to the Auditor; provided that (i) the Auditor shall base its determination solely on (A) the written submissions of the parties and shall not conduct an independent investigation and (B) the extent to which the Closing Date Tax Amount, Closing Date Indebtedness and Closing Date Cash are determined in accordance with Section 3.6.2 (including the definitions of defined terms used in Section 3.6.2) in each written submission, and (ii) the Auditor shall have no authority to vary or ignore the terms of this Agreement. Each party agrees to promptly make available to each other and to the Auditor all documents, books, records and personnel under that party’s control as the Auditor shall determine in its judgment to be necessary or relevant to its review of the disagreement and otherwise to cooperate with the other parties and the Auditor to facilitate a prompt resolution of the disagreement.  The determination of the Auditor shall be final, conclusive and binding on the parties. The date on which the Closing Date Tax Amount, Closing Date Indebtedness, and Closing Date Cash are finally determined in accordance with this Section 3.6.3 is hereinafter referred to as the “Determination Date.”  The fees and expenses of the Auditor incurred pursuant to this Section 3.6.4 shall be borne 50% by Parent and 50% by the Company.

Section 3.6.4The “Adjustment Amount,” which may be positive or negative, shall mean (i) the Estimated Closing Date Tax Amount, minus the Closing Date Tax Amount (as finally determined in accordance with Section 3.6.3), plus (ii) Estimated Closing Date Indebtedness, minus Closing Date Indebtedness (as finally determined in accordance with Section 3.6.3), plus (iii) Closing Date Cas h (as finally determined in accordance with Section 3.6.3), minus Estimated Closing Date Cash.  The Adjustment Amount shall be paid in accordance with Section 3.6.5.

Section 3.6.5If the Adjustment Amount is a positive number (such amount, the “Increase Amount”), then, promptly following the Determination Date, and in any event within five (5) Business Days of the Determination Date, Parent shall deliver to Seller or its designee(s) (i) an amount of cash equal to the sum of (A) an amount determined in Parent’s sole discretion, (the “Stock-Replacement Adjustment Cash”) plus (B) the Adjustment Excess Dividend Amount, if any, and (ii) one or more stock certificates, issued in the name of Seller or its designee(s), representing, in the aggregate, a number of shares (such aggregate number, the “Adjustment Share Number”) of Parent Common Stock (in such denominations as shall be requested by Seller) equal to (A) the Increase Amount minus the Stock-Replacement Adjustment Cash divided by (B) the Deemed Parent Common Stock Price.  If the Adjustment Amount is a negative number (the absolute value of such amount, the “Deficit Amount”), then, promptly following the Determination Date, and in any event within five (5) Business Days of the Determination Date, the Escrow Agent shall release, from the Escrow Account to Parent Escrow Property (as defined and allocated in the Escrow Agreement) in the amount of the Deficit Amount.  Each of Parent and the Company shall, no later than two (2) Bu siness Days after the Determination Date, execute joint written instructions to the Escrow Agent instructing the Escrow Agent to release the applicable Escrow Property in accordance with this Section 3.6.5 and the Escrow Agreement.  In no event shall (x) the Company have any liability under this Section 3.6 in excess of the

24

Escrow Property or (y) Parent have any liability under this Section 3.6 in excess of an amount equal to the Indemnification Escrow Amount.  In no event shall Parent be entitled to payment pursuant to this Section 3.6 other than the release to it of all or a portion (as applicable) of the Escrow Property.  The Aggregate Purchase Consideration will be deemed to be decreased by the Deficit Amount, to the extent the Escrow Property is sufficient recourse to pay the Parent therefor; the Aggregate Purchase Consideration will be deemed to be increased by the sum of (x) the cash amount and (y) the product of the Deemed Parent Common Stock Price and the number of shares of Parent Common Stock, in each case, delivered to Seller or its designee(s) in respect of the Increase Amount.

Section 3.6.6Prior to the Closing, the Company will receive an opinion with respect to the valuation of OpCo from a nationally recognized firm that is regularly engaged to render such opinions (the “Valuation Opinion”).  The parties hereto agree that the fair market value of the Equity Interests in OpCo, at the time of any actual or deemed distrib ution to the holders of Equity Interests in the Company, for U.S. federal and applicable state income Tax purposes, shall be equal to (i) if the Valuation Opinion provides a specific fair market value of such Equity Interests, such fair market value and (ii) if the Valuation Opinion provides a range of valuations, an amount within such range specified by the Company in its reasonable discretion.  The parties agree that they shall not, and shall not permit their Affiliates to, take a position on any Tax Return or in the calculation of the Closing Date Tax Amount pursuant to this Section 3.6.6 that is inconsistent with such determination

Section 3.7Dividends.  Notwithstanding anything to the contrary in this Agreement, (i) if, prior to Closing, Parent pays, or a record date occurs for the payment of, a dividend in cash or (other than a stock dividend accounted for in the Deemed Parent Common Stock Price) in kind on a pro rata basis to all holders of Parent Common Stock (other than Parent’s regular quarterly dividends, paid at the annual rate reflected in Parent’s most recent market guidance, as the same m ay be increased or reduced by Parent from time to time, which dividends are expressly excluded from this adjustment provision), then the Cash Consideration will be increased to reflect an amount (the “Pre-Closing Excess Dividend Amount”) equal to the aggregate amount that Seller would have received in respect of all such dividends on the shares of Parent Common Stock included in the Stock Consideration if Seller had held such shares on the record date for each such dividend, and (ii) if, prior to the date on which payment of any Increase Amount is made, Parent pays, or a record date occurs for the payment of, a dividend in cash or (other than a stock dividend accounted for in the Deemed Parent Common Stock Price) in kind on a pro rata basis to all holders of Parent Common Stock (other than Parent’s regular quarterly dividends, paid at the annual rate reflected in Parent’s most recent market guidance, as the same may be increased or reduced by Parent from time to time, which di vidends are expressly excluded from this adjustment provision), then the cash amount payable in respect of the Increase Amount pursuant to Section 3.6.5 will be increased to reflect an amount (the “Adjustment Excess Dividend Amount”) equal to the aggregate amount that Seller would have received in respect of all such dividends on the shares of Parent Common Stock included in the Adjustment Shares Number if Seller had held such shares on the record date for each such dividend.  Any dividend described in this Section 3.7 which is not paid in cash will be valued at the fair market value of such in-kind dividend as of the payment date for such dividend.

25

Section 3.8Purchase and Sale of Company Interests.

Section 3.8.1Acquisition at the Closing.

Section 3.8.1.1If the Company shall expect to implement the transactions contemplated by Section 2.03 of the Reorganization Agreement (to the extent Section 2.03 of the Reorganization Agreement contemplates such transactions having occurred at or prior to the Closing), (i) the Company shall, at least three (3) Business Days prior to the Closing Date, deliver written notice to Parent of its intent to implement such transactions, and (ii) Parent may, by written notice to the Company delivered at least two (2) Business Days prior to the Closing Date, elect to acquire the Parent OpCo Interest (the “OpCo Interest Election”).

Section 3.8.1.2For the purposes of this Agreement, the “Parent OpCo Interest” means Equity Interests in NewCo 1 that, as of immediately after the Closing, represent 9.9% of outstanding Equity Interests of NewCo 1 (excluding the Management Equity and any preferred stock contemplated by Exhibit A to the Reorganization Agreement), provided, that the Parent OpCo Interest will not have any direct or indirect rights or interest in the Aggregate Purchase Consideration or any other amounts payable to the Seller or the Company or any of the Seller Indemnified Parties under this Agreement or the Escrow Agreement or in distributions made by the Company in respect thereof.  “Management Equity” means options or other Equity Interests held by directors, officers and employees of the Company or its Subsidiaries representing, in the aggregate, no more than 5% of the fully diluted Equity Interests of NewCo 1 as of (and taking into account) the issuance of the Parent OpCo Interest. The entity in which Buyer or its designee shall own its 9.9% interest shall have organizational documents that preclude Buyers’ or such designee’s ownership from exceeding 9.9% under any circumstances.

Section 3.8.1.3If Parent has made the OpCo Interest Election in accordance with this Agreement, then, upon the terms and subject to the conditions of this Agreement, at the Closing, (i) NewCo 1 will issue to Buyer or its designee, and Buyer will, or will cause its designee to, subscribe for and purchase from NewCo 1, the Parent OpCo Interest, free and clear of all Encumbrances, (ii) Buyer or its designee shall, and Parent shall cause Buyer or its designee to, deliver to NewCo 1 or its designee(s), as payment for the Parent OpCo Interest, $95,000,000.00, by wire transfer of immediately available funds to an account designated in writing by the Company prior to the Closing Date, (iii) Buyer or its designee shall, and Parent shall cause Buyer or its designee to, execute and deliver to NewCo 1, and the Company shall and shall cause Newco 1 to execute and deliver to Buyer or its designee, a counterparty signature page of the NewCo 1 LLC Agreement and the HCR ManorCare Equityholders Agreement, (iv) Buyer or its designee shall take, and the Company shall cause NewCo 1 to take, all action necessary under the NewCo 1 LLC Agreement to cause Buyer or its designee to be a member of NewCo 1 with respect to the Parent OpCo Interest, and (v) the Company shall cause NewCo 1 to deliver to Buyer or its designee a schedule of the issued and outstanding number of each type of unit of membership interest in NewCo 1 as of, and taking into account, Buyer’s or its designee’s acquisition of the Parent OpCo Interest

Section 3.8.2Warrant.  If, at least three (3) Business Days prior to the Closing Date, the Company shall expect to implement the transactions contemplated by Section 2.04 of

26

the Reorganization Agreement then upon the terms and subject to the conditions set forth in this Agreement at the Closing (to the extent Section 2.04 of the Reorganization Agreement contemplates such transactions having occurred at or prior to the Closing as specified in Section 2.04 of the Reorganization Agreement), then (i) the Company shall implement the transactions contemplated by Section 2.04 of the Reorganization Agreement (including the merger involving the Company contemplated thereby) in which the surviving company thereof shall be a limited liability company (and promptly upon filing deliver evidence thereof to Parent), (ii) the Company and Buyer shall (or Buyer shall cause its designee to) execute and deliver to each other a Warrant Agreement, which Warrant Agreement is in all material respects in the form of Exhibit F hereto (the “Warrant”), (iii)  ;Buyer shall (or Buyer shall cause its designee to) execute and deliver to the Company and the Company shall execute and deliver to Buyer or its designee, a counterparty signature page of the HCR ManorCare LLC Agreement and the HCR ManorCare Equityholders Agreement, (iv) the Company and Buyer shall (or Buyer shall cause its designee to) take all action necessary under and/or in connection with the HCR ManorCare LLC Agreement to cause Buyer (or Buyer’s designee) to be party to such agreement, and (v) the Company shall deliver to Buyer (or Buyer’s designee) a schedule of the issued and outstanding number of each type of unit of membership interest in the Company as of, and taking into account, Buyer’s or its designee’s acquisition of the Warrant

Article 4.
Representations and Warranties of the Company

Except as set forth in the disclosure schedule that has been prepared by the Company and delivered by the Company to Parent in connection with the execution and delivery of this Agreement, the Company hereby represents and warrants to Parent and Buyer that:

Section 4.1Organization, Standing and Power.

Section 4.1.1The Company and each Subsidiary of the Company is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, as applicable.  The Company and each Subsidiary of the Company has all requisite corporate or other power and authority to own, operate, lease and encumber its properties and carry on its business as now being conducted.  The certificate of incorporation, as amended and supplemented, of the Company (the “Company Certificate”) the certificate of formation, as amended and supplemented, of PropCo (the “PropCo Certificate”), the certificate of incorporation, as amended and supplemented, of Manor Care (the “Manor Care Certificate”) and the comparable organizational documents of each of the Subsidiaries of the Company are valid and in full force and effect. Each of the Company and Subsidiaries of the Company is duly qualified or licensed to do business as a foreign corporation or other limited liability entity and is in good standing in all jurisdictions in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed, individually and in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect.

Section 4.1.2The Company has delivered or made available to Parent and Buyer complete and correct copies of the Company Certificate, the PropCo Certificate, the bylaws of the Company (the “Company Bylaws”), the bylaws of Manor Care (the “Manor Care Bylaws”),

27

the PropCo limited liability company agreement (the “PropCo Limited Liability Company Agreement”) and the comparable organizational documents of OpCo and each REIT Entity of the Company, in each case as amended, restated or supplemented to the date of this Agreement.  The Company is not in violation in any material respect of any provision of the Company Certificate or the Company Bylaws, Manor Care is not in violation in any material respect of any provision of the Manor Care Certificate or the Manor Care Bylaws and PropCo is not in violation in any material respect of the PropCo Limited Liability Company Agreement.  No other Subsidiary of the Company is in violation in any material respect of its organizational documents.

Section 4.2Capital Structure; Subsidiaries.

Section 4.2.1As of the date hereof, all of the issued and outstanding PropCo Interests are held, beneficially and of record, by Manor Care, Inc., a direct, wholly owned subsidiary of the Company (“Manor Care”), free and clear of all Encumbrances.  Immediately prior to the Closing, all of the PropCo Interests will be held, beneficially and of record, by Seller, free and clear of all Encumbrances.

Section 4.2.2Schedule 4.2.2 provides a correct and, in all material respects, complete description of all warrants or other rights (of persons other than the Subsidiaries of the Company) to acquire PropCo Interests (whether or not such any such PropCo Interests are issued at such time), including all options, calls, purchase rights, subscription rights, exchange rights, appreciation rights, restricted stock, phantom shares, dividend equivalents, deferred compensation accounts, performance awards, restricted stock units, partnership units, stock units and other awards or equity-like rights or arrangements, and all bonds, notes, debentures and other Indebtedness for Borrowed Money which are at any time convertible into, or exchangeable or exercisable for, PropCo Interests, in each case which are outstanding on the date of this Agreement. Except as set forth in Schedule 4.2.2, there are no Contracts (other than this Agreement, any Ancillary Agreement or any Contract with another REIT Entity) to which PropCo is a party or by which such entity is bound, obligating PropCo, or, as applicable, any other person, to issue, grant, deliver, sell, transfer, redeem, repurchase or otherwise acquire, or cause to be issued, granted, delivered, sold, transferred, redeemed, repurchased or otherwise acquired additional PropCo Interests or obligating PropCo to issue, grant, extend or enter into any such Contract.

Section 4.2.3Schedule 4.2.3 lists, as of the date hereof, each REIT Subsidiary, the jurisdiction of organization thereof and each person owning Equity Interests in such REIT Subsidiary.

Section 4.2.4Except as set forth in Schedule 4.2.4, each REIT Subsidiary is and, immediately prior to the Closing, will be directly or indirectly wholly owned, beneficially and of record, by the Company, and no REIT Entity owns directly or indirectly any capital stock, limited liability company or partnership interest, joint venture interest or other Equity Interest in any other Person (other than in any REIT Subsidiary).  Except as set forth in Schedule 4.2.4, all of the outstanding Equity Interests in each REIT Entity have been duly authorized and validly issued and (i) in the case of stock Equity Interests, are fully paid and (in applicable jurisdictions) nonassessable and free of preemptive or similar rights, and (ii) in the case of partnership, limited

28

liability company or other Equity Interests, are not subject to any Indebtedness for Borrowed Money, capital calls or other obligations (contingent or otherwise) to contribute monies or property in respect thereof and (iii) are free of preemptive or other similar rights under Law, any applicable organizational document and any Contract or instrument to which any REIT Entity is a party or by which it is bound.

Section 4.2.5Except as contemplated by this Agreement and any Ancillary Agreements, Schedule 4.2.5 provides a correct and, in all material respects, complete description of all warrants or other rights (of persons other than the Subsidiaries of the Company, as applicable) to acquire Equity Interests in the Company and its Subsidiaries, including all stock options, stock appreciation rights, restricted stock, phantom shares, dividend equivalents, defer red compensation accounts, performance awards, restricted stock units, partnership units, stock units and other awards or equity-like rights or arrangements, and all bonds, notes, debentures and other Indebtedness for Borrowed Money which are at any time convertible into, or exchangeable or exercisable for, Equity Interests in each case which are outstanding on the date of this Agreement.  Except as set forth in Schedule 4.2.5, as of the date of this Agreement there are no Contracts (other than this Agreement, any Ancillary Agreement or any Contract with another Subsidiary of the Company) to which the Company and its Subsidiaries is a party or by which such entity is bound, obligating the Company and its Subsidiaries to issue, deliver, sell, transfer, redeem, repurchase or otherwise acquire, or cause to be issued, delivered, sold, transferred, redeemed, repurchased or otherwise acquired additional Equity Interests of any REIT Subsidiary, or obligating any REIT Subsidiary to issue, grant, extend o r enter into any such Contract.

Section 4.2.6All dividends and distributions on Equity Interests in the Company that have been declared prior to the date of this Agreement have been paid in full.

Section 4.2.7The authorized capital stock of the Company consists of 200,000,000 shares of common stock (“Company Common Stock”) and 50,000,000 shares of preferred stock, par value $0.01 per share.  As of the date hereof, 131,491,743 shares of Company Common Stock were duly authorized, validly issued and outstanding and such shares are not subject to any right of first refusal, preemptive right or subscription right and were not issued in vi olation of the Company Certificate or the Company Bylaws, and no shares of preferred stock were issued and outstanding.  The outstanding shares of Company Common Stock are fully paid and nonassessable.

Section 4.2.8As of the Closing, if Parent causes Buyer or its designee to acquire the Parent OpCo Interest, (i) the Parent OpCo Interest will represent no more than 9.9% of the outstanding economic ownership of NewCo 1 and (ii) the total number of issued and outstanding units of each class of membership interest shall be as set forth in the schedule delivered by NewCo 1 in accordance with Section 3.8.1.3.

Section 4.2.9As of the date hereof, all of the issued and outstanding Equity Interests of OpCo are held, beneficially and of record, by Manor Care.

29

Section 4.3Authority; Noncontravention; Consents.

Section 4.3.1The Company and each of its applicable Subsidiaries has all necessary corporate or other power and authority to execute and deliver this Agreement (in the case of the Company) and each Ancillary Agreement to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby to be consummated by the Company or the applicable Subsidiaries.  The execution and delivery by the C ompany and each of its applicable Subsidiaries of this Agreement and each Ancillary Agreement to which it is a party, the performance of its obligations hereunder and thereunder, and the consummation by it of the transactions contemplated hereby and thereby to be consummated by it have been duly and validly authorized by all necessary action and no other proceedings on the part of the Company or any such Subsidiary and no votes by any holder of Equity Interests in the Company or any such Subsidiary are necessary to authorize this Agreement or any Ancillary Agreement or to consummate the transactions contemplated hereby and thereby (in each case, other than the Company Approval, which will occur immediately after the execution and delivery of this Agreement by the Company).  This Agreement and each Ancillary Agreement has been, or (in the case of Ancillary Agreements executed after the date hereof) will be, when executed, duly and validly executed and delivered by the Company, as applicable, and each of its applicable Subsidiaries party thereto and, constitutes or will (in the case of Ancillary Agreements executed after the date hereof) constitute, when executed, a legal, valid and binding obligation of the Company, as applicable, and each such Subsidiary, enforceable against the Company or the applicable Subsidiary in accordance with its respective terms.

Section 4.3.2Except as set forth in Schedule 4.3.2, the execution and delivery of this Agreement and the Ancillary Agreements by the Company and its applicable Subsidiaries do not, and the consummation of the transactions contemplated by, and the performance of their respective obligations under, this Agreement and the Ancillary Agreements and compliance by the Company and its applicable Subsidiaries with the provisions hereof and thereof, will not co nflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of a benefit under, result in a material increase in payment obligations under, or result in the creation of any Encumbrance, other than Permitted Encumbrances under, (i) the Company Certificate, the Company Bylaws or the other organizational documents of any Subsidiary of the Company, each as amended or supplemented, (ii)(A) any Permit required for the businesses, activities or operations of the Company or (B) any Company Material Contract or (iii) subject to the governmental filings and other matters referred to in Section 4.3.3, any Laws applicable to the Company or any Subsidiary of the Company, other than, in the case of clause (ii) or (iii), any such conflicts, violations, defaults, rights, losses or Encumbrances that, individually and in the agg regate, would not reasonably be expected to have a Company Material Adverse Effect or prevent or delay in any material respect the consummation of the transactions contemplated by this Agreement or the Ancillary Agreements.

Section 4.3.3No consent, approval, order or authorization of, or registration, declaration, notice or filing with, any Governmental Entity is required by or with respect to the Company or any of its Subsidiaries in connection with the execution and delivery of this Agreement and the Ancillary Agreements by the Company and its Subsidiaries or the

30

consummation by the Company and its Subsidiaries of the transactions contemplated by this Agreement and the Ancillary Agreements, except for such other consents, approvals, orders, authorizations, registrations, declarations and filings (i) as are set forth in Schedule 4.3.3; (ii) as may be required under (A) the HSR Act, (B) Laws requiring transfer, recordation or gains tax filings, (C) Environmental Laws or (D) the Blue Sky Laws of various states, to the extent applicable; or (iii) which, if not obtained or made, individually and in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect or prevent or delay in any material respect the consummation of the transactions contemplated by this Agreement or the Ancillary Agreements.

Section 4.4Financial Statements; Undisclosed Liabilities.

Section 4.4.1Schedule 4.4.1 contains the Audited Financial Statements.  The audited consolidated balance sheets of the Company and its consolidated Subsidiaries as of December 31, 2009 and 2008, and the audited consolidated statements of income and cash flows of the Company for the twelve (12) months ended December 31, 2009 and 2008 (the “Company Audited Financial Statements”), and the Company Audited 2010 Financial Statements, when delivered pursuant to Section 6.13, (i) have been or (when delivered) will be, as the case may be, prepared in accordance with GAAP, applied on a consistent basis during the periods involved, except for changes in accounting principles required by GAAP as expressly disclosed therein (including the notes thereto) and (ii) fairly present or (when delivered) will fairly present, as the case may be, in all material respects the consolidated financial position, results of operations and cash flows of the Company and its consolidated Subsidiaries, as of the dates and for the periods presented therein.  The audited consolidated balance sheets of PropCo and its consolidated Subsidiaries as of December 31, 2009 and 2008 and as of September 30, 2010, and the audited consolidated statements of income and cash flows of PropCo and its consolidated Subsidiaries for the twelve (12) months ended December 31, 2009 and 2008 and the nine (9) months ended September 30, 2010 (together, the “PropCo Audited Financial Statements” and, together with the Company Audited Financial Statements, the “Audited Financial Statements”) and the PropCo Audited 2010 Financial Statements, when delivered pursuant to Section 6.13, (i) have been or (when delivered) will be, as the case may be, prepared in accordance with GAAP, applied on a consistent basis during the periods involved, except for changes in accounting principles required by GAAP as expressly disclosed therein (including the notes thereto) and (ii) fairly present or (when delivered) will fairly present, as the case may be, in all material respects the consolidated financial position, results of operations and cash flows of PropCo and its consolidated Subsidiaries, as of the dates and for the periods presented therein.

Section 4.4.2The unaudited consolidated balance sheet as of September 30, 2010 (the “Reference Balance Sheet”), and unaudited statements of income and cash flows for the nine (9) months ended September 30, 2010, in each case for the Company and its consolidated Subsidiaries, and the PropCo Unaudited Q1 2011 Financial Statements and PropCo Unaudited Q2 2011 Financial Statements, if delivered pursuant to Section 6.13, (i)  have been or (when delivered) will be, as the case may be, prepared in accordance with GAAP, applied on a consistent basis for the periods involved, except for changes in accounting principles required by GAAP as expressly disclosed therein, and except for normal year-end adjustments and except for the absence of footnotes and (ii) fairly present or (when) delivered will fairly present, as the case may be, in all material respects the consolidated financial position, results of operations and cash

31

flows of the Company and its consolidated Subsidiaries, as of the dates and for the periods presented therein.

Section 4.4.3Except (i) for Liabilities or obligations to the extent reflected or reserved against in the Reference Balance Sheet, (ii) for Liabilities or obligations incurred since September 30, 2010 in the ordinary course of business and consistent with past practice, (iii) as otherwise set forth on Schedule 4.4.3, and (iv) for Liabilities reflected in the Closing Date Tax Amount and Closing Date Indebtedness, there are no m aterial Liabilities of the Company and its Subsidiaries (other than Liabilities under Contracts disclosed on Schedule 4.16.1, except for any Liabilities arising from a breach thereof) that would, individually or in the aggregate, reasonably be expected to result in Damages in excess of $10,000,000.

Section 4.5Absence of Certain Changes or Events. Except as set forth in Schedule 4.5, since September 30, 2010 (the “Reference Balance Sheet Date”), except as contemplated by this Agreement and the Ancillary Agreements, the business of the Company has been conducted in the ordinary course of business consistent with past practice.  Except as disclosed in Schedule 4.5, since the Reference Balance Sheet Date there has not been (i) any cir cumstance, event, occurrence, change or effect that, individually or in the aggregate, would reasonably be expected to have a Company Material Adverse Effect, or (ii) on or prior to the date of this Agreement, any other action or omission by the Company or any of its Subsidiaries which, if occurring during the period from the date of this Agreement through the Closing without the consent of Parent, would constitute a material breach of the covenants set forth in Section 6.1 (other than Section 6.1.6 Section 6.1.8, Section 6.1.9, Section 6.1.11 and, with respect thereto, Section 6.1.15).

Section 4.6Litigation.  Except as disclosed in Schedule 4.6, as of the date of this Agreement (i) there is no suit, action, investigation or proceeding pending or, to the Knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries that (A) individually, if determined or resolved adversely, would reasonably be expected to result in any Liabilities exceeding $10,000,000 (after taking into consideration any insurance or third party proceeds which have been or would reasonably be expected to be received in connection with such suit, action, investigation or proceeding) or (B) in the aggregate, would reasonably be expected to have a Company Material Adverse Effect, nor (ii) is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against the Company or any of its Subsidiaries that has had or would reasonably be expected to have any effect set forth in clause (A) or (B) above.

Section 4.7Properties.

Section 4.7.1Schedule 4.7.1 sets forth (i) a complete and correct list of (A) the REIT Facilities, (B) the street address of each REIT Facility, (C) the licensed capacity of each REIT Facility, (D) a listing of any Material Lease at each REIT Facility, and (E) the REIT Entity that owns, leases or subleases the REIT Real Property with respect to each such REIT Facility and (ii)&nb sp;whether each parcel of REIT Real Property is owned in fee simple or held pursuant to a ground leasehold or other real property interest (the “Leased REIT Real Property”). Except as set forth on Schedule 4.7.1, no REIT Entity leases, subleases or otherwise permits the occupancy by any third party of all or any portion of any REIT Real Property other than (I)(A) to one or more

32

residents in their capacity as such, or (B) to one or more commercial tenants which provide services to residents at a REIT Facility under a commercial lease or occupancy agreement, including the Material Leases, which, in the case of each such lease, sublease, or occupancy agreement, would be permitted under or pursuant to the terms of the Lease Agreement if effective (the “Permitted Lease Agreement Subleases”), (II) cellular towers, oil-and-gas leases, and similar leases, subleases or occupancy agreement which would not reasonably be expected to have a material adverse effect on the use, occupancy or operation of such REIT Facility as a Senior Living Facility consistent with past practice or materially adversely affect the value of such REIT Facility, and (III) the existing leases or subleases between the OpCo Entities and the REIT Entities, all of which shall be terminated at immediately prior to Closing. No REIT Entity owns, leases, or subleases any Real Property other than the Real Property associated with the REIT Facilities.

Section 4.7.2Each REIT Entity designated on Schedule 4.7.1 as an owner, leaseholder, or subleaseholder of any REIT Real Property is the record owner, leaseholder, or subleaseholder of such REIT Real Property and has good and marketable fee simple title to, or holds a valid leasehold interest in, the REIT Real Property, in each case free and clear of all Encumbrances (except for Permitted Encumbrances).  Each REIT Subsidiary’s fee simple or leasehold title in its REIT Real Property is insured pursuant to an Existing Title Policy and, to the Knowledge of the Company and its Subsidiaries, (i) each Existing Title Policy is in an amou nt reasonably sufficient as of the date of policy issuance to provide a full recovery in the event of a total loss of title and is in full force and effect and (ii) no claim has been made thereunder.  The Company has delivered or made available to Parent an accurate copy of each Existing Title Policy.

Section 4.7.3Except as set forth on Schedule 4.7.3, each REIT Facility:

(a)is supplied with utilities and other services adequate for the operation of such REIT Facilities;

(b)is in working order sufficient for the ordinary course operation of such REIT Facility by an OpCo Entity consistent with past practice, subject only to normal wear and tear, and is free from any material structural defects;

(c)is adequate and suitable for the ordinary course operation of such REIT Facility by an OpCo Entity consistent with past practice;

(d)has sufficient access to and from publicly dedicated streets or valid easements for its current use and operations, without any constraints that interfere with the normal use, occupancy and operation thereof;

(e)is in compliance with existing zoning, land use, or similar Laws; and

(f)is assessed by local property assessors as a tax parcel or parcels separate from all other tax parcels.

33

Section 4.7.4There are no pending or, to the Knowledge of the Company or any of its Subsidiaries, threatened condemnation proceedings relating to any REIT Real Property that reasonably would be expected to have a material adverse effect on the use, occupancy or operation of any REIT Facility as a Senior Living Facility consistent with past practice or materially adversely affect the value of such REIT Facility.  Except as set forth on Schedule 4.7.4, there are no outstanding agreements, contracts, commitments, options, or rights of first refusal granted to third parties to purchase any REIT Facility, or any portion thereof of interest ther ein. There are no pending proceedings initiated by or on behalf of any Company or any of its Subsidiaries to change or redefine the zoning or land use classification or all or any portion of any REIT Facility and neither the Company nor any of its Subsidiaries has received written notice of, and, to the Knowledge of the Company or any of its Subsidiaries, there is no proposed proceeding of such kind in each case that reasonably would be expected to have a material adverse effect on the use, occupancy or operation of any REIT Facility as a Senior Living Facility consistent with past practice.

Section 4.7.5Schedule 4.7.5 lists, as of the date of this Agreement, (a) each material renovation or construction project with aggregate projects in excess of $2,000,000 currently being performed at any REIT Real Property (the “Construction Projects”), and (b) the budgeted cost to complete each Construction Project.  None of the Companies or any of its Subsidiaries has received written notice of material default by it of any obligation with respect to the Construction Projects and, to the Knowledge of the Company and its Subsidiaries, the general contractors obligat ed to complete any of the Construction Projects are not in material default with respect to such obligations.

Section 4.7.6Set forth in Schedule 4.7.6 is a complete and correct list of all ground leases relating to the REIT Real Property (the “Ground Leases”). Except as set forth in Schedule 4.7.6, through the date hereof, the Company has no Knowledge of delivery or receipt of any written notice of termination under any Ground Lease as a result of any default that remains uncured.  The landlord under each Ground Lease does not have any outstanding options or rights to terminate any Ground Lease prior to the expiration of the term thereof (except for termination rights following a casualty, condemnation, default or similar event or any other rights under the applicable Ground Lease that are not currently exercisable and which will not be exercisable as a result of the transactions contemplated by this Agreement and/or the Ancillary Agreements).  Neither the Company nor any of its Subsidiaries has received a written notice that it is in material violation of or in default under (nor, to the Knowledge of the Company, does there exist any such material violation or default or any condition which upon the passage of time or the giving of notice or both would cause such a violation of or default under) any Ground Lease that remains uncured. Each Ground Lease is in full force and effect in all material respects and is binding and enforceable against the REIT Entities, as applicable, and, to the Knowledge of the Company, each other party thereto.  The Company has delivered or made available to Parent and Buyer correct and complete copies of all Ground Leases, including all material amendments, modifications, supple ments, renewals, extensions and guarantees related thereto, in effect as of the date hereof.

34

Section 4.7.7A REIT Entity has valid title to or valid leasehold interest in all material FF&E and Tangible Personal Property included in the REIT Assets free and clear of all Encumbrances, except for Permitted Encumbrances and Encumbrances that are immaterial or related to debt and encumbrances which do not materially detract from the value of such personal property.

Section 4.7.8At the Closing, the REIT Real Property and FF&E and Tangible Personal Property (other than the Assets owned or leased by the OpCo Entities in connection with the operation of the REIT Facilities, a list of which is set forth on Schedule 4.7.8 (the “OpCo FF&E and Tangible Personal Property”)) will constitute all of the material assets, properties and rights reasonably necessary for the REIT Entities to own and triple-net lease such assets to the OpCo Entities in a manner consistent in all material respects with the ownership and triple-net lease of such assets by the REIT Entities to the OpCo Entities as of the date hereof.

Section 4.8Environmental Matters.  Except as set forth in Schedule 4.8, (i) neither the Company nor any of its Subsidiaries has caused or permitted the presence of any Hazardous Materials at, on or under any of the Real Property of the Company or its Subsidiaries except as in material compliance with applicable Environmental Laws, and except for Hazardous Materials in such quantities or under such conditions that the presence of such Hazardous Materials, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect; (ii) to the Knowledge of the Company, there have been no Releases or threatened Releases of Hazardous Materials at, on, under or from any Real Property of the Company or its Subsidiaries during the period of ownership, operation or tenancy, which, individually or in the aggregate, would reasonably be expected to have a Company Material Adverse Effect; (iii) the Company and its Subsidiaries have complied in all material respects with applicable Environmental Law, and neither the Company nor any Subsidiary has Liability under the Environmental Laws, except to the extent that any such failure to comply or any such Liability, individually and in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect; (iv) the Company and its Subsidiaries have been duly issued, and currently have and will maintain through the Closing Date, all permits, licenses, certificates and approval s required under any Environmental Law (collectively, the “Environmental Permits”) necessary to operate the business of the Company as currently operated except where the failure to obtain and maintain such Environmental Permits, individually and in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect; and (v) there is no suit, action, investigation or proceeding pending or, to the Knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries directly relating to or involving the business of the Company or any assets of the Company pursuant to any Environmental Law that, individually or in the aggregate, if determined or resolved adversely, would reasonably be expected to have a Company Material Adverse Effect. Notwithstanding any other representation or warranty herein, the representations and warranties in Section 4.4, Section 4.5, and this Section 4.8 constitute the sole repres entations and warranties by the Company with respect to compliance with or any other matter relating to any Environmental Law, Hazardous Materials, Environmental Permits or litigation relating thereto.

Section 4.9Affiliate Transactions; Intercompany Liabilities.  Except as set forth in Schedule 4.9, and except for Contracts that will be terminated prior to the Closing in accordance with the Reorganization Agreement, there are no material understandings,

35

arrangements or Contracts, including those providing for sales, purchases, leasing, subleasing, licensing or sublicensing of material goods or services, or Indebtedness for Borrowed Money, between any of the REIT Entities, on the one hand, and any OpCo Entity or any of their respective current directors, officers or other Affiliates (other than the Subsidiaries of the Company), on the other hand.

Section 4.10Employee Benefits

Section 4.10.1Schedule 4.10.1 lists each Company Employee Plan in effect as of the date of this Agreement, whether written or oral, for which Parent, Buyer or PropCo has or would reasonably be expected to have material liability. Each such Company Employee Plan that has received a favorable determination letter from the IRS National Office as of the date of this Agreement has been separately identified and, to the Knowledge of the Company, no event h as occurred as of the date of this Agreement that would reasonably be expected to adversely affect such favorable determination letter.

Section 4.10.2All Company Employee Plans have been operated in all material respects in compliance with their terms, ERISA, the Code and other applicable Laws.  None of the REIT Entities has engaged in any transaction with respect to any Company Employee Plan subject to ERISA that, assuming the taxable period of such transaction expired as of the date of this Agreement, could subject any REIT Entity to any material tax or penalty imposed by either Section 4975 of the Code or Section 502(i)  of ERISA.

Section 4.10.3(i) No REIT Entity or ERISA Affiliate (as defined below) is subject to, or is reasonably expected to incur, any material liability under Title IV of ERISA with respect to any ongoing, frozen or terminated “single-employer plan,” within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained, sponsored or contributed to by any of them, or the single-employer plan of any entity that is considered one employer with any REIT Entity under Section 40 01 of ERISA or Section 414 of the Code (an “ERISA Affiliate”), (ii) no notice of a “reportable event” within the meaning of Section 4043 of ERISA for which the reporting requirement has not been waived or extended, other than pursuant to the PBGC Reg. Section 4043.33 or 4043.66, has been required to be filed by the Company or any of its Subsidiaries or any ERISA Affiliate within the twelve (12)-month period ending on the date of this Agreement or will be required to be filed in connection with the transactions contemplated hereunder and (iii) no notices have been required to be sent to participants and beneficiaries of any Company Employee Plan or the PBGC with respect to any Company Employee Plan under Section 302 or 4011 of ERISA or Section 412 of the Code.  At no time within the past six (6) years has the Company or any of its Subsidiaries or any ERISA Affiliate maintained, established, sponsored, participated in, or contributed to, a ny (A) multiemployer plan (as defined in Section 3(37) of ERISA) or (B) multiple employer plan as defined in ERISA or the Code.

Section 4.10.4All contributions required to be made for any period through the Closing Date under each Company Employee Plan have been or, as applicable, shall be, made in all material respects and, to the extent required by GAAP, all obligations in respect of each Company Employee Plan have in all material respects been properly accrued and reflected in the most recent consolidated balance sheet prior to the date of this Agreement.

36

Section 4.10.5No REIT Entity has any obligations for retiree health and life benefits under any Company Employee Plan (other than as mandated by applicable Law) or collective bargaining agreement.

Section 4.11Employment and Labor Matters.

Section 4.11.1No REIT Entity employs any employees and any services performed for the REIT Entities are performed by the OpCo Entities or independent contractors.

Section 4.11.2Except as set forth in Schedule 4.11.2, (i) there are no suits, charges, grievances or attorney demand letters, pending or threatened, involving employees of the Company and its Subsidiaries that, individually or in the aggregate, would reasonably be expected to have a Company Material Adverse Effect, and (ii) neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement, labor union Contract or legally binding commitment to any labor uni on, and, to the Knowledge of the Company, there are no activities or proceedings involving any labor union to organize or represent any employees of the Company or its Subsidiaries, that, individually or in the aggregate, if successful, would reasonably be expected to have a Company Material Adverse Effect.

Section 4.11.3Company and its Subsidiaries are in compliance in all material respects with all applicable Laws respecting employment and employment practices, including, without limitation, all Laws respecting terms and conditions of employment, health and safety, wages and hours, child labor, immigration, employment discrimination, equal employment opportunity, affirmative action, disability and employee leave issues, plant closures and layoffs, and labor relations.

Section 4.12Intellectual Property.

Section 4.12.1Except as set forth in Schedule 4.12.1 or as, individually and in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect, (i)  the Company or one of its Subsidiaries owns or has the valid right to use all Intellectual Property that is used by the Company or any of its Subsidiaries in the manner in which it is currently used; (ii) to the Knowledge of the Company, neither the Company nor any of its Subsidiaries has misappropriated, dilu ted, is infringing upon, or has otherwise violated any Intellectual Property of any third party, (iii) to the Knowledge of the Company, no third party is misappropriating, infringing, diluting or otherwise violating any Intellectual Property owned by any of the Company or its Subsidiaries, and no such claims have been asserted or threatened in writing against any third party by the Company or its Subsidiaries in the past three (3) years; (iv) the Company and its Subsidiaries have taken reasonable actions to protect and maintain the Intellectual Property that is used by the Company or any of its Subsidiaries, and (v) there are no claims, suits or other actions pending or, to the Knowledge of the Company, threatened, nor have any such claims been asserted or threatened in the past three (3) years, that seek to limit or challenge the validity, enforceability, ownership, or right to use, sell or license the Intellectual Property owned by the Company or any of its Subsidiaries, or the rig ht to use or license any Intellectual Property that the Company or any of its Subsidiaries uses or holds for use but does not own, nor, to the Knowledge of the Company, is there any valid basis therefor.

37

Section 4.12.2Each of the Company and its Subsidiaries has at all times materially complied with all applicable Laws, as well as its own rules, policies, and procedures, relating to privacy, data protection, and the collection and use of personal information collected, used, or held by the Company or its Subsidiaries and no claims have been asserted or threatened against the Company or its Subsidiaries with respect thereto.

Section 4.13Taxes.

Section 4.13.1Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, (i) each of the Company, the Subsidiaries of the Company, OpCo and the OpCo Subsidiaries (A) has timely filed (or has had timely filed on its behalf) all Tax Returns required to be filed by it (after giving effect to any filing extension properly granted by a Governmental Entity having authority to do so) and all s uch Tax Returns are accurate and complete in all respects, (B) has paid (or the Company has paid on its behalf or will designate as a portion of the Estimated Closing Date Tax Amount) all Taxes of it (whether or not shown on any Tax Return) that are due and payable, (C) has complied in all respects with all applicable Laws relating to the payment and withholding of Taxes (including withholding of Taxes pursuant to Sections 1441, 1442, 1445, 1446, 3111, and 3402 of the Code or any similar provision of Law), (D) is not the subject of any pending audit, examination, or other proceeding in respect of material Taxes, and to the Knowledge of the Company, no audit, examination or other proceeding in respect of material Taxes is being considered by any Tax authority, (E) does not have deficiencies for any Taxes that have been proposed, asserted or assessed against it or any Affiliate (to the extent that any REIT Entity could be held liable for such Taxes) that will not have been fully paid prior to the Closing Date (including any applicable interest charges, penalties or other additions to Taxes), and no requests for waivers of the time to assess any such Taxes have been agreed to or are pending, and (F) is not the subject of a claim that has been made by any Tax authority, in a jurisdiction where it does not file a Tax Return, stating that such entity is or may be subject to taxation by that jurisdiction for Taxes that would be covered by or the subject of such Tax Return, which claim has not been fully paid or settled to the satisfaction of such Tax authority, (ii) the Reference Balance Sheet reflects an adequate reserve (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax income) for all unpaid Taxes of the REIT Entities for all taxable periods and portions thereof through the Reference Balance Sheet Date, (iii) there are no Encumbrances for Taxes (other than for current Taxes not yet due and payable or Taxes being the validity or amount of which is contested in good faith by appropriate proceedings, which proceedings are listed in Schedule 4.13.1) on any assets of the REIT Entities and (iv) no REIT Entity has engaged in any transaction that has given rise to or would reasonably be expected to give rise to a disclosure obligation as a “listed transaction” under Section 6011 of the Code and the regulations promulgated thereunder.

Section 4.13.2Except as set forth in Schedule 4.13.2, each REIT Entity (other than, from and after the Closing Date, PropCo) that is a partnership, joint venture or limited liability company has been properly treated since its formation and continues to be properly treated for federal and relevant state income tax purposes as a partnership or as an entity that is disregarded for federal income tax purposes and not as a corporation or an association taxable as a corporation.

38

Section 4.13.3None of the REIT Entities nor any predecessors of such entities by merger or consolidation has within the past three (3) years been a party to a transaction intended to qualify under Section 355 of the Code or under so much of Section 356 of the Code as it relates to Section 355 of the Code.

Section 4.13.4Except as set forth on Schedule 4.13.4, none of the REIT Entities is or will be required to include in income any material adjustment pursuant to Section 481(a) of the Code (or similar provision of state, local or foreign Law) by reason of a change in accounting method or as a result of the transactions contemplated hereby.  None of the REIT Entities will be required to include any item of income in, or exclude any material item of deduction from, Taxable income for an y Taxable period (or portion of a Straddle Period) ending after the Closing Date as a result of any (i) installment sale or open transaction disposition made on or prior to the Closing Date, (ii) prepaid amount received on or prior to the Closing Date, or (iii) intercompany transaction or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding provision of state, local or foreign income Tax Law).

Section 4.13.5Except as set forth on Schedule 4.13.5, none of the Company, any Subsidiary of the Company, OpCo or any Subsidiary of OpCo, (x) has been a member of an affiliated group filing a consolidated Income Tax Return (other than a group the common parent of which was the Company or a wholly owned Subsidiary of the Company) for any taxable period for which the relevant statute of limitations has not expired, (y) is a party to any Tax protection or Tax-sharing agreement (other than a rrangements between or among the Company and any of its Subsidiaries) or (z) has liability for the Taxes of any Person other than it and/or its Subsidiaries, as of the date of this Agreement, pursuant to Treasury Regulations Section 1.1502-6 (or similar provision in state or local Law), by Contract, as a transferee or successor, or otherwise.

Section 4.13.6Immediately after the transactions contemplated by the Reorganization Agreement and this Agreement, the remaining aggregate current and accumulated earnings and profits of the Company and its Subsidiaries accumulated through the “non-REIT year” (within the meaning of Section 857(a)(2) of the Code) ending on the Closing Date will not exceed $0.

Section 4.13.7Not less than 58% of the interests in the Carlyle Funds (as measured by capital) is held directly or indirectly through entities that are flow-through entities for U.S. federal income tax purposes by investors who are corporations for U.S. federal income tax purposes. The Carlyle Funds have informed the Company in writing of the information contained in the foregoing sentence.

Section 4.14No Brokers.  Except for JPMorgan Chase & Co., whose fees are solely payable by the Company or any of its Subsidiaries, no broker or other person is entitled to any broker’s or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company or any of its Subsidiaries.

Section 4.15Compliance with Laws; Permits.  Except as set forth in Schedule 4.15, since December 31, 2007, neither the Company nor any of its Subsidiaries has

39

violated or failed to comply with all Laws applicable to its business or operations, except in each case to the extent that such violation or failure, individually and in the aggregate, would not reasonably be expected to result in Damages in excess of $10,000,000.00.  Each of the Company and its Subsidiaries own and/or possess all permits, licenses, variances, authorizations, exemptions, orders, registrations, franchises, consents and approvals of all Governmental Entities (the “Permits”) which are required for its businesses, activities and operations, except where the absence of such Permits, individually and in the aggregate, would not reasonably be expected to result in Damages in excess of $10,000,000.00. The Company and its Subsidiaries have been in compliance in all respects with the terms of such Permits, except for such instances of non-compliance which have been cured or which, individually and in the aggregate, would not reasonably be expected to result in Damages in excess of $10,000,000.00.  All such Permits are in full force and effect and neither the Company nor any of its Subsidiaries has received notice that any suspension, modification or revocation of any of them is pending or, to the Knowledge of the Company, threatened nor, to the Knowledge of the Company, do any grounds exist for any such action, except for such suspensions, modifications or revocations that, individually and in the aggregate, would not reasonably be expected to result in Damages in excess of $10,000,000.00.  All material applications required to have been filed for the renewal of the Permits have been duly filed with the appropriate Governmental Entity, and all other material filings required to have been made with respect to such Permit have been duly made on a timely basis with the appropriate Governmental Entity, except for such instances of failure to file that, individually or in the agg regate, do not have a Company Material Adverse Effect.

Section 4.16Contracts.

Section 4.16.1Schedule 4.16.1 sets forth a true and complete list of each Contract to which any REIT Entity is a party or which binds the REIT Assets, and falls within any of the following categories:  (i) Contracts for any construction work (including any additions or expansions) which are currently in effect and under which any REIT Entity currently has an obligation in excess of $1,500,000; (ii) Contracts providing for (A)  ;the sale, lease, or sublease (with respect to leases and subleases, excluding (1) any Permitted Lease Agreement Sublease (other than a Material Lease), (2) any cellular towers, oil-and-gas leases, and similar leases, subleases or occupancy agreement which would not reasonably be expected to have a material adverse effect on the use, occupancy or operation of the affected REIT Facility as a Senior Living Facility consistent with past practice or materially adversely affect the value of such REIT Facility) and (3) any existing lease or sublease between the REIT Entities and the OpCo Entities, option to do any of the foregoing, or right of first refusal or offer with respect to any rights of the Company or any of its Subsidiaries in any REIT Real Property or, other than sales of inventory, consumables or FF&E and Tangible Personal Property in the ordinary course of business consistent with past practice, other material assets of the REIT Entities or (B) the purchase of (other than with respect to fixtures and capital improvements), or option to purchase or right of first refusal or offer for, any real estate by a REIT Entity involving (in the case of clause (B)) payments of $1,500,000 or more; (iii) Contracts pursuant to which the Company or any of its Subsidiaries has any material continuing contractual obligation (A) for indemnification or otherwise under any agreements relating to the sale of real estate, or any other business or material assets, previously owned, whether directly or indirectly, by the Company or any of its Subsidiaries if such Contracts are likely to involve a Liability of $1,500,000 or more or (B) to make payments, contingent or otherwise, on account of or arising out of prior acquisitions or

40

sales of any of the REIT Real Property in any case in excess of $1,500,000); (iv) the Ground Leases; (v) loan or credit agreements, notes, bonds, mortgages, indentures, guarantee or any other Contracts pursuant to which any Indebtedness for Borrowed Money is outstanding or may be incurred; (vi) partnership, limited liability company, joint venture, strategic alliance or other similar Contracts or arrangements with respect to the ownership or governance of, or otherwise with respect to the Equity Interests representing ownership of, a REIT Entity not wholly-owned by another REIT Entity; (vii) Contracts (other than this Agreement and the Ancillary Agreements) that materially restrict the operations of the REIT Business as currently conducted or, at or after the Closing, would otherwise limit the freedom of Parent or Buyer or any REIT Entity to own or lease any facility or otherwise conduct its operations in any geographic area; (viii) employment or consulting agreement requiring payment by the REIT Entities in excess of $250,000 in any calendar year remaining in its term; (ix) Contracts containing an active and effective covenant not to compete or standstill that prohibits or materially restricts the ability of the REIT Entities, directly or indirectly, to compete in any line of business or with any Person; (x) operating leases of tangible personal property requiring payment by the REIT Entities in excess of $150,000 in any calendar year remaining in its term; (xi) Contracts for the purchase of supplies or products which requires performance over a period of more than one (1) year and the payment of an amount in excess of $500,000 in any calendar year; (xii) management agreements (i.e., Contracts providing for the management and/or operation of any REIT Facility, and specifically excluding management agreements between two or more of the REIT Entities or any Contract to be terminated prior to Closing); (xiii) captive insurance Contracts; (xiv) Contracts with or for the benefit of any Governmental Entity requiring payment in excess of $250,000 in any calendar year remaining in its term; (xv) Contracts requiring the REIT Entities to provide any funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in any other person (other than between two or more of the REIT Entities); (xvi) Contracts involving swaps, forwards, futures, options, caps, floors or collar financial contracts, or any other interest-rate or foreign currency hedge or protection contract, other than any such Contract under which the contractual obligations included therein do not exceed $1,000,000 in the aggregate; (xvii) Contracts set forth or required to be set forth in Section 4.9; (xviii) Contracts with any labor union or other employee organization with respect to the employees of the REIT Entities or with respect to the Compan y’s or any of its Subsidiaries’ employees at any REIT Facility; (xix) material licenses of Intellectual Property (a) from any the Company or any of its Subsidiaries to any third party or (b) to the Company or any of its Subsidiaries from any third party (other than Contracts to be terminated prior to Closing and licenses for off-the-shelf software); (xx) Contracts material to the REIT Business, taken as a whole, except for any such Contract that may be canceled, without any material penalty or other liability to any REIT Entity, upon notice of ninety (90) days or less.  Each Contract of the type described in this Section 4.16.1 is referred to herein as a “Company Material Contract.”  True and complete copies of each Company Material Contract have been provided or made available by the Company to Parent and Buyer.

Section 4.16.2Neither the Company nor its Subsidiaries has received any claim of default of any material provision under or cancellation of any Company Material Contract, none of the Company and its Subsidiaries is in material breach or violation of, or default under, any Company Material Contract and no event has occurred that with notice or lapse of time or both would constitute a material violation, breach or default under any Company Material Contract, and to the Knowledge of the Company, no other pa rty is, in any material respect, in breach or violation of, or default under, any Company Material Contract and neither the execution of this

41

Agreement nor the consummation of the transactions contemplated by this Agreement shall constitute a default under, or give rise to cancellation rights under, or otherwise adversely affect any of the Company or its Subsidiaries’ material rights under any Company Material Contract, and except to the extent such Company Material Contract has expired in the ordinary course of business in accordance with its terms after the date of this Agreement, each Company Material Contract is in full force and effect and is binding and enforceable against the Company and its Subsidiaries, as applicable, party thereto and, to the Knowledge of the Company, each other party thereto.

Section 4.17Guarantees; Letters of Credit.  Set forth in Schedule 4.17 is a correct and complete list of all Liabilities of the REIT Entities under any guaranty, letter of credit, comfort letter, surety bond and/or other credit support provided by any of the REIT Entities in support of any Liability of any person (other than a REIT Entity) in excess of $500,000 or, with respect to such items of credit support that do not involve any financial obligation, a value of $1,000,000.

Section 4.18Insurance.  Schedule 4.18 contains a correct and complete list as of the date of this Agreement of all material insurance policies (except title insurance) and fidelity bonds owned or held by the Company or its Subsidiaries (the “Insurance Policies”).  There is no claim in excess of $500,000 by the Company or any of its Subsidiaries relating to the REIT Real Property and the FF&E and Tangible Personal Property that is pending under any of such policies or bonds as to which coverage h as been questioned, denied or disputed by the underwriters of such policies or bonds or in respect of which such underwriters have reserved their rights. Except as, individually and in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect, (i) all premiums payable under all such policies and bonds have been timely paid, (ii) the Company and its Subsidiaries have complied in all material respects with the terms and conditions of all such policies and bonds, (iii) such policies of insurance and bonds (or other policies and bonds providing substantially similar insurance coverage) have been in effect since January 1, 2010 and/or have been renewed at expiration and remain in full force and effect as of the date hereof, (iv) such policies and bonds, in the aggregate, cover all of the assets of the Company and its Subsidiaries, (v) except as set forth in Schedule 4.18, such policies and bonds are sufficient for compliance with all requir ements under any Company Material Contracts or Laws, or to which any of the applicable insured Assets of the Company or its Subsidiaries is subject and (vi) to the Knowledge of the Company, there is no threatened termination any such policies or bonds.

Section 4.19Required Vote.  The affirmative vote of (i) the holders of a majority of the outstanding shares of Company Common Stock, (ii) each holder of shares of Company Common Stock entitled to vote thereon with respect to the conversion of the Company into a limited liability company in accordance with the Reorganization Agreement or, if such approval is not obtained prior to the Closing, the holders of a majority of the outstanding shares of Company Common Stock approving the merger of the Company pursuant to whic h the surviving corporation is a limited liability company, which shall have been obtained and delivered to Buyer (the “Conversion Approval”), and (iii) the sole holder of PropCo Interests to approve the Purchase are the only votes required of the holders of any class or series of capital stock or other Equity Interests of the Company or any of its Subsidiaries to approve and adopt this Agreement and the transactions contemplated hereby (the “Company Approval”).

42

Section 4.20Solvency.  Immediately prior to, and immediately after, the Closing, OpCo will be solvent.  At or prior to the Closing, the Company shall provide to Parent a complete and correct copy of any valuation analysis of OpCo prepared by any nationally recognized valuation firm or similar expert (and such analysis shall conclude at a minimum that immediately prior to and after the Closing, OpCo is and will be solvent).

Section 4.21Books and Records.  The financial books and records of the Company and each of its Subsidiaries (relating in whole or in part to any REIT Entity) are complete and correct in all material respects for the periods for which they exist and accurately reflect the transactions to which the Company and each of its Subsidiaries (to the extent relating to any REIT Entity) is a party or by which the REIT Assets are bound. The minute books of the Company and each of its Subsidiaries (relating in whole or in part to any REIT E ntity or the business conducted thereby) contain records that are accurate and complete in all material respects of all meetings held of, and action taken by, stockholders of the Company and each of its Subsidiaries, the board of directors (or equivalent body) of the Company and each of its Subsidiaries and any committees of the board of directors (or equivalent body) of the Company and each of its Subsidiaries; provided, however, that no representation or warranty is given under this Section 4.21 with respect to (i) for each entity, the minutes of any meeting taking place subsequent to the date of the last meeting for which minutes of that entity’s board have been provided or (ii) the extent to which any minutes are complete with respect to information believed by the Company to be strategic, confidential or sensitive with respect to the OpCo Business.  At, or within a reasonable period following, the Closing, all of the books and records related to the REIT Ent ities or the business conducted thereby will be in the possession or control or available to (including for copying) the REIT Entities.

Section 4.22Investment Company Act of 1940.  None of the Company or any of its Subsidiaries is, or at the Closing will be, required to be registered under the Investment Company Act of 1940, as amended.

Section 4.23OFAC.  No stockholder of the Company and to the Knowledge of the stockholders of the Company, no Person that owns an equity interest in any stockholder of the Company is (i) listed on the Specially Designated Nationals and Blocked Persons List or any other similar list maintained by the Office of Foreign Assets Control, United States Department of the Treasury, pursuant to any authorizing statute, executive order or regulation, (ii) a “specially designated global terrorist” or other Person listed in Appendix A to Chapter V of 31 C.F.R., as the same has been from time to time updated and amended or (iii) a Person either (A) included within the term “designated national” as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515 or (B) designated under Section 1(a), 1(b), 1(c) or 1(d) of Executive Order No. 13224, 66 Fed. Reg. 49079 (published September 25, 2001) or a Person similarly designated under any related enabling legislation or any other similar Executive Orders. No stockholder of the Company is restricted or prohibited from entering into this Agreement (either directly or indirectly) by any United States federal or state law, executive order of the President of the United States or any rule, regulation or other promulgation of any Governmental Entity.

43

Article 5.
Representations and Warranties of Parent

Except as set forth in the disclosure schedule that has been prepared by Parent and delivered by Parent to the Company in connection with the execution and delivery of this Agreement, or as disclosed in Parent SEC Documents filed with, or furnished to, as applicable, the SEC prior to the date of this Agreement, each of Parent and Buyer hereby, jointly and severally, represents and warrants to the Company that:

Section 5.1Organization, Standing and Power.

Section 5.1.1Each of Parent and Buyer is an entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, as applicable.  The charter of Parent (the “Parent Certificate”), the certificate of formation, as amended and supplemented, of Buyer (the “Buyer Certificate”) are valid and in full force and effect. Parent and each of its Subsidiaries has all requis ite corporate or other power and authority to own, operate, lease and encumber its properties and carry on its business as now being conducted. Each of Parent and Buyer is duly qualified or licensed to do business as foreign corporations and are in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed, individually and in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect.

Section 5.1.2Parent has made available to the Company complete and correct copies of the Parent Certificate, the bylaws of Parent (the “Parent Bylaws”), the Buyer Certificate and the limited liability company agreement of Buyer (the “Buyer Limited Liability Company Agreement”), in each case, as amended, restated or supplemented to the date of this Agreement. Parent and Buyer are not in violation of any provision of the Parent Cer tificate, the Parent Bylaws, the Buyer Certificate or the Buyer Limited Liability Company Agreement, except where such violation would not reasonably be expected to have a Parent Material Adverse Effect.

Section 5.2Capital Structure.

Section 5.2.1As of the date hereof, the authorized capital stock of Parent consists of 750,000,000 shares of Parent Common Stock and 50,000,000 shares of preferred stock, par value $1.00 per share (“Parent Preferred Stock”).  As of the date hereof, of the authorized Parent Preferred Stock, 4,140,000 shares are 7.25% Series E Cumulative Redeemable Preferred Stock (“Series E Preferred Stock”) and 7,820,000 shares are 7.1% Series F Cumulative Redeemable Preferred Stock (“Series F Preferred Stock”).  At the close of business on December 10, 2010, there were 324,895,064 shares of Parent Common Stock were duly authorized, validly issued and outstanding.  The outstanding shares of Parent Common Stock are fully paid and nonassessable.  As of the date of this Agreement, 11,820,000 shares of Parent Preferred Stock were issued and outstanding (consisting of 4,000,000 of 7.25% Series E Preferred Stock and 7,820,000 of 7.1% Series F Preferred Stock).

44

Section 5.2.2All outstanding shares of Parent Common Stock and Parent Preferred Stock are duly authorized, validly issued, fully paid and nonassessable and free of preemptive or similar rights under Law, the Parent Certificate or Parent Bylaws and any Contract or instrument to which Parent is a party or by which it is bound.

Section 5.3Authority; Noncontravention; Consents.

Section 5.3.1Each of Parent and Buyer has all necessary corporate or other power and authority to execute and deliver this Agreement and each Ancillary Agreement to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby to be consummated by Parent and Buyer.  The execution and delivery by Parent and Buyer of this Agreement and each Ancillary Agreement to which it is a party, the performance of its obligations hereunder and thereunder, and the consummation by it of the transactions contemplated hereby and thereby to be consummated by it have been duly and validly authorized by all necessary action and no other proceedings on the part of Parent and Buyer and no votes by any holder of Equity Interests in Parent and Buyer are necessary to authorize this Agreement or any Ancillary Agreement or to consummate the transactions contemplated hereby and thereby.  This Agreement and each Ancillary Agreement has been, or  (in the case of Ancillary Agreements executed after the date hereof) will be, when executed, duly authorized and validly executed and delivered by Parent and Buyer party thereto and constitutes or will (in the case of Ancillary Agreements executed after the date hereof) constitute, when executed, a legal, valid and binding obligation of Parent and Buyer, enforceable against Parent and Buyer in accordance with its terms.

Section 5.3.2Except as set forth in Schedule 5.3.2, the execution and delivery of this Agreement and the Ancillary Agreements by Parent and its Subsidiaries do not and the consummation of the transactions contemplated by, and performance of their respective obligations under, this Agreement and the Ancillary Agreements and compliance by Parent and its Subsidiaries with the provisions hereof and thereof, will not, conflict with, or result in any violat ion of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of a benefit under, result in a material increase in payment obligations thereunder, or result in the creation of any Encumbrance upon any of the Assets of Parent or any of its Subsidiaries under, (i) the Parent Certificate or the Parent Bylaws or the other organizational documents of any Parent Subsidiary, each as amended, restated or supplemented, (ii) any loan or credit agreement, note, bond, mortgage, indenture, merger or other acquisition agreement, reciprocal easement agreement, lease or other Contract, instrument, permit, concession, franchise or license applicable to Parent or any of its Subsidiaries, or their respective Assets or (iii) subject to the governmental filings and other matters referred to in Section 5.3.3, any Laws applicable to Parent or any of its Subsidiaries or their respective Asse ts, other than, in the case of clause (ii) or (iii), any such conflicts, violations, defaults, rights, losses or Encumbrances that, individually and in the aggregate, would not reasonably be expected to (x) have a Parent Material Adverse Effect or (y) prevent or delay in any material respect the consummation of the transactions contemplated by this Agreement or the Ancillary Agreements.

Section 5.3.3No consent, approval, order or authorization of, or registration, declaration, notice or filing with, any Governmental Entity is required by or with respect to

45

Parent, or any of its Subsidiaries in connection with the execution and delivery of this Agreement and the Ancillary Agreements by Parent or any of its Subsidiaries or the consummation by Parent or its Subsidiaries of the transactions contemplated by this Agreement and the Ancillary Agreements, except for such other consents, approvals, orders, authorizations, registrations, declarations and filings necessary (A) for the ownership of PropCo’s assets following the Closing in the manner contemplated by this Agreement, (B) as may be required under (i) (A) the HSR Act, (B) the rules and regulations of the Exchange, (C) Laws requiring transfer, recordation or gains Tax filings, (D) Environmental Laws or (E) Blue Sky Laws, to the extent applicable; or (ii) which, if not obtained or made, individually and in the aggregate, would not reasonably be expected to have a Parent Material Adverse Effect or prevent or delay in any material respect the consummation of the transactions contemplated by this Agreement or the Ancillary Agreements or otherwise prevent Parent or any of its Subsidiaries from performing its or their respective obligations under this Agreement or the Ancillary Agreements in any material respect.

Section 5.4SEC Filings; Financial Statements.

Section 5.4.1Except as set forth in Schedule 5.4.1, Parent and its Subsidiaries have timely filed or otherwise furnished (as applicable) with the SEC all forms, reports, schedules, statements and other documents (as supplemented and amended since the time of filing, collectively, the “Parent SEC Documents”) required to be filed by them since January 1, 2008 under the Exchange Act or the Securities Act, as the case may be, togethe r with all certifications required pursuant to the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”).  The Parent SEC Documents, including any financial statements or schedules included in the Parent SEC Documents, in each case, at the time filed (and, in the case of registration statements and proxy statements, on the dates of effectiveness and the dates of mailing, respectively, and, in the case of any Parent SEC Document amended or superseded by a filing prior to the date of this Agreement, then on the date of such amending or superseding filing) (i) did not (or with respect to Parent SEC Documents filed after the date hereof, will not) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and (ii) complied in all material respects with the applicable requirements of the Excha nge Act, the Securities Act and, as the case may be, the Sarbanes-Oxley Act and the applicable rules and regulations of the SEC thereunder.  None of the Parent Subsidiaries is currently required to file any forms, schedules, statements, reports or other documents with the SEC.

Section 5.4.2All of the audited consolidated financial statements and unaudited consolidated interim financial statements of Parent and its consolidated Subsidiaries included in the Parent SEC Documents (collectively, the “Parent Financial Statements”) (i) have been or will be, as the case may be, prepared from, are in accordance with, and accurately reflect the books and records of Parent and its consolidated Subsidiaries in all material re spects, (ii) have been or will be, as the case may be, prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of interim financial statements, for normal and recurring year-end adjustments as may be permitted by the SEC on Form 10-Q, Form 8-K or any successor or like form under the Exchange Act) and (iii) fairly present in all material respects the consolidated financial position and the results of

46

operations, cash flows and changes in stockholders’ equity of Parent and its consolidated Parent Subsidiaries as of the dates and for the periods referred to therein.

Section 5.5Absence of Certain Changes or Events. Except as disclosed in Schedule 5.5, since September 30, 2010 (the “Parent Financial Statement Date”), there has not been any circumstance, event, occurrence, change or effect that, individually or in the aggregate, would reasonably be expected to have a Parent Material Adverse Effect.

Section 5.6Litigation.  Except as reflected on the Parent Financial Statements or as disclosed in Schedule 5.6, there is no suit, action, investigation or proceeding pending or, to the Knowledge of Parent, threatened against or affecting Parent or any of its Subsidiaries that (i) individually, if determined or resolved adversely, would reasonably be expected to result in a liability exceeding $10,000,000 (after taking into consideration any insurance or third party proceeds which have been or would reasonably be expected to be received in connection with such suit, action, investigation or proceeding) or (ii) in the aggregate, would reasonably be expected to (A) have a Parent Material Adverse Effect or (B) prevent or delay in any material respect the consummation of the transactions contemplated by this Agreement or the Ancillary Agreements, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against the Company or any of its Subsidiaries that has had or would reasonably be expected to have any effect set forth in clause (i) or (ii) above.

Section 5.7Affiliate Transactions; Intercompany Liabilities.  Except as set forth in Schedule 5.7 or as otherwise disclosed in Parent SEC Documents filed with the SEC prior to the date of this Agreement, there are no understandings, arrangements or Contracts, including those providing for sales, purchases, leasing, subleasing, licensing or sublicensing of goods, services, tangible or intangible property or joint activities (including any Indebtedness for Borrowed Money), of the type described in Item 404 of Regulation S-K of the Exchange Act between any of Parent on the one hand, and any Parent Subsidiary or any of their respective current directors, officers or other Affiliates or any other individuals who were named executive officers (as such term is used in Regulation S-K of the Exchange Act) of the Company at any time since December 31, 2008 or any relative of any of the foregoing  on the other hand.

Section 5.8Taxes.

Section 5.8.1Except as would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect, (i) each of Parent and its Subsidiaries (A) has timely filed (or has had timely filed on its behalf) all Tax Returns required to be filed by it (after giving effect to any filing extension properly granted by a Governmental Entity having authority to do so) and all such Tax Returns are accurate and complete in all respects , (B) has paid (or Parent has paid on its behalf) all Taxes of it (whether or not shown on any Tax Return) that are due and payable and (C) has complied in all respects with all applicable Laws relating to the payment and withholding of Taxes (including withholding of Taxes pursuant to Sections 1441, 1442, 1445, 1446, 3111 and 3402 of the Code or any similar provision of Law), (ii) neither Parent nor any Subsidiary of Parent is the subject of any pending audit, examination, or other proceeding in respect of material Taxes, and to the Knowledge of Parent, no audit, examination or other proceeding in respect of material Taxes involving any such entity is being considered by any Tax authority, (iii) no deficiencies for any material Taxes have been proposed, asserted or

47

assessed against Parent, any Subsidiary of Parent or any Affiliate that will not have been fully paid prior to the Closing Date (including any applicable interest charges, penalties or other additions to Taxes), and no requests for waivers of the time to assess any such Taxes have been agreed to or are pending, (iv) no claim has been made by any Tax authority, in a jurisdiction where Parent or the Subsidiaries of Parent do not file a Tax Return, stating that any such entity is or may be subject to taxation by that jurisdiction for Taxes that would be covered by or the subject of such Tax Return, which claim has not been fully paid or settled to the satisfaction of such Tax authority, (v) there are no Encumbrances for Taxes (other than for current Taxes not yet due and payable or Taxes the validity or amount of which being contested in good faith by appropriate proceedings, which proceedings are listed on Schedule 5.8.1) on any Assets of Parent or any Subsidiary of Parent and (vi) neither Parent nor any of its Subsidiaries has engaged in any transaction that has given rise to or would reasonably be expected to give rise to a disclosure obligation as a “listed transaction” under Section 6011 of the Code and the regulations promulgated thereunder.

Section 5.8.2(i) Parent for all taxable years commencing in the year that Parent first made a REIT tax election under Section 856 of the Code, through the most recent December 31, has elected to be subject to taxation, and has been properly subject to taxation, as a REIT within the meaning of Section 856 of the Code and has satisfied all requirements to qualify as a REIT for such years, (ii) Parent has operated, and intends to continue to operate, in such a manner as to qualify as a REIT for the taxable year of this Agreement and, if different, the taxable year including the Closing and (iii) Parent has not taken or omitted to take any action that could reasonably be expected to result in a challenge by the IRS or any other taxing authority to Parent’s status as a REIT.

Section 5.9No Brokers.  Except for CSCA Capital Advisors, LLC, whose fees are solely payable by Parent and Buyer or any of their Subsidiaries, no broker or other person is entitled to any broker’s or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent and Buyer or any of their Subsidiaries.

Section 5.10Compliance with Laws; Permits.  Except as disclosed in the Parent SEC Documents filed as of the date hereof, Parent and its Subsidiaries have complied with all applicable Laws and have not received any notice of violation of any such Law, except as would not have a Parent Material Adverse Effect.

Section 5.11Contracts.  All Parent Material Contracts have been filed as exhibits to the Parent SEC Documents. Each Parent Material Contract is in full force and effect and is valid, binding and enforceable against Parent and/or its Subsidiaries party thereto, and, to the Knowledge of Parent, each other party thereto in accordance with its terms, except for such failures to be in such full force and effect or to be valid, binding and enforceable as are not reasonably likely to have, individually or in the aggregate, a Parent Ma terial Adverse Effect. None of Parent or any of its Subsidiaries, nor, to the Knowledge of Parent, any other party thereto, is in material breach or violation of, or default under, any Parent Material Contract, and no event has occurred that with notice or lapse of time or both would constitute a violation, breach or default under any Parent Material Contract, except where in each case such breach, violation or default is not reasonably likely to have, individually or in the aggregate, a Parent

48

Material Adverse Effect. As of the date of this Agreement, none of Parent or any of its Subsidiaries has received any written notice of an event of default pursuant to the terms of any Parent Material Contract, specifically excluding, for this purpose, any notice of an alleged event of default which has since been withdrawn or otherwise remedied and any notice of default which, even if true, does not have an Parent Material Adverse Effect.

Section 5.12Insurance.  Parent maintains insurance policies with reputable insurers, or maintains self-insurance practices, in such amounts and covering such risks as are in accordance with normal industry practice for companies engaged in businesses similar to that of Parent.

Section 5.13Bridge Financing.  Parent has delivered to the Company a true, complete and correct copy of the executed credit agreement, dated as of December 13, 2010 (the “Bridge Credit Agreement”), among Parent and the lenders from time to time party to the Bridge Credit Agreement, as lenders (the “Lenders”), pursuant to which the Lenders have committed, subject to the terms and conditions set forth therein, to lend the amounts set forth therein (the “Bridge Financing”).&# 160; Except for any amendments or drafts of amendments that Parent has delivered to the Company, the Bridge Credit Agreement has not been amended or modified prior to the date of this Agreement, no such amendment or modification is contemplated, and as of the date hereof, the respective commitments contained in the Bridge Credit Agreement have not been withdrawn or rescinded in any respect. Except for fee letters relating to fees with respect to Bridge Financing and an engagement letter (complete copies of which have been provided to the Company, with only fee provisions, “market flex” provisions and securities demand provisions redacted), as of the date hereof there are no side letters or other agreements, Contracts or arrangements related to the funding of the Bridge Financing other than as expressly set forth in the Bridge Credit Agreement delivered to the Company prior to the date hereof.  Parent has fully paid any and all commitment fees, other fees and deposits in connection with the Bri dge Credit Agreement that are payable on or prior to the date hereof, and as of the date hereof, the Bridge Credit Agreement is in full force and effect and is a legal, valid, binding and enforceable obligation of Parent.  There are no conditions precedent or other contingencies related to the funding of the full amount of the Bridge Financing, other than as expressly set forth in or expressly contemplated by the Bridge Credit Agreement.  No event has occurred which, with or without notice, lapse of time or both, would or would reasonably be expected to constitute a default or breach on the part of Parent.  The aggregate proceeds contemplated by the Bridge Credit Agreement, together with cash of Parent and Buyer on hand and/or available under currently existing credit facilities, in each case on the Closing Date, will be sufficient for Parent, Buyer and PropCo to (i) effect, as required, the repayment or refinancing of any outstanding Indebtedness for Borrowed Money of the Company contemp lated by this Agreement or the Bridge Credit Agreement (excluding, in any event, the approximately $1 billion of existing Indebtedness for Borrowed Money held by Parent or its subsidiaries that is mezzanine debt issued by one or more of the REIT Entities, which mezzanine debt shall remain outstanding), (ii) pay any and all fees and expenses required to be paid by Parent, Buyer and PropCo in connection with the Purchase and Bridge Credit Agreement and (iii) satisfy all of the other payment obligations of Parent, Buyer and PropCo contemplated hereunder.

49

Article 6.
Covenants

Section 6.1Conduct of the Company Pending the Closing.  The Company agrees that, between the date of this Agreement and the Closing, except as expressly set forth in this Agreement, the Ancillary Agreements or Schedule 6.1, the Company shall cause the REIT Business to be conducted in the ordinary course of business consistent with past practice, and the Company shall use commercially reasonable efforts to preserve substantially intact the REIT Business and to preserve, in al l material respects, the current relationships of the REIT Entities with customers, suppliers, key employees and other persons with which the REIT Entities have significant business relations, and the Company shall not, and shall cause its Subsidiaries not to, take any action that would, as of the Closing Date, cause or result in OpCo being in violation of any of the covenants set forth in the Lease Agreement.  Except as expressly set forth in this Agreement, the Ancillary Agreements or set forth in Schedule 6.1, the Company shall not, and the Company shall cause the REIT Entities to not, between the date of this Agreement and the Closing, do any of the following without the prior written consent of Parent, which consent shall not be unreasonably withheld or delayed:

Section 6.1.1with respect to the REIT Business, change in any material manner any of its methods, principles or practices of accounting in effect at the Reference Balance Sheet Date, except as may be required by applicable Law or GAAP;

Section 6.1.2fail to duly and timely file any material reports, Tax Returns or other material documents required to be filed with Government Entities, subject to extensions permitted by Law;

Section 6.1.3make or rescind any material Tax election (including, but not limited to, any entity classification election);

Section 6.1.4except with respect to Indebtedness for Borrowed Money with respect to which all Liabilities are fully discharged at or prior to the Closing, incur, prepay, or refinance any Indebtedness for Borrowed Money that would be a Liability of a REIT Entity or enter into any commitment or contractual obligation to incur, prepay or refinance any Indebtedness for Borrowed Money, other than Indebtedness for Borrowed Money under existing credit facilities;

Section 6.1.5amend any of the organizational documents of the REIT Entities or change the legal form of the Company, Manor Care, Seller or any REIT Entity;

Section 6.1.6classify or re-classify, grant or issue, sell, pledge, dispose of, encumber, combine, split, subdivide, redeem or otherwise make any change in the number of issued and outstanding, shares of beneficial interest, capital stock, membership interests, units of limited partnership interest, or other Equity Interests, in each case, of any REIT Entity or authorize any of the foregoing (other than (i) as contemplated by the Reorganization Agreement or (ii) in connection with the exercise of Company Options);

Section 6.1.7(a) sell, lease, mortgage, assign, subject to Encumbrance (other than Permitted Encumbrances) or otherwise dispose of any of the REIT Entities or any of their

50

respective material assets, except for disposals of inventories, consumables and FF&E and Tangible Personal Property, and, except for obsolete assets, in each case, in the ordinary course of business or (b) make one or more capital expenditures with respect to the REIT Business or REIT Assets which (i)(A) involves the purchase of any real property or the entry into any lease or sublease of real property as tenant or sub-tenant, or (B) is not in connection with a Construction Project, and (ii) is not consistent with the capital expenditure forecasts delivered by the Company to Parent prior to the date hereof.

Section 6.1.8(i) with respect to the REIT Business, pay, discharge, settle or satisfy any claims or Liabilities other than the payment, discharge, settlement or satisfaction (A) in the ordinary course of business consistent with past practice or (B) in full of claims or Liabilities which involve an amount of Liabilities of the REIT Entities no greater than $750,000 with respect to an individual claim or Liability, or one or more related claims or L iabilities, or $2,000,000 in the aggregate, and do not impose any material Liability on the REIT Entities other than the payment of money or (ii) waive, assign, transfer or release any claims or rights that are REIT Assets and of material value;

Section 6.1.9enter into any Contract between any REIT Entity on the one hand, and any officer or director of the Company or a Subsidiary of the Company, on the other hand;

Section 6.1.10other than in the ordinary course of business, consistent with past practice, (i) materially amend modify, renew, extend or terminate or waive rights under, compliance with the terms of or breaches under, any Company Material Contract, or (ii) enter into a new Contract that would constitute a Company Material Contract unless such new Contract is terminable by the Company or its applicable Subsidiary without any penalty, premium, termination payment or other Liabilities upon not mo re than ninety (90) days notice;

Section 6.1.11settle or compromise any material Tax Liability to the extent such settlement or compromise would reasonably be expected to materially reduce the tax basis in any asset of the REIT Entities;

Section 6.1.12modify the general business of the REIT Entities or (in any material sense) the OpCo Entities;

Section 6.1.13with respect to the Company, NewCo 1, Manor Care or the REIT Entities, merge or consolidate itself with any other person, or restructure, reorganize or completely or partially liquidate itself;

Section 6.1.14other than the Dividends (which, notwithstanding anything to the contrary in this Agreement, the Company may declare and pay without Parent’s consent), declare or pay any dividends or other distributions in respect of Equity Interests in the Company payable in cash, stock, property or otherwise;

Section 6.1.15enter into any Contract or other agreement, commitment or arrangement to do any of the foregoing prohibited actions;

Section 6.1.16not enter into, adopt or amend (i) any Company Employee Plan or any other employee compensatory program, policy or arrangement with respect to any employee

51

of any REIT Entity (including any employment agreement (not terminable at will)) or severance or change of control agreement with any employee of the REIT Entities or (ii) any Company Employee Plan for which Parent could be liable following the Closing, except (A) as required by Law, or (B) in the ordinary course of business consistent with past practice; provided that in no event shall any action be taken that would expand the positions eligible for participation in any Company Employee Plan or any other employee compensatory program, policy or arrangement with respect to the employees of the REIT Entities; or

Section 6.1.17not increase the rate of compensation of, or pay or agree to pay any benefit to, any employee of the REIT Entities, except as may be required by applicable Law or by any Company Employee Plan in existence as of the date hereof, hire any employee, or terminate the employment of any employee of the REIT Entities whose aggregate compensation is, as of the date of this Agreement, in excess of $100,000.

Section 6.2Control of Other Party’s Business. Nothing contained in this Agreement shall give Parent, directly or indirectly, the right to control or direct the operations of the Company or any of its Subsidiaries in violation of applicable Law.  Nothing contained in this Agreement shall give the Company, directly or indirectly, the right to control or direct the operations of Parent or any of its Subsidiaries in violation of applicable Law.

Section 6.3Access to Information; Confidentiality.

Section 6.3.1The Company shall, and shall cause its Subsidiaries to, afford to Parent and its accountants, counsel, consultants, financial advisors and other representatives reasonable access, during normal business hours, in such manner as to not unreasonably interfere with the normal operation of the Company and its Subsidiaries, to all of their respective properties, books, Contracts, commitments, Tax Returns, records and appropriate officers and employees of the Company and its Subsidiaries, and shall furnish such representatives with all financial and operating data and other information concerning the affairs of the Company and its Subsidiaries, in each case, as such representatives may reasonably request; provided, however, that (i) Parent shall not be permitted to perform any environmental sampling at any real property owned or leased by the Company or any of its Subsidiaries, including sampling of soil, groundwater, surface water, building materials, or air or wastewater emissions, and (ii) after consultation with Parent, the Company may restrict access and provision of information to the extent the Company reasonably believes (after consultation with counsel) necessary to (A) comply with existing confidentiality agreements with third parties, or (B) preserve legal privilege that the Company or any of its Subsidiaries otherwise would be entitled to assert, if the Company reasonably believes (after consultation with, and in the opinion of, counsel) that undermining such privilege would materially and adversely affect the Company’s position in any pending, or what the Company believes in good faith (after consultation with counsel) is likely to be future, litigation; provided that in each case the parties hereto shall cooperate in good faith to permit disclosure of such information to the extent doing so would not (in the good faith belief of the Company after consultation with counsel) reasonably be likely to (x) result in a violation of the applicable agreement or (y) undermine the applicable privilege.

Section 6.3.2Parent and the Company shall, and shall cause their respective Subsidiaries to, comply with that certain letter agreement, dated November 12, 2010, by and

52

between Parent and the Company with respect to the confidentiality of information provided to each other (the “Confidentiality Agreement”), including with respect to any information disclosed pursuant to Section 6.3.1 (in the case of Parent) or Section 6.11; provided that Parent’s obligations thereunder shall terminate with respect to the REIT Business as of the Closing.

Section 6.4Appropriate Action; Consents; Filings.  Each of the Company and Parent shall use its reasonable best efforts to (i) take, or cause to be taken, all appropriate action, and do, or cause to be done, all things necessary, proper or advisable under applicable Law or otherwise to consummate and make effective the transactions contemplated by this Agreement and each Ancillary Agreement, including the Reorganization Transactions, as promptly as practicable, (ii) take all a cts necessary to cause the conditions to Closing to be satisfied as promptly as practicable, (iii) obtain from any Governmental Entity any consents, licenses, permits, waivers, approvals, authorizations or orders required to be obtained or made by Parent or the Company, as the case may be, or any of their respective Subsidiaries, or to avoid any action or proceeding by any Governmental Entity (including those in connection with the HSR Act, including to the extent necessary in connection with the transactions contemplated hereby), in connection with the authorization, execution and delivery of this Agreement and each Ancillary Agreement and the consummation of the transactions contemplated herein and therein, including the Purchase, (iv) make all necessary filings, and thereafter make any other required submissions, with respect to this Agreement and each Ancillary Agreement and the Purchase required under (x) the Securities Act and the Exchange Act, and any other applicable federal or state s ecurities Laws, (y) the HSR Act and (z) any other applicable Law; provided that Parent and the Company shall cooperate with each other in connection with the making of all such filings, including providing copies of all such documents to the non-filing party and its advisors prior to filing and, if requested, to accept all reasonable additions, deletions or changes suggested in connection therewith and (v) obtain all consents, approvals and waivers from third parties reasonably requested by Parent to be obtained in connection with the Purchase.  Each of the Company and Parent shall furnish to each other all information required for any application or other filing under the rules and regulations of any applicable Law in connection with the transactions contemplated by this Agreement and each Ancillary Agreement.

Section 6.5Certain Notices.  From and after the date of this Agreement until the Closing, each party hereto shall promptly notify the other party hereto of (i) the occurrence, or non-occurrence, of any event that would reasonably be expected to cause any condition to the obligations of any party to effect the Purchase and the other transactions contemplated by this Agreement or any Ancillary Agreement not to be satisfied or (ii) the material failure of the Company or Parent, a s the case may be, to comply with or satisfy any representation, covenant, condition or agreement to be complied with or satisfied by it pursuant to this Agreement or any Ancillary Agreement; provided, however, that the delivery of any notice pursuant to this Section 6.5, or a party’s knowledge of a breach by the other party hereunder, shall not cure any breach of any representation or warranty requiring disclosure of such matter prior to the date of this Agreement or otherwise limit or affect the remedies available hereunder to the party receiving such notice.

Section 6.6Public Announcements.  Each of Parent and the Company shall consult with the other before issuing any press release or otherwise making any public statements with respect to the Purchase and shall not issue any such press release or make any such public

53

statement prior to such consultation, except as may be required by applicable Law or any listing agreement with the Exchange. The parties agree that the initial press release to be issued with respect to the transactions contemplated by this Agreement shall be in the form heretofore agreed to by the parties. Notwithstanding the foregoing, Parent may make any public statements with respect to the Purchase in response to specific questions by the press, analysts, investors or those attending industry conferences or financial analyst conference calls and in meetings with lenders or investors in connection with the Bridge Financing and any Capital Markets Financing.

Section 6.7Stock Exchange Listing.  Parent shall promptly prepare and submit to the Exchange a listing application covering the shares of Parent Common Stock to be issued in the Purchase and shall use its reasonable best efforts to cause such shares to be approved for listing on such Exchange, subject to official notice of issuance, prior to the Closing.

Section 6.8Ancillary Agreements.  Each of Parent, the Company and OpCo shall, and shall cause its Subsidiaries to, duly execute and deliver the Ancillary Agreements to which it is contemplated to be a party, except as set forth in Section 6.9 with respect to the Lease Agreement and Guaranty, prior to the Closing.  Prior to the Closing, each of the Company and OpCo shall, in accordance with the terms and subject to the conditions of this Agreement and the Ancillary Agree ments, perform and comply with all of their respective obligations under the Reorganization Agreement and shall cause the Reorganization Transactions to occur, to the extent required under the Reorganization Agreement.  Without the prior the written consent of Parent, the Company and OpCo shall not amend, modify, waive or terminate any provision of the Reorganization Agreement.

Section 6.9Lease Agreement and Guaranty.  Immediately before the Closing, any lease agreements between the REIT Entities and the OpCo Entities will be terminated.  Parent and the Company shall take all action necessary such that immediately after the Closing, the Lease Agreement and the Guaranty will be duly executed and delivered by the parties contemplated by Exhibits D and C, respectively.

Section 6.10Bridge Financing.

(a)Parent shall use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable in Parent’s reasonable judgment satisfy all conditions and covenants applicable to Parent in the Bridge Credit Agreement and to obtain the funds contemplated by the Bridge Financing on the terms and conditions described in the Bridge Credit Agreement in an amount necessary to finance the Purchase to the extent such proceeds are not obtained from one or more debt or equity securities offerings (such offerings, collectively, the “Capi tal Markets Financing”) (it being understood the commitments under the Bridge Financing may be reduced by the amount of any proceeds obtained by Parent from any Capital Markets Financing or asset sales).  Parent shall not permit, without the Company’s consent (which shall not be unreasonably withheld or delayed) any amendment or modification to be made to, or any waiver of any provision or remedy under the Bridge Credit Agreement if such amendment, modification or waiver would (i) reduce the aggregate amount of the Bridge Financing or (ii) impose new or additional conditions, or otherwise amend, modify or expand any conditions, to the receipt of the Bridge Financing in a manner that would reasonably be expected to (a) materially delay or prevent the Closing, (b)

54

make the funding of the Bridge Financing (or satisfaction of the conditions to obtaining the Bridge Financing) less likely to occur or (c) adversely impact the ability of Parent to enforce its rights against the other parties to the Bridge Credit Agreement.  Subject to the limitations set forth in this Section 6.10, Parent may amend the Bridge Credit Agreement and any related fee letter to add lenders, lead arrangers, bookrunners, syndication agents or similar entities (and affiliates thereof) that have not executed the Bridge Credit Agreement as of the date hereof.  Without limiting the foregoing, Parent shall use commercially reasonable efforts to (i) maintain in effect the Bridge Credit Agreement in accordance with the terms and subject to the conditions thereof (and subject to Parent’s ability to undertake Capital Markets Financings or sales of assets which reduce commitments under the Bridge Credit Agreement), (ii) satisfy all conditions and covenants applicable to Parent in the Bridge Credit Agreement and (iii) cause the Lenders and other persons providing financing under the Bridge Financing to fund the Bridge Financing on the Closing Date to the extent Parent deems it necessary to draw upon the Bridge Financing on the Closing Date. Without limiting the generality of the foregoing, Parent shall give the Company prompt notice:  (A) of any material breach or default (or any event or circumstance that, with or without notice, lapse of time or both, would reasonably be expected to give rise to any material breach or default) by any party to the Bridge Credit Agreement or definitive document related to the Bridge Financi ng of which Parent or its Affiliates becomes aware and (B) of the receipt of any written notice or other written communication from any person with respect to any (x) actual or potential material breach, default, termination or repudiation by any party to the Bridge Credit Agreement or any definitive document related to the Bridge Financing or any provisions of the Bridge Credit Agreement or any definitive document related to the Bridge Financing or (y) material dispute or disagreement between or among any parties to the Bridge Credit Agreement or any definitive document related to the Bridge Financing (but excluding, for the avoidance of doubt, any ordinary course negotiations with respect to the terms of the Bridge Financing or any definitive agreement with respect thereto); provided that in no event will Parent be under any obligation to disclose any information that is subject to attorney-client or similar privilege if Parent shall have used their reasonable best efforts to disclose such information in a way that would not waive such privilege. As soon as reasonably practicable, but in any event within two (2) Business Days after the date the Company delivers Parent a written request, Parent shall provide any information reasonably requested by the Company relating to any circumstance referred to in clause (A) or (B) of the immediately preceding sentence.  If any portion of the Bridge Financing becomes unavailable on the terms and conditions contemplated in the Bridge Credit Agreement and any related fee letter, Parent shall use its commercially reasonable efforts to arrange and obtain alternative financing from alternative sources on terms not materially less favorable, in the aggregate, to Parent, than the terms set forth in the Bridge Credit Agreement and any related fee letter, in an amount sufficient to consummate the transactions contemplated by this Agreement (“Alternative Financing”) as promptly as practicable following the occurrence of suc h event and the provisions of this Section 6.10 shall apply to such Alternative Financing as though it was the Bridge Financing; provided that Parent shall not be required to arrange for such Alternative Financing or execute any commitment letter or agreement in connection therewith (the “New Commitment”) on terms and conditions which are materially less favorable, in the aggregate, to Parent than those included in the Bridge Credit Agreement and any related fee letter that such New Commitment is replacing; provided, further that Parent shall not be required to arrange for such Alternative Financing or execute any New Commitment in the event that the proceeds from any Capital Markets Financings are sufficient to

55

finance the Purchase on the Closing Date. Notwithstanding anything to the contrary in this Agreement or otherwise, Parent, at Parent’s election, may elect to cause HCP Mezzanine Lender, LLC and HCP Mezzanine Lender TRS, LLC, which are the holders of the REIT Indebtedness comprised of the Fourth Mezzanine Loan, Fifth Mezzanine Loan, Sixth Mezzanine Loan, and Seventh Mezzanine Loan (each as defined in Schedule 1.3 and, collectively, the “HCP Mezzanine Loans”), to waive their rights to prepayment of the HCP Mezzanine Loans and maintain the outstanding loan balances of the HCP Mezzanine Loans as Indebtedness for Borrowed Money which shall survive Closing and be a Permitted Encumbrance on the REIT Assets in all respects.  In connection with any such election, the Company and Company Subsidiaries shall, at the sole expense of Parent, cooperate with Parent’s efforts to take, or c ause to be taken, all actions and to do, or cause to be done, all things reasonably requested by Parent in connection with such election, including by cooperating with Parent and the servicer, lenders, and administrative agents under any of the loans comprising the REIT Indebtedness to assist in effectuating such election.

(b)If Parent does not cause all Indebtedness under the REIT Indebtedness to be paid in full contemporaneously with the Closing, Parent shall take all actions required for termination of the Bad Acts Guaranty, with no Liability thereunder for the OpCo Entities.

Section 6.11Cooperation with Financing.  Prior to the Closing, the Company shall, and shall cause each of its Subsidiaries to use commercially reasonable efforts to, at Parent’s sole expense, cooperate as reasonably requested by Parent to assist Parent (a) in causing the conditions in the Bridge Credit Agreement to be satisfied, (b) in completing any Capital Markets Financing on terms and conditions satisfactory to Parent and (c) as otherwise necessary in connection with the Bridge Financing, any Capital Mar kets Financing and the repayment and/or defeasance or satisfaction and discharge of existing Indebtedness for Borrowed Money, including (i) using commercially reasonable efforts to furnish Parent and its financing sources with financial and other pertinent information regarding the REIT Entities reasonably requested by Parent, (ii) participating in, and causing its senior executive officers to participate in, a reasonable number of meetings, presentations, road shows, due diligence sessions, drafting sessions and sessions with rating agencies at reasonable times in connection with the Bridge Financing or any Capital Markets Financing, (iii) assisting Parent in the preparation of customary offering memoranda, bank information memoranda, rating agency presentations and lender presentations relating to the Bridge Financing or any Capital Markets Financing and business projections and pro forma financial statements reasonably necessary in connection with the Bridge Financing or any Capital Markets Financing as reasonably requested by Parent, (iv) cooperating with the marketing efforts of Parent for all or any portion of the Bridge Financing or any Capital Markets Financing, (v) reasonably cooperating with Parent’s legal counsel in connection with any legal opinions that such legal counsel may be required to deliver in connection with the Bridge Financing or any Capital Markets Financing, (vi) assisting Parent in obtaining surveys, title insurance, non-invasive environmental assessments, zoning reports, or any other real estate diligence as reasonably requested by Parent, (vii) requesting, and using commercially reasonable efforts, at Parent’s sole cost and expense, to obtain, estoppel certificates from landlords and other third parties, including, without limitation, the landlords under the Ground Leases, as reasonably requested by Parent, (viii) assisting Parent in connection with Parent’s structuring efforts or otherwise assisting Parent in complying with any reasonable structuring requests made of Parent in connection with the Bridge Financing or any Capital

56

Markets Financing, (ix) requesting its independent accountants to provide assistance and cooperation in the Bridge Financing or any Capital Markets Financing including (A) participating in accounting due diligence, (B) providing necessary consents for their audit reports, and (C) providing customary “comfort letters” and (x) cooperating with Parent’s efforts in connection with the repayment or defeasance of any Indebtedness for Borrowed Money of PropCo and its Subsidiaries; provided, however, in each case, that (a) none of the Company or any of its Subsidiaries shall be required to incur any liability in connection with the Bridge Financing or the Capital Markets Financing other than Liabilities of the REIT Entities arising after the Closing, (b) the Board of Directors of the Company and the directors, members, managers and general partners of the Company’s Subsidiaries (except for the post-Closing Boards of Directors and members of the REIT Entities) shall not be required to adopt resolutions approving the agreements, documents and instruments pursuant to which the Bridge Financing is obtained, (c) neither the Company nor any of its Subsidiaries shall be required to execute any definitive financing documents, including any credit or other agreements, pledge or security documents, or other certificates, legal opinions or documents in connection with the Bridge Financing or the Capital Markets Financing (other than the execution of such documents by the REIT Entities following Closing), and (d) nothing herein shall require such cooperation to the extent it would interfere unreasonably with the business or operations of the Company or its Subsidiaries.  None of the Company or any of its Subsidiaries shall be required to bear any cost or expense or to pay any commitment or other similar fee or make any other payment in connection with the Bridge Financing or the Capital Markets Financing or any of the foregoing other than fees payable by the REIT Entities following the Closing.  Parent shall indemnify and hold harmless the Company, its Subsidiaries, its Affiliates and their respective employees, officers, directors, agents and representatives from and against any and all liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments and penalties suffered or incurred by them in connection with the arrangement of the Bridge Financing and the Capital Markets Financing (including without limitation any action taken in accordance with Section 6.10 or this Section 6.11) and any information utilized in connection therewith; provided, however, that the foregoing indemnity shall not apply with respect to any liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments and penalties resulting from a willful or intentional breach of any representation, warranty, c ovenant or agreement of the Company or any of its Subsidiaries under this Agreement or any Ancillary Agreement.  Parent shall, promptly upon request by the Company, reimburse the Company for all reasonable out-of-pocket costs incurred by the Company or its Subsidiaries in connection with this Section 6.11.

Section 6.12Section 16 Matters.  Parent shall take all steps necessary to cause acquisitions of Parent Common Stock pursuant to this Agreement by each person who is subject to Section 16 of the Exchange Act, or will become subject to such reporting requirements with respect to Parent (including any person deemed to be a director of Parent), to be exempt under Rule 16b-3 promulgated under the Exchange Act.

Section 6.13Delivery of Financial Statements.  The Company shall use commercially reasonable efforts to cause to be delivered, on or prior to February 1, 2011, to Parent, an audited consolidated balance sheet of PropCo and its consolidated Subsidiaries at December 31, 2010 and audited statements of income and cash flows of PropCo and its consolidated Subsidiaries for 2010 (the “PropCo Audited 2010 Financial Statements”).  If the Closing has not occurred prior to such date, the Company shall use c ommercially reasonable

57

efforts to cause to be delivered, (i) on or prior to April 25, 2011, to Parent, an unaudited consolidated balance sheet of PropCo and its consolidated Subsidiaries at March 31, 2011 and unaudited statements of income and cash flows of PropCo and its consolidated Subsidiaries for the three months ending on March 31, 2011 (the “Unaudited Q1 2011 Financial Statements”) and (ii) on or prior to July 25, 2011, to Parent, an unaudited consolidated balance sheet of PropCo and its consolidated Subsidiaries at June 30, 2011 and unaudited statements of income and cash flows of PropCo and its consolidated Subsidiaries for the three months and six months ending on June 30, 2011 (the “Unaudited Q2 2011 Financial Statements”).

Section 6.14Ground Lease Estoppels.  The Company and its Subsidiaries shall use commercially reasonable efforts to secure, at Parent’s sole cost and expense, prior to the Closing Date, an estoppel certificate, in form and substance reasonably satisfactory to Parent, from each landlord under the applicable Ground Lease.

Section 6.15Transfer Taxes.  The Company agrees to cooperate with Buyer in connection with the preparation and filing of any returns with respect to Transfer Taxes, including promptly supplying any information in their possession that is reasonably necessary to complete such returns and, where required by Law, making or joining with Buyer (or its applicable Affiliate) in making such filings, it being understood that Parent will take the lead in identifying the Transfer Tax filing requirements and preparing the relevant material s for submission.  The Company and Buyer agree to share equally any and all real property or direct or indirect equity interest transfer tax or gains tax, stamp tax, stock transfer tax, and other similar Tax or expense imposed, and all recording fees that may be imposed as a result of the transactions contemplated herein or under any other related agreement (including the Lease Agreement), and any fines, penalties, interest or additions with respect thereto (collectively, the “Transfer Taxes”), provided that the Company or OpCo (and not Buyer) shall be solely responsible for all Transfer Taxes that may be imposed with respect to the excluded properties that are retained by OpCo.

Section 6.16Tax Matters.

Section 6.16.1Preparation and Filing of Tax Returns; Payment of Taxes.

Section 6.16.1.1OpCo Responsibility.

Section 6.16.1.1.1OpCo shall prepare and timely file (or cause to be prepared and timely filed) (x) all Tax Returns of OpCo and the OpCo Entities due after the Closing Date, (y) all Tax Returns with respect to any real property, personal property or other similar ad valorem Taxes that relate to any OpCo Assets or the OpCo Business and are due after the Closing and (z) all Tax Returns with respect to any sales Taxes that relate to the OpCo Assets or the OpCo Business and are due after the Closing.

Section 6.16.1.1.2OpCo shall prepare all Tax Returns of the Company and its Subsidiaries with respect to Pre-Closing Tax Periods.  OpCo shall prepare, at its sole cost and expense, all Tax Returns described in this Section 6.16.1.1.2 in a manner that is consistent with the prior practice of the Company

58

and its Subsidiaries (including, prior Tax elections and accounting methods or conventions made or utilized by the Company or its Subsidiaries), except as required by a change in applicable Law, as a result of the transactions contemplated by the Reorganization Agreement, or as consented to by Parent (such consent not to be unreasonably withheld or delayed).  The parties agree to report all Dividends that are declared between the date of this Agreement and the Closing as dividends under Section 316 of the Code to the extent of current and accumulated earnings and profits as of the Closing Date.  In addition, OpCo shall include in the period ending on the Closing Date any Section 481(a) adjustments and any amounts previously deferred under Section 108(i).  OpCo shall deliver drafts of all such Tax Returns together with workpapers to Buyer for Buyer’s review, approva l (not to be unreasonably withheld or delayed) and filing at least fifteen (15) Business Days prior to the due date (including validly obtained extensions) of any such Tax Return.

Section 6.16.1.1.3At least five (5) Business Days prior to the due date for the Tax Returns covered by Section 6.16.1.1.2 above, OpCo shall pay Buyer the amount of Taxes reported on such Tax Returns that exceed the Closing Date Tax Amount, or Buyer shall pay OpCo the amount of Taxes that were included in the calculation of the Closing Date Tax Amount that exceed the Taxes reported on such Tax Returns. Buyer shall timely pay the Taxes reported on the Tax Returns covered by Section 6.16.1.1.2 to the applicable taxing authority.

Section 6.16.1.2Buyer Responsibility.  Buyer shall prepare and timely file (or cause to be prepared and timely filed) all Tax Returns with respect to Buyer and its Subsidiaries not otherwise required to be filed by OpCo pursuant to Section 6.16.1.1, and Buyer shall timely file the Tax Returns prepared by OpCo pursuant to Section 6.16.1.1.2.  Provided that OpCo complies with its obligation set forth in the penultimate sentence of this Section 6.16.1.2, Buyer sh all timely pay (or cause to be timely paid) all Taxes due with respect to such Tax Returns.  With respect to any such Tax Returns that are Straddle Period Tax Returns, Buyer shall deliver (or cause to be delivered) drafts of such Straddle Period Tax Returns together with workpapers to OpCo at least fifteen (15) Business Days prior to the due date for such Straddle Period Tax Returns (including validly obtained extensions), for OpCo’s review and approval, and shall not file such Straddle Period Tax Returns without such approval (not to be unreasonably withheld or delayed).  At least five (5) days prior to the due date for such Straddle Period Tax Returns, OpCo shall pay Buyer the amount of Taxes reported on such Straddle Period Tax Returns that are allocable to the portion of such Straddle Period ending on the Closing Date, as calculated pursuant to Section 6.16.4.  Buyer shall not, and shall not permit any of its Affiliates to, (i) amend, refile or otherwise modify a ny Tax Returns with respect to the Company or its Subsidiaries for Pre-Closing Tax Periods ending on or prior to the Closing Date without OpCo’s prior written consent, such consent not to be unreasonably withheld or delayed, unless required by applicable Law or (ii) file an election under Section 338 of the Code with respect to the Purchase.

Section 6.16.1.3In the event that OpCo or Buyer disputes any item on any Tax Return provided to such party for its review and approval pursuant to Section 6.16.1.1 or

59

Section 6.16.1.2, the disputing party shall notify the other party of the disputed item or items and the basis for its objection.  The parties shall act in good faith to resolve any such dispute prior to the due date for such Tax Return.  If the parties cannot resolve any disputed item, such disputed item shall be resolved by an independent accounting firm mutually acceptable to OpCo and Buyer. The fees and expenses of such accounting firm shall be borne equally by OpCo and Buyer.

Section 6.16.2Cooperation and Retention.

Section 6.16.2.1Until one (1) year after the expiration of all applicable statutes of limitations (including any waivers or extensions thereof), Buyer and OpCo and their respective Affiliates shall provide the other party, promptly upon request, with such cooperation and assistance, documents and other information, at the reasonable expense of the requesting party, as may reasonably be requested by such party in connection with (i) the preparation and filing of any original or amended Tax Return or any other filing with any taxing authority, (ii)&nb sp;the conduct of or defense against any Tax Proceeding, or (iii) the verification by a party of an amount payable hereunder to, or receivable hereunder from, another party.  Such cooperation and assistance shall include:  (i) the provision promptly on request of books and records, Tax Returns, documentation or other information relating to any relevant Tax Return, in each case, owned or controlled by the party or its Affiliates receiving such request, (ii) the execution of any document that may be necessary or reasonably helpful in connection with the filing of any Tax Return, or in connection with any Tax Proceeding, including the execution of powers of attorney and extensions of applicable statutes of limitations, (iii) the prompt and timely filing of appropriate claims for refund, and (iv) the use of commercially reasonable efforts to obtain any documentation from a Governmental Entity or a third party that may be necessary or helpful in connection with any of the foreg oing.  Each party shall make its employees and facilities available on a mutually convenient basis to facilitate such cooperation.

Section 6.16.2.2Buyer and OpCo shall retain or cause to be retained all Tax Returns and all books and records, schedules, workpapers and other documents relating thereto with respect to taxable periods (or portions thereof) ending on or prior to the Closing Date, in each case, owned or controlled by Buyer or OpCo or their respective Affiliates, until one (1) year after the expiration of all applicable statutes of limitations (including any waivers or extensions thereof).  The parties shall promptly notify each other in writing of any waivers, extens ions or expirations of applicable statutes of limitations.

Section 6.16.3Contests.

Section 6.16.3.1After the Closing, each party shall promptly notify the other party of any demand, claim or notice of the commencement of a Tax Proceeding received with respect to Taxes for which OpCo or Buyer is liable pursuant to this Agreement; provided, however, that a party’s failure to give such notice will not affect the other party’s rights to indemnification under Section 9.8 except to the extent that the other party is materially prejudiced thereby.  Such notice shall contain factual information (to the

60

extent known) describing the asserted Tax liability and shall include copies of the relevant portion of any notice or other document received from any Governmental Entity or any other Person in respect of any such asserted Tax liability.

Section 6.16.3.2At OpCo’s request and expense, Buyer shall contest (or cause to be contested) any asserted Pre-Closing Tax Period Tax liability for which OpCo may have an indemnity obligation under Section 9.8.  If OpCo so elects, and acknowledges in writing its ability and obligation to indemnify the Parent Indemnified Parties for the Pre-Closing Tax Period Tax in question, OpCo shall control the conduct, through counsel of its own choosing and at its own expense, of any Tax Proceeding involving any asserted Pre-Closing Tax Period Tax l iability with respect to the Company and/or its Subsidiaries relating to Pre-Closing Tax Period Taxes for which OpCo is exclusively liable pursuant to Section 9.8; provided that Buyer and its Affiliates shall have the right to participate in such Tax Proceeding, including through counsel of their choosing, at their own expense.  OpCo shall keep Buyer fully informed on a timely basis of all matters relating to any Tax Proceeding controlled by OpCo hereunder.  OpCo shall not accept any proposed adjustment or enter into any settlement or agreement in compromise regarding any Tax Proceeding controlled by OpCo without the consent of Buyer, which consent shall not be unreasonably withheld or delayed. Notwithstanding any other provision in this Agreement, Buyer shall control the conduct of any Tax Proceeding which may materially adversely affect any Parent Indemnified Party (after taking into account OpCo’s indemnification obligations); provided, that Buyer shall not accept any proposed adjustment or enter into any settlement or agreement in compromise regarding any Tax Proceeding controlled by Buyer for which OpCo may have an indemnity obligation without the consent of OpCo (not to be unreasonably withheld or delayed), and, if the Tax Proceeding relates to a Pre-Closing Tax Period or Straddle Period, OpCo shall have the right to participate in any such proceeding at its own expense.  Buyer shall keep OpCo fully informed on a timely basis of all matters relating to any Tax Proceeding controlled by Buyer hereunder.

Section 6.16.3.3In the case of a Tax Proceeding that relates to a Straddle Period, Buyer shall control the conduct of such Tax Proceeding, but OpCo shall have the right to participate in such Tax Proceeding at its own expense if OpCo first acknowledges in writing its ability and obligation to indemnify the Parent Indemnified Parties for the portion of the Tax in question that relates to the portion of the Straddle Period ending on or before the Closing Date; provided, that Buyer shall not accept any proposed adjustment or enter into any settlement or a greement in compromise regarding any such Tax Proceeding OpCo’s prior written consent (such consent not to be unreasonably withheld or delayed).  Buyer shall keep OpCo fully informed on a timely basis of all matters relating to any Tax Proceeding controlled by Buyer hereunder.

Section 6.16.3.4Payment by OpCo of any amount due under Section 9.8 shall be made within ten (10) days following written notice by Buyer that payment of such amounts to the appropriate Governmental Entity or other applicable third party is due; provided that OpCo shall not be required to make any payment earlier than ten (10) days before it is due to the appropriate Governmental Entity or applicable third party.  Payment by Buyer of any amount due under Section 9.8 shall be made within ten (10)

61

days following written notice by OpCo that payment of such amounts to the appropriate Governmental Entity or other applicable third party is due; provided that Buyer shall not be required to make any payment earlier than ten (10) days before it is due to the appropriate Governmental Entity or applicable third party.  In the case of a Tax that is contested in accordance with the provisions of this Section 6.16.3, payment of such contested Tax will not be considered due earlier than the date a “final determination” to such effect is made by such Governmental Entity.  For this purpose, a “final determination” shall mean a settlement, compromise, or other agreement with the relevant Governmental Entity, a deficiency notice with respect to which the period for filing a petition with the Tax court or the relevant state, local or foreign tribunal has ex pired or a decision of any court of competent jurisdiction that is not subject to appeal or as to which the time for appeal has expired.

Section 6.16.4Straddle Periods.  For purposes of this Agreement, in the case of any Taxes of the Company or any of its Subsidiaries that are payable with respect to any Straddle Period, the portion of any such Taxes allocable to the portion of such Straddle Period ending on the Closing Date shall: (i) in the case of Taxes other than property Taxes, be deemed equal to the amount that would be payable if the tax year or period ended on the Cl osing Date; and (ii) in the case of property Taxes, be deemed to be the amount of such Taxes for the entire period (or, in the case of such Taxes determined on an arrears basis, the amount of such Taxes for the immediately preceding tax period) multiplied by a fraction the numerator of which is the number of calendar days in the portion of the period ending on the Closing Date and the denominator of which is the number of calendar days in the entire period.  For purposes of clause (i) of the preceding sentence, any exemption, deduction, credit or other item (including the effect of any graduated rates of Tax) that is calculated on an annual basis shall be allocated to the portion of the Straddle Period ending on the Closing Date on a pro rata basis determined by multiplying the total amount of such item allocated to such period by a fraction, the numerator of which is the number of calendar days in the portion of the such period ending on the Closing Date and the denomina tor of which is the number of calendar days in the entire period.  Notwithstanding the foregoing, any Tax incurred in connection with the Reorganization  Transactions (including, for the avoidance of doubt, any Tax incurred in connection with the Distribution of OpCo) shall be allocated to the portion of the Straddle Period ending on the Closing Date.

Section 6.16.5Refunds; Credits.  OpCo shall be entitled to, and Buyer shall promptly pay OpCo, the amount of any Tax refund or credit (except to the extent such refund or credit constitutes a Tax benefit that reduces under Section 9.4.3 an amount to which an Indemnified Party would otherwise be entitled) actually received by Buyer or its Subsidiaries after the Closing Date to the extent such Tax refund or credit is attributable to Ta xes of the Company and its Subsidiaries with respect to Pre-Closing Periods (net of any reasonable costs to Parent or its Subsidiaries in obtaining such Tax refund or credit).  Buyer shall use commercially reasonable efforts to promptly obtain any such refund or credit, including, subject to Section 6.16.1.2, through the filing of amended Tax Returns or refund claims.  Buyer shall be entitled to, and OpCo shall promptly pay to Buyer, the amount of any Tax refund or credit actually received by OpCo or any OpCo Subsidiary with respect to Taxes of PropCo and its Subsidiaries for any Tax period (or the portion of any Straddle Period) beginning after the Closing Date (net of reasonable costs to OpCo or any OpCo Subsidiary in obtaining such Tax refund or credit).  OpCo shall use commercially reasonable efforts to obtain any such Tax refund or credit.

62

Notwithstanding the foregoing, any refund request filed on or prior to the Closing Date shall not be treated as Cash and Cash Equivalents or otherwise reduce Liabilities on any Balance Sheet until received.

Section 6.16.6Termination of Tax Sharing Agreements.  The Company and the Subsidiaries of the Company shall cause the termination prior to the Closing Date of all Tax sharing and indemnity agreements or similar arrangements among the Company and its Subsidiaries, and after the Closing Date, none of the Company, any Subsidiary of the Company, Buyer, or any Affiliate of Buyer shall be bound thereby or have any liability thereunder.

Section 6.16.7Earnings and Profits Report

Section 6.16.7.1.Prior to the Closing Date, the Company shall deliver to Buyer the formal report of a nationally-recognized independent accounting firm (the “Final E&P Report”) regarding the calculation of the aggregate current and accumulated earnings and profits of the Company and its Subsidiaries through December 31, 2010. The Final E&P Report shall be consistent in all material respects with such accounting firm’s earnings and profits analysis provided to Buyer prior to the date of this Agreement.  Buyer shall be p ermitted to provide the Final E&P Report to its auditors and in response to a governmental inquiry.

Section 6.16.7.2.At least ten (10) days prior to the Closing Date, the Company shall use commercially reasonable efforts to deliver to Buyer an analysis that rolls forward the calculation of earnings and profits from December 31, 2010 through the Closing Date, using estimates where necessary.  The roll-forward analysis shall indicate the estimated aggregate current and accumulated earnings and profits of the Company and its Subsidiaries accumulated through the “non-REIT year” (within the meaning of Section 857(a)(2) of the Code) ending on the expected Closing Date.

Section 6.16.8IRS Ruling; Alternative Structure.

Section 6.16.8.1IRS Ruling.  The Company shall use commercially reasonable efforts to obtain, prior to the Closing Date, a favorable ruling from the IRS substantially to the effect that the transfer of the stock of Manor Care, Inc. to NewCo 3 pursuant to and in accordance with Exhibit A to the Reorganization Agreement will be a “qualified stock purchase” as defined in Section 338(d)(3) of the Code, and is eligible for an election pursuant to Section 338(h)(10) of t he Code (the “IRS Ruling”).  The Company shall send to Buyer (i) a copy of the proposed pre-submission conference memorandum at least two (2) days prior to the intended submission date and (ii) a copy of the proposed ruling request at least five (5) days prior to the intended submission date, in each case, for Buyer’s timely review and comment.  The Company shall consider in good faith Buyer’s comments to such submissions and shall provide Buyer with copies of all material correspondence, with the IRS promptly after the submission date.  The Company shall keep Buyer fully informed on a timely basis of all material discussions with the IRS relating to the IRS Ruling.  If the Company obtains the IRS Ruling prior to the Closing Date, the Company shall implement the transactions set forth in Section 2.03 to the Reorganization Agreement at such times and in such order as set forth in such Section 2.03.

63

Section 6.16.8.2Alternative Structure.  If the Company has not obtained the IRS Ruling prior to the Closing Date, then the Company shall not implement the transactions set forth in Section 2.03 to the Reorganization Agreement, and, in lieu thereof, the Company shall implement the transactions set forth in Section 2.04 to the Reorganization Agreement.

Section 6.16.9Taxable Transaction.  The parties shall treat the sale of the PropCo Interests to Buyer pursuant to this Agreement as a taxable stock purchase for all Tax purposes and the parties shall not take any position contrary to such treatment on any Tax Return or in any Tax Proceeding.

Section 6.17Formation of New Parties.  As soon as practicable following the date of this Agreement, the Company shall take all action to cause Seller to be formed pursuant to the DLLCA and to execute and deliver a signature page to this Agreement, upon which execution and delivery Seller shall become a party to this Agreement and shall be bound by its provisions with the same force and effect as if Seller had become a party hereto on the date hereof.

Section 6.18Distribution of Parent Common Stock.  Immediately following the receipt of any of shares of Parent Common Stock pursuant to this Agreement or the Escrow Agreement, the Company shall cause all such shares of Parent Common Stock to be distributed to holders of Equity Interests of the Company.

Section 6.19No Solicitation.  Prior to the Closing, the Company shall not, and shall cause its Subsidiaries and Affiliates not to: (i) solicit or invite, or engage in discussions or negotiations with respect to, any inquiries or proposals that constitute, or may reasonably be expected to lead to, any sale of the Company or any of its Subsidiaries, whether by asset purchase, sale of equity interests, merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution, or otherwise (an
47;Acquisition Transaction”), (ii) enter into any Contract (including any agreement in principle, letter of intent, or understanding) with respect to any Acquisition Transaction or (iii) enter into any Contract requiring the Company or any of its Subsidiaries or any of the members or shareholders thereof to abandon, terminate or fail to consummate the transactions contemplated by this Agreement.

Section 6.20Title Insurance Coverage.  Prior to the Closing, the Company shall reasonably cooperate with Parent’s efforts to cause the title insurance company or companies that issued the Existing Title Policies to issue, at Parent’s sole cost and expense, a New Title Policy, to the extent such coverage is available in the applicable jurisdiction.  As used herein, the term “New Title Insurance Policy” shall mean an ALTA (Form B-2006) Owner Policy of Title I nsurance or other customary title policy with respect to the applicable REIT Real Property issued by a title insurance company selected by Parent, in the amount of the fair market value of the applicable REIT Real Property, insuring that the applicable owner has good and marketable fee simple title to, or holds a valid leasehold interest in, the applicable REIT Real Property, subject to no Encumbrances other than the Permitted Encumbrances, and containing such endorsements as shall be reasonably requested by Parent.

Section 6.21Name Changes.  Without limiting in any respect the rights of the OpCo Entities to the Intellectual Property included in the Assets of the OpCo Entities, promptly

64

after the Closing, and in any event within forty-five (45) days after the Closing Date, PropCo shall take all action necessary to change the legal name of each REIT Entity the name of which includes “HCR”, “ManorCare” or “Manor Care” to another legal name that does not include “HCR”, “ManorCare” or “Manor Care” or any confusingly similar word.

Section 6.22Books and Records.  The Company shall promptly provide Buyer with copies of all books and records owned or controlled by the Company to the extent that such books and records are related to the REIT Entities, the REIT Business or the Assets or Liabilities thereof, to the extent they already exist, including upon either Party’s reasonable request.  In the case of such books and records to be delivered to Buyer that are maintained in electronic format, such books and records shall be delivered in an electron ic format reasonably requested by the Buyer to the extent practicable.

Section 6.23Valuation Opinion.  The Company shall use its commercially reasonable efforts to cause the firm engaged to render the Valuation Opinion to permit reliance thereon by Parent.

Article 7.

Closing Conditions

Section 7.1Conditions to Obligations of Each Party Under This Agreement.  The respective obligations of each party to effect the Purchase and the other transactions contemplated herein shall be subject to the satisfaction as of the Closing of the following conditions, any or all of which may be waived jointly by Parent and the Company, in whole or in part, to the extent permitted by applicable Law:

Section 7.1.1No Order.  There shall not be in force any order, decree, judgment or injunction of any Governmental Entity enjoining or prohibiting the consummation of the Purchase or any other transactions contemplated in this Agreement or any Ancillary Agreement.

Section 7.1.2HSR Act.  Any applicable waiting periods, together with any extensions thereof, under the HSR Act shall have expired or been terminated.

Section 7.1.3Exchange Listing.  The shares of Parent Common Stock issuable to the Company’s stockholders in the Purchase shall have been approved for listing on the Exchange, subject to official notice of issuance.

Section 7.1.4Reorganization Transactions.  The Reorganization Transactions that the Reorganization Agreement requires to occur prior to the Closing shall have occurred.

Section 7.2Additional Conditions to Obligations of Parent and Buyer.  The obligations of Parent and Buyer to effect the Purchase and the other transactions contemplated herein are also subject to the following conditions, any or all of which may be waived by Parent:

Section 7.2.1Representations and Warranties.  Each of the representations and warranties of the Company contained in (i) Sections 4.1.1 (solely with respect to the REIT Entities), Section 4.2.1, Section 4.2.2, Section 4.3.1 and Section 4.20 shall be true and correct in all respects as of the Closing Date, as if made anew a t and as of that time and (ii) this Agreement

65

(other than those described in the preceding clause (i)) shall be true and correct as of the Closing Date, as if made anew at and as of that time, except, in each case, with respect to representations and warranties which speak as to an earlier date, which representations and warranties shall be true and correct at and as of such date (without giving effect to any qualifications for Company Material Adverse Effect or materiality, except for the use of Company Material Adverse Effect in Section 4.5), except for (A) in each case in clause (ii), any inaccuracy or omission that, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect and (B) in each case in this Section 7.2.1, changes after the date of this Agreement which are required by this Agreement or any Ancillary Agreement.

Section 7.2.2Agreements and Covenants.  Each of the covenants of the Company to be performed as of or prior to the Closing shall have been performed or complied with in all material respects.

Section 7.2.3Officer’s Certificate.  The Company shall have delivered to Parent a certificate signed by an officer of the Company, dated the Closing Date, certifying that, to the knowledge and belief of such officer, the conditions specified in Sections 7.2.1 and 7.2.2 have been fulfilled.

Section 7.2.4Material Adverse Effect.  Since the date of this Agreement, there shall not have occurred any circumstances, events, occurrences, changes or effects that, individually or in the aggregate, would reasonably be expected to have a Company Material Adverse Effect.

Section 7.2.5Customary Assurances.  Parent shall have obtained such assurances as are customarily obtained under local custom and practice, if any (which, if applicable, may be satisfied by the mere expiry of a notice period without objection by the relevant governing authority), to allow a reasonable person, acting in good faith, to conclude that (i) all consents and approvals, of State licensing authorities necessary for the ownership, operation and management of each of the REIT Facilities following Closing in the manner contemplated by the Lease Agreement and Guaranty have been issued or will be issued, as applicable, in the ordinary course and effective as of Closing and (ii) all notice periods with respect to State licensing authorities necessary for the ownership, operation and management of each such REIT Facility in such manner shall have expired; provided, that this condition will deemed to be satisfied, in each case, unless one or more failures exist that, individually or in the aggregate, would reasonably be expected to result in Damages to Parent, the Company or their respective Subsidiaries in excess of $40,000,000.

Section 7.2.6Resignations.  The Company shall have caused to be delivered to Parent signed resignations, effective as of the Closing, of each of the directors or their equivalents of PropCo and each of its Subsidiaries.

Section 7.2.7Payoff Letter.  The Company shall have delivered to Parent the Payoff Letter.

Section 7.3Additional Conditions to Obligations of the Company, PropCo and OpCo.  The obligation of the Company, PropCo and OpCo to effect the Purchase and the

66

other transactions contemplated herein are also subject to the following conditions any one or more of which may be waived in writing by the Company:

Section 7.3.1Representations and Warranties.  Each of the representations and warranties of Parent or Buyer contained in (i) Sections 5.1.1 and 5.3.1 shall be true and correct in all respects as of the Closing Date, as if made anew at and as of that time, (ii) Section 5.2.1 shall be true and correct in all material respects and (iii) this Ag reement (other than those described in the preceding clause (i)) shall be true and correct as of the Closing Date, as if made anew at and as of that time, except with respect to representations and warranties which speak as to an earlier date, which representations and warranties shall be true and correct at and as of such date (without giving effect to any qualifications for Parent Material Adverse Effect or materiality, except for the use of Parent Material Adverse Effect in Section 5.5) except for (A) in each case in clause (ii), any inaccuracy or omission that, individually or in the aggregate, would not reasonably be expected to have a Parent Material Adverse Effect and (B) in each case in this Section 7.3.1 changes after the date of this Agreement which are required by this Agreement or any Ancillary Agreement.

Section 7.3.2Agreements and Covenants.  Each of the covenants of Parent or Buyer to be performed as of or prior to the Closing shall have been performed or complied with in all material respects.

Section 7.3.3Officer’s Certificate.  Each of Parent and Buyer shall have delivered to the Company a certificate signed by an officer of Parent or Buyer, as applicable, dated the Closing Date, certifying that, to the knowledge and belief of such officer, the conditions specified in Sections 7.3.1 and 7.3.2 have been fulfilled.

Section 7.3.4Tax Opinion.  The Company shall have received the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, dated as of the Closing Date, in form and substance reasonably satisfactory to the Company, that, commencing with its taxable year ended December 31, 1985 and through the Closing Date, Parent was organized and has operated in conformity with the requirements for qualification and taxation as a REIT under the Code and that, after giving effect to the Purchase, Parent’s proposed method of operation will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code (with customary exceptions, assumptions and qualifications and based upon customary representations and with such additional exceptions, assumptions, qualifications and representations as are set forth in writing and are reasonably satisfactory to the Company).

Section 7.3.5Material Adverse Effect.  Since the date of this Agreement, there shall not have occurred any circumstances, events, occurrences, changes or effects that, individually or in the aggregate, would reasonably be expected to have a Parent Material Adverse Effect.

Section 7.3.6Customary Assurances.  The Company and Parent shall have obtained such assurances as are customarily obtained under local custom and practice, if any (which, if applicable, may be satisfied by the mere expiry of a notice period without objection by the relevant governing authority), to allow a reasonable person, acting in good faith, to conclude that (i) all consents a nd approvals of State licensing authorities necessary (A) for the ownership,

67

operation and management of each of the REIT Facilities following Closing in the manner contemplated by the Lease Agreement and Guaranty have been issued or will be issued, as applicable, in the ordinary course and effective as of Closing and (ii) all notice periods with respect to federal or state Governmental Entities necessary for the ownership, operation and management of each such REIT Facility in such manner shall have expired; provided, that this condition will deemed to be satisfied unless one or more failures exist that would reasonably be expected to, individually or in the aggregate, (i) result in Damages to the Company and its Subsidiaries in excess of $40,000,000 or (ii) result in any breach or default under the Lease Agreement.

Article 8.

Termination, Amendment and Waiver

Section 8.1Termination.  This Agreement may be terminated, and the Purchase and other transactions contemplated hereby may be abandoned, at any time prior to the Closing, by action taken or authorized by the terminating party or parties, whether before or after approval of the matters presented in connection with the Purchase by the stockholders of the Company:

Section 8.1.1By mutual written consent of Parent and the Company;

Section 8.1.2By either the Company or Parent, by written notice to the other, if the Purchase shall not have been consummated prior to June 13, 2011;provided, however, in the event that, as of such date, each of the conditions set forth in Article 7, other than one or more of the conditions set forth in Section 7.2.5, Section 7.3.6 or (with respect to the matters covered by Section 7.2.5 or Section&nb sp;7.3.6) Section 7.1.1 (collectively, the “Deferral Conditions”), shall have been satisfied or waived or would reasonably be expected to be satisfied if the Closing occurred on such date, such date shall automatically be extended until September 13, 2011 to the extent the Deferral Conditions would reasonably be expected to be satisfied (or waived), as the case may be, on or prior to such later date (the latest applicable date, the “Outside Date”);

Section 8.1.3By either the Company or Parent, by written notice to the other, if any Governmental Entity shall have issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement or any Ancillary Agreement, and such order, decree, ruling or other action shall have become final and nonappealable (which order, decree, ruling or other action the terminating party shall have used its reasonable best efforts to resist, resolve or lift, as applicable, subject to the provisions of Section 6.4);

Section 8.1.4By Parent, by written notice to the Company, if there is any material breach of any representation, warranty, covenant or agreement on the part of the Company set forth in this Agreement, such that the conditions specified in Section 7.2.1 or Section 7.2.2 would not be satisfied at the Closing (a “Terminating Company Breach”), except that, if such Terminating Company Breach is curable by the Company within thi rty (30) days after receipt by the Company of notice from Parent of such breach but in no event later than the Outside Date, but only as long as the Company continues to use its reasonable best efforts to cure such Terminating Company Breach (the “Company Cure Period”), such termination shall not be

68

effective, and such termination shall become effective only if the Terminating Company Breach is not cured within the Company Cure Period;

Section 8.1.5By the Company, by written notice to Parent, if there is any material breach of any representation, warranty, covenant or agreement on the part of Parent or Buyer set forth in this Agreement, such that the conditions specified in Section 7.3.1 or Section 7.3.2 would not be satisfied at the Closing (a “Terminating Parent Breach”), except that, if any Terminating Parent Breach (other than any failure of Parent o r Buyer to consummate the Purchase on the date on which the Closing was to occur under Section 2.1) is curable by Parent within thirty (30) days after receipt by Parent of notice from the Company of such breach but in no event later than the Outside Date, but only as long as Parent continues to exercise such reasonable best efforts to cure such Terminating Parent Breach (the “Parent Cure Period”), such termination shall not be effective, and such termination shall become effective only if the Terminating Parent Breach is not cured within the Parent Cure Period; or

Section 8.1.6By the Company, by written notice to Parent, if (i) all of the conditions set forth in Article 7 have been satisfied or waived (other than those conditions that by their terms may only be satisfied at the Closing; provided that such conditions are capable of being satisfied) and (ii) Parent and Buyer shall have failed to consummate the Purchase on the last date on which the Closing was required to occur under Section&n bsp;2.1 (other than as a result of the Company’s refusal to proceed with the Closing).

Section 8.2Effect of Termination.

Section 8.2.1Generally.  Except as otherwise set forth in this Section 8.2, in the event of the termination of this Agreement pursuant to Section 8.1, this Agreement shall forthwith become void and have no effect, without any liability on the part of any party hereto or its respective Affiliates, officers, directors or stockholders, other than (i) liability of the Company, Parent or Buyer, as the case may be, for any intentional and willful breach of this Agreement occurring prior to such termination and (ii) any liability of Parent for payment of the Parent Termination Fee, and any associated expenses or interest (if applicable), pursuant to Section 8.5.  For purposes of this Section 8.2.1, the failure by the Company or its Subsidiaries to effect the Reorganization Transactions pursuant to Section 6.8 shall be deemed to be an intentional and willful breach of this Agreement.  In no event shall Parent or Buyer be liable for any breach of this Agreement (other than liability for payment of the Parent Termination Fee, and any associated expenses or interest, pursuant to Section 8.5) in the circumstances in which the Parent Termination Fee is payable under Section 8.5.  Notwithstanding any provision hereof to the contrary, in no event shall Parent or Buyer be liable or responsible for Damages or losses as a result of a breach of this Agreement in excess of $500 million less the amount of the Parent Termination Fee, if paid pursuant to Section 8.5.1, together with any amounts payable under Section 8.5.3.

Section 8.2.2Survival.  The provisions of Article 8, Article 11, the indemnification and expense reimbursement provisions of Section 6.11, and the Confidentiality Agreement shall survive any termination of this Agreement.

69

Section 8.3Amendment.  This Agreement may be amended by written agreement of the parties hereto at any time prior to the Closing.  This Agreement may not be amended except by an instrument in writing signed by the parties hereto.

Section 8.4Waiver.  At any time prior to the Closing, any party hereto may (i) extend the time for the performance of any of the obligations or other acts of the other party hereto not affiliated with such party, (ii) waive any inaccuracies in the representations and warranties of such other party contained herein or in any document delivered pursuant hereto, and (iii) waive compliance by the other party with any of the agreements or conditions contained herein; provid ed, however, that after any approval of the transactions contemplated by this Agreement by the stockholders of the Company, there may not be, without further approval of such stockholders, any extension or waiver of this Agreement or any portion thereof which by Law requires further approval by such stockholders.  Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party or parties to be bound thereby, but such extension or waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

Section 8.5Fees and Expenses.  Subject to Section 3.6, Section 6.14, Section 6.15, Section 8.2, this Section 8.5, and the indemnification and expense reimbursement provisions of Section 6.11, all expenses incurred by the parties hereto shall be borne solely and entirely by the party which has incurred the same (it being understood that any expenses incurred by PropCo or any of its Subsidiaries shall be borne solely and exclusively by the Company except to the extent expressly allocated to Parent or Buyer pursuant to this Agreement).

Section 8.5.1If (i) this Agreement is terminated pursuant to Section 8.1.6 or (ii)(A) this Agreement is terminated pursuant to Section 8.1.2 or Section 8.1.5 and (B) immediately prior to such termination, all conditions set forth in Article 7 shall have been satisfied or waived (other than those conditions that by their terms are to be satisfied at the Closing, provided that such conditions are capabl e of being satisfied, or any condition that was not satisfied as a result of the breach of, or default under, this Agreement by Parent or Buyer), then, promptly, and in any event, within two (2) Business Days of the date of such termination, Parent shall pay to the Company $500,000,000 (the “Parent Termination Fee”) by wire transfer of same day funds as directed in writing by the Company.

Section 8.5.2Notwithstanding anything to the contrary in this Agreement, in the circumstances in which Parent becomes obligated to pay the Parent Termination Fee, and associated expenses and interest, then the Company’s termination of this Agreement and receipt of payment of the Parent Termination Fee, and any associated expense and interest, pursuant to Section 8.5 shall be the sole and exclusive remedy of the Company and its Subsidiaries agains t Parent, Buyer, the Lenders,  and any of their former, current or future general or limited partners, members or stockholders or against any of their respective former, current or future directors, officers, employees, Affiliates, general or limited partners, stockholders, managers, members or agents (each, a “Specified Person”) for any loss or damage suffered as a result of the breach of any representation, warranty, covenant or agreement contained in this Agreement by Buyer and Parent and the failure of the Purchase to be consummated, and upon payment of the Parent Termination Fee, and associated expenses and interest, in accordance with Section 8.5, none of

70

Lender, Parent, Buyer or any of their Specified Persons shall have any further liability or obligation relating to or arising out of this Agreement or the transactions contemplated by this Agreement.  In no event shall the Company or its Subsidiaries seek any loss or damage or any recovery, judgment or damages of any kind, including consequential, indirect, or punitive damages, against any Lender or its Specified Persons in connection with this Agreement or the transactions contemplated hereby or in respect of any document or theory of law or equity or in respect of any oral statement made or representation alleged to be made in connection herewith or therewith, whether at law or equity, in contract, in tort or otherwise, provided that this shall not preclude any liability or obligation of the Lenders to Parent or Buyer.

Section 8.5.3The parties acknowledge that the agreements contained in Section 8.5 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, the parties would not enter into this Agreement; accordingly, if Parent fails to promptly (and in any event within three (3) Business Days pay the Parent Termination Fee in accordance with Section 8.5.1, (i) Parent shall pay to the Company in terest on the unpaid amount from such third Business Day at 10% per annum, compounding monthly, until all amounts owing by Parent under this Section 8.5 have been paid in full and (ii) if in order to obtain such payment, the Company commences a suit that results in a final judgment against Parent for the amount set forth in Section 8.5.1 or any portion thereof, Parent shall pay to the Company its costs and expenses (including attorneys’ fees) in connection with such suit.

Section 8.5.4Notwithstanding anything to the contrary in this Agreement, the Parties hereto expressly acknowledge and agree that, in light of the difficulty of accurately determining actual damages with respect to the foregoing in any of the circumstances in which the Parent Termination Fee is payable under this Agreement, (i) the payment of the Parent Termination Fee pursuant to Section 8.5.1 which constitutes a reasonable estimate of the monetary damages that will be suffered by the Company by reason of breach or termination of this Agreement in such circumstances, and (ii) any reimbursement and expense obligations of Parent pursuant to Section 8.5.3, shall be in full and complete satisfaction of any and all monetary damages of the Company arising out of or related to this Agreement and the transactions contemplated hereby and thereby (including any breach by Parent or Buyer), the termination of this Agreement, the failure to consummate the transactions contemplated by this Agreement, and any claims or actions under applicable Law arising out of any such breach, termination or failure.

Section 8.5.5This Agreement may only be enforced against, and any claim or cause of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby may only be brought against, the entities that are expressly named as parties hereto and then only with respect to the specific obligations set forth herein with respect to such party. Except to the extent a named party to this Agreement (and then only to the extent of the speci fic obligations undertaken by such named party in this Agreement and not otherwise), no past, present or future director, officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney, advisor or representative or Affiliate of any of the foregoing that is not a party to this Agreement shall have any liability (whether in contract, tort, equity or otherwise) for any one or more of the representations, warranties, covenants, agreements or other obligations or liabilities of any one or more of the Company, PropCo, OpCo, Buyer or Parent under this Agreement (whether for indemnification or otherwise) of or for any claim based on,

71

arising out of, or related to this Agreement or the transactions contemplated hereby, the termination of this Agreement, the failure to consummate the transactions contemplated by this Agreement, and any claims or actions under applicable Law arising out of any such breach, termination or failure.  Notwithstanding any provision of this Agreement, Parent agrees on its behalf and on behalf of its Subsidiaries and Affiliates that none of JPMorgan Chase Bank, N.A., J.P. Morgan Securities LLC or any of their respective Affiliates (the “JPMorgan Entities”) shall have any liability or obligation to the Parent and its Subsidiaries and Affiliates relating to the refinancing of the Existing Credit Agreement as contemplated by Section 2.02 of the Reorganization Agreement.

Article 9.

Indemnification

Section 9.1Survival of Representations, Warranties and Covenants.  Each representation, warranty, covenant and obligation contained herein and any certificate related to any such representation, warranty, covenant or obligation will survive the Closing and continue in full force and effect for eighteen (18) months after the Closing Date except the representations and warranties contained in (i) Section 4.1, Section 4.2.1, Section 4.2.2, Sectio n 4.3.1, Section 5.1.1 and Section 5.3.1 shall survive the Closing indefinitely, (ii) Section 4.13 (other than the representations and warranties contained in Section 4.13.4, Section 4.13.6 and Section 4.13.7) shall survive the Closing and continue in full force and effect for eighteen (18) months after the Closing Date, and (iii) Section 4.13.4, Section 4.13.6 and Section 4.13.7 shall survive the Closing until the expiration of the fifth (5th) anniversary of the Closing Date (as applicable, the “Survival Expiration Date”); provided, however, that any covenant contained in this Agreement that, by its terms, provides for performance following the Closing Date shall survive until such covenant is performed; provided, furthe r, however, that the indemnification obligations contained in Section 9.2.1(ii) and Section 9.2.2(ii) shall surviving the Closing indefinitely; provided, further, however, no claim for indemnification for breach of any representation, warranty, covenant or agreement contained in, or otherwise pursuant to, this Agreement (other than any covenant that provides for performance following the Closing) may be asserted pursuant to this Agreement unless, at or before midnight on the applicable Survival Expiration Date, the Indemnified Party delivers written notice of claim to the Indemnitor setting forth, in reasonable detail, the nature and basis of the claim and (to the extent known at such time) an estimate of the amount of Damages reasonably expected to arise in connection with such claim (it being understood that in no event shall such estimate limit any claim for Damages hereunder); provided, further, however, that the oblig ation to indemnify shall continue following the applicable Survival Expiration Date with respect to any claim for indemnification as to which notice was provided in accordance with this Section 9.1 prior to such applicable Survival Expiration Date hereunder.

Section 9.2Indemnification.

Section 9.2.1Without duplication of Section 9.8, subject to the terms and conditions of this Article 9, from and after the Closing, Parent and its Subsidiaries (including the REIT Entities after the Closing), their Affiliates and their respective directors, officers, employees, agents, successors and permitted assigns (collectively, the “Parent Indemnified Parties”) shall be entitled to indemnification (i) first from the Rem aining Escrow Property, then

72

(after the Escrow Expiration Date) from OpCo, for any and all Damages to the extent arising from (A) any failure of any representation or warranty contained in Article 4 (other than Section 4.1, Section 4.2.1, Section 4.2.2, Section 4.3.1, Section 4.8 and Section 4.13) to be true and correct on the date hereof or on the Closing Date, as if made on such date (except in the case of any representations or warranties that address matters only as of a particular date, as of such date), including those contained in the certificate to be delivered at Closing pursuant to Section 7.2.3 or (B) any failure by the Company to perform any covenant, agreement, obligation or undertaking of the Company or (excluding any failure to perform by the REIT Entities after the Closing) any of its Subsidiaries in this Agreement or the Reor ganization Agreement or (ii) first from the Remaining Escrow Property, then from OpCo for any and all Damages to the extent arising (A) from any failure of any representation or warranty contained in Sections 4.1, Section 4.2.1, Section 4.2.2, Section 4.3.1, Section 4.8 and Section 4.13to be true and correct on the date hereof or on the Closing Date, as if made on such date (except, in such case of any representations or warranties that address matters only as of a particular date, as of such date) or (B) out of the management and operation of the businesses of the Company and its Subsidiaries or the ownership, operation or use of the assets of the Company, its Subsidiaries (including the REIT Entities), or any predecessors to the Company or its Subsidiaries, in each case, at or before the Closing (including all employee Lia bilities; all Liabilities arising under any Environmental Law, including Liabilities related to or arising out of (x) the presence at or prior to the Closing of any Hazardous Materials at any property currently or formerly owned or leased by the Company, its Subsidiaries or any predecessors to the Company or its Subsidiaries, (y) the presence at or prior to the Closing of Hazardous Materials at any other location where the Company, any of its Subsidiaries, or any predecessors to the Company or its Subsidiaries is alleged to be responsible for the Release of any Hazardous Materials, or (z) the actual or alleged violation of any Environmental Law; all professional liability/general liability claims, whether or not such claims are actually covered by any existing professional liability/general liability policies; and the matters set forth in Schedule 9.2.1), of which Schedule 9.2.1 is incorporated by reference directly into this Agreem ent to the extent specified therein.

Section 9.2.2Subject to the terms and conditions of this Article 9, from and after the Closing, Parent shall indemnify and defend the Company, its Affiliates and their respective directors, officers, employees, agents, successors and assigns (collectively, the “Seller Indemnified Parties”) for, and hold the Seller Indemnified Parties harmless from, any and all Damages to the extent arising from (i)(A) any failure of any represent ation or warranty by Parent or Buyer contained in Article 5 to be true and correct on the date hereof or on the Closing Date, as if made on such date (except, in the cases of any representations or warranties that address matters only as of a particular date, as of such date), including those contained in the certificate to be delivered at Closing pursuant to Section 7.3.3 or (B) any failure by Parent or Buyer to perform any covenant, agreement, obligation or undertaking of Parent or Buyer in this Agreement or (ii) any Liabilities with respect to the REIT Indebtedness to the extent (A) included in the Closing Indebtedness, (B) arising on the Closing Date after the Closing and excluded from the Closing Balance Sheet and Closing Date Indebtedness in accordance with Section 3.6.2 or (C) arising after the Closing Date.

Section 9.2.3The amount of indemnification to which an Indemnified Party shall be entitled under this Article 9 shall be determined: (i) by written agreement between the Indemnified Party and the Indemnitor; (ii) by a judgment or decree of any court of competent

73

jurisdiction; or (iii) by any other means to which the Indemnified Party and the Indemnitor shall agree.  Without limiting a party’s obligation to make payment upon the earliest event specified in the preceding sentence, from and after the date on which the amount of Damages for which an Indemnified Party is entitled to indemnification under this Article 9 is determined in accordance with this Section 9.2.3, interest will accrue on such amount from such date until the date of payment at 10% per annum, compounding monthly; provided, however, that no such interest will be payable in the event that a final judgment or decree of any court of competent jurisdiction subsequently determines that the Indemnified Party was not entitled to indemnification for the underlying amount under this Article 9.

Section 9.2.4For purposes of this Article 9 and for purposes of determining whether a Parent Indemnified Party is entitled to indemnification pursuant to Section 9.2.1 and whether a Seller Indemnified Party is entitled to indemnification pursuant to Section 9.2.2, any inaccuracy in or breach of any representation or warranty made by Parent or the Company, as applicable, contained in this Agreement or in any document delivered or made available in connection herewith shall be determined without regard to any qualification as to “Company Material Adverse Effect”, “Parent Material Adverse Effect” or “materiality” set forth in such representation or warranty or in any document delivered or made available in connection herewith, and all references to the terms “material”, “materiality”, “materially”, “Company Material Adverse Effect” “Parent Material Adverse Effect” or any similar terms shall be ignored for purposes of determining whether such representation or warranty was true and correct (other than with respect to Section 4.5 and Section 5.5).

Section 9.3Indemnification Claim Procedures.

Section 9.3.1If any Action is commenced or threatened that may give rise to a claim for indemnification pursuant to this Article 9 (an “Indemnification Claim”) by any person entitled to indemnification under this Agreement (each, an “Indemnified Party”), then such Indemnified Party shall promptly (i) notify the Indemnitor and (ii) deliver to the Indemnitor a written notice (A) describing in reasonable detail the nature of the A ction, (B) including a copy of all papers served, if any, with respect to such Action, (C) to the extent known at such time, including the Indemnified Party’s estimate of the amount of Damages that may arise from such Action (it being understood that in no event shall such estimate limit any claim for Damages hereunder), and (D) describing in reasonable detail the basis for the Indemnified Party’s request for indemnification under this Agreement. Failure to notify the Indemnitor in accordance with this Section 9.3.1 will not relieve the Indemnitor of any liability that it may have to the Indemnified Party, except to the extent (1) the Indemnitor is actually and materially prejudiced by the Indemnified Party’s failure to give such notice or (2) the Indemnified Party fails to notify the Indemnitor of such Indemnification Claim in accordance with this Section 9.3.1 prior to the applicable Survival Expiration Date.

Section 9.3.2Except as set forth in Section 6.16.3, an Indemnitor may elect at any time to assume and thereafter conduct the defense of any Action subject to any such Indemnification Claim with counsel of the Indemnitor’s choice (which counsel shall be reasonably satisfactory to the Indemnified Party), and the Indemnified Party shall bear any fees, costs and expenses of its counsel in connection with such Action.  Notwithstanding the foregoing, the In demnitor will bear the reasonable fees, costs and expenses of one such separate

74

counsel to the Indemnified Party in each jurisdiction (and shall pay such fees, costs and expenses as incurred), if the defendants in, or targets of, any such action or proceeding include both the Indemnified Party and the Indemnitor, and the Indemnified Party shall have reasonably concluded that there are or are reasonably likely to be legal defenses available to it which are different from or additional to those available to the Indemnitor or that representation by the same counsel is or is reasonably likely to be a conflict of interest. If the Indemnitor assumes such defense, the Indemnified Party shall have the right, but not the obligation, to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the Indemnitor, it being understood that the Indemnitor shall control such defense.  If the Indemnitor assumes such defense, it shall be permitted to settle or compromise any such Action, and each Indemnified Party shall reasonably cooperate in all respects with the conduct of such defense by the Indemnitor (including the making of any related claims, counterclaim or cross complaint against any Person in connection with the Action) and/or the settlement of such Action by the Indemnitor; provided, however, that the Indemnitor will not approve of the entry of any judgment or enter into any settlement or compromise with respect to the Indemnification Claim without the Indemnified Party’s prior written approval, unless (i) the terms of such settlement provide for a full and complete release by the third-party claimant of the claims that are the subject of such Action in favor of the Indemnified Party, (ii) the Indemnitor does not admit or otherwise acknowledge in writing to the relevant court of Governmental Authority or third-party claimant any liability, wrongdoing or misconduct on behalf of the Indemnified Party or any of its Affilia tes and (iii) such settlement is only for money damages that are paid out of the Remaining Escrow Property or by OpCo and does not include any equitable relief.  If the Indemnified Party gives an Indemnitor notice of an Indemnification Claim and the Indemnitor does not, within thirty (30) days after such notice is given, (i) give notice to the Indemnified Party of its election to assume the defense of the Action or Actions subject to such Indemnification Claim and (ii) thereafter promptly assume such defense, then the Indemnified Party may conduct the defense of such Action, provided, however, that the Indemnified Party will not agree to the entry of any judgment or enter into any settlement or compromise with respect to the Action or Actions subject to any such Indemnification Claim without the prior written consent of the Indemnitor (which consent shall not be unreasonably withheld or delayed).  The Indemnitor may participate in any defense or settlement controlled by the Indemnifie d Party pursuant to this Section 9.3.2 and the Indemnitor shall bear its own costs and expenses with respect to such participation.

Section 9.3.3If any Indemnified Party becomes aware of any circumstances that it reasonably expects would give rise to an Indemnification Claim for any matter not involving an Action, then such Indemnified Party shall promptly (i) notify the Indemnitor and (ii) deliver to the Indemnitor a written notice (A) describing in reasonable detail the nature of the circumstances giving rise to the Indemnification Claim and (B) to the extent known at such time, including the In demnified Party’s estimate of the amount of Damages that may arise from such circumstances (it being understood that in no event shall such estimate limit any claim for Damages hereunder). Failure to notify the Indemnitor in accordance with this Section 9.3.3 will not relieve the Indemnitor of any liability that it may have to the Indemnified Party, except to the extent (1) the Indemnified Party is materially prejudiced by the Indemnified Party’s failure to give such notice or (2) the Indemnified Party fails to notify the Indemnitor of such Indemnification Claim in accordance with this Section 9.3.3 prior to the Survival Expiration Date.

75

Section 9.3.4At the reasonable request of the Indemnitor or the Indemnified Party, each such party shall grant the other party and its representatives all reasonable access to the books, records, employees and properties of such Indemnified Party to the extent reasonably related to the matters to which the applicable Indemnification Claim relates.  All such access shall be granted during normal business hours and shall be granted under the conditions which shall not unreasonably interfere with the business and operations of such Indemnified Party.

Section 9.4Limitations on Indemnification Liability. Notwithstanding any provision of this Agreement to the contrary (other than the last sentence of Section 9.8.1 and the last sentence of Section 9.8.2), any claims an Indemnified Party makes under this Article 9 will be limited as follows:

Section 9.4.1Indemnification Cap.  The aggregate amount of Damages for which the Parent Indemnified Parties shall be entitled to indemnification pursuant to Section 9.2.1 will not exceed the Indemnification Escrow Amount, other than in connection with the indemnification obligations of OpCo contained in Section 9.2.1(ii), which shall not be so limited.  The Remaining Escro w Property shall serve as the sole and exclusive source of payment of any claim for indemnification pursuant to Section 9.2.1 other than (if there is insufficient Remaining Escrow Property to provide full indemnification to the Parent Indemnified Parties for the Damages for which they are entitled to indemnification under Section 9.2.1) in connection with the indemnification obligations of OpCo contained in Section 9.2.1(ii), which shall not be so limited.

Section 9.4.2Claims Basket.  The Parent Indemnified Parties shall not be entitled to indemnification pursuant to this Article 9 with respect to any claim for indemnification pursuant to Section 9.2.1(i)(A) unless and until the amount of Damages (excluding costs and expenses of the Parent Indemnified Parties incurred in connection with making such claim under this Agreement) inc urred by the Parent Indemnified Parties that are the subject of such claim (or any series of related claims arising out of similar circumstances) exceeds $50,000 (the “Per-Claim Basket”), and the Parent Indemnified Parties shall only be entitled to indemnification pursuant to this Article 9 with respect to any claim for indemnification pursuant to Section 9.2.1(i)(A) to the extent the aggregate amount of all Damages (excluding costs and expenses of Parent Indemnified Parties incurred in connection with making such claim under this Agreement) incurred by the Parent Indemnified Parties for which the Parent Indemnified Parties are entitled to indemnification pursuant to this Article 9 (excluding amounts below any applicable Per-Claim Basket) exceeds $20,000,000 (the “Basket Amount”), and the Parent Indemnified Parties shall only be entitled to indemnification for such Damages to the extent such Damages exceed the Per-Claim Basket and the Basket Amount.  ; The Seller Indemnified Parties shall not be entitled to indemnification pursuant to this Article 9 with respect to any claim for indemnification pursuant to Section 9.2.2(i)(A) unless and until the amount of Damages incurred by the Seller Indemnified Parties that are the subject of such claim exceeds the Per-Claim Basket, and the Seller Indemnified Parties shall only be entitled to indemnification pursuant to this Article 9 with respect to any claim for indemnification pursuant to Section 9.2.2(i)(A) to the extent the aggregate amount of all Damages incurred by the Seller Indemnified Parties for which the Seller Indemnified Parties are entitled to indemnification pursuant to this Article 9 (excluding amounts below any applicable Per-Claim Basket) exceeds the Basket Amount, and the Seller Indemnified Parties shall only be entitled to indemnification

76

for such Damages to the extent such Damages exceed the Basket Amount .  For the avoidance of doubt, any claims for indemnification pursuant to Section 9.2.1(i)(B), Section 9.2.1(ii) or Section 9.2.2(ii) or Section 9.2.2(i)(B) shall not be subject to the Per-Claim Basket or the Basket Amount.

Section 9.4.3Damages Net of Insurance Proceeds, Tax Benefits and Other Third-Party Recoveries.  All Damages for which any Indemnified Party would otherwise be entitled to indemnification under this Article 9 shall be reduced by the amount of insurance proceeds, Tax benefits, indemnification payments and other third-party recoveries including any recoveries under the Reorganization Agreement, actually received by any Indemnified Party (net of any costs incurred in recovering such amounts) in respect of any Damages incurred by such Indemnified Party.  In the event any Indemnified Party is entitled to any insurance proceeds, Tax benefits, or third party indemnity payments in respect of any Damages for which such Indemnified Party is entitled to indemnification pursuant to this Article 9, such Indemnified Party shall use commercially reasonable efforts to obtain, receive or realize such proceeds, benefits or payments.  In the event that any such insurance proceeds, Tax benefits, indemnity payments or other third-party recoveries are actually received by an Indemnified Party subsequent to receipt by such Indemnified Party of any indemnification payment hereunder in respect of the claims to which such insurance proceeds, Tax benefits, indemnity payments or other third-party recoveries relate, appropriate refunds shall be made promptly by the relevant Indemnified Parties of all or the relevant portion of such indemnification payment; provided that any such refunds made by Parent Indemnified Parties shall be made to the Holder Representative in its capacity as such.  Any Tax benefit calculations under this Section 9.4.3 shall be determined using the highest combined marginal corporate Tax rate for federal and applicable foreign, state and local Income Taxes for the applicable period; provided, that for purposes of the foregoing, an Indemnified Party will be deemed to have actually received a Tax benefit to the extent that the amount of Taxes payable by the Indemnified Party as shown on such Person’s Tax Return for the year in which the Damages are incurred or in an earlier year is reduced below the amount of Taxes that the Indemnified Party would have been required to pay in such year but for the deduction attributable to the incurrence of the Damages.

Section 9.4.4Assignment of Claims.  If any Indemnified Party receives any indemnification payment pursuant to this Article 9, at the election of the Indemnitor, such Indemnified Party shall assign to the Indemnitor all of its claims for recovery against third persons as to such Damages, whether by insurance coverage, contribution claims, subrogation or otherwise.

Section 9.4.5Punitive and Certain Other Damages.  No Indemnified Party shall be entitled to indemnification for any punitive, consequential, special or indirect Damages, including business interruption, loss of future revenue, profits or income or loss of business reputation or opportunity related to the breach or alleged breach of this Agreement.

Section 9.4.6Damages Reserved for on the Closing Balance Sheet.  No Parent Indemnified Party shall be entitled to indemnification for any Damages in respect of any Liability reflected in the Closing Date Tax Amount or Closing Date Indebtedness (in each case, as finally determined in accordance with Section 3.6.3).

77

Section 9.4.7No Duplication.  Any liability for indemnification under this Agreement shall be determined without duplication of recovery due to the facts (i) giving rise to such liability constituting a breach of more than one representation, warranty, covenant or agreement or (ii) taken into account in determining any adjustment to the Purchase Consideration.

Section 9.5Mitigation of Damages.  An Indemnified Party shall use its commercially reasonable efforts to mitigate any Damages for which it is entitled to indemnification pursuant to this Article 9 for which the Indemnified Party is entitled to indemnification before such Damages actually are incurred by the Indemnified Party.

Section 9.6Indemnification Escrow Amount.  Claims for Damages pursuant to Section 9.2.1 shall be paid first from Remaining Escrow Property pursuant to the terms of the Escrow Agreement, and thereafter (subject to the applicable limitations in this Article 9 and, in the case of claims under Section 9.2.1(i), only after the Escrow Expiration Date) from OpCo, as applicable.  All amounts paid with respect to indemnification claims under this Agreement shall be treated b y the parties hereto for all Tax purposes as adjustments to the Aggregate Purchase Consideration. Notwithstanding anything to the contrary in this Agreement, with respect to any claim required to be made against the Remaining Escrow Property, OpCo (despite being the Indemnitor) will not be responsible for any Damages in connection with such claims, including with respect to expenses under Section 9.3, except (i) with respect to claims under Section 9.2.1(i), solely after the Escrow Expiration Date, to the extent there is no Remaining Escrow Property and (ii) with respect to claims under Section 9.2.1(ii) or Section 9.8, to the extent there is no Remaining Escrow Property, but in each case, subject to the terms and conditions of Section 9.4.

Section 9.7Release of Indemnification Escrow.  The Escrow Agreement shall specify that any Remaining Escrow Property shall be released to Seller (or its designees in accordance with the Escrow Agreement) the Business Day following the date (the “Escrow Expiration Date”) that is twelve (12) months following the Closing Date; provided, however, that if any claim pursuant to Article 9 shall have been properly asserted by any Parent Indemnified Party in acco rdance with this Agreement on or prior to the Escrow Expiration Date and remains pending on the Escrow Expiration Date (any such claim, a “Pending Claim”), (i) an amount of Remaining Escrow Property shall be released from the Escrow Account in accordance with the Escrow Agreement such that (A) the amount of cash remaining in the Escrow Account and (B) the number of Escrow Shares then held by the Escrow Agent shall have a combined value following such release (determined by, in the case of the Escrow Shares, by multiplying the Average Parent Common Stock Price on such date by the number of Escrow Shares remaining in the Escrow Account on such date) equal to the amount of indemnification to which the Parent Indemnified Party is entitled in respect of such Pending Claim and (ii) any Remaining Escrow Property that remains in escrow following the Survival Expiration Date in respect of any such Pending Claim shall be released to Seller (or its designees in accordance with the Escrow Agreement) pro mptly upon resolution or (if applicable) satisfaction of such Pending Claim.  In each case in which this Section 9.7 provides for the release of the Remaining Escrow Property, each of Parent and the Company shall promptly submit joint written instructions to the Escrow Agent instructing the Escrow Agent to distribute the Remaining Escrow Property in accordance with this Section 9.7 and the Escrow Agreement.

78

Section 9.8Tax Indemnification.

Section 9.8.1Tax Indemnification Obligation of OpCo. Without duplication of Section 9.2, OpCo shall indemnify, defend and hold harmless the Parent Indemnified Parties from and against any and all Damages from, arising out of or relating to (i) any Taxes of the Company, any Subsidiary of the Company, OpCo or any OpCo Subsidiary for (w) any Pre-Closing Tax Period or (x) that portion of any Straddle Period tha t ends on the Closing Date (calculated as set forth in Section 6.16.4), except, in the case of clauses (w) and (x), to the extent such Taxes are attributable to any action taken by or with respect to PropCo and its Subsidiaries outside of the ordinary course of business on the Closing Date after the Closing; provided, that any action taken by or with respect to PropCo or its Subsidiaries that is contemplated by this Agreement (other than the last two sentences of Section 6.10(a)) or the Reorganization Agreement shall not be treated as being taken outside of the ordinary course of business, (ii) any Transfer Taxes for which the Company is liable under Section 6.15, (iii) any failure by OpCo to comply with or perform or not perform any covenant or agreement of OpCo contained in Section 6.16 or the Reorganization Agreement and (iv) any breach of the representations set forth in Section 4.13.4, Section 4.13.6 or Section 4.13.7, except, in the case of each c lause (i), (ii), (iii) and (iv), to the extent included in the Closing Date Tax Amount. The indemnity provided in the foregoing sentence shall include, without limitation, any Tax liability arising by reason of any Parent Indemnified Party being liable for any Taxes of another Person pursuant to Treasury Regulation Section 1.1502-6 or any analogous state, local or foreign Tax provision, by contract, as a transferee or successor by operation of Law, or otherwise, and any Tax liability incurred in connection with the transactions contemplated by this Agreement.  Notwithstanding any provision of this Agreement to the contrary, this Section 9.8.1 indemnification shall survive until the expiration of the latest applicable statute of limitations (except for the items in (iv) above which shall survive for the period specified in Section 9.1) and shall not be subject to the limitations contained in Section 9.4.1 or Section 9.4.2.

Section 9.8.2Tax Indemnification Obligation of Buyer.  Buyer shall indemnify, defend and hold harmless the Seller Indemnified Parties from and against any and all Damages resulting from, arising out of or relating to (i) any Taxes of  Parent and its Subsidiaries for (x) that portion of any Straddle Period that begins after the Closing Date (calculated as set forth in Section 6.16.4) or (y) any Tax period beginning after the Closing Date, (ii) any Transfer Taxes for which Buyer is liable under Section 6.15, (iii) any Taxes attributable to any action taken by or with respect to PropCo and its Subsidiaries outside of the ordinary course of business on the Closing Date after the Closing; provided, that any action taken by or with respect to PropCo or its Subsidiaries that is contemplated by this Agreement or the Reorganization Agreement shall not be treated as being taken outside of the ordinary course of business, and (iv) any failure by Buyer to comply with or perform or not perform any covenant or agreement of Buyer contained in Section 6.16. Notwithstanding any provision of this Agreement to the contrary, this Section 9.8.2 indemnification shall survive until the expiration of the latest applicable statute of limitations and shall not be subject to the limitations contained in Section 9.4.

Section 9.9Indemnification Sole and Exclusive Remedy. Following the Closing, except for the remedies described in Section 11.11, indemnification pursuant to this Article 9 shall be the sole and exclusive remedy of the parties and any parties claiming by or through any party (including the Indemnified Parties) related to or arising from any breach of

79

any representation, warranty, covenant or agreement contained in, or otherwise pursuant to, this Agreement (other than any breach of (i) any covenant or agreement contained in Article 3 or (ii) any post-Closing obligation under any covenant that provides for performance following the Closing Date).  Nothing herein shall limit any of the parties’ rights or remedies under the Ancillary Agreements.

Article 10.

RESERVED

Article 11.

General Provisions

Section 11.1Notices.  All notices required or permitted pursuant to this Agreement shall be in writing (including facsimile or similar writing) and shall be deemed to be properly given (i) if given by facsimile, when the facsimile is transmitted to the facsimile number specified in this Section and the appropriate facsimile confirmation is received, (ii) if given by email, when the email is transmitted to the email address specified in this Section and receipt of such email is confirmed, or (iii) if given by overnight cour ier or personal delivery, when delivered at the address stated below, or at such other address as a party may provide by notice to the other parties:

If to Parent or Buyer or (after the Closing) PropCo, addressed to it at:
	HCP, Inc.
	3760 Kilroy Airport Way, Suite 300
	Long Beach, CA 90806
	Attention:		James F. Flaherty III
			J. Alberto Gonzalez - Pita
	Telecopy No.:		(562) 733-5200
	Email:		jflaherty@hcpi.com
			agonzalez@hcpi.com
with a mandated copy to:
	Skadden, Arps, Slate, Meagher & Flom LLP
	Four Times Square
	New York, NY 10036
	Attention:	Joseph A. Coco
		Thomas W. Greenberg
		Kenneth M. Wolff
	Telecopy No.: (212) 735-2000
	Email:	joseph.coco@skadden.com
		thomas.greenberg@skadden.com
		kenneth.wolff@skadden.com

80

If to the Company or (prior to the Closing) PropCo, addressed to it at:
	HCR ManorCare, Inc.
	333 N. Summit Street, 16th Floor
	Toledo, OH 43604
	Attention:	Steven M. Cavanaugh
		Richard A. Parr
	Telecopy No.: (419) 252-5599
	Email:	scavanaugh@hcr-manorcare.com
		rparr@hcr-manorcare.com
with a mandated copy to:
	Latham & Watkins LLP
	555 Eleventh Street, N.W., Suite 1000
	Washington, D.C. 20004-1304
	Attention:	Daniel T. Lennon
		David I. Brown
	Telecopy No.: (202) 637-2201
	Email:	daniel.lennon@lw.com
		david.brown@lw.com

Section 11.2Headings.  The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 11.3Severability.  The illegality or partial illegality of any or all of this Agreement or any provision hereof shall not affect the validity of the remainder of this Agreement, or any provision hereof, and the illegality or partial illegality of this Agreement shall not affect the validity of this Agreement in any jurisdiction in which such determination of illegality or partial illegality has not been made.

Section 11.4Entire Agreement.  This Agreement (together with the Exhibits, Parent and Company disclosure schedules and the other documents delivered pursuant hereto), each Ancillary Agreement and the Confidentiality Agreement constitute the entire agreement between the parties hereto with respect to the subject matter hereof and thereof and shall supersede all previous negotiations, commitments, agreements and understandings (both oral and written) with respect to such subject matter.

Section 11.5Successors and Assigns.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, as applicable, and their respective successors and permitted assigns.  The parties may not assign this Agreement, or any of their rights or liabilities hereunder (whether by operation of law or otherwise), without the prior written consent of the other parties hereto; provided, however, that, without the consent of any party, (i) a party may assign (including by way of a pledge) to its lenders or other financing sources any or all of its rights hereunder (including its rights to seek indemnification hereunder) as collateral security, and (ii) each of Parent and Buyer shall be entitled to assign its rights, interests and obligations

81

hereunder, in whole or in part, to one or more of its wholly owned Subsidiaries, without the prior written consent of the Company, but no such assignment shall relieve either Parent or Buyer of its obligations hereunder.  Any purported assignment without such consent shall be void. Any such assignment shall not relieve the party making the assignment from any liability under this Agreement.

Section 11.6Third Party Beneficiaries. Notwithstanding anything contained in this Agreement to the contrary, nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement; provided, however, that, notwithstanding the foregoing, (a) from and after the Closing, Seller or its designee(s) or assignee(s) (in accordance with Sec tion 11.5) shall be intended third party beneficiaries of, and may enforce, Article 3, (b) the Lenders shall be express third party beneficiaries of, and may enforce, Section 8.5.2 and Section 11.8 and (c) the JPMorgan Entities shall be third-party beneficiaries of, and may enforce, Section 8.5.5.

Section 11.7Mutual Drafting.  Each party hereto has participated in the drafting of this Agreement, which each party acknowledges is the result of extensive negotiations between the parties. In the event of an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.

Section 11.8Governing Law; Jurisdiction.

Section 11.8.1Any and all claims or causes of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby, shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to principles or rules of conflict of laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction.

Section 11.8.2Any proceeding or action based upon, arising out of or related to this Agreement or the transactions contemplated hereby may be brought in the Delaware Chancery Court (or, if the Delaware Chancery Court shall be unavailable, any other court of the State of Delaware or, in the case of claims to which the federal courts have exclusive subject matter jurisdiction, any federal court of the United States of America sitting in the State of Delaware), and each of the parties irrevocably submits to the exclusive jurisdiction of each such court in any such proceeding or action, waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, agrees that all claims in respect of the proceeding or action shall be heard and determined only in any such court, and agrees not to bring any proceeding or action arising out of or relating to this Agreement or the transactions contemplated hereby in any other court.  Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by Law or to commence legal proceedings or otherwise proceed against any other party in any other jurisdiction, in each case, to enforce judgments obtained in any action, suit or proceeding brought pursuant to this Section 11.8, and each party agrees that service of process by registered or certified mail, return receipt requested, at its address specified in Section 11.1 is reasonably calculated to give actual no tice.

82

Each of the parties hereto agrees that it will not bring or support any action, cause of action, claim, cross-claim or third-party claim of any kind or description, whether in law or in equity, whether in contract or in tort or otherwise, against the Lenders in any way relating to this Agreement, in any forum other than the Delaware Chancery Court (or, if the Delaware Chancery Court shall be unavailable, any other court of the State of Delaware or, in the case of claims to which the federal courts have exclusive subject matter jurisdiction, any federal court of the United States of America sitting in the State of Delaware); provided that this will not preclude any action, cause of action, claim, cross-claim or third-party claim of any kind or description, whether in law or in equity, whether in contract or in tort or otherwise, in other jurisdictions by Parent under the Bridge Credit Agreement.

Section 11.8.3EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

Section 11.9Interpretation.  The captions appearing in this Agreement are inserted only as a matter of convenience and in no way define, limit or describe the scope or intent of this Agreement or any of the provisions hereof.  In this Agreement (i) words denoting the singular include the plural and vice versa, (ii)”it” or “its” or words denoting any gender include all genders, (iii) the words “including”, “includes” and “ include” shall be deemed to be followed by the words “without limitation,” whether or not expressed, (iv) any reference in this Agreement to a Section, Article, Exhibit or Schedule refers to a Section or Article of or an Exhibit or Schedule to this Agreement, unless otherwise stated, (v) when calculating the period of time within or following which any act is to be done or steps taken, the date which is the reference day in calculating such period shall be excluded and if the last day of such period is not a Business Day, then the period shall end on the next day which is a Business Day, (vi) the words “shall” and “will” have the same meaning, (vii)”hereof”, “herein”, “hereby”, “hereto” and “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement, (viii) any Law defined or referred to herein means such Law or statute as from time to time amended, modified or supplemented, including by succession of comparable successor Laws, (ix) the term “dollars” and “$” means United States dollars, and (x) the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or”.  The definitions given for terms in Article 1 and elsewhere in this Agreement shall apply equally to both the singular and plural forms of the terms defined.  References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.  References to any person include the successors and permitted assigns of that person. Any disclosure made by a party in the Schedules with reference to any section or schedule of this Agreement shall be deemed to be a disclosure with respect to all other sections or schedules to which such disclosure may apply to the extent the applicability of such disclosure to such other sections or schedules is readily apparent on its face.Certain information set forth in the Schedules is included solely for informational purposes and may not be required to be disclosed pursuant to this Agreement.  The disclosure of any information shall not be deemed to constitute an acknowledgment that such

83

information is required to be disclosed in connection with the representations and warranties made in this Agreement, nor shall such information be deemed to establish a standard of materiality.  All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP.  Solely for purposes of Article 4 and the definition of Company Material Adverse Effect, all references to Subsidiaries of the Company include PropCo and its Subsidiaries and OpCo Entities then in existence on the date of this Agreement and the Closing Date, whether or not the Reorganization Transactions have occurred.

Section 11.10Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one agreement.  This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other parties hereto.  Until and unless each party has received a counterpart hereof signed by the other parties, this Agreement shall have no effect and no party shall have any right or obligation hereunder (wheth er by virtue of any other oral or written agreement or other communication).  The exchange of a fully executed Agreement (in counterparts or otherwise) by facsimile or electronic delivery in .pdf format shall be sufficient to bind the parties to the terms and conditions of this Agreement.

Section 11.11Specific Performance.  The parties hereby acknowledge and agree that the failure of any party to perform its agreements and covenants hereunder shall cause irreparable injury to the other party for which damages, even if available, shall not be an adequate remedy.  Accordingly, each party hereby consents to the issuance of injunctive relief by any court of competent jurisdiction to compel performance of such party’s obligations and to the granting by any court of the remedy of specific performance of its obligations hereunder.  In the event that any action shall be brought in equity to enforce the provisions of this Agreement, no party shall allege, and each party hereby waives the defense, that there is an adequate remedy at law, and each party waives any requirement of the other party to post a bond or other security in connection with seeking specific performance.  Notwithstanding anything to the contrary in this Agreement, in circumstances where the Parent and Buyer are obligated to consummate the Purchase and the Purchase has not been consummated on or prior to the last day that the Closing was scheduled to occur under Section 2.1, the parties acknowledge that the Company, PropCo and OpCo shall not be entitled to enforce specifically the obligations of Parent or Buyer to consummate the Purchase under circumstances where the Company could terminate pursuant to Section 8.1.6.

Section 11.12REIT Savings Clause.  Notwithstanding anything in this Agreement to the contrary, in no event shall any amount paid to any Parent Indemnified Party pursuant to this Agreement in any tax year exceed the maximum amount that can be paid in such year without causing any Parent Indemnified Party to fail to meet the requirements of Sections 856(c)(2) and (3) of the Code (the “REIT Requirements”) for such year, determined as if the payment of such amount did not constitute income described in Sections 856(c)(2)(A)-(I) and 856(c)(3) (A)-(I) of the Code (“Qualifying Income”) as determined by independent accountants to Parent.  If the amount payable for any tax year under the preceding sentence is less than the amount which the Indemnitor would otherwise be obligated to pay to the Parent Indemnified Parties pursuant to this Agreement (the “Indemnifiable Amount”), the Parent Indemnified Parties shall so notify the Indemnitor, and the Indemnitor shall (at the Parent Indemnified Parties’ sole cost and expense) place the remaining portion of the Indemnifiable Amount in escrow and shall

84

not execute any instrumentation permitting a release of any portion thereof to the Parent Indemnified Parties, and the Parent Indemnified Parties shall not be entitled to any such amount, unless and until the Indemnitor and escrow holder receive (all at the Parent Indemnified Parties’ sole cost and expense) notice from Parent, together with either (a) an opinion of Parent’s tax counsel to the effect that such amount, if and to the extent paid, would not constitute gross income which is not Qualifying Income or (b) a letter from Parent’s independent accountants indicating the maximum amount that can be paid at that time to the Parent Indemnified Parties without causing any Parent Indemnified Party to fail to meet the REIT Requirements for any relevant taxable year, together with either a ruling from the IRS issued to Parent or an opinion of Parent’s tax counsel to the effect that su ch payment would not be treated as includible in the income of the applicable Parent Indemnified Party for any prior taxable year, in which event the escrow holder shall pay such maximum amount. The Indemnitor’s and escrow holder’s obligation to pay any unpaid portion of the Indemnifiable Amount shall terminate ten (10) years from the date of this Agreement and, upon such date, escrow holder shall remit any remaining funds in escrow to the Indemnitor and the Indemnitor shall have no obligation to make any further payments to the Parent Indemnified Parties notwithstanding that the entire Indemnifiable Amount has not been paid as of such date.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

85

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

HCP, INC.
By:	/s/ Paul F. Gallagher
Name:	Paul F. Gallagher
Title:	Executive Vice President —
	Chief Investment Officer
HCP 2010 REIT LLC
By: HCP Mezzanine Lender, LLC, as its Member
By:	/s/ Paul F. Gallagher
Name:	Paul F. Gallagher
Title:	Executive Vice President

[SIGNATURE PAGE TO PURCHASE AGREEMENT]

86

HCR MANORCARE, INC.
By:	/s/ Paul A. Ormond
Name:	Paul A. Ormond
Title:	President and Chief Executive Officer
HCR PROPERTIES, LLC
By:	/s/ Paul A. Ormond
Name:	Paul A. Ormond
Title:	President and Chief Executive Officer
HCR HEALTHCARE, LLC
By:	/s/ Paul A. Ormond
Name:	Paul A. Ormond
Title:	President and Chief Executive Officer

[SIGNATURE PAGE TO PURCHASE AGREEMENT]

87

EX-10.1

Exhibit 10.1

HCP, INC. STOCKHOLDERS AGREEMENT

Dated as of December 13, 2010

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS		2
1.1	Defined Terms	2
1.2	Terms Generally	6
ARTICLE II GOVERNANCE		7
2.1	Composition of the Board of Directors On the Day Immediately Following the Closing Date	7
2.2	Composition of the Board of Directors Following the Closing Date	7
2.3	Venture Capital Qualifying Investment	7
ARTICLE III TRANSFERS		8
3.1	Transfer Restrictions	8
ARTICLE IV REGISTRATION		9
4.1	Demand Registrations	9
4.2	Piggyback Registrations	11
4.3	Shelf Registration Statement	12
4.4	Registration Procedures	13
4.5	Registration Expenses	17
4.6	Participation in Underwritten Registrations	17
4.7	Suspension of Sales	17
4.8	Rule 144; Legended Securities	18
4.9	Holdback	18
4.10	Delay of Registration; Furnishing Information	18
ARTICLE V INDEMNIFICATION		19
5.1	Indemnification	19
ARTICLE VI REPRESENTATIONS AND WARRANTIES		22
6.1	Representations and Warranties of the Investors	22
6.2	Representations and Warranties of the Company	23
ARTICLE VII MISCELLANEOUS		23
7.1	Term	23
7.2	No Inconsistent Agreements	23
7.3	Investor Actions	24
7.4	Amendments and Waivers	24

i

7.5	Successors and Assigns	24
7.6	Severability	24
7.7	Counterparts	24
7.8	Entire Agreement	24
7.9	Governing Law; Jurisdiction	24
7.10	WAIVER OF JURY TRIAL	25
7.11	Specific Performance	25
7.12	No Third Party Beneficiaries	25
7.13	Notices	25

ii

STOCKHOLDERS AGREEMENT, dated as of December 13, 2010 (as it may be amended from time to time, this “Agreement”), among (i) HCP, Inc., a Maryland corporation (the “Company”), (ii) HCR ManorCare, Inc, a Delaware corporation (including as converted to a limited liability company, “ManorCare”), and (iii) Carlyle Partners V MC, L.P., a Delaware limited partnership, Carlyle MC Partners, L.P., a Delaware limited partnership, Carlyle Partners V-A MC, L.P., a Delaware limited partnership, CP V Coinvestment A, L.P., a Delaware limited partnership, and CP V Coinvestment B, L.P., a Delaware limited partnership (each, together with ManorCare and any Subsidiary of ManorCare that receives Shares on the Closing Date in connection with the Purchase, an “Initial Investor” and collectively, the “Initial Investor s”).

W I T N E S S E T H:

WHEREAS, on the date hereof, the Company, HCP 2010 REIT LLC, a Delaware limited liability company and an indirect subsidiary of the Company (“Buyer”), ManorCare, HCR Properties, LLC, a Delaware limited liability company and an indirect, wholly owned subsidiary of ManorCare (“PropCo”), and HCR Healthcare, LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of ManorCare, have entered into a Purchase Agreement (as it may be amended from time to time, the “Purchase Agreement”) pursuant to which Buyer will acquire all of the outstanding limited liability company interests of PropCo (the “Purchase”);

WHEREAS, ManorCare will receive shares (“Shares”) of common stock, par value $1.00 per share, of the Company (“Company Common Stock”) in connection with the Purchase, including (i) pursuant to the payment of the Increase Amount, if any, in accordance with Section 3.6.5 of the Purchase Agreement and (ii) (subject to the terms of the Escrow Agreement) pursuant to the Escrow Agreement; and

WHEREAS, the Initial Investors and the Stockholders are the owners of the capital stock of ManorCare;

WHEREAS, ManorCare will cause the Shares issued in the Purchase to be dividended to the other Initial Investors and the Stockholders;

WHEREAS, each of the parties hereto wishes to set forth in this Agreement certain terms and conditions regarding the Investors’ and the Stockholders’ ownership of the Shares.

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:

ARTICLE I

DEFINITIONS

1.1Defined Terms. Capitalized terms when used in this Agreement have the following meanings:

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

“Agreement” has the meaning set forth in the preamble.

“Applicable Law” means all applicable provisions of any law, statute, code, ordinance, rule, regulation, order, judgment, writ, stipulation, award, injunction, decree or arbitration award or finding of any Governmental Entity.

“Beneficially Own” with respect to any securities shall mean having “beneficial ownership” of such securities (as determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to any agreement, arrangement or understanding, whether or not in writing; provided, however, that solely for the purposes of determining the Shares with respect to which an Investor is required to vote, cause the record holder to attend a meeting, or take any other action required under this Agreement, such Investor shall be deemed not to Beneficially Own such Shares unless such Investor holds the voting or other power that is reasonably necessary to comply with such obligation.

“Board” has the meaning set forth in Section 2.1.

“Business Day” means any day other than a Saturday, Sunday or a day on which banking institutions are generally authorized or required by law to close in the United States or New York, New York.

“Buyer” has the meaning set forth in the recitals.

“Carlyle Holders” means Carlyle Partners V MC, L.P., Carlyle MC Partners, L.P., Carlyle Partners V-A MC, L.P., CP V Coinvestment A, L.P., CP V Coinvestment B, L.P., and any Affiliate of any such Investor that is issued or Transferred Registrable Securities after the date hereof.

“Carlyle Majority” means Carlyle Holders that, in the aggregate, hold a majority of the total number of Registrable Securities held by all Carlyle Holders.

“Closing” has the meaning set forth in the Purchase Agreement.

“Closing Date” has the meaning set forth in the Purchase Agreement.

2

“Commission” means the Securities and Exchange Commission or any other federal agency administering the Securities Act or the Exchange Act, as applicable.

“Company” has the meaning set forth in the preamble.

“Company Common Stock” has the meaning set forth in the recitals.

“Consent of the Investors” means, unless the context expressly provides otherwise, the consent of Investors holding a majority of the Shares held by Investors at the time of the applicable consent.

“Control” means the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of stock or as trustee or executor, by contract or credit arrangement or otherwise.

“Covered Person” has the meaning set forth in Section 5.1(a).

“Demand Rights Commencement Date” has the meaning set forth in Section 4.1(a).

“Demand Registration” has the meaning set forth in Section 4.1(a).

“Escrow Agreement” has the meaning set forth in the Purchase Agreement.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Governmental Entity” means any national, federal, state, provincial, municipal, local or foreign government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court, tribunal, arbitrator or self-regulatory organization.

“Increase Amount” has the meaning set forth in the Purchase Agreement.

“Initial Investor” and “Initial Investors” have the meaning set forth in the preamble.

“Investor” and “Investors” means (i) the Initial Investors and (ii) any Permitted Transferee to whom any Investor Transfers ManorCare Common Stock before the Closing Date.

“Investor Designee” means Paul Ormond.

“Investor Rights Termination Event” shall be deemed to occur if, as of the end of any Business Day following the Closing Date, the Investors Beneficially Own less than 5% of then-outstanding shares of Company Common Stock.

“ManorCare” has the meaning set forth in the preamble.

3

“ManorCare Common Stock” has the meaning set forth in Section 3.1(a).

“Purchase” has the meaning set forth in the recitals.

“Purchase Agreement” has the meaning set forth in the recitals.

“Nominating and Corporate Governance Committee” means the Nominating and Corporate Governance Committee of the Board or any such successor or replacement committee.

“Permitted Transferee” has the meaning set forth in Section 3.1(a).

“Person” means an individual, corporation, limited liability company, partnership, association, trust, unincorporated organization, other entity or group (as defined in Section 13(d) of the Exchange Act).

“Piggyback Registration” has the meaning set forth in Section 4.2(a).

“PropCo” has the meaning set forth in the recitals.

“Public Offering” means a public offering of equity securities of the Company, whether or not for sale for the Company’s account, pursuant to an effective Registration Statement under the Securities Act (other than a Special Registration).

“register”, “registered” and “registration” shall refer to a registration effected by preparing and (i) filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of effectiveness of such registration statement or (ii) filing a prospectus and/or prospectus supplement in respect of an appropriate effective registration statement.

“Registrable Securities” means any Shares held by the Stockholders; provided that the Shares shall cease to be Registrable Securities when (i) they are sold or otherwise transferred pursuant to an effective registration statement under the Securities Act, (ii) they are sold pursuant to Rule 144 (or any successor provision) under the Securities Act and subsequent disposition of such Shares shall not require registration or qualification of such securities under the Securities Act, or (iii) they shall have ceased to be outstanding.

“Registration Expenses” means all expenses incurred by the Company in effecting any registration pursuant to this Agreement, including, all registration and filing fees, Financial Industry Regulatory Authority, Inc. fees, printing expenses, fees and disbursements of counsel for the Company, blue sky fees and expenses and expenses of the Company’s independent accountants in connection with any regular or special reviews or audits incident to or required by any such registration, but shall not include Selling Expenses.

“Registration Request” has the meaning set forth in Section 4.1(a).

“Registration Statement” means the prospectus and other documents filed with the Commission to effect a registration under the Securities Act.

4

“Securities Act” means the Securities Act of 1933, as amended, supplemented or restated from time to time and any successor to such statute, and the rules and regulations promulgated thereunder.

“Selling Expenses” means all underwriting discounts, selling commissions and transfer taxes applicable to the sale of Registrable Securities hereunder and fees and disbursements of counsel for any holder of Registrable Securities.

“Shares” shall have the meaning set forth in the recitals and shall also be deemed to refer to any securities issued in respect of the shares of Company Common Stock received by the Stockholders in connection with the Purchase, or in substitution therefor, in connection with any stock split, dividend or combination, or any reclassification, recapitalization, merger, consolidation, exchange or other similar reorganization.

“Shelf Registration” has the meaning set forth in Section 4.3.

“Shelf Registration Statement” means a Registration Statement on Form S-3 (or any successor or similar provision) or any similar short-form or other appropriate Registration Statement that may be available at such time, in each case for an offering to be made on a continuous or delayed basis pursuant to Rule 415 (or any successor or similar provision) under the Securities Act covering Registrable Securities. To the extent that the Company is a “well-known seasoned issuer” (as such term is defined in Rule 405 (or any successor or similar rule) of the Securities Act), a “Shelf Registration Statement” shall be deemed to refer to an “automatic shelf registration statement,” as such term is defined in Rule 405 (or any successor or similar rule) of the Securities Act.

“Special Registration” means the registration of (i) equity securities and/or options or other rights in respect thereof solely registered on Form S-4 or Form S-8 (or any successor or similar forms for similar purposes) or (ii) shares of equity securities and/or options or other rights in respect thereof to be offered to directors, members of management, employees, consultants or sales agents, distributors or similar representatives of the Company or its direct or indirect subsidiaries or in connection with dividend reinvestment plans.

“State Act” has the meaning set forth in Section 3.1(b).

“Stockholders” means (i) the Investors and any Persons set forth on Annex A and (ii) any Permitted Transferee to whom any Stockholder Transfers Shares after the Closing Date in compliance with the terms of this Agreement.

“Subsidiary” has the meaning set forth in the Purchase Agreement.

“Transfer” means any sale, assignment, disposition or other transfer of any capital stock or any security which references the capital stock, or any synthetic, hedging or derivative transaction which has the effect of any of the foregoing.

“VCOC” has the meaning set forth in Section 2.3.

5

“VCOC Investor” means any Investor designated as a VCOC Investor in a written notice by a Carlyle Majority to the Company from time to time.

1.2Terms Generally.  In this Agreement (i) words denoting the singular include the plural and vice versa, (ii) “it” or “its” or words denoting any gender include all genders, (iii) the words “including”, “includes” and “include” shall be deemed to be followed by the words “without limitation,” whether or not expressed, (iv) any reference in this Agreement to a Section, Article, Exhibit or Schedule refers to a Section or Article of or an Exhibit or Schedule to this Agreement, unless otherwise stated, (v) when calculating the period of time within or following which any act is to be done or steps taken, the date which is the reference day in calculating such period shall be excluded and if the last day of such period is not a Business Day, then the period shall end on the next day which is a Business Day, (vi) the words “shall” and “will” have the same meaning, (vii) “hereof”, “herein”, “hereby”, “hereto” and “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement, (viii) any Applicable Law defined or referred to herein means such Applicable Law or statute as from time to time amended, modified or supplemented, including by succession of comparable successor Applicable Laws, (ix) the term “dollars” and “$” means United States dollars, and (x) the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or”.  The definitions given for terms in Article I and elsewhere in this Agreement shall apply equally to both the singular and plural forms of the terms defined. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. References to any Person include the successors and permitted assigns of that Person.  Certain information set forth in the Schedules is included solely for informational purposes and may not be required to be disclosed pursuant to this Agreement.  All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP.  References herein to any agreement or letter (including the Purchase Agreement) shall be deemed references to such agreement or letter as it may be amended, restated or otherwise revised from time to time.  Unless the context expressly provides otherwise, subject to Section 2.2(e), any reference to a design ation, notice or other action by the Investors means such action by the Investors holding a majority of the Shares held by Investors at the time of the applicable consent.

6

ARTICLE II

GOVERNANCE

2.1Composition of the Board of Directors On the Day Immediately Following the Closing Date.  On the day immediately following the Closing Date, (i) the number of directors on the Company’s board of directors (the “Board”) shall be increased by one (and the Board shall take all action necessary to effect such increase) and (ii) the Nominating and Corporate Governance Committee will recommend to the Board, and the Board will elect, the Investor Designee to the Board to fill such vacancy (effective on the date immediately following the Closing Date).  Notwithstanding the foregoing, if the Investors and the Stockholders own less than 5% of the then outstanding Company Common Stock at the time of the Closing, the Board will not be required to appoint the Investor Designee.

2.2Composition of the Board of Directors Following the Closing Date.

(a)Following the Closing Date and until the Investor Rights Termination Event, at each annual or special meeting of stockholders of the Company at which directors are to be elected to the Board, the Company will use its reasonable best efforts to cause the nomination and election to the Board of a slate of directors that includes the Investor Designee by including the Investor Designee in the slate of nominees recommended for election to the Board in the Company’s proxy statements with respect to such meeting; provided that, in any event, the Investor Designee desires to be nominated for service and is willing to the serve on the Board.

(b)Prior to the Investor Rights Termination Event, the Board will not remove, or recommend to the stockholders of the Company removal of, the Investor Designee without the prior written Consent of the Investors unless (i) the election of the Investor Designee to the Board would cause the Company to be not in compliance with Applicable Law so long as the Company, the Board and the Nominating and Corporate Governance Committee have taken all reasonable actions to cause the election of the Investor Designee to be in compliance with Applicable Law, (ii) the Investor Designee has been the subject of a conviction or proceeding enumerated in Item 2(d) or (e) of Schedule 13D (under Rule 13d-101 promulgated under the Ex change Act) in the five (5)-year period preceding such date, or (iii) the Investor Designee is or has been a party to a proceeding, or is subject to an order, judgment or decree, of the type enumerated in Item 401(f) of Regulation S-K in the ten (10)-year period preceding such date or is subject to any order, decree or judgment of any court or agency prohibiting service as a director of any public company.

(c)Subject to the occurrence of the Investor Rights Termination Event, in the event the Investor Designee fails to be elected to the Board following any annual or special meeting of the stockholders at which the Investor Designee stood for election as a director but was nevertheless not elected, the Board will have no obligation to nominate a replacement Investor Designee for election at any subsequent meeting of stockholders of the Company at which directors are to be elected.

(d)The Company will at all times provide the Investor Designee with the same rights to indemnification that it provides to the other members of the Board.

(e)At any time, and from time to time, when (i) the Investors are entitled to designate the Investor Designee and (ii) a VCOC Investor holds Shares, such VCOC Investor shall be entitled to designate the Investor Designee.

(f)Following the Investor Rights Termination Event, upon the request of the Board, the Investors shall use reasonable best efforts to cause the Investor Designee to resign as a director of the Company.

2.3Venture Capital Qualifying Investment. Subject to Applicable Law, the Company shall (i) furnish each VCOC Investor with such financial and operating data and other information with respect to the business and properties of the Company as the Company prepares and compiles for its directors in the ordinary course and as such VCOC Investor may from time to time reasonably request and provide such VCOC Investor reasonable access to the books and records of the Company, including financial and operating data and (ii) permit each VCOC

7

Investor to discuss the affairs, finances and accounts of the Company, and to make proposals and furnish advice with respect thereto, with the principal officers of the Company from time to time and, in any event, within thirty (30) days after the end of each fiscal quarter of the Company.  The provisions of this Section 2.3 shall terminate on the date on which, in each VCOC Investor’s good faith judgment, the provisions of this Section 2.3 are no longer required in order for the ownership of the Shares to qualify as a venture capital investment within the meaning of Department of Labor “plan asset” regulations (a “VCOC”).  The Investors agree to notify the Company promptly if, in each VCOC Investor’s good faith judgment, the provisions set forth in this Section 2.3 are no longer required in order for the ownership of the Shares to qualify as a VCOC.

ARTICLE III

TRANSFERS

3.1Transfer Restrictions.

(a)Without the prior written consent of the Company, no Investor shall Transfer (which shall not include the conversion of the shares of ManorCare Common Stock into limited liability company interests) any shares of common stock, par value $0.01 per share, of the ManorCare (“ManorCare Common Stock”) between the date hereof and the Closing, other than (i) to an Affiliate of such Investor, (ii) to or for the benefit of any member or members of such Investors’ immediate family (which shall include any spouse, lineal ancestor or descendant or sibling) or to a trust, partnership or limited liability company of or for the benefit of one or more of such Investors or such family members or (iii) to the heirs, executors or legatee s of such Investor by operation of law upon death or incapacity of such Investor, in each case, such that the transferee referenced above agrees to be bound by the provisions of this Agreement as if it were an Investor hereunder (each, a “Permitted Transferee”).

(b)Any certificates for Shares issued pursuant to the Purchase or issued to the Investors subsequent to the Closing as a result of any stock split, dividend or combination, or any reclassification, recapitalization, merger, consolidation, exchange or other similar reorganization shall bear a legend (and an appropriate comparable notation or other arrangement will be made with respect to any uncertificated Shares) referencing restrictions on transfer of such Shares under the Securities Act which legend shall state in substance:

“The securities evidenced by this certificate have been issued and sold without registration under the United States Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state of the United States (a “State Act”) in reliance upon certain exemptions from registration under said laws.  The securities evidenced by this certificate cannot be sold, assigned or otherwise transferred within the United States unless such sale, assignment or other transfer is (i) made pursuant to an effective registration statement under the Securities Act and in accordance with each applicable State Act or (ii) exempt from, or not subject to, the Securities Act and each applicable State Act.”

8

(c)Notwithstanding the foregoing, the holder of any certificate(s) for Shares shall be entitled to receive from the Company, without expense, new certificates for a like number of Shares not bearing such legend (or the elimination or termination of such notation or arrangement) upon the request of such holder if (i) at such time such restrictions are no longer applicable, or (ii) upon the Transfer of such Shares other than to a Permitted Transferee, so long as (in the case of clause (ii)), if required by the Company’s transfer agent, with respect to the restriction on transfer of such Shares other than pursuant to a registration statement under the Securities Act, such holder delivers an opinion of counsel to such holder, which opinion is reasonably satisfactory in form and substance to such transfer agent, that the restriction referenced in such legend (or such notation or arrangement) is no longer required in order to ensure compliance with the Securities Act; provided, that if the Transfer contemplated by clause (ii) above is of less than all of the Shares represented by any certificate, then, subject to the other provisions of this Section 3.1(c), the certificate representing the Shares retained by such holder may bear the legends contemplated by Section 3.1(b).

ARTICLE IV

REGISTRATION

4.1Demand Registrations.

(a)Requests for Registration. Subject to Section 4.1(b), at any time following the date that is the earlier of (i) one hundred eighty (180) days after the Closing Date; and (ii) ninety (90) days after the later of the Closing Date and the completion of an offering by the Company of equity securities in exchange for cash, the proceeds of which (when added to the proceeds of all offerings by the Company of equity securities since the date of the Purchase Agreement) are equal to or greater than One Billion Five Hundred Million Dollars ($1,500,000,000), (the “Demand Rights Commencement Date”), an Investor or Investors representing a Carlyle Majority may request in wr iting that the Company effect the registration (which, for avoidance of doubt, may be a Shelf Registration) of all or any part of the Registrable Securities held by such Investor or Investors (a “Registration Request”) (which Registration Request shall specify the number of Registrable Securities intended to be registered, the intended method of distribution and the identity of the Investor or Investors making the Registration Request), provided, however, that the minimum number of Registrable Securities relating to any Registration Request must be no less than 0.5% of the then-outstanding Shares.  Promptly after its receipt of any Registration Request, the Company will give written notice of such request to all other holders of Registrable Securities (which notice shall be given in any event within five (5) Business Days of the date on which the Company received the applicable Registration Request) and will use its reasonable best efforts to register, as soon as prac ticable (and in any event within sixty (60) days of the date of such Registration Request) in accordance with the provisions of this Agreement, all Registrable Securities that have been requested to be registered in the Registration Request or by any other holders of Registrable Securities by written notice to the Company given within ten (10) Business Days after the date the Company has given such holders of Registrable Securities notice of the Registration Request. Any registration requested by an Investor or Investors pursuant to this Section 4.1(a) is referred to in this Agreement as a “Demand Registration.”

9

(b)Limitation on Demand Registrations.

(i)The Company shall not be required to (A) effect more than four (4) Demand Registrations or underwritten takedowns under the Shelf Registration Statement (and not more than two (2) Demand Registrations in any twelve (12)-month period), (B) effect a Demand Registration or underwritten takedown under the Shelf Registration Statement unless the expected gross proceeds of the offering of Registrable Securities to be included in such Demand Registration or underwritten takedown are at least 0.5% of then-outstanding Shares, (C) cause any Demand Registration to become effective prior to the Demand Rights Commencement Date, or (D) effect a Demand Registration if within 120 days of any other Demand Registration.  No Demand Registration or underwrit ten takedown will count for the purposes of the limitations in this Section 4.1(b) unless a Registration Statement covering not less than all Registrable Securities specified in the applicable Registration Request for sale in accordance with the intended method of distribution specified in the applicable Registration Request has been declared or ordered effective by the Commission and remains continuously effective until (A) in the case of a Shelf Registration, the earlier of (i) three (3) years after its effective date, (ii) the date on which all Registrable Securities covered thereby have been sold pursuant to such registration and (iii) the first date on which no Registrable Securities remain outstanding and (B) in the case of a Registration Statement that does not relate to a Shelf Registration, the earlier of (x) date on which all Registrable Securities covered thereby have been sold pursuant to such registration (or if earlier, the first date on which no Reg istrable Securities remain outstanding) and (y) the close of business on the 180th day after such registration has been declared or ordered effective by the Commission.

(ii)Notwithstanding anything to the contrary in this Agreement, the Company shall not be required to file a Registration Statement if the Company has notified the Investor or Investors making the Registration Request that, in the good faith judgment of the Company, (A) it would be materially detrimental to the Company for such registration to be effected at such time or (B) solely during the period from the last Business Day of any fiscal quarter through and including the Business Day after the day on which the Company publicly releases its earnings information for such quarter, it would be not be appropriate for such registration to be effected at such time in light of the pending earnings release, in each case the Company shall have the right to defer such filing for a period of not more than twenty (20) Business Days after receipt of the request of the Investor or Investors; provided that such right to delay a request pursuant to this Section 4.1(b)(ii) shall be exercised by the Company (1) in the cause of clause (A) above, not more than two periods in any twelve (12)-month period and (2) in the case of this Section 4.1(b)(ii), not more than forty (40) Business Days in the aggregate in such twelve (12) month period.  If the Company postpones the filing of a prospectus or the effectiveness of a Registration Statement pursuant to this Section 4.1(b)(ii), an Investor or Investors will be entitled to withdraw its or their Registration Request and, if such request is withdrawn, such registration request will not count for the purposes of the limitation set forth in this Section 4.1(b).

10

(c)Selection of Underwriters.

(i)The lead underwriter to administer the offering in connection with any Demand Registration will be chosen by the Company, subject to the prior written consent, not to be unreasonably withheld, conditioned, or delayed, of the Investors.

(ii)The right of any holders of Registrable Securities to registration pursuant to this Section 4.1 will be conditioned upon such holders of Registrable Securities agreeing to the method of distribution being proposed by the Investor requesting such Demand Registration and, in the case of an underwritten offering, agreeing to such underwriting and the inclusion of such holder’s Registrable Securities in the underwriting, and, in the case of an underwritten offering, each such holder of Registrable Securities will (together with the Company and the other holders of Registrable Securities distributing their securities through such underwriting) enter into an underwriting agreement in the form reasonably approved by the Investors with the underwriter or underwriters selected for such underwriting.

(d)Priority on Demand Registrations.  If the managing underwriter advises the Company that in its reasonable opinion the number of Registrable Securities (together with any other securities to be included in such offering) exceeds the number of securities that can be sold in such offering without materially adversely affecting the marketability of the offering (including an adverse effect on the per share offering price), the Company will include in such offering only such number of securities that in the reasonable opinion of such underwriters can be sold without materially adversely affecting the marketability of the offering (including an adverse effect on the per share offering price), which sec urities will be so included in the following order of priority:  (i) first, Registrable Securities of the Stockholders, pro rata on the basis of the aggregate number of Registrable Securities owned by all Stockholders who have delivered written requests for registration pursuant to Section 4.1(a), (ii) second, any shares of Company Common Stock to be sold by the Company and (iii) third, any shares of Company Common Stock requested to be included pursuant to the exercise of other contractual registration rights granted by the Company, pro rata among such holders (if applicable) on the basis of the aggregate number of securities requested to be included by such holders.

4.2Piggyback Registrations.

(a)Right to Piggyback.  At any time following the Demand Rights Commencement Date, if the Company proposes to register any shares of Company Common Stock (or securities convertible into or exercisable for shares of Company Common Stock) in connection with a Public Offering, other than solely with respect to a Demand Registration or a Special Registration, and the registration form to be filed may be used for the registration or qualification for distribution of Registrable Securities, the Company will give prompt written

11

notice to all holders of Registrable Securities of its intention to effect such a registration and, subject to Section 4.2(c), shall use its commercially reasonable efforts to include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within five (5) days after delivery of the Company’s notice (a “Piggyback Registration”). Any holder of Registrable Securities that has made such a written request may withdraw its Registrable Securities from such Piggyback Registration by giving written notice to the Company and the managing underwriter, if any, on or before the fifth (5th) day prior to the planned effective date of such Piggyback Registration.  The Company may terminate or withdraw any registration under this Section 4.2 prior to the effectiveness of such registration, whether or not any holder of Registrable Securities has elected to include Registrable Securities in such registration, and except for the obligation to pay Registration Expenses pursuant to Section 4.5, the Company will have no liability to any holder of Registrable Securities in connection with such termination or withdrawal.

(b)Underwritten Registration.  If the registration referred to in Section 4.2(a) is proposed to be underwritten, the Company will so advise the holders of Registrable Securities.  In such event, the right of any holder of Registrable Securities to registration pursuant to this Section 4.2 will be conditioned upon such holder’s participation in such underwriting and the inclusion of such holder’s Registrable Securities in the underwriting, and each such holder of Registrable Securities will (together with the Company and the other holders of Registrable Securities and other holders of securities distributing their securities through such underwriting) enter into an under writing agreement in customary form and providing for customary underwriting discounts with the underwriter or underwriters selected for such underwriting by the Company; provided that the terms of such agreement (including with respect to underwriting discounts) shall not be less favorable to the holders of Registrable Securities than to the Company or any other holder participating in the registration.

(c)Priority on Primary Registrations.  If a Piggyback Registration relates to an underwritten primary offering on behalf of the Company, and the managing underwriters advise the Company that in their reasonable opinion the number of securities requested to be included in such registration exceeds the number that can be sold without materially adversely affecting the marketability of such offering (including an adverse effect on the per share offering price), the Company will include in such registration or prospectus only such number of securities that in the reasonable opinion of such underwriters can be sold without materially adversely affecting the marketability of the offering (including an adv erse effect on the per share offering price), which securities will be so included in the following order of priority:  (i) first, the shares of Company Common Stock the Company proposes to sell, (ii) second, pro rata, on the basis of the aggregate number of securities requested to be included by such holders the Registrable Securities of any holders of Registrable Securities who have requested registration of Registrable Securities pursuant to Section 4.2(a) and the shares of Company Common Stock proposed to be included by any holders of other piggyback registration rights.

4.3Shelf Registration Statement.   On the Demand Rights Commencement Date, the Company shall file with the Commission either (i) a Shelf Registration Statement or (ii) pursuant to Rule 424(b) under the Securities Act, a prospectus supplement that shall be deemed to be part of an existing Shelf Registration Statement in accordance with Rule 430B

12

under the Securities Act, in each case relating to the offer and sale of all of the Registrable Securities (the “Shelf Registration”).  The Company shall, if such Shelf Registration Statement is not automatically effective, use its reasonable best efforts to cause such Shelf Registration Statement to be declared effective under the Securities Act as soon as possible after filing.  The Company shall promptly amend or supplement such Shelf Registration Statement from time to time to include any additional Registrable Securities.  The Company shall use its reasonable best efforts to cause the Shelf Registration Statement to remain effective, including by filing a replacement Shelf Registration Statement upon the expiration of the original Shelf Registration Statement until such time as there are no remaining Registrable Securities, and subject to the limitation on underwritten taked owns set forth in Section 4.1(b)(i), amend the Shelf Registration Statement from time to time as reasonably requested by the holders of Registrable Securities to permit disposition of Registrable Securities pursuant thereto in accordance with the preferred method of distribution of Shares under the Shelf Registration Statement of such holders.

4.4Registration Procedures. Subject to Section 4.1(b), whenever the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to Sections 4.1 or 4.2 of this Agreement and with respect to a Shelf Registration, the Company shall as promptly as practicable (in each case, to the extent applicable):

(a)With respect to a Demand Registration or a Piggyback Registration, prepare and file with the Commission a Registration Statement with respect to such Registrable Securities (which, for the avoidance of doubt, may be a Shelf Registration) and use its reasonable best efforts to cause such Registration Statement to become effective, or prepare and file with the Commission a prospectus supplement with respect to such Registrable Securities pursuant to an effective Registration Statement and, upon the request of the holders of a majority of the Registrable Securities registered hereunder, keep such Registration Statement effective or such prospectus supplement current, until (i) in the case of a Shelf Registration (other than the Shelf Registration Statem ent described in Section 4.3), the earlier of (A) three (3) years after the effective date, (B) the date on which all Registrable Securities covered thereby have been sold pursuant to such registration and (C) the first date on which no Registrable Securities remain outstanding and (ii) in the case of any Registration Statement not related to a Shelf Registration, the earlier of (A) the date on which all Registrable Securities covered thereby have been sold pursuant to such registration, (B) in the case of a Demand Registration pursuant to Section 4.1, the expiration of 90 days after such registration statement becomes effective or (ii) in the case of a Piggyback Registration pursuant to Section 4.2, the expiration of 90 days after such registration statement becomes effective;

(b)Prepare and file with the Commission such amendments and supplements to the applicable Registration Statement and the prospectus or prospectus supplement used in connection with such Registration Statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement for the period set forth in paragraph (a);

(c)Furnish to the holders of Registrable Securities such number of copies of the applicable Registration Statement and each such amendment and supplement thereto (including in each case all exhibits) and of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documentsas they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them;

13

(d)Use its reasonable best efforts to register and qualify the securities covered by such Registration Statement under such other securities, blue sky or other laws of such jurisdictions as shall be reasonably requested by the holders of Registrable Securities, to keep such registration or qualification in effect for so long as such Registration Statement remains in effect, and to take any other action which may be reasonably necessary to enable such seller to consummate the disposition in such jurisdictions of the securities owned by such holder of Registrable Securities; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business, to subject itself to taxation or to file a general conse nt to service of process in any such states or jurisdictions;

(e)Enter into customary agreements (including, if permitted hereunder, if the method of distribution is by means of an underwriting, an underwriting agreement in customary form with the managing underwriter(s) of such offering) and take such other actions (including participating in and making documents available for the due diligence review of underwriters if the method of distribution is by means of an underwriting) as are reasonably required in order to facilitate the disposition of such Registrable Securities.  Each holder of Registrable Securities participating in such underwriting shall also enter into and perform its obligations under such underwriting agreement;

(f)With respect to a Demand Registration, at the reasonable request of the Investor who delivered the Registration Request, cause appropriate executives to participate, at the Company’s expense, in customary investor presentations and “road shows” (to be scheduled in a collaborative manner so as not to unreasonably interfere with the conduct of the business of the Company); notwithstanding anything to the contrary herein, (i) the aggregate number of “road shows” the Company shall be required to participate in pursuant to this Agreement shall not exceed six and (ii) the Company shall not be obligated to participate in any “road show” pursuant to this Agreement within 120 days of any other “road show” in w hich the Company has participated or will be participating pursuant to this Agreement;

(g)Notify each holder of Registrable Securities at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the happening of any event as a result of which the applicable prospectus, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

(h)Make such representations and warranties to the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in an underwritten Public Offering and deliver such documents and certificates as may be reasonably requested by the managing underwriter, if any, to evidence compliance with the foregoing and with any customary conditions contained in the applicable underwriting agreement entered into by the Company;

14

(i)Use its reasonable best efforts to furnish to the managing underwriter, if any, (i) an opinion of outside legal counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten Public Offering, addressed to the underwriters, and (ii) a “comfort letter” from the independent registered public accountants of the Company addressed to underwriters, if any, in form and substance as is customarily given by independent registered public accountants to underwriters in an underwritten Public Offering;

(j)Give written notice to the holders of Registrable Securities:

(i)when any Registration Statement relating to such registrations or any amendment thereto has been filed with the Commission and when such Registration Statement or any post-effective amendment thereto has become effective;

(ii)of any request by the Commission for amendments or supplements to any Registration Statement filed in connection therewith or the prospectus included therein or for additional information;

(iii)of the issuance by the Commission of any stop order suspending the effectiveness of any Registration Statement filed in connection therewith or the initiation of any proceedings for that purpose;

(iv)of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Company Common Stock for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

(v)of the happening of any event that requires the Company to make changes in any effective Registration Statement filed in connection therewith or the prospectus related to the registration statement in order to make the statements therein not misleading (which notice shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made).

(k)Use its reasonable best efforts to prevent the issuance or obtain the withdrawal of any order suspending the effectiveness of any Registration Statement referred to in Section 4.4(j)(iii) at the earliest practicable time;

(l)Upon the occurrence of any event contemplated by Section 4.4(j)(v) above, promptly prepare (and afford holders’ counsel reasonable opportunity to review and comment thereon) a post-effective amendment to such Registration Statement or a supplement to the related prospectus or file any other required document so that, as thereafter delivered to the holders of Registrable Securities, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the holders of Registrable Securities in accordance with Section 4.4(j)(v) above to suspend the use of the prospectus until the requisite changes to the prospectus have been made, then the holders of

15

Registrable Securities shall suspend use of such prospectus and use their commercially reasonable efforts to return to the Company all hard copies of such prospectus (at the Company’s expense) other than permanent file copies then in such holder’s possession, and the period of effectiveness of such Registration Statement provided for above shall be extended by the number of days from and including the date of the giving of such notice to the date holders of Registrable Securities shall have received such amended or supplemented prospectus pursuant to this Section 4.4(l);

(m)Procure the cooperation of the Company’s transfer agent in settling any offering or sale of Registrable Securities, including with respect to the transfer of physical stock certificates into book-entry form in accordance with any procedures reasonably requested by the holders of Registrable Securities or the underwriters;

(n)If requested by the managing underwriter or a holder of Registrable Securities being sold in connection with an underwritten offering, promptly incorporate in a supplement or post-effective amendment such information as the managing underwriter and the holders of a majority of Registrable Securities being sold agree should be included therein relating to the sale of the Registrable Securities, including information with respect to the number of shares of Registrable Securities being sold to underwriters, the purchase price being paid therefor by such underwriters and with respect to any other terms of the underwritten offering of the Registrable Securities to be sold in such underwritten offering, and make all required filings of such supplement or post-e ffective amendment as soon as notified of the matters to be incorporated in such supplement or post-effective amendment;

(o)Cooperate with the selling holders of Registrable Securities and the managing underwriter, if any, to facilitate the timely preparation and delivery of certificates not bearing any restrictive legends representing the Registrable Securities to be sold and cause such Registrable Securities to be in such denominations and registered in such names as the managing underwriter may reasonably request at least two (2) Business Days prior to any sale of Registrable Securities to the underwriters;

(p)Use its reasonable best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriters, if any, to consummate the disposition of such Registrable Securities;

(q)Use its reasonable best efforts to cause all Registrable Securities covered by the applicable Registration Statement to be listed on the New York Stock Exchange;

(r)Use its reasonable best efforts to cause a CUSIP number for all Registrable Securities not later than the effective date of the applicable Registration Statement;

(s)Following reasonable advance notice, make available for inspection by representatives of the holders of a majority of the Registrable Securities being sold, any underwriter participating in any disposition pursuant to the applicable Registration Statement, and any attorney or accountant retained by such holders (but not more than one firm of counsel and one firm of accountants to such holders) or any such underwriter, all relevant financial and

16

other records and pertinent corporate documents and information of the Company, as shall be reasonably requested in connection with the applicable registration and customary for similar due diligence examinations by underwriters, and cause the Company’s officers, directors and employees to supply such information during normal business hours at the offices where such information is normally kept; and

(t)Otherwise use its reasonable best efforts to comply with all rules and regulations of the Commission applicable to the Company in connection with such registration, facilitate the registration of such Registrable Securities and make generally available to the Company’s securityholders an earnings statement satisfying the provisions of Section 11(a) of the Securities Act, (A) covering the twelve (12)-month period commencing at the end of the fiscal quarter in which the applicable Registration Statement becomes effective, within ninety (90) days of the end of such twelve (12)-month period, and (B) beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of the applicabl e Registration Statement, which statements shall cover such twelve (12)-month period.

4.5Registration Expenses. Except as specifically provided herein, all Registration Expenses incurred in connection with any registration, qualification or compliance hereunder shall be borne by the Company. All Selling Expenses incurred in connection with any registrations hereunder shall be borne by the holders of the Shares so registered pro rata on the basis of the aggregate offering or sale price of the Shares so registered; provided that (i) Selling Expenses consisting of fees and disbursements of counsel not authorized by holders of a majority of the Shares so registered shall be borne pro rata by the holders of such Shares who authorized such fees and disbursements and (ii) S elling Expenses consisting of taxes applicable to the Transfer of such Shares shall be borne solely by the holders of the Shares subject to such taxes.

4.6Participation in Underwritten Registrations.  No holder of Registrable Securities may participate in any registration hereunder that is underwritten unless such holder (i) agrees to sell its Registrable Securities on the basis provided in any underwriting arrangements approved by the Investor who delivered the Registration Request, in the case of a registration effected pursuant to Section 4.1 or Section 4.3, or the Company, in the case of a registration effected pursuant to Section 4.2 (including pursuant to the terms of any over-allotment or “green shoe” option requested by the managing underwriter(s); provided that no holder of Registrable Securities w ill be required to sell more than the number of Registrable Securities that such holder has requested the Company to include in any registration), (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements, and (iii) cooperates with the Company’s reasonable requests in connection with such registration or qualification.

4.7Suspension of Sales. Upon receipt of written notice from the Company that a Registration Statement or prospectus supplement contains or may contain an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading, each holder of Registrable Securities shall forthwith discontinue disposition of Registrable Securities until the holder of Registrable Securities has received copies of a supplemented or amended prospectus or prospectus supplement, or until such holder is advised in writing by the Company that the use of the

17

prospectus and, if applicable, prospectus supplement may be resumed, and, if so directed by the Company, such holder shall deliver to the Company (at the Company’s expense) all hard copies, other than permanent file copies then in such holder’s possession, of the prospectus and, if applicable, prospectus supplement covering such Registrable Securities current at the time of receipt of such notice.  The total number of days that any one or more such suspensions may be in effect in any twelve (12)-month period shall not exceed the excess of forty (40) Business Days less the number of Business Days in such twelve (12)-month period that the Company has delayed effecting a registration in reliance on Section 4.1(b)(ii).

4.8Rule 144; Legended Securities.  The Company will use its reasonable best efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder, with a view to enabling such holder of Registrable Securities to sell shares of Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities Act.  Upon the request of any holder of Registrable Securities, the Company will deliver to such holder a written statement as to whether it has complied with such information requirements.

4.9Holdback. If requested by the underwriters managing any underwritten offering in which Registrable Securities are eligible to be sold, without the prior written consent of the underwriter for such offering during the period specified by such underwriter, which period shall not exceed fourteen (14) days prior to or sixty (60) days following the effective date of the applicable registration, each holder of Registrable Securities will agree with such underwriter and the other holders of Registrable Securities not to (other than to a Permitted Transferee or as part of such offering) Transfer any Company Common Stock or any other equity securities of the Company; provided, that the Company and all of its executive officers and directors shall have likewise agreed with such underwriter not to issue or (other than as part of such offering) Transfer any shares of Company Common Stock or any securities convertible into or exchangeable or exercisable for shares of Company Common Stock during such period pursuant to an agreement that is substantially identical to the lock-up agreement to be signed by the holders of Registrable Securities, which agreement may not be waived or amended without the consent of the holders of Registrable Securities, except any waiver applicable to any director or executive officer of the Company that is applied equally to the holders of Registrable Securities.  This Section 4.9 shall not apply to any offering by the Company effected during the period following receipt by the Company of any Registration Request for a Demand Registration until the earlier of (A) thirty (30) days after the date on which the Registration Statement filed pursuant to such Registratio n Request is declared effective and (B) the date on which all securities covered by such Registration Statement have been sold pursuant thereto.

4.10Delay of Registration; Furnishing Information.

(a)No holder of Registrable Securities shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration as the result of any controversy that might arise with respect to the interpretation or implementation of Section 4.2.

18

(b)No holder of Registrable Securities shall use any free writing prospectus (as defined in Rule 405 under the Securities Act) in connection with the sale of Registrable Securities without the prior written consent of the Company.

(c)It shall be a condition precedent to the obligations of the Company to file any Registration Statement pursuant to Section 4.1 that the selling holders of Registrable Securities shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities reasonably requested by the Company to the extent such information is necessary to effect the registration of their Registrable Securities.

ARTICLE V

INDEMNIFICATION

5.1Indemnification.

(a)The Company shall indemnify and hold harmless each holder of Registrable Securities, its officers, directors, employees, agents and managers and each Person who is a controlling Person of such holder of Registrable Securities within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each such Person being referred to herein as a “Covered Person”) from and against any losses, claims, damages, liabilities, joint or several, and expenses (including reasonable expenses of investigation and reasonable attorneys’ fees and expenses) to which such Covered Person may become subject under the Securities Act or oth erwise, insofar as such losses, claims, damages, liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (i) any untrue or alleged untrue statement of material fact contained in any Registration Statement, prospectus or preliminary prospectus used to register Registrable Securities pursuant to this Agreement or any amendment thereof or supplement thereto, or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company will pay and reimburse such Covered Persons for any legal or any other expenses actually and reasonably incurred by them in connection with investigating, defending or settling any such loss, claim, liability, action or proceeding; provided that the Company shall not be liable to a Covered Person in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect ther eof) or expense arises out of or is based upon an untrue statement or alleged untrue statement, or omission or alleged omission, made or incorporated by reference in such Registration Statement, any such prospectus or preliminary prospectus or any amendment or supplement thereto, or any document incorporated by reference therein, in reliance upon, and in conformity with, written information prepared and furnished to the Company by such Covered Person expressly for use therein, or arises out of or is based on such holder’s failure to deliver a copy of the Registration Statement or prospectus or any amendments or supplements thereto after the Company has furnished such holder with copies thereof.

19

(b)In connection with any Registration Statement in which a holder of Registrable Securities is participating, each such holder will furnish to the Company in writing such information as the Company reasonably requests for use in connection with any suchRegistration Statement or prospectus and will indemnify and hold harmless, to the extent permitted by law, the Company, its directors and officers, employees, agents, each underwriter and any Person who is or might be deemed to be a controlling Person of the Company, any of its subsidiaries or any underwriter within the mean ing of Section 15 of the Securities Act or Section 20 of the Exchange Act against any losses, claims, damages, liabilities, joint or several, to which the Company or any such director, officer, employee, agent, underwriter or controlling Person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (i) any untrue or alleged untrue statement of material fact contained in the Registration Statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is made in such Registration Statement, any such prospectus or preliminary prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information prepared and furnished to the Company by such holder expressly for use therein; provided that the obligation to indemnify and hold harmless will be individual and several to each holder of Registrable Securities and will be limited to the net proceeds received by such holder from the sale of Registrable Securities pursuant to such Registration Statement.

(c)Promptly after receipt by an indemnified Person under subsection (a) or (b) above of notice of the commencement of any action, such indemnified Person shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission to so notify the indemnifying party shall not relieve it from any liability that it may have to any indemnified Person except to the extent the indemnifying party is actually prejudiced by such failure to give notice.  In case any such action shall be brought against any indemnified Person and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish (and the indemnifying party acknowledges its obligation to indemnify the indemnified parties for losses related to such action), jointly with any other indemnifying Person similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified Person, and, after notice from the indemnifying party to such indemnified Person of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified Person under such subsection for any other legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified Person, in connection with the defense thereof other than reasonable costs of investigation.  Notwithstanding the foregoing, 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 the indemnifying party and the indemnified Person shall have mutually agreed to the contrary or the named parties in any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interest between them.  It is understood and agreed that the indemnifying party shall not, in connection with any proceeding or related proceeding, be liable for the fees and expenses of more than one separate firm (in addition to any one firm of local counsel for each jurisdiction) retained by the indemnified Persons for all indemnified persons and that all such fees and expenses of such separate counsel shall be reimbursed as they are

20

incurred.  The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably denied, withheld, conditioned or delayed, but if settled with such consent or if there be a judgment for the plaintiff, the indemnifying party agrees to indemnify each indemnified Person from and against any loss or liability by reason of such settlement or judgment.  No indemnifying party shall, without the written consent of the indemnified Person, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified Person is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified Person from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified Person.

(d)The indemnification provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified Person or any officer, director or controlling Person of such indemnified Person and will survive the registration and sale of any securities by any Person entitled to any indemnification hereunder and the expiration or termination of this Agreement.

(e)If the indemnification provided for in Section 5.1(a) or Section 5.1(b) is held by a court of competent jurisdiction to be unavailable to an indemnified Person with respect to any loss, liability, claim, damage or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified Person thereunder, will contribute to the amount paid or payable by such indemnified Person as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified Person on the other hand in connection with the st atements or omissions that resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations.  The relevant fault of the indemnifying party and the indemnified Person will be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact was supplied by the indemnifying party or by the indemnified Person and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  Notwithstanding the foregoing, the amount any holder of Registrable Securities will be obligated to contribute pursuant to this Section 5.1(e) will be limited to an amount equal to the net proceeds to such holder of Registrable Securities sold pursuant to the Registration Statement that gives rise to such obligation to contribute (less the aggregate amount of any damages that the holder of Registrable Securities ha s otherwise been required to pay in respect of such loss, claim, damage, liability or action or any substantially similar loss, claim, damage, liability or action arising from the sale of such Registrable Securities).  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.

21

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

6.1Representations and Warranties of the Investors.  Each of the Investors, on behalf of itself and not any other Investor, hereby represents and warrants to the Company as follows:

(a)Such Investor is the sole record and (other than Affiliates holding Beneficial Ownership through such Investor) Beneficial Owner of the number of shares of ManorCare Common Stock listed on Annex B opposite such Investor’s name and such shares constitute all of the shares of capital stock of ManorCare owned of record or Beneficially Owned by such Investor.

(b)If such Investor is not an individual, such Investor has been duly formed, is validly existing and is in good standing under the laws of its state of organization. Such Investor has all requisite power and authority to execute and deliver this Agreement, to perform its obligations under this Agreement and to consummate the transactions contemplated hereby.

(c)The execution and delivery by such Investor of this Agreement, the performance by such Investor of its obligations under this Agreement and the consummation of the transactions contemplated hereby (assuming that the consents, approvals and filings referred to in Section 4.3 of the Purchase Agreement are duly obtained and/or made) do not and will not conflict with, violate any provision of, or require the consent or approval of any Person under, Applicable Law, the organizational documents of such Investor or any contract or agreement to which such Investor is a party.

(d)The execution, delivery and performance of this Agreement by such Investor has been duly authorized by all necessary corporate, partnership or limited liability company action on the part of such Investor.  This Agreement has been duly executed and delivered by such Investor and, assuming the due authorization, execution and delivery by each of the other parties hereto, constitutes a legal, valid and binding obligation of such Investor, enforceable against such Investor in accordance with its terms, subject to bankruptcy, insolvency and other laws of general applicability relating to or affecting creditors’ rights and to general principles of equity.

(e)Such Investor: (i) is acquiring the Shares for its own account, solely for investment and not with a view toward, or for sale in connection with, any distribution thereof in violation of any federal or state securities or “blue sky” laws, or with any present intention of distributing or selling such Shares in violation of any such laws, (ii) has such knowledge and experience in financial and business matters and in investments of this type that it is capable of evaluating the merits and risks of its investment in the Shares and of making an informed investment decision and (iii) is an “accredited investor” within the meaning o f Rule 501 of Regulation D under the Securities Act.  Such Investor has requested, received, reviewed and considered all information that such Investor deems relevant in making an informed decision to invest in the Shares and has had an opportunity to discuss the Company’s

22

business, management and financial affairs with its management and also had an opportunity to ask questions of officers of the Company that were answered to such Investor’s satisfaction. Such Investor understands that the Company is relying on the statements contained herein to establish an exemption from registration under the Securities Act and under state securities laws and acknowledges that the Shares are not registered under the Securities Act or any other Applicable Law and that such Shares may not be Transferred except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom.

6.2Representations and Warranties of the Company.  The Company hereby represents and warrants to the Investors as follows:

(a)The Company is a corporation, duly incorporated, validly existing and in good standing under the laws of the State of Maryland.  The Company has all requisite power and authority to execute and deliver this Agreement, to perform its obligations under this Agreement and to consummate the transactions contemplated hereby.

(b)The execution and delivery by the Company of this Agreement, the performance of the obligations of the Company under this Agreement and the consummation of the transactions contemplated hereby (assuming that the consents, approvals and filings referred to in Section 4.3 of the Purchase Agreement are duly obtained and/or made) do not and will not conflict with, violate any provision of, or require any consent or approval of any Person under, Applicable Law, the organizational documents of the Company or any contract or agreement to which the Company is a party.

(c)The execution, delivery and performance of this Agreement by the Company has been duly authorized by all necessary corporate action on the part of the Company. This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by each of the other parties hereto, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency and other laws of general applicability relating to or affecting creditors’ rights and to general principles of equity.

ARTICLE VII

MISCELLANEOUS

7.1Term.  This Agreement will be effective as of the Closing and, except as otherwise set forth herein, will continue in effect thereafter until the earliest of (a) the termination of the Purchase Agreement, (b) its termination by the consent of all parties hereto or their respective successors in interest and (c) the date, on or after the Closing Date, on which the Investors no longer own more than 0.5% of the then-outstanding shares of Company Common Stock.

7.2No Inconsistent Agreements.  The Company will not hereafter enter into any agreement with respect to its securities that violates the rights granted to the holders of Registrable Securities in this Agreement.

23

7.3Investor Actions. Except as otherwise expressly contemplated in this Agreement, any action taken by the Investors pursuant to this Agreement shall be by the act of the holders of a majority of the Shares held by all Investors.

7.4Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may be amended or waived only upon the prior written consent of the Company and the Consent of the Investors.  No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of an y rights or remedies provided by Applicable Law.

7.5Successors and Assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by the Investors, in whole or in part (whether by operation of law or otherwise), without the prior written consent of the Company.  Notwithstanding the foregoing, any Investor may assign all or any portion of its rights under this Agreement to a Permitted Transferee of such Investor. This Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective permitted successors and permitted assigns .  Any attempted assignment in violation of this Section 7.5 shall be void.

7.6Severability.  The illegality or partial illegality of any or all of this Agreement or any provision hereof shall not affect the validity of the remainder of this Agreement, or any provision hereof, and the illegality or partial illegality of this Agreement shall not affect the validity of this Agreement in any jurisdiction in which such determination of illegality or partial illegality has not been made.

7.7Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one agreement.  This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other parties hereto.  Until and unless each party has received a counterpart hereof signed by the other parties, this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement o r other communication).  The exchange of a fully executed Agreement (in counterparts or otherwise) by facsimile or electronic delivery in .pdf format shall be sufficient to bind the Parties to the terms and conditions of this Agreement.

7.8Entire Agreement. This Agreement (including the documents and the instruments referred to in this Agreement), together with the Purchase Agreement (and the agreements contemplated thereby), constitute the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter of this Agreement.

7.9Governing Law; Jurisdiction. This Agreement shall be construed and enforced in accordance with the laws of Delaware, without regard to any conflicts or choice of law principles or rules, whether of Delaware or of another jurisdiction.  The parties hereto agree that any suit, action or proceeding brought by any party to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated

24

hereby shall be brought exclusively in any federal or state court located in the State of Delaware.  Each of the parties hereto submits to the personal jurisdiction of any such court in any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of, or in connection with, this Agreement or the transactions contemplated hereby and hereby irrevocably waives the benefit of jurisdiction derived from present or future domicile or otherwise in such action or proceeding.  Each party hereto irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court in Delaware or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

7.10WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

7.11Specific Performance.  The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that, except as otherwise provided in Section 4.10, the parties shall be entitled to an injunction or injunctions or other equitable relief to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any court set forth in Section 7.9, in addition to any other remedy to which they are entitled at law or in equity.

7.12No Third Party Beneficiaries. Notwithstanding anything contained in this Agreement to the contrary, nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, provided that (i) the Stockholders not party to this Agreement are intended third party beneficiaries of Article VI and (ii) the Persons indemnified under Article V are intended third party beneficiaries of Article V.

7.13Notices.  All notices required or permitted pursuant to this Agreement shall be in writing (including facsimile or similar writing) and shall be deemed to be properly given (i) if given by facsimile, when the facsimile is transmitted to the facsimile number specified in this Section and the appropriate facsimile confirmation is received, (ii) if given by email, when the email is transmitted to the email address specified in this Section 7.13 and receipt of such email is confirmed, or (iii) if given by overnight courier or personal delivery, when delivered at the address stated belo w, or at such other address as a party may provide by notice to the other parties:

25

If to the Company, to:

HCP, Inc.
3760 Kilroy Airport Way, Suite 300
Long Beach, CA 90806
Attention:		James F. Flaherty III
		J. Alberto Gonzalez-Pita
Facsimile:		(562) 733-5200
Email:	jflaherty@hcpi.com
	agonzalez@hcpi.com

with a copy to (which shall not constitute notice):

Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
Attention:		Joseph A. Coco
		Thomas W. Greenberg
		Kenneth M. Wolff
Facsimile:		(212) 735-2000
Email:	joseph.coco@skadden.com
	thomas.greenberg@skadden.com
	kenneth.wolff@skadden.com

If to a Carlyle Holder, to:

TC Group, L.L.C.
c/o The Carlyle Group
520 Madison Avenue, 42nd Floor
New York, New York 10022
Attention:		Karen Bechtel
		Stephen Wise
Facsimile:		(212) 813-4990
Email:	karen.bechtel@carlyle.com
	steve.wise@carlyle.com

with a copy to (which shall not constitute notice):

Latham & Watkins LLP
555 Eleventh Street, NW
Suite 1000
Washington, DC 20004
Attention:		Daniel T. Lennon
		David I. Brown
Facsimile:		(202) 637-2201
Email:	daniel.lennon@lw.com
	david.brown@lw.com

If to any Initial Investor who is not a Carlyle Holder, to the address set forth on such Initial Investor’s signature page hereto.

[The remainder of this page left intentionally blank.]

26

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement by their authorized representatives as of the date first above written.

HCP, Inc.
By:	/s/ Paul F. Gallagher
Name:	Paul F. Gallagher
Title:	Executive Vice President – Chief Investment Officer

Signature Page to Stockholders Agreement

INVESTORS
CARLYLE MC PARTNERS, L.P.,
	By: TC Group V, L.P.,
	its General Partner
	By: TC Group V Managing GP, L.L.C.,
	its General Partner
	By: TC Group, L.L.C.,
	its Managing Member
	By: TCG Holdings, L.L.C.,
	its Managing Member
	By:	/s/ Stephen Wise
		Name: Stephen Wise
		Title: Managing Director

Signature Page to Stockholders Agreement

CARLYLE PARTNERS V-A MC, L.P.,
By: TC Group V, L.P.,
its General Partner
By: TC Group V Managing GP, L.L.C.,
its General Partner
By: TC Group, L.L.C.,
its Managing Member
By: TCG Holdings, L.L.C.,
its Managing Member
By:	/s/ Stephen Wise
	Name: Stephen Wise
	Title: Managing Director
CARLYLE PARTNERS V MC, L.P.,
By: TC Group V, L.P.,
its General Partner
By: TC Group V Managing GP, L.L.C.,
its General Partner
By: TC Group, L.L.C.,
its Managing Member
By: TCG Holdings, L.L.C.,
its Managing Member
By:	/s/ Stephen Wise
	Name: Stephen Wise
	Title: Managing Director

Signature Page to Stockholders Agreement

CP V COINVESTMENT A, L.P.,
By: TC Group V, L.P.,
its General Partner
By: TC Group V Managing GP, L.L.C.,
its General Partner
By: TC Group, L.L.C.,
its Managing Member
By: TCG Holdings, L.L.C.,
its Managing Member
By:	/s/ Stephen Wise
	Name: Stephen Wise
	Title: Managing Director

Signature Page to Stockholders Agreement

	CP V COINVESTMENT B, L.P.,
	By: TC Group V, L.P.,
	its General Partner
	By: TC Group V Managing GP, L.L.C.,
	its General Partner
	By: TC Group, L.L.C.,
	its Managing Member
	By: TCG Holdings, L.L.C.,
	its Managing Member
	By:		/s/ Stephen Wise
	Name: Stephen Wise
	Title: Managing Director
HCR MANORCARE, INC.
By:		/s/ Paul A. Ormond
Name:		Paul A. Ormond
Title:		President and Chief Executive Officer

Signature Page to Stockholders Agreement

EX-10.2

Exhibit 10.2

EXECUTION COPY

Published CUSIP Number: [                    ]

$3,300,000,000

CREDIT AGREEMENT

Dated as of December 13, 2010

among

HCP, INC.,

as Borrower

THE LENDERS PARTY HERETO FROM TIME TO TIME,

UBS AG, STAMFORD BRANCH,

as Administrative Agent,

UBS SECURITIES LLC

CITIGROUP GLOBAL MARKETS INC.

WELLS FARGO SECURITIES, LLC,

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

J.P. MORGAN SECURITIES, LLC

as Joint Lead Arrangers and Joint Bookrunners

and

CITIBANK, N.A.

WELLS FARGO BANK, NATIONAL ASSOCIATION,

BANK OF AMERICA, N.A.

JPMORGAN CHASE BANK, N.A.

as Co-Syndication Agents

TABLE OF CONTENTS

Section		Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS		1
1.01	Defined Terms	1
1.02	Other Interpretive Provisions	21
1.03	Accounting Terms	22
1.04	Rounding	22
1.05	Times of Day	22
ARTICLE II THE COMMITMENTS AND BORROWINGS		22
2.01	Loans	22
2.02	Borrowings, Conversions and Continuations of Loans	23
2.03	Prepayments	24
2.04	Termination or Reduction of Aggregate Commitments	25
2.05	Repayment	26
2.06	Interest	26
2.07	Fees	27
2.08	Computation of Interest and Fees	27
2.09	Evidence of Debt	28
2.10	Payments Generally; Administrative Agent’s Clawback	28
2.11	Sharing of Payments by Lenders	30
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY		30
3.01	Taxes	30
3.02	Illegality	33
3.03	Inability to Determine Rates	33
3.04	Increased Costs; Reserves on Eurodollar Rate Loans	34
3.05	Compensation for Losses	35
3.06	Mitigation Obligations; Replacement of Lenders	36
3.07	Survival	36
ARTICLE IV CONDITIONS PRECEDENT TO EFFECTIVENESS AND BORROWING		36
4.01	Conditions Precedent to Effectiveness	36
4.02	Conditions Precedent to Borrowing	37
ARTICLE V REPRESENTATIONS AND WARRANTIES		38
5.01	Existence, Qualification and Power; Compliance with Laws	38
5.02	Authorization; No Contravention	39
5.03	Governmental Authorization; Other Consents	39
5.04	Binding Effect	39

i

5.05	Litigation	39
5.06	Environmental Compliance	39
5.07	Margin Regulations; Investment Company Act; REIT Status	39
5.08	Compliance with Laws	40
5.09	Anti-Terrorism Law	40
ARTICLE VI AFFIRMATIVE COVENANTS		41
6.01	Financial Statements	41
6.02	Certificates; Other Information	42
6.03	Notices	44
6.04	Payment of Obligations	44
6.05	Preservation of Existence, Etc.	44
6.06	Maintenance of Properties	45
6.07	Maintenance of Insurance	45
6.08	Compliance with Laws	45
6.09	Books and Records	45
6.10	Inspection Rights	46
6.11	Use of Proceeds	46
6.12	REIT Status	46
6.13	Employee Benefits	46
ARTICLE VII NEGATIVE COVENANTS		47
7.01	Liens	47
7.02	Investments	48
7.03	Indebtedness	48
7.04	Fundamental Changes	48
7.05	Dispositions	48
7.06	Restricted Payments	48
7.07	Change in Nature of Business	49
7.08	Transactions with Affiliates	49
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES		49
8.01	Events of Default	49
8.02	Remedies Upon Event of Default	51
8.03	Application of Funds	52
ARTICLE IX ADMINISTRATIVE AGENT		53
9.01	Appointment and Authority	53
9.02	Rights as a Lender	53
9.03	Exculpatory Provisions	53
9.04	Reliance by Administrative Agent	54
9.05	Delegation of Duties	54
9.06	Resignation of Administrative Agent	55
9.07	Non-Reliance on Administrative Agent and Other Lenders	55
9.08	No Other Duties, Etc.	56
9.09	Administrative Agent May File Proofs of Claim	56

ii

ARTICLE X MISCELLANEOUS		57
10.01	Amendments, Etc.	57
10.02	Notices; Effectiveness; Electronic Communication	58
10.03	No Waiver; Cumulative Remedies	59
10.04	Expenses; Indemnity; Damage Waiver	59
10.05	Payments Set Aside	61
10.06	Successors and Assigns	61
10.07	Treatment of Certain Information; Confidentiality	66
10.08	Right of Setoff	67
10.09	Interest Rate Limitation	67
10.10	Counterparts; Integration; Effectiveness	67
10.11	Survival of Representations and Warranties	68
10.12	Severability	68
10.13	Replacement of Lenders	68
10.14	Governing Law; Jurisdiction; Etc.	69
10.15	Waiver of Jury Trial	70
10.16	No Advisory or Fiduciary Responsibility	70
10.17	USA Patriot Act Notice	71
10.18	Delivery of Signature Page	71

iii

SCHEDULES
2.01	Commitments and Applicable Percentages
10.02	Administrative Agent’s Office; Certain Addresses for Notices
EXHIBITS
	Form of
A	Bridge Loan Notice
B	Note
C	Compliance Certificate
D	Assignment and Assumption

iv

CREDIT AGREEMENT

This CREDIT AGREEMENT, dated as of December 13, 2010 (as amended, restated, supplemented or otherwise modified from time to time, this “Agreement”), among HCP, INC., a Maryland corporation (the “Borrower”), the lending institutions party hereto from time to time (each, a “Lender” and collectively, the “Lenders”), UBS AG, STAMFORD BRANCH, as Administrative Agent, UBS SECURITIES LLC, as Joint Lead Arranger and Joint Bookrunner, CITIGROUP GLOBAL MARKETS INC., as Joint Lead Arranger and Joint Bookrunner, CITIBANK, N.A., as Co-Syndication Agent, WELLS FARGO SECURITIES, LLC, as Joint Lead Arranger and Joint Bookrunner, WELLS FARGO BANK, NATIONAL ASSOCIATION, as Co-Syndication Agent, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as Joint Lead Arranger and Joint Bookrunner, BANK OF AMERICA, N.A., as Co-Syndication A gent, J.P. MORGAN SECURITIES, LLC, as Joint Lead Arranger and Joint Bookrunner, and JPMORGAN CHASE BANK, N.A., as Co-Syndication Agent.

WHEREAS, the Borrower has requested that the Lenders provide a bridge loan facility, and the Lenders are willing to do so on the terms and conditions set forth herein.

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

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

1.01        Defined Terms.

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

“Acquired Business” means HCR Properties, LLC, a Delaware limited liability company.

“Acquisition” means the acquisition of all of the capital stock or other Equity Interests of the Acquired Business.

“Acquisition Documents” means the collective reference to the Purchase Agreement, each amendment or supplement thereto and each other agreement entered into in connection therewith relating to the Acquisition.

“Administrative Agent” means UBS AG, 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 the Borrower and the Lenders.

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

“Affiliate” means, with respect to any 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.

“Agents” means the Administrative Agent, the Arrangers, the Bookrunners and the Syndication Agent.

“Aggregate Commitments” means the Commitments of all Lenders.  The Aggregate Commitments on the Closing Date are $3,300,000,000.

“Agreement” means this Credit Agreement.

“Applicable Percentage” means, for each Lender at any time, a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the amount of such Lender’s Commitment at such time and the denominator of which is the amount of the Aggregate Commitments at such time.  The initial Applicable Percentages of each Lender are 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, for Loans, from time to time, the number of basis points per annum set forth in the following table; provided, that, notwithstanding the following table, if at any time the Debt Rating is less than BBB- from S&P and less than Baa3 from Moody’s or S&P and Moody’s have ceased to provide a Debt Rating, the “Applicable Rate” shall be 350 basis points for Eurodollar Rate Loans and 250 basis points for Base Rate Loans:

Pricing Level	Time period	Applicable Rate for Eurodollar Rate Loans	ApplicableRatefor Base RateLoans
1	Closing Date until 89 days following the Closing Date	200 bps	100 bps
2	90th day following the Closing Date until the 179th day following the Closing Date	250 bps	150 bps
3	180th day following the Closing Date until the 269th day following the Closing Date	300 bps	200 bps
4	270th day following the Closing Date and thereafter	350 bps	250 bps

“Debt Rating” means, as of any date of determination, the rating as determined by either S&P or Moody’s (collectively, the “Debt Ratings”) of the Borrower’s non-credit enhanced, senior unsecured long-term debt.

2

“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.

“Arrangers” means UBS Securities LLC, Citigroup Global Markets Inc., Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities, LLC, each in its capacity as joint lead arranger and joint bookrunner.

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

“Attributable Indebtedness” means, on any date, (a) in respect of any capital 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 as in effect on the Effective Date, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease 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 as in effect on the Effective Date if such lease or other agreement or instrument were accounted for as a capital lease.

“Audited Financial Statements” means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2009, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto.

“Availability Period” means the period from and including the Effective Date to and including 6:00 p.m. New York time on the earliest of (i) June 13, 2011, provided, that such date shall be automatically extended to September 13, 2011 in the event the “Outside Date” (as defined in the Purchase Agreement) is extended to such date in accordance with the terms of Section 8.1.2 of the Purchase Agreement, (ii) the date of the Acquisition closing and (iii) the date the Purchase Agreement is terminated.

“Bank Loan Agreement” means the credit agreement, dated as of August 1, 2007 (as amended, restated, supplemented or otherwise modified from time to time), among the Borrower, as borrower, the lenders party thereto from time to time, Bank of America, N.A., as administrative agent, swingline lender and letter of credit issuer, Banc of America Securities LLC, as joint lead arranger and joint bookrunner, UBS Securities LLC, as joint lead arranger, joint bookrunner and syndication agent, Barclays Capital, as joint bookrunner and co-documentation agent, Citicorp North America, Inc., as co-documentation agent, Credit Suisse, Cayman Islands Branch, as co-documentation agent, Goldman Sachs Credit Partners L.P., as co-documentation agent, JPMorgan Chase Bank, N.A., as co-documentation agent, Wachovia Bank,

3

National Association, as co-documentation agent, Wells Fargo Bank, N.A., as co-documentation agent, The Bank of Nova Scotia, as senior managing agent, Calyon New York Branch, as senior managing agent, Key Bank National Association, as senior managing agent, Merrill Lynch Bank USA, as senior managing agent, The Royal Bank of Scotland plc, as senior managing agent, and SunTrust Bank, as senior managing agent.

“Base Rate” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus ½ of 1%, (b) the corporate base rate of interest in effect for such day as established from time to time by the Administrative Agent and (c) the Eurodollar Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%.  Any change in such rate established by UBS AG shall take effect at the opening of business on the day of such change.

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

“Bookrunners” means Citigroup Global Markets Inc., Wells Fargo Securities LLC, UBS Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities, LLC, each in its capacity as joint bookrunner.

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

“Borrower Material” 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.

“Bridge 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.

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

“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 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, provided that notwithstanding anything herein to the contrary,  the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith shall be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

4

“Change of Control” means an event or series of events by which:

(a)           any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire (such right, an “option right”), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 35% or more of the equity securities of the Borrower en titled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right); or

(b)           during any period of 24 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing b ody (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors).

“Closing Date” means the date on which the initial Borrowing is made.

“Closing Date Material Adverse Effect” means any change, event, condition, circumstance or development that, individually or in the aggregate, (a) is or is reasonably likely to be material and adverse to the business, operations or financial condition of the Company and its Subsidiaries (as defined in the Purchase Agreement), taken as a whole; provided, however, that in no event would any of the following (or the effect of any of the following), alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or will be, a “Closing Date Material Adverse Effect”: (i) any change in applicable Laws (as defined in the Purchase Agreement) or GAAP (as defined in the Purchase Agreement) or any interpretation thereof, (ii) any change in interest rates or economic, political, business or financial market conditio ns generally, (iii) any change generally affecting any of the industries in which the Company and its Subsidiaries operate or the U.S. economy as a whole, (iv) the announcement or the execution of the Purchase Agreement or any change, event or occurrence resulting from, or reasonably necessary for, the taking of any action expressly required by the

5

Purchase Agreement (provided that the exclusion set forth in this clause (iv) shall not apply to Section 4.3.2 of the Purchase Agreement), (v) any action of, or on behalf of, the Borrower or any of its Affiliates (as defined in the Purchase Agreement), (vi) any natural disaster, (vii) any acts of terrorism or war or the outbreak or escalation of hostilities or change in geopolitical conditions or (viii) any failure of the Company or any of its Subsidiaries to meet any projections or forecasts, provided that clause (viii) shall not prevent a determination that any change or effect underlying such failure to meet projections or forecasts has resulted in a Closing Date Material Adverse Effect (to the extent such change or effect is not otherwise excluded from this definition of Closing Date Material Adverse Effect); provided, further, however, that with respect to clauses (i), (i i), (iii), (vi) and (vii), such change, effect, event, circumstance, occurrence or state of facts shall be taken into account in the determination of whether or not there has been a “Closing Date Material Adverse Effect” to the extent such circumstance, occurrence or state of facts affects the Company and its Subsidiaries, taken as a whole, in a disproportionate manner relative to other companies operating in the industry in which they operate or (b) could reasonably be expected to materially impair the ability of the Company or its Subsidiaries to timely perform their obligations hereunder or under any Ancillary Agreement (as defined in the Purchase Agreement) or to timely consummate the transactions contemplated by the Purchase Agreement or prevent or materially delay the consummation of the transactions contemplated by the Purchase Agreement.

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

“Commitment” means, as to each Lender, its obligation to make Loans to the Borrower pursuant to Section 2.01 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 or 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.

“Company” means HCR ManorCare, Inc., a Delaware corporation (including as converted to a limited liability company pursuant to the Reorganization Agreement (as defined in the Purchase Agreement)).

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

“Consolidated Intangible Assets” means an amount equal to the Intangible Assets of the Borrower and its Subsidiaries on a consolidated basis.

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

6

“Consolidated Tangible Net Worth” means, as of any date of determination, for the Borrower and its Subsidiaries on a consolidated basis, an amount equal to (a) Consolidated Shareholders’ Equity on such date minus (b) Consolidated Intangible Assets on such date.

“Consolidated Total Asset Value” means the sum of (a) Total Asset Value of the Borrower and its Subsidiaries on a consolidated basis plus (b) without duplication, the Borrower’s Pro Rata Share of Total Asset Value of each Material Joint Venture.

“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.

“Debt Issuance” means the issuance or sale by the Borrower or one of its wholly-owned Subsidiaries of Indebtedness for borrowed money, including any Rule 144A offering, for aggregate Net Cash Proceeds of at least $250,000,000 (other than a public offering pursuant to a registration statement on Form S-8); provided that the term Debt Issuance shall not include (i) the issuance or sale of Indebtedness by a Subsidiary of the Borrower to the Borrower or another Subsidiary of the Borrower, (ii) Indebtedness under the Borrower’s Bank Loan Agreement (or any replacement or refinancing thereof), (iii) any intercompany Indebtedness, (iv) any Indebtedness which is a refinancing of Indebtedness existing as of the Effective Date or (v) any Indebtedness incurred in the ordinary course of business which is related to the development, construction , ownership or management of properties.

“Debt Rating” has the meaning specified in the definition of “Applicable Rate.”

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

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

“Default Rate” means an interest rate equal to (i) the Base Rate plus (ii) the Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2% per annum; provided, however, that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum.

7

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

“Development Property” means any real property in which the development and construction with respect thereto are not complete.

“Disposition” or “Dispose” means the sale, transfer or assignment of any property by any Person other than in the ordinary course of business.  For the avoidance of doubt, it is understood that the following shall not constitute a Disposition by any Person: (i) dispositions of property resulting in the receipt of Net Cash Proceeds in an amount not to exceed individually or in a series of related transactions $5,000,000, (ii) leases and licenses, (iii) dispositions of cash, cash equivalents, notes, accounts or securities, (iv) issuances of Equity Interests in any Person by any Person, and (v) Dispositions by the Borrower to any Subsidiary and Dispositions by any Subsidiary to any other Subsidiary or the Borrower.

“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.

“Effective Date” means December 13, 2010.

“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 pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any of its 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.

8

“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 and all of the warrants or options for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person.

“Equity Issuance” means the issuance by the Borrower or any of its wholly-owned Subsidiaries of their respective Equity Interests, including any Rule 144A offering (other than a public offering pursuant to a registration statement on Form S-8); provided that the term Equity Issuance shall not include (a) issuances to third parties in the ordinary course of business in connection with the development, construction, ownership or management of properties, (b) the issuance or sale of Equity Interests by a Subsidiary of the Borrower to the Borrower or another Subsidiary of the Borrower or (c) any rights, options or Equity Interests issued pursuant to employee or director incentive, stock option or stock repurchase plans in the ordinary course, dividend reinvestment programs, conversions or exchanges of Equity Interests in Affiliates or issuances of eq uity in connection with the acquisition of another Person or property of another Person.

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

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

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

“Eurodollar Rate” means, for any Interest Period with respect to a Eurodollar Rate Loan, the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period.  If such rate is not available at such time for any reason, then the “Eurodollar Rate” for such Interest Period shall be the rate per annum determined by the

9

Administrative Agent to be the rate 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 UBS AG and with a term equivalent to such Interest Period would be offered by UBS AG’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 4:00 p.m. (London time) two Business Days prior to the commencement 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 Equity Issuance” means the first $575,000,000 of aggregate Net Cash Proceeds from Equity Issuances which occur after the Effective Date.

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder or any other Loan Document, (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 and (b) any branch profits Taxes imposed by the United States or any similar Tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the 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 the Borrower with respect to such withholding Tax pursuant to Section 3.01(a) and (d) United States backup withholding Taxes.

“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 of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to the Administrative Agent on such day on such transactions as determined by the Administrative Agent.

“Fee Letter” means, collectively, the fee letters of even date herewith, among the Borrower, UBS Loan Finance LLC, UBS Securities LLC, Citigroup Global Markets Inc., Citibank, N.A., Wells Fargo Securities, LLC, Wells Fargo Bank, National Association, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bank of America, N.A., J.P. Morgan Securities, LLC and JPMorgan Chase Bank, N.A., as applicable.

10

“Financial Covenant Bank Loan Agreement Event of Default” means a failure to comply with Section 7.10 of the Bank Loan Agreement as in effect on the date hereof without giving effect to any amendment, waiver or modification thereto.

“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is a 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.

“Foreign Subsidiary” shall mean a Subsidiary that is organized under the laws of a jurisdiction other than the United States or any state thereof or the District of Columbia.

“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.

“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 supranational bodies such as the European Union or the European Central Bank).

“Granting Lender” has the meaning set forth in Section 10.06(h).

“Guarantee” means, as to any Person, (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

11

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 g ood faith.  The term “Guarantee” as a verb has a corresponding meaning.

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

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

(a)           all obligations of such Person for borrowed money, whether secured or unsecured, and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments including, without limitation, recourse and non-recourse mortgage debt;

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

(c)           aggregate net obligations of such Person under Swap Contracts;

(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);

(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, to the extent of the value of the property encumbered by such Lien;

(f)            capital leases and Synthetic Lease Obligations;

(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 at any time prior to the date that is six months after the Maturity Date, valued, in the case of a redeemable preferred interest, at the liquidation preference thereof; and

12

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

For all purposes hereof, (i) 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 (which shall be a positive number if such amount would be owed by the Borrower and a negative number if such amount would be owed to the Borrower) and the net obligations under Swap Contacts shall not be less than zero, and (ii) the amount of any capital lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.

“Indemnified Taxes” means Taxes other than Excluded Taxes.

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

“Initial Lender” means each of UBS Loan Finance LLC, Citibank, N.A., Wells Fargo Bank, National Association, Bank of America, N.A. and JPMorgan Chase Bank, NA.

“Intangible Assets” means assets of a Person and its Subsidiaries that are classified as intangible assets under GAAP, but excluding interests in real estate that are classified as intangible assets in accordance with GAAP.

“Interest Expense” means, for any period, for a Person and its Subsidiaries on a consolidated basis, the sum of all (a) interest expense for such period determined in accordance with GAAP (but excluding any charges resulting from settlement of options to repurchase remarketable bonds) and (b) interest that is capitalized in such period in accordance with GAAP.

“Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided, however, that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each calendar quarter 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 (or if agreed to by all Lenders, nine or twelve months) thereafter, as selected by the Borrower in its Bridge Loan Notice; provided that:

13

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

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

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

“Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor Guarantees Indebtedness of such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit.  For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent i ncreases or decreases in the value of such Investment.

“IP Rights” has the meaning specified in Section 5.16.

“IRS” means the United States Internal Revenue Service.

“Joint Venture” means any Person in which the Borrower, directly or indirectly, has an ownership interest but does not consolidate the assets or income of such Person in preparing its consolidated financial statements.

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

“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 the Borrower and the Administrative Agent.

14

“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” means an extension of credit by a Lender to the Borrower under Article II.

“Loan Documents” means this Agreement and each Note.

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

“Material Joint Venture” means a Joint Venture in which the Borrower has made a net equity investment of $15,000,000 or greater. For purposes of this definition, the Borrower’s aggregate Investment in a Joint Venture will be valued at (a) the aggregate amount of cash and cash equivalents and the net book value of other property (less, without duplication, the aggregate principal amount of Indebtedness secured by a Lien on such property at the time of contribution unless, after giving effect to the contribution of such property to the Joint Venture and any other transactions occurring in connection therewith, such Indebtedness constitutes an obligation of the Borrower or any of its Subsidiaries) contributed by the Borrower to such Joint Venture minus (b) the aggregate amount of distributions received by the Borrower from such Joint Venture that would be cla ssified as a return of capital (as opposed to a return on investment).

“Maturity Date” means the date which is 364 days following the Closing Date, provided, however, if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day.

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

“Mortgage Lien” means any Lien that encumbers a real property owned by a Person other than Permitted Liens.

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

“Net Cash Proceeds” means, with respect to:

15

(a)           any Debt Issuance or Equity Issuance, the excess of (i) the sum of the cash and cash equivalents received in connection with such event over (ii) the underwriting discounts and commissions, and other out-of-pocket fees and expenses, incurred by the Borrower and its Subsidiaries in connection with such sale; and

(b)           any Disposition (other than any Equity Issuance), the cash proceeds received by the Borrower or any of its wholly-owned Subsidiaries (including cash proceeds subsequently received (as and when received by the Borrower or any of its wholly-owned Subsidiaries) in respect of non-cash consideration initially received) net of (i) selling expenses (including reasonable brokers’ fees or commissions, legal, accounting and other professional and transactional fees, transfer and similar Taxes and Borrower’s good faith estimate of Taxes actually paid or payable in connection with such transaction within the taxable year of such transaction or the immediately succeeding taxable year); (ii) amounts provided as a reserve, in accordance with GAAP, against (x) any liabilities under any indemnification obligations associate d with such Disposition or (y) any other liabilities retained by the Borrower or any of its wholly-owned Subsidiaries associated with the properties sold in such Disposition (provided that, to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds); (iii) Borrower’s good faith estimate of payments required to be made with respect to unassumed liabilities relating to the properties sold within 90 days of such Disposition (provided that, to the extent such cash proceeds are not used to make payments in respect of such unassumed liabilities within 90 days of such Disposition, such cash proceeds shall constitute Net Cash Proceeds); and (iv) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness which is secured by a Lien on the properties sold in such Disposition (so long as such Lien was permitted to encumber such properties under the Loan Documents at the ti me of such sale) and which is repaid with such proceeds (other than any such Indebtedness assumed by the purchaser of such properties).

“Net Income” means, for any period, for a Person and its Subsidiaries on a consolidated basis, the net income of such Person and its Subsidiaries (excluding extraordinary gains and extraordinary losses and other non-recurring items, including, without limitation, charges resulting from settlement of options to repurchase remarketable bonds and other similar charges) for that period as determined in accordance with GAAP.

“Non-Recourse Bank Loan Agreement Event of Default” means an event of default under Section 8.01(e)(i)(B) of the Bank Loan Agreement relating to any Non-Recourse Indebtedness as in effect on the date hereof without giving effect to any amendment, waiver or modification thereto.

“Non-Recourse Indebtedness” of a Person means Indebtedness of such Person the recourse for which is limited to the asset or assets securing such Indebtedness, other than in respect of environmental liabilities, fraud, misrepresentation and other similar matters.

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

16

“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of the Borrower arising under any Loan Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including (i) interest and fees that accrue after the commencement by or against the Borrower 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, and (ii) obligations of the Borrower under any Swap Contract to which a Lender or any Affiliate of a Lender is a 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 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 with respect to Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments occurring on such date.

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

“Patriot Act” has the meaning specified in Section 10.17.

“PBGC” means the Pension Benefit Guaranty Corporation.

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

“Permitted Liens” means Liens permitted under Section 7.01(c), (d), (e), (f) and (g).

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

17

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

“Platform” has the meaning specified in Section 6.02.

“Pro Rata Share” means (a) with respect to the EBITDA, Net Income, Interest Expense, Total Asset Value and Unencumbered Asset Value of each Joint Venture, the Borrower’s direct or indirect, percentage ownership interest in such Joint Venture and (b) with respect to the Indebtedness of each Joint Venture (i) if the Indebtedness is recourse to the Borrower or any of its Subsidiaries the amount of such Indebtedness that is recourse to the Borrower or such Subsidiary and (ii) if the Indebtedness is not recourse to the Borrower or any of its Subsidiaries, the Borrower’s percentage ownership interest in such Joint Venture.

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

“Purchase Agreement” means that certain Purchase Agreement, dated as of December 13, 2010, by and among the Borrower, HCP 2010 REIT, LLC, a Delaware limited liability company, the Company, the Acquired Business, and HCR Healthcare, LLC, a Delaware limited liability company.

“Refinancing” means the repayment or purchase of (i) existing indebtedness of the Borrower of up to $425,000,000 incurred pursuant to the Facility Agreement, dated August 3, 2009, by and between HCP MC Mortgage Lender, LLC, a Delaware limited liability company, and J.P. Morgan Markets Limited, as amended, restated, amended and restated, supplemented and otherwise modified from time to time and (ii) indebtedness of the Acquired Business and its Subsidiaries.

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

“REIT” means a real estate investment trust as defined in Sections 856-860 of the Code.

“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.

“Required Lenders” means, as of any date of determination, Lenders having more than 50% of (i) the Aggregate Commitments or (ii) the Total Outstandings, as the case may be; provided that the Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

18

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

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

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

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

“SPC” has the meaning set forth in Section 10.06(h).

“Specified Representations” means the representations and warranties of the Borrower contained in Sections 5.01, 5.02(a), 5.03, 5.04, and 5.07.

“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity the accounts of which are consolidated with the accounts of the Borrower in the Borrower’s consolidated financial statements prepared in accordance with GAAP. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.

“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing, 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.

19

“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).

“Syndication Agent” means Citicorp North America, Inc., Wells Fargo Bank, National Association, Bank of America, N.A. and JPMorgan Chase Bank, N.A., each in its capacity as Syndication Agent.

“Synthetic Lease Obligation” means the monetary obligation of a Person under a so-called synthetic, off-balance sheet or tax retention lease.

“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.

“Threshold Amount” means $100,000,000.

“Total Asset Value” means an amount equal to (a) all assets of a Person and its Subsidiaries as determined in accordance with GAAP plus (b) all accumulated depreciation associated with such assets minus (c) Intangible Assets.

“Total Outstandings” means the aggregate Outstanding Amount of all Loans.

“Transactions” means, collectively, (i) the Acquisition, (ii) the Refinancing, (iii) the entering into of this Agreement and the funding of the Loans, (iv) the payment of related fees, commissions and expenses, and (v) all transactions related thereto.

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

“UBS AG” means UBS AG, Stamford Branch.

“Unencumbered Asset Value” means the sum of (a) the aggregate net book value, as determined in accordance with GAAP, of all real property of a Person that is not subject to a Mortgage Lien plus (b) all accumulated depreciation with respect to such real properties plus (c) unrestricted cash and cash equivalents of such Person plus (d) the sum of (i) unencumbered mezzanine and mortgage loan receivables (at the value reflected in the consolidated financial statements of the Borrower, in accordance with GAAP, as of such date, including the effect of any impairment charges), (ii) unencumbered marketable securities (at the value reflected in the

20

consolidated financial statements of the Borrower, in accordance with GAAP, as of such date, including the effect of any impairment charges), provided that the items described in this clause (ii) and in the preceding clause (i) shall not be taken into account to the extent that the amounts of such items exceed, in the aggregate, 20% of Unencumbered Asset Value.

“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.

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, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and 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 a mended, 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.

21

1.03Accounting 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 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 after the Effective Date, any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.  For clarity purposes, in determining whether a lease is a capital lease or an operating lease and whether interest expense exists, such determination shall be made in accordance with GAAP as in effect on the Effective Date.

1.04Rounding.

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

1.05Times of Day.

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

ARTICLE II

THE COMMITMENTS AND BORROWINGS

2.01        Loans.

Subject to the terms and conditions set forth herein, each Lender severally agrees to make a loan (each such loan, a “Loan”) to the Borrower on a single Business Day during the Availability Period in the amount of such Lender’s Applicable Percentage of Loans requested by the Borrower; provided that no Lender shall be required to make Loans in excess of such Lender’s Commitment.  The Commitments are not revolving in nature, and amounts repaid in respect of Loans may not be reborrowed.  Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein.

22

2.02Borrowings, 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 the Borrower’s irrevocable notice to the Administrative Agent, which may be given by telephone.  Each such notice must be received by the Administrative Agent not later than 12:00 Noon (i) 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) on the requested date of any Borrowing of Base Rate Loans.  Ea ch telephonic notice by the Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Bridge Loan Notice, appropriately completed and signed by a Responsible Officer. 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 $100,000 in excess thereof.  Each Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $100,000 in excess thereof.  All Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein, provided, however, the Borrowing made on the Closing Date shall be made as Base Rate Loans unless the Borrower delivers a funding indemnity letter in form and substance reasonably acceptable to the Administrative Agent at least three (3) Business Days prior to the Closing Date.

Each Bridge Loan Notice (whether telephonic or written) shall specify (i) whether the 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 the Borrower fails to specify a Type of Loan in a Bridge Loan Notice or if the 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 the Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such Bridge Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.

(b)Following receipt of a Bridge Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Applicable Percentage of the applicable Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in the preceding subsection.  Each 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 sp ecified in the applicable Bridge Loan Notice.  Upon satisfaction of the applicable conditions set forth in Section 4.02, the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent by wire transfer of such funds in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower.

23

(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 the 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 promptly notify the Borrower and the Lenders of any change in the rate used in determining the Base Rate.

(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 ten Interest Periods in effect with respect to all Loans hereunder.

2.03Prepayments.

(a)Voluntary Prepayments.  The Borrower may, upon notice to the Administrative Agent, at any time or from time to time, voluntarily prepay Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurodollar Rate Loans and (B) on the date of prepayment of Base Rate Loans (provided that, notwithstanding anything to the contrary contained herein, the Borrower may state that suc h notice is conditioned upon the effectiveness of another credit facility, the receipt of Net Cash Proceeds from the issuance of other Indebtedness, the closing of one or more securities offerings or the consummation of any other transaction or the occurrence of some other identifiable event or condition, in which case such notice may be revoked by Borrower (by notice to the Administrative Agent on or prior to the specified prepayment date) if such condition is not satisfied); (ii) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $100,000 in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a principal amount of $1,000,000 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.  The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment.  If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.  Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05.  Each prepayment shall be allocated ratably among the Lenders in accordance with their Applicable Percentages.

24

(b)Mandatory Prepayments — Debt and Equity Issuances.  Not later than five Business Days following the receipt of any Net Cash Proceeds from any Debt Issuance or Equity Issuance to occur on or after the Closing Date, the Borrower shall prepay Loans in whole or in part without premium or penalty by an amount equal to the Net Cash Proceeds of such Debt Issuance and/or Equity Issuance (other than the Net Cash Proceeds of an Excluded Equity Issuance). The Administrative Agent will promptly notify each Lender of its receipt of each such Net Cash Proceed s, and of the amount of such Lender’s Applicable Percentage of such prepayment.  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.  Each prepayment shall be allocated ratably among the Lenders in accordance with their Applicable Percentages.

(c)Mandatory Prepayments — Dispositions.  Not later than five Business Days following the receipt of any Net Cash Proceeds of any Disposition by the Borrower or any of its wholly-owned Subsidiaries after the Closing Date, the Borrower shall prepay Loans in whole or in part without premium or penalty by an amount equal to the Net Cash Proceeds of such Disposition; provided that, (i) such prepayment shall only be required to the extent that the aggregate Net Cash Proceeds of all Dispositions after the Closing Date exceed $100,000,000 and (ii) so long as no Default shall then exist or would arise therefrom, no such prepayment shall be required under this Section 2.03(c) to the extent that Borrower shall have delivered an Officers’ Certificate to the Administrative Agent not later than five Business Days following the receipt of such Net Cash Proceeds stating that such Net Cash Proceeds are expected to be reinvested in assets useful to its business within six months following the date of such Disposition (which Officers’ Certificate shall set forth the estimates of the Net Cash Proceeds to be so expended) (it being understood that, if within such six-month period the Borrower has contractually committed to reinvest Net Cash Proceeds, then any Net Cash Proceeds so committed shall not be required to be applied to prepay Loans pursuant to this Section 2.03(c), so long as such funds are in fact reinvested pursuant to such contract within six months of the receipt of such Net Cash Proceeds); provided that (i) the foregoing reinvestment exclusion shall only apply to a maximum of $250,000,000 of Net Cash Proceeds from Dispositions and (ii) if all or any portion of such Net Cash Proceeds is not so reinvested within such period, such unused portion shall be applied to prepay Loans on the last day of such period as provided in this Section 2.03(c).

2.04Termination or Reduction of Aggregate Commitments.

Unless previously terminated, the Aggregate Commitments will terminate on the earliest to occur of (A) the Closing Date, immediately after the Borrowing to occur on the Closing Date and (B) the end of the Availability Period.  In addition, the Borrower may, upon notice to the Administrative Agent, terminate the Aggregate Commitments, or from time to time permanently reduce the Aggregate Commitments; provided, that (i) any such notice shall be received by the Administrative Agent not later than 9:00 a.m. three Business Days prior to the date of termination or reduction (it being understood that, notwithstanding anything to the contrary contained herein, the Borrower may state that such notice is conditioned upon the effectiveness of another credit facility, the receipt of Net Cash Proceeds from the issuance of other Indebtednesses, the closing of a securities offering or the consumma tion of any other transaction or the occurrence of some other identifiable event or condition, in which case such notice may be revoked by Borrower (by notice to the Administrative Agent on or prior to the specified date of such reduction of the Aggregate Commitments) if such condition is not satisfied), and (ii) any such partial reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of

25

$1,000,000 in excess thereof.  The Aggregate Commitments shall automatically be reduced on the date of each prepayment required pursuant to Section 2.03(b) or (c) (or the date on which prepayment would have been required under such Sections assuming that the Loans were outstanding on such date) from and after the Effective Date by an amount equal to the Net Cash Proceeds required to be applied to prepay Loans pursuant to Section 2.03(b) or (c). The Administrative Agent shall promptly notify the Lenders of any such notice of termination or reduction of the Aggregate Commitments.  Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Applicable Percentage.  All undrawn commitment fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such terminat ion.

2.05Repayment.

The Borrower shall repay to the Lenders on the Maturity Date, unless accelerated sooner pursuant to Section 8.02, the entire outstanding principal balance of all Loans together with accrued but unpaid interest, fees and all other sums with respect thereto.

2.06Interest.

(a)Applicable Interest.  Subject to the provisions of subsection (b) below, (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 Per iod 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)Default Interest.

(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 the 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, the Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

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

26

(c)Interest Payment Date.  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.

2.07Fees.

(a)Undrawn Commitment Fee.  On the date on which the Aggregate Commitments are terminated in accordance with Section 2.04, the Borrower shall pay to the Administrative Agent, for the account of each Lender in accordance with its Applicable Percentage, an undrawn commitment fee which shall accrue at the rate of 0.30% per annum on the daily amount of the undrawn Commitment of such Lender during the period commencing on the 91st day following the Effective Date to but excluding the date on which the Aggregate Commitments are terminated in accordance with Section 2.04.

(b)Duration Fee.  The Borrower shall pay to the Administrative Agent, for the account of each Lender in accordance with its Applicable Percentage, duration fees in an amount equal to:  (i) 0.50% of the outstanding amount of the Loan of such Lender on the date that is 90 days after the Closing Date, payable in cash on such date; (ii) 1.00% of the outstanding amount of the Loan of such Lender on the date that is 180 days after the Closing Date, payable in cash on such date; and (iii) 1.50% of the outstanding amount of the Loan of such Lender on the d ate that is 270 days after the Closing Date, payable in cash on such date.

(c)Other Fees.

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

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

2.08Computation of Interest and Fees.

All computations of interest for Base Rate Loans when the Base Rate is determined by clause (b) thereof 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 2.13(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.

27

2.09Evidence of Debt.

Loans 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 Loans made by the Lenders to the 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 the Borrower hereunder to pay any amount owing with respect to the Obligations.  In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.  Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans in addition to such accounts or records.  Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.

2.10Payments Generally; Administrative Agent’s Clawback.

(a)General.  All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff.  Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein.  The Administrative Agent will promptly distri bute 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 2:00 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 the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

(b)(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 12:00 noon 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 Loa ns, 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 the 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 and the Borrower 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 the Borrower to but excluding the date of payment to the Administrative

28

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 connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans.  If the 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 the Borrower the amount of such interest paid by the 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 paym ent by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

(ii)Payments by the Borrower; Presumptions by Administrative Agent.  Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due.  In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender 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 the 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 the Borrower by the Administrative Agent because the conditions to the making of such Loan 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 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 m ake its payment under Section 10.04(c).

29

(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.

2.11Sharing of Payments by Lenders.

If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any Loans made by it resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Loans or participations and accrued interest thereon greater than its pro rata share thereof as provided herein, 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 Loans 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 principal of and accrued interest on their respective Loans and other amounts owing them, 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 (x) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or any Subsidiary thereof (as to which the provisions of this Section shall apply).

The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01Taxes.

(a)Payments Free of Taxes.  Any and all payments by or on account of any obligation of the 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 the 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

30

applicable to additional sums payable under this Section 3.01) the Administrative Agent or Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

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

(c)Indemnification by the Borrower.  The Borrower shall indemnify the Administrative Agent and each Lender, 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 3.01) paid by the Administrative Agent or such Lender, 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 wer e correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, setting forth in reasonable detail the basis for such amounts, shall be conclusive absent manifest error.

(d)Evidence of Payments.  As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the 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 (and any Participant that would be a Foreign Lender if it were a Lender) that is entitled to an exemption from or reduction of withholding Tax under the law of the jurisdiction in which the 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 the Borrower (with a copy to the Administrative Agent and, in the case of a Participant, to the Lender from which the related participation shal l have been purchased), at the time or times prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the 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, in the event that the Borrower is resident for Tax purposes in the United States, any Administrative Agent, Lender or Participant shall deliver to the 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 Administrative Agent, Lender or Participant becomes a party to this Agreement (and from time to time thereafter upon the request of the Borrower or the Administrative Agent, but only if such Person is legally entitled to do so), whichever of the following is applicable:

31

(i)in the case of an Administrative Agent, Lender or Participant that is a “United States person” (as defined in section 7701(a)(30) of the Code), a properly completed and executed IRS Form W-9 (or successor form), certifying that such Person is not subject to U.S. backup withholding Tax;

(ii)in the case of an Administrative Agent, Lender or Participant that is not a “United States person” (as defined in Section 7701(a)(30) of the Code), a duly completed IRS Form W-8BEN, W-8IMY or W-8ECI (or successor form), as applicable, claiming any available exemptions from and reductions of U.S. withholding Taxes with respect to payments under any Loan Document;

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

(iv)in the case of an Administrative Agent that is a U.S. branch of a Person that is not a “United States person” (as defined in Section 7701 (a)(30) of the Code), a properly completed and executed IRS Form W-8IMY (or successor form), with respect to any amounts payable to such Agent for the account of others, certifying that it is a “U.S. branch” and that the payments it receives for the account of others are not effectively connected with the conduct of its trade or business in the United States and that it is using such form as evidence of its agreement with the Borrower to be treated as a United States pe rson with respect to such payments (and the Borrower and such Agent agree to so treat such Agent as a U.S. person with respect to payments under any Loan Document as contemplated by U.S. Treasury Regulation §1.1441-1(b)(2)(iv)); or

(v)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 the Borrower to determine the withholding or deduction required to be made.

(f)Treatment of Certain Refunds.  If the Administrative Agent or any Lender determines, in its sole discretion, that it has received a refund of any Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 3.01, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 3.01 with respect to the Taxes giving rise to such refund), ne t of all out-of-pocket expenses of the Administrative Agent or such Lender, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with

32

respect to such refund), provided that the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority.  This subsection shall not be construed to require the Administrative Agent or any Lender to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the Borrower or any other Person.

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 the 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 the Borrower that the circumstances giving rise to such determination no longer exist.  Upon receipt of such notice, the Borrower s hall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans.  Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.

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 the Borrower and each Lender.  Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended until the Administrative Agen t (upon the instruction of the Required Lenders) revokes such notice.  Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein.

33

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));

(ii)           subject any Lender to any Tax of any kind whatsoever with respect to this Agreement, any Eurodollar Loan made by it or change the basis of taxation of payments to such Lender 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

(iii)          impose on any Lender or the London interbank market any other condition, cost or expense affecting this Agreement or Eurodollar Loans made by such Lender 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 Loan (or of maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or any other amount) then, upon request of such Lender, the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender, as the case may be, for such additional costs incurred or reduction suffered.

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

(c)           Certificates for Reimbursement.  A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower, in detail sufficient to enable the Borrower to verify the computation thereof, shall be conclusive absent manifest error.  The Borrower shall pay such Lender 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 to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender 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 notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, the n the nine month period referred to above shall be extended to include the period of retroactive effect thereof).

34

(e)           Reserves on Eurodollar Rate Loans.  The Borrower shall pay to each Lender, as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided the Borrower shall have received at least 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.

3.05        Compensation for Losses.

Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense (other than loss of anticipated profits) 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)           failure to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Borrower, including any failure to prepay after such notice has been revoked if the revocation is not received by all Lenders at least one (1) Business Day prior to the date originally specified in such prepayment notice (including any conditional prepayment notice permitted hereunder); or

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

The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.

For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 3.05, 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 eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan was in fact so funded.

35

3.06        Mitigation Obligations; Replacement of Lenders.

(a)           Designation of a Different Lending Office.  If any Lender requests compensation under Section 3.04, or the 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.  The 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 (i) any Lender requests compensation under Section 3.04, (ii) the 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 (iii) any Lender is a Defaulting Lender, then the Borrower may replace such Lender in accordance with Section 10.13.

3.07        Survival.

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

ARTICLE IV

CONDITIONS PRECEDENT TO EFFECTIVENESS AND BORROWING

4.01        Conditions Precedent to Effectiveness.

The effectiveness of this Agreement on the Effective Date 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 telecopies (followed promptly by originals) and each dated the Effective Date:

(i)            counterparts of this Agreement, executed and delivered by the Administrative Agent, the Borrower and each Lender listed on Schedule 2.01 and counterparts of the Fee Letter executed by all of the parties thereto;

(ii)           a certificate of the Secretary or an Assistant Secretary of the Borrower certifying as to and attaching (A) the charter and By-Laws of the Borrower, (B) the resolutions of the Borrower authorizing the execution, delivery and performance of the Loan Documents by the Borrower, and (C) a list of the Responsible Officers authorized to act in connection with the Loan Documents together with incumbency; and

36

(iii)          a good standing certificate with respect to the Borrower issued by the State Department of Assessments and Taxation of the State of Maryland.

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, (i) this Agreement and each other document to which it is a party or which it has reviewed or (ii) any 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 Effective Date specifying its objection thereto.  Upon request of the Borrower, the Administrative Agent shall confirm in writing the effectiveness of this Agreement as of the Effective Date or indicate the conditions that are required to be satisfied in order for this Agreement to be effective.

4.02        Conditions Precedent to Borrowing.

The obligation of each Lender to make its Loans hereunder on the Closing Date are subject to satisfaction of the following conditions precedent:

(a)           The Effective Date shall have occurred in accordance with Section 4.01.

(b)           The Administrative Agent’s receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer, 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:

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

(ii)           an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the Borrower, addressed to the Administrative Agent and each Lender, in substantially the form previously agreed with the Administrative Agent;

(iii)          a certificate signed by a Responsible Officer certifying (A) except as disclosed in Schedule 4.5 or 5.5 to the Purchase Agreement, since September 30, 2010, there has not been any circumstance, event, occurrence, change or effect that, individually or in the aggregate, would reasonably be expected to have a Closing Date Material Adverse Effect; (B) that the Specified Representations are true and correct on and as of the Closing Date and (C) that no event described in subsections (a) through (k) of Section 8.01 shall have occurred and be continuing and resulted in a Material Adverse Effect.

(c)           The Borrower shall have used commercially reasonable efforts to obtain the pro forma Debt Rating after giving effect to the Transactions.

37

(d)           Any fees and expenses required to be paid on or before the Closing Date shall have been paid to the extent such fees have been invoiced at least two Business Days prior to the Closing Date (except as otherwise reasonably agreed by the Borrower).

(e)           The Acquisition shall have been consummated, or shall be consummated substantially concurrently with the initial Borrowing.  The Purchase Agreement shall not have been amended or waived by the Borrower in a manner materially adverse to the Initial Lenders without the consent of the Initial Lenders (such consent not to be unreasonably held or delayed) it being understood that any reduction in the acquisition consideration shall not be deemed to be materially adverse to the Initial Lenders.

(f)            The Administrative Agent’s receipt, at least five days prior to the Closing Date, of the documentation and other information that is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the Patriot Act that has been requested in writing at least 10 days prior to the Closing Date.

(g)           The Administrative Agent shall have received a Bridge Loan Notice in accordance with the requirements hereof.

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 4.02, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, (i) this Agreement and each other document to which it is a party or which it has reviewed or (ii) any 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.

The Bridge Loan Notice submitted by the Borrower with respect to the Borrowing on the Closing Date shall be deemed to be a representation and warranty that the conditions specified in Sections 4.02 have been satisfied on and as of the Closing Date.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

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

5.01        Existence, Qualification and Power; Compliance with Laws.

The Borrower (a) is validly existing and in good standing under the Laws of the jurisdiction of its incorporation, and (b) has all requisite corporate power and authority to execute, deliver and perform its obligations under the Loan Documents to which it is a party.

38

5.02        Authorization; No Contravention.

The execution, delivery and performance by the Borrower of each Loan Document has been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of the Borrower’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 the Borrower is party or affecting the Borrower or the properties of the Borrower or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which the Borrower or its property is subject; or (c) violate any Law except, in the case of clauses (b) and (c), to the extent such conflict, breach, payment, contravention, creation, requirement or violation would not reasonabl y be expected to result in a Material Adverse Effect.

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 the execution, delivery or performance by the Borrower of this Agreement or any other Loan Document except as would not reasonably be expected to result in a Material Adverse Effect.

5.04        Binding Effect.

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

5.05        Litigation.

There are no actions, suits, proceedings, claims, investigations or disputes pending or, to the knowledge of the Borrower, threatened in writing, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of their properties or revenues that, either individually or in the aggregate would reasonably be expected to have a Material Adverse Effect.

5.06        Environmental Compliance.

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

5.07        Margin Regulations; Investment Company Act; REIT Status.

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

39

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

(c)           The Borrower meets all requirements to qualify as a REIT.

5.08        Compliance with Laws.

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

5.09        Anti-Terrorism Law.

(a)           None of the Borrower or any of its Subsidiaries is in violation (other than immaterial, unknowing (based on the knowledge of a Responsible Officer) or unintentional violations) of any legal requirement relating to any Applicable Laws with respect to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist Financing effective September 24, 2001 (the “Executive Order”) and the Patriot Act.  None of the Borrower or any of its Subsidiaries and, to the knowledge of the Responsible Officers of the Borrower, no agent of the Borrower or any of its Subsidiaries acting on behalf of the Borrower or any of its Subsidiaries, as the case may be, is any of the following:

(i)            a Person that is listed in the annex to, or it otherwise subject to the provisions of, the Executive Order;

(ii)           a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;

(iii)          a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;

(iv)          (iv) a Person that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order; or

(v)           a Person that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control (“OFAC”) at its official website or any replacement website or other replacement official publication of such list.

40

(b)           None of the Borrower or any of its Subsidiaries and, to the knowledge of the Responsible Officers of the Borrower, no agent of the Borrower or any of its Subsidiaries acting on behalf of the Borrower or any of its Subsidiaries, as the case may be, (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of a Person described in Section 5.09(a), (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order, or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

ARTICLE VI

AFFIRMATIVE COVENANTS

Immediately following the initial Borrowing on the Closing Date, so long as any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, the Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.01, 6.02, and 6.03) cause each Subsidiary to:

6.01        Financial Statements.

Deliver to the Administrative Agent and each Lender:

(a)           as soon as available, but in any event within five days of the date the Borrower is required to file its Form 10-K with the SEC (without giving effect to any extension of such due date, whether obtained by filing the notification permitted by Rule 12b-25 or any successor provision thereto or otherwise), a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by (i) a report and opinion of an independent certified public accountant of nation ally recognized standing, which report and opinion shall be prepared in accordance with generally accepted auditing standards; and

(b)           as soon as available, but in any event within five days of the date the Borrower is required to file its Form 10-Q with the SEC (without giving effect to any extension of such due date, whether obtained by filing the notification permitted by Rule 12b-25 or any successor provision thereto or otherwise), a consolidated balance sheet of the Borrower as at the end of such fiscal quarter, and the related consolidated statements of income or operations for such fiscal quarter and for the portion of the Borrower’s fiscal year then ended, and a statement of cash flow for the portion of the Borrower’s fiscal year then ended setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonabl e detail, such consolidated statements to be certified by a Responsible Officer as fairly presenting the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes; and

41

(c)           as soon as available, but in no event later that 60 days following the end of each fiscal year of the Borrower, an annual forecast for the then-current fiscal year.

As to any information contained in materials furnished pursuant to Section 6.02(d), the Borrower shall not be separately required to furnish such information under clause (a) or (b) above, but the foregoing shall not be in derogation of the obligation of the Borrower to furnish the information and materials described in clauses (a) and (b) above at the times specified therein.

6.02        Certificates; Other Information.

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

(a)           concurrently with the delivery of the financial statements referred to in Sections 6.01(a) and (b) a duly completed Compliance Certificate signed by a Responsible Officer;

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

(c)           concurrently with the delivery of the financial statements referred to in Section 6.01(a), a certificate of its independent certified public accountants certifying such financial statements and stating that in making the examination necessary therefor no knowledge was obtained of any Default or, if any such Default shall exist, stating the nature and status of such event;

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

(e)           promptly, and in any event within five Business Days after receipt thereof by the Borrower or any 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 by such agency regarding financial or other operational results of the Borrower or any Subsidiary thereof; and

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

42

Documents required to be delivered pursuant to Section 6.01(a) or (b) or Section 6.02(d) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 10.02; or (ii) on which such documents are posted on the 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) the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender that requests the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrower shall notify 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 (i.e., soft copies) of such documents.  Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the Compliance Certificates required by Section 6.02(a) 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 the Borrower with any such request for delivery, and each Lender shall be solely re sponsible for requesting delivery to it or maintaining its copies of such documents.

The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arrangers will make available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on Syntrack or another similar electronic system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel that do not wish to receive material non-public information with respect to the 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’ activities.  The Borrower hereby agrees that so long as the Borrower is the issuer of any outstanding debt or equity securities that are registered or issu ed pursuant to a private offering or is actively contemplating issuing any such securities (w) all Borrower Materials that are to be made available to Public Lenders shall be 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,” the Borrower shall be deemed to have authorized the Administrative Agent, the Arrangers and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the 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  7;Public Investor;” and (z) the Administrative Agent and the Arrangers 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.” Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials “PUBLIC.”

43

6.03        Notices.

Promptly notify the Administrative Agent and each Lender of:

(a)           the occurrence of any Default;

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

(c)           the occurrence of any ERISA Event;

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

(e)           any announcement by Moody’s or S&P of any change or possible change in a Debt Rating.

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

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 the Borrower or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness, in each case except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

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 not prohibited by Section 7.04 or 7.05, or to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; (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.  Without limiting the generality of the foregoing, the Borrower will do all things necessary to maintain its status as a REIT.

44

6.06        Maintenance of Properties.

(a)           Maintain, preserve and protect, or make contractual or other provisions to cause to maintain, preserve or protect, all of its properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted, in each case except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; (b)  make, or make contractual or other provisions to cause to be made, 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.

6.07        Maintenance of Insurance.

(a)           Maintain with financially sound and reputable insurance companies not Affiliates of the Borrower, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons.

(b)           Use its, and cause the Subsidiaries to use their, commercially reasonable best efforts to ensure that each lessee of a property owned in whole or in part, directly or indirectly, by the Borrower or any Subsidiary, and each mortgagee of a property on which the Borrower or any Subsidiary holds a mortgage, has, and until the Maturity Date will keep, in place adequate insurance that names the Borrower or such Subsidiary as a loss payee.  For purposes of the preceding sentence “adequate insurance” shall mean insurance, with financially sound and reputable insurers in such amounts and insuring against such risks as are customarily maintained by similar businesses.

6.08        Compliance with Laws.

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

6.09        Books and Records.

Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Borrower or such Subsidiary, as the case may be.

45

6.10        Inspection Rights.

Permit representatives and independent contractors of the Administrative Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of the Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the 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 the Borrower at any time during normal business hours and without advance notice.

6.11        Use of Proceeds.

Use proceeds from the Loans to finance, in part, the Transactions and to pay transaction fees, commissions and expenses in connection therewith.

6.12        REIT Status.

The Borrower will, and will cause each of its Subsidiaries to, operate its business at all times so as to satisfy all requirements necessary to qualify and maintain the Borrower’s  qualification as a REIT under Sections 856 through 860 of the Code.  The Borrower will maintain adequate records so as to comply with all record-keeping requirements relating to its qualification as a REIT as required by the Code and applicable regulations of the Department of the Treasury promulgated thereunder and will properly prepare and timely file with the Internal Revenue Service all returns and reports required thereby.

6.13        Employee Benefits.

Comply in all material respects with the applicable provisions of ERISA and the Code with respect to each Plan, and (b) furnish to the Administrative Agent (x)  within five days after any Responsible Officer or any ERISA Affiliate knows or has reason to know that, any ERISA Event has occurred that, alone or together with any other ERISA Event could reasonably be expected to result in liability of the Borrower or any of its ERISA Affiliates in an aggregate amount exceeding the Threshold Amount or the imposition of a Lien, a statement setting forth details as to such ERISA Event and the action, if any, that the Borrower or ERISA Affiliate proposes to take with respect thereto, and (y) upon request by the Administrative Agent, copies of (i) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by the Borrower or any ERISA Affiliate with the Internal Revenue Service with respect to each Pension Plan; (ii) the most recent actuarial valuation report for each Pension Plan; (iii) all notices received by the Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor or any governmental agency concerning an ERISA Event; and (iv) such other documents or governmental reports or filings relating to any Plan as the Administrative Agent shall reasonably request.

46

ARTICLE VII

NEGATIVE COVENANTS

Immediately following the initial Borrowing on the Closing Date, so long as any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, the Borrower shall not, nor shall it permit any Subsidiary to, directly or indirectly:

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, other than the following:

(a)           Liens pursuant to any Loan Document;

(b)           Liens securing Indebtedness permitted under Section 7.03;

(c)           Without limiting the other exceptions contained in this Section 7.01, Liens upon any of its property, assets or revenues, provided, that if such Liens are granted by the Borrower to secure any Indebtedness, the Borrower shall have granted to the Administrative Agent, for the benefit of itself and the Lenders, (and within ten Business Days thereafter taken such actions as may be necessary to perfect, such Liens) an equal and ratable Lien on the property, assets or revenues subject to such Lien;

(d)           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;

(e)           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, to the extent required by GAAP, are maintained on the books of the applicable Person;

(f)            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;

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

(h)           easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person; and

(i)            Liens securing judgments for the payment of money not constituting an Event of Default under Section 8.01(h) or securing appeal or other surety bonds related to such judgments.

47

7.02        Investments.

(a)           make or allow Investments in Development Property to exceed, in the aggregate at any one time outstanding, 35% of Consolidated Total Asset Value.

(b)           make or allow Investments in Joint Ventures to exceed, in the aggregate at any one time outstanding, 25% of Consolidated Total Asset Value.  For purposes of this Section 7.02(b), the Borrower’s aggregate Investment in Joint Ventures will be valued at (i) the aggregate amount of cash and cash equivalents and the net book value of other property (less, without duplication, the aggregate principal amount of Indebtedness secured by a Lien on such property at the time of contribution unless, after giving effect to the contribution of such property to the Joint Ventures and any other transactions occurring in connection therewith, such Indebtedness constitutes an obligation of the Borrower or any of its Subsidiaries) contributed by the Borrower to the Joint Ventures minus (ii) the aggregate amount of distr ibutions received by the Borrower from the Joint Ventures that would be classified as a return of capital (as opposed to a return on investment).

7.03        Indebtedness.

Create, incur, assume or suffer to exist any Indebtedness of the Borrower or any of its Subsidiaries, except:

(a)           Indebtedness under the Loan Documents; and

(b)           other Indebtedness; provided that (i) after giving effect thereto (including any Liens associated therewith), no Event of Default is continuing under Section 8.01(e)(v) and (ii) with respect to obligations of the Borrower in respect of Swap Contracts, such Swap Contracts shall be entered into in order to manage existing or anticipated risk and not for speculative purposes.

7.04        Fundamental Changes.

Merge, dissolve, liquidate, consolidate with or into another Person, except that, so long as no Default exists or would result therefrom, (a) any Subsidiary may merge with (x) the Borrower, provided that the Borrower shall be the continuing or surviving Person, or (y) any one or more other Subsidiaries, provided that, when any wholly-owned Subsidiary is merging with another Subsidiary, a wholly-owned Subsidiary shall be the continuing or surviving Person or (b) the Borrower or any Subsidiary may merge with an other Person not specified in clause (a) above; provided that, in the case of a merger or consolidation of the Borrower, the Borrower shall be the continuing or surviving Person.

7.05        Dispositions.

Make any Disposition of all or substantially all of the assets of the Borrower and its Subsidiaries, taken as a whole.

7.06        Restricted Payments.

Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that, so long as no Default shall have occurred and be continuing or would result therefrom, the Borrower and each Subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by it in an amount not to exceed, in the aggregate, fifteen percent (15%) of Consolidated Tangible Net Worth during the term of this Agreement.

48

7.07        Change in Nature of Business.

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

7.08        Transactions with Affiliates.

Enter into any transaction of any kind with any Affiliate of the Borrower (other than a Subsidiary), whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to the Borrower or such Subsidiary as would be obtainable by the Borrower or such Subsidiary at the time in a comparable arm’s-length transaction with a Person other than an Affiliate.

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

8.01        Events of Default.

The occurrence and continuance of any of the following at any time after the initial Borrowing on the Closing Date shall constitute an Event of Default:

(a)           Non-Payment. The Borrower fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan, or (ii) within three days after the same becomes due, any interest on any Loan or any fee due hereunder, or (iii) within five days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or

(b)           Specific Covenants. The Borrower or any of its Subsidiaries fails to perform or observe any term, covenant or agreement contained in any of Section 6.01, 6.02, 6.03, 6.05, 6.10, 6.11 or Article VII; or

(c)           Other Defaults. The Borrower or any of its Subsidiaries fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days; or

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

49

(e)           Cross-Default/Cross-Acceleration.  (i) The Borrower or any of its Subsidiaries (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee of Indebtedness (other than Indebtedness hereunder, Indebtedness under Swap Contracts and Non-Recourse Indebtedness) 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 (other than with respect to any Non-Recourse Bank Loan Agreement Event of Default or Financial Covenant Bank Loan Agreement Event of Default) or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness (other than with respect to any Non-Recourse Bank Loan Agreement Event of Default or Financial Covenant Bank Loan Agreement Event of Default) 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 the Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which the Borrower or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the Borrower or such Subsidiary as a result thereof is greater than the Threshold Amount, (iii) the Borrower or any of its Subsidiaries fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Non-Recourse Indebtedness 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, (iv) a Non-Recourse Bank Loan Agreement Event of Default occurs or is continuing (solely to the extent that such Non-Recourse Bank Loan Agreement Event of Default is the result of an acceleration of the maturity of Non-Recourse Indebtedness) or (v) a Financial Covenant Bank Loan Agreement Event of Default occurs or is continuing; or

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

50

(g)           Inability to Pay Debts; Attachment.  (i) The Borrower or any of its Subsidiaries 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 30 days after its issue or levy; or

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

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

(j)            Invalidity of Loan Documents.  Any 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 the Borrower or any other Person contests in any manner the validity or enforceability of any provision of any Loan Document; or the Borrower denies that it has any or further liability or obligation under 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.

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 to be terminated, whereupon such commitments and obligation shall be terminated;

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

51

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

provided, however, that upon the occurrence of an Event of Default pursuant to Sections 8.01(f) or (g) or the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans 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 without further act of the Administrative Agent or any Lender.

8.03        Application of Funds.

After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable as set forth in the 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, expenses and other amounts (other than principal and interest) payable to the Lenders (including fees, charges and disbursements of counsel to the respective Lenders and amounts payable under Article III), ratably among them in proportion to the amounts described in this clause Second payable to them;

Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on Loans and fees, premiums and scheduled periodic payments, and any interest accrued thereon, due under any Swap Contract between the Borrower and any Lender, or any Affiliate of a Lender, ratably among the Lenders (and, in the case of such Swap Contracts, Affiliates of Lenders) in proportion to the respective amounts described in this clause Third payable to them;

Fourth, to payment of that portion of the Obligations constituting unpaid principal of Loans, payment of breakage, termination or other payments, and any interest accrued thereon, due under any Swap Contract between the Borrower and any Lender, or any Affiliate of a Lender, ratably among the Lenders (and, in the case of such Swap Contracts, Affiliates of Lenders), in proportion to the respective amounts described in this clause Fourth held by them; and

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

52

ARTICLE IX

ADMINISTRATIVE AGENT

9.01Appointment and Authority.

Each of the Lenders hereby irrevocably appoints UBS AG 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 Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article (other than Section 9.06) are solely for the benefit of the Administrative Agent and the Lenders, and the Borrower shall not have rights as a third party beneficiary of any of such provisions.

9.02Rights 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 the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

9.03Exculpatory 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

(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 the 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.

53

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 the Borrower or a Lender.

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 (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.

9.04Reliance 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 that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have r eceived notice to the contrary from such Lender prior to the making of such Loan. The Administrative Agent may consult with legal counsel (who may be counsel for the 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.

9.05Delegation 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 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.

54

9.06Resignation of Administrative Agent.

The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrower.  Upon receipt of any such notice of resignation, the Required Lenders shall have the right, subject to the approval of the Borrower (unless an Event of Default under Section 8.01(a) or (f) has occurred and is continuing), to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank 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 subject to the approval of the Borrower (unless an Event of Default under Section 8.01(a) or (f) has occurred and is continuing)), appoint a successor Administrative Agent meeting the qualifications set forth above; provided that if the Administrative Agent shall notify the 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 (1) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (2) 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 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) Administrati ve Agent, and the retiring 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 the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the retiring Administrative Agent’s resignation 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 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 Administrative Agent was acting as Administrative Agent.

9.07Non-Reliance on Administrative Agent and Other Lenders.

Each Lender 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 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.

55

9.08No Other Duties, Etc.

Anything herein to the contrary notwithstanding, none of the Arrangers, Bookrunners, or Syndication Agent 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 or a Lender hereunder.

9.09Administrative Agent May File Proofs of Claim.

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

(a)to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 2.10 and 10.04) allowed in such judicial proceeding; and

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

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.10 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 any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

56

ARTICLE X

MISCELLANEOUS

10.01Amendments, Etc.

No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:

(a)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;

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

(c)reduce the principal of, or the rate of interest specified herein on, any Loan, or (subject to clause (iv) of the second proviso to this Section 10.01) any fees or other amounts payable hereunder (including pursuant to Section 2.06) or under any other Loan Document without the written consent of each Lender directly affected thereby; 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 the Borrower to pay interest at the Default Rate;

(d)change Section 2.14 or Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender; or

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

and provided, further, that 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.  Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Commitment of such Lender may not be increased or extended without the consent of such Lender.

Notwithstanding the fact that the consent of all the Lenders is required in certain circumstances as set forth above, (x) each Lender is entitled to vote as such Lender sees fit on any reorganization plan that affects Loans and each Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code supersede the unanimous consent provisions set forth herein and (y) the Required Lenders may consent to allow the Borrower to use cash collateral in the context of a bankruptcy or insolvency proceeding.

57

10.02Notices; Effectiveness; Electronic Communication.

(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:

(i)if to the Borrower or the Administrative Agent, 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 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 if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication.  The Administrative Agent or the 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 ident ifying the website address therefor.

58

(c)Change of Address, Etc.  Each of the Borrower and the Administrative Agent 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 the Borrower and the Administrative Agent.  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 comm unications 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 the Borrower or its securities for purposes of United States Federal or state securities laws.

(d)Reliance by Administrative Agent and Lenders.  The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Bridge Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.  The Borrower shall indemnify the Administrative Agent, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reli ance by such Person on each notice purportedly given by or on behalf of the 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.

10.03No Waiver; Cumulative Remedies.

No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

10.04Expenses; Indemnity; Damage Waiver.

(a)Costs and Expenses.  The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Agents and their 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, due diligence, 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 (ii) all out-of-pocket expenses incurred by the Administrative Age nt or any Lender (including the fees, charges and

59

disbursements of any counsel for the Administrative Agent or any Lender), 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 the Loans made hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans.

(b)Indemnification by the Borrower.  The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender, the Agents and their Affiliates 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, penalties, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower arising out of, in connection with, or as a result of (i) the execution or delivery of t his 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 (including, without limitation, each Lender’s agreement to make Loans or the use or intended use of the proceeds thereof), (ii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iii) 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 the Borrower, 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, penalties, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the Borrower against an Indemnitee for breach in bad faith or a material breach of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Borrower has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.  Notwithstanding the foregoing, (A) Section 3.01 shall be the sole remedy for any indemnification claim in respect of Taxes, and (B) each Indemnitee shall be obligated to refund and return any and all amounts paid by the Borrower under this paragraph to such Indemnitee for any such fees, expenses or damages to the extent such Indemnitee is not entitled to payment of such amou nts in accordance with the terms hereof.

(c)Reimbursement by Lenders.  To the extent that the 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) or any Related Party of any of the foregoing and without relieving the Borrower of its obligations with respect thereto, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) 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 against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) in connection with such capacity.  The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.13(d).

60

(d)Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable law, the Borrower shall not assert, and 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 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 by it 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.

(e)Payments.  All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.

(f)Survival.  The agreements in this Section shall survive the resignation of the Administrative Agent, the replacement of any Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all the other Obligations.

10.05Payments Set Aside.

To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of 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 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 severally agrees to pay to the Administrative Age nt 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 under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

10.06Successors 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 the 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 subsection (b) of this

61

Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, (iii) by way of pledge or assignment or grant of a security interest subject to the restrictions of subsection (f) of this Section, or (iv) to an SPC in accordance with the provisions of subsection (h) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agree ment.

(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 and the Loans 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

(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 $2,500,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consen t 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 assignee (or to an 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:

62

(A)the consent of the Borrower (such consent (including any consent pursuant to the proviso clause below) not to be unreasonably withheld or delayed with respect to assignments after the Closing Date) shall be required unless (1) with respect to assignments after the Closing Date, an Event of Default has occurred and is continuing at the time of such assignment or (2) with respect to assignments after the Closing Date, such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that, notwithstanding the foregoing, for the twelve-month period commencing on the Closing Date, the consent of the Borrower shall be required (other than upon the occurrence and continuation of a payment or bankruptcy (with respect to the Borrower) Event of Default or the failure of the Borrower to consummate a “Take-out Financing” following a “Take-out Demand” (as each such term is defined in the Fee Letter) in accordance with the terms of the Fee Letter) with respect to any assignment that would result in any Initial Lender holding less than 51% of the aggregate outstanding principal amount of Loans it held on the Closing Date; and

(B)the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required 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 such processing and recordation fee in the case of any assignment.  The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

(v)No Assignment to the Borrower.  No such assignment shall be made to the Borrower or any of the Borrower’s 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 Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall

63

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, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

Notwithstanding anything to the contrary herein (including, without limitation, Section 10.01 and this Section 10.06), until after the Borrowing on the Closing Date has occurred (i) no Initial Lender shall be relieved, released or novated from its obligations hereunder (including its obligation to make Loans in respect of any Borrowing on the Closing Date) in connection with any syndication, assignment or participation of Loans, including its Commitments in respect thereof and (ii) the Initial Lenders shall retain exclusive control over all rights and obligations with respect to its Commitments, including all rights with respect to consents, modifications, waivers and amendments, unless the Borrower agrees in writing in its sole discretion.

(c)Register.  The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  No transfer of any Obligation under the Loan Documents shall be effective until entered into the Register.  The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender (with respect to its own interest only), 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, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans 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 obl igations and (iii) the Borrower, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that affects such Participant.  Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and

64

3.05to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.14 as though it were a Lender.

(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 the Borrower’s prior written consent.  A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with < u>Section 3.01(e) as though it were a Lender.

(f)Certain Pledges.  Any Lender may at any time pledge, assign or grant 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 or grant of a security interest to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment or grant of a security interest shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee or grantee 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 U niform Electronic Transactions Act.

(h)Special Purpose Funding Vehicles. Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower (an “SPC”) the option to provide all or any part of any Loan that such Granting Lender would otherwise be obligated to make pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to fund any Loan, and (ii) if an SPC elects not to exercise such option or otherwise fails to make all or any part of such Loan , the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof or, if it fails to do so, to make such payment to the Administrative Agent as is required under Section 2.13(b)(ii).  Each party hereto hereby agrees that (i) neither the grant to any SPC nor the exercise by any SPC of such option shall increase the costs or expenses or otherwise increase or change the obligations of the Borrower under this Agreement (including its obligations under Section 3.04), (ii) no SPC shall be liable for any indemnity or similar payment obligation under this Agreement for which a Lender would be liable, and (iii) the Granting Lender shall for all purposes, including the approval of any amendment, waiver or other modification of any provision of any Loan Document, remain the lender of record hereunder. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender

65

to the same extent, and as if, such Loan were made by such Granting Lender.  In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior debt of any SPC, it will not institute against, or join any other Person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding under the laws of the United States or any State thereof. Notwithstanding anything to the contrary contained herein, any SPC may (i) with notice to, but without prior consent of the Borrower and the Administrative Agent and with the payment of a processing fee in the amount of $3,500 (which processing fee may be waived by the Administrative Agent in its sole discretion), assign all o r any portion of its right to receive payment with respect to any Loan to the Granting Lender and (ii) disclose on a confidential basis any non-public information relating to its funding of Loans to any rating agency, commercial paper dealer or provider of any surety or Guarantee or credit or liquidity enhancement to such SPC.

10.07Treatment of Certain Information; Confidentiality.

Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its 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 governmental agency or regulatory authority purporting to have jurisdiction over it or its Affiliates (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)& nbsp;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 the Borrower and its obligations, (g) with the consent of the Borrower, (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender, or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower that the Administrative Agent, an y such Lender reasonably believes is not bound by a duty of confidentiality to the Borrower (i) to any rating agency (provided such rating agencies are advised of the confidential nature of such information and agree to keep such information confidential) or (j) as reasonably required by any Lender or other Person providing financing to such Lender (provided such Lenders or other Persons are advised of the confidential nature of such information and agree to keep such information confidential).

For purposes of this Section, “Information” means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower or any Subsidiary,

66

provided that, in the case of information received from the Borrower or any 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 confidentiality of such Information as such Person would accord to its own or its other similarly situated customers’ confidential information.

10.08Right of Setoff.

If an Event of Default shall have occurred and be continuing, each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, 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 or any such Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement or any other Loan Document to such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch or office of such Lender diffe rent from the branch or office holding such deposit or obligated on such indebtedness.  The rights of each Lender and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender or their respective Affiliates may have.  Each Lender agrees to notify the 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.

10.09Interest 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 Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, pror ate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

10.10Counterparts; 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, the other Loan Documents and the Fee Letter 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

67

the subject matter hereof.  Upon the satisfaction of the conditions precedent contained 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 image scan transmission (e.g., “pdf” via e-mail) shall be effective as delivery of a manually executed counterpart of this Agreement.

10.11Survival 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 Borrowing, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied.

10.12Severability.

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.

10.13Replacement of Lenders.

If any Lender requests compensation under Section 3.04, or if the 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 is a Defaulting Lender, or if any Lender does not consent to any amendment or waiver of any provision hereof or of any other Loan Document for which its consent is required under Section 10.01 after Required Lenders have consented thereto, then the 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:

(a)the Borrower shall have paid to the Administrative Agent the assignment fee specified in Section 10.06(b);

68

(b)such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, 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 the 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 the Borrower to require such assignment and delegation cease to apply.

10.14Governing 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; WITHOUT REGARD TO ITS CONFLICT OF LAW PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW), provided, however, that the interpretation of the definition of “Closing Date Material Adverse Effect” (and whether or not a Closing Date Material Adverse Effect has occurred) shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws.

(b)SUBMISSION TO JURISDICTION.  THE BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY AND ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY AND ALL JUDGMENTS, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING WILL BE HEARD AND DETERMINED IN SUCH NEW YORK STATE CO URT 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 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 OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

69

(c)WAIVER OF VENUE.  THE 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.

10.15Waiver 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.

10.16No 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), the 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, the Arranger, the Lenders and the other Lead Arrangers are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent, the Lenders and the Lead Arrangers, on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transacti ons contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent, each Lender and each Lead 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 the

70

Borrower or any of its Affiliates, or any other Person and (B) neither the Administrative Agent, any Lender nor any Lead Arranger has any obligation to the 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, the Lenders and the Lead Arrangers and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and neither the Administrative Agent, any Lender nor any Lead Arranger has any obligation to disclose any of such interests to the Borrower or its Affiliates.  To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against the Administrative Agent, the Lenders and the Lead Arrangers wit h respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

10.17USA Patriot Act Notice.

Each Lender that is subject to the Patriot Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the 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 “Patriot Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Patriot Act.

10.18Delivery of Signature Page.

Each Lender to become a party to this Agreement on the date hereof shall do so by delivering to the Administrative Agent a counterpart of this Agreement duly executed by such Lender.

71

Each of the parties hereto have caused a counterpart of this Agreement to be duly executed as of the date first above written.

HCP, INC.
as Borrower
By:	/s/ Paul F. Gallagher
Name:	Paul F. Gallagher
Title:	Executive Vice President – Chief Investment Officer

72

UBS AG, STAMFORD BRANCH
as Administrative Agent
By:	/s/ Mary E. Evans
Name:	Mary E. Evans
Title:	Associate Director Banking Products Services, US
By:	/s/ April Varner-Nanton
Name:	April Varner-Nanton
Title:	Director Banking Products Services, US

73

UBS LOAN FINANCE LLC,
as a Lender
By:	/s/ Mary E. Evans
Name:	Mary E. Evans
Title:	Associate Director Banking Products Services, US
By:	/s/ April Varner-Nanton
Name:	April Varner-Nanton
Title:	Director Banking Products Services, US

74

CITIBANK, N.A.
as a Lender
By:	/s/ David Bouton
Name:	David Bouton
Title:	Managing Director

75

WELLS FARGO BANK, NATIONAL
ASSOCIATION, as a Lender
By:	/s/ Vanessa Sheh Meyer
Name:	Vanessa Sheh Meyer
Title:	Managing Director

76

BANK OF AMERICA, N.A.,
as a Lender
By:	/s/ Amie L. Edwards
Name:	Amie L. Edwards
Title:	Senior Vice President

77

JPMORGAN CHASE BANK, N.A.,
as a Lender
By:	/s/ Donald S. Shokrian
Name:	Donald S. Shokrian
Title:	Managing Director

78

EX-99.1

Exhibit 99.1

HCP TO ACQUIRE THE REAL ESTATE ASSETS OF HCR MANORCARE, INC. FOR $6.1 BILLION

LONG BEACH, CA — December 13, 2010 — HCP (NYSE:HCP) announced that it has signed a definitive agreement to acquire substantially all of the real estate assets of privately-owned HCR ManorCare, Inc. (“HCR ManorCare”), for a purchase price of $6.1 billion.  The consideration for the purchase will consist of the following:

·$3.528 billion in cash;

·$1.72 billion reinvested from the payoff of HCP’s existing debt investments in HCR ManorCare (original cash investment of $1.49 billion); and

·$852 million in HCP common stock issued directly to the shareholders of HCR ManorCare (a fixed 25.7 million shares, or, at HCP’s option, a cash equivalent to the currently agreed value of those shares).

HCP will acquire from HCR ManorCare 338 post-acute, skilled nursing and assisted living facilities located in strong markets with high barriers to entry.  The facilities are located in 30 states, with the highest concentrations in Ohio, Pennsylvania, Florida, Illinois and Michigan.

HCR ManorCare and its affiliates will continue to operate the assets pursuant to a long-term triple-net master lease supported by a guaranty from HCR ManorCare.  In addition, HCR ManorCare will grant HCP an option to acquire a 9.9% interest in HCR ManorCare for an additional purchase price of $95 million.

The triple-net lease with HCR ManorCare will provide for rent in the first year of $472.5 million, an amount representing a 1.5x EBITDAR coverage ratio.  The rent will increase by 3.5% per year after each of the first five years and by 3% for the remaining portion of the fixed term.  The properties will be grouped into four pools, and HCR ManorCare will have a one-time extension option for each pool with rent increased for the first year of the extension option to the greater of fair market rent or a 3% increase over the rent for the prior year.  The pools will have initial terms ranging from 13 to 17 years, and if the extension terms are exercised the total available term of the lease will range among pools from 23 to 35 years.

HCP has obtained a commitment for a bridge loan in an amount up to $3.3 billion that will be available to complete the HCR ManorCare acquisition.  HCP intends to issue debt and equity securities in lieu of any borrowings available under the bridge loan.

HCR ManorCare, Inc., based in Toledo, Ohio, is widely recognized as a leading provider of short-term, post-hospital rehabilitation, complex medical services and long-term care. HCR ManorCare is owned privately by management and equity funds managed by The Carlyle Group.  HCR ManorCare has successfully expanded its clinical capabilities in recent years to become a premier provider of post-acute services and to offer patients and payors a more cost-effective alternative to prolonged and costly hospitalizations.  For the first nine months of 2010, HCR ManorCare’s portfolio had a quality mix, which represents the percentage of revenues from Medicare and private pay sources, of 71%.  Paul A. Ormond, the Chairman, President and Chief Executive Officer of HCR ManorCare, will be invited to join HCP’s Board of Directors.

“This transaction reinvests our substantial debt investment in a secure long-term, growing income stream that will be highly accretive to HCP’s funds from operations and funds available for distribution,” said Jay Flaherty, HCP’s Chairman and Chief Executive Officer.  “The acquisition is consistent with our ‘5x5’ business model and an important milestone for our Company.  Pro forma for this transaction, HCP will have $19 billion in assets comprised of a well-balanced portfolio of 1,000 properties.”

Paul Ormond added, “We at HCR are delighted to have the opportunity to help secure the future of HCR ManorCare’s operations by partnering with HCP.  Going forward, our company leadership remains the same, we will continue our high level of investment in training and facilities, and our employees will continue to provide the same high-quality care that our patients and residents expect. HCR ManorCare’s priority has always been to focus on providing the highest quality care and caring possible to meet the needs and expectations of those we serve, and we selected HCP as our partner because of our shared vision and its industry leading franchise.”

The transaction, which has been approved by HCP’s Board of Directors and the shareholders of HCR ManorCare, is structured as an acquisition of the stock of the HCR ManorCare subsidiary that owns the assets. Completion of the transaction is subject to satisfaction of conditions regarding regulatory approvals and third party consents, and to other customary closing conditions. In addition, the purchase price will be adjusted at closing based on changes in net liabilities associated with the acquired assets, which adjustment may be effected through adjustments in the amount of stock issued to the shareholders of HCR ManorCare.  HCP expects the acquisition to close late in the first quarter of 2011, although there can be no assurance that the transaction will close or, if it does, when the closing will occur.

CSCA Capital Advisors, LLC acted as lead financial advisor and provided a fairness opinion in connection with the transaction. Citi, UBS and Wells Fargo Securities also acted as financial advisors.  Skadden, Arps, Slate, Meagher & Flom LLP acted as HCP’s legal advisor. In connection with the transaction, J.P. Morgan Securities LLC is HCR ManorCare’s exclusive financial advisor and Latham & Watkins LLP is their legal advisor.

On December 14, 2010, HCP will host a conference call and webcast at 8:15 a.m. Eastern Time to discuss the acquisition.

The dial-in number for the conference call is 866-202-3048 (U.S.) and 617-213-8843 (International). The participant passcode is 81650073. You may also access the conference call via webcast at www.hcpi.com. The link may be found under the “Investor Relations” tab and the “Event Calendar” page. An archive of the event will be available on HCP’s website through December 28, 2010.

An investor presentation discussing the HCR ManorCare transaction will be available on HCP’s website at www.hcpi.com under the “Presentations” portion of the “Investor Relations” tab.

ABOUT HCP

HCP, Inc., an S&P 500 company, is a real estate investment trust (REIT) that, together with its consolidated subsidiaries, invests primarily in real estate serving the healthcare industry in the United States. As of September 30, 2010, HCP’s portfolio of investments, including properties owned by its unconsolidated joint ventures, consisted of: (i) interests in 670 properties among the following segments: 250 senior housing, 102 life science, 252 medical office, 45 skilled nursing and 21 hospital; and (ii) $2.0 billion of mezzanine and other secured loans. For more information, visit the Company’s website at www.hcpi.com.

FORWARD-LOOKING STATEMENTS

The statements contained in this release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities

Exchange Act of 1934. These statements are made as of the date hereof and are subject to known and unknown risks, uncertainties, assumptions and other factors—many of which are out of the Company’s control and difficult to forecast—that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. These risks and uncertainties include, but are not limited to: the satisfaction of the conditions to the closing of the acquisition; the ability of HCP to obtain financing necessary to consummate the acquisition or on acceptable terms, including the satisfaction of conditions necessary for a draw on the bridge loan; national and local economic conditions; changes in healthcare laws and regulations, including the impact of future or pending healthcare reform, and other changes in the healthcare industry which affect the operations of HCR ManorCare or th e above facilities;  the ability of HCR ManorCare to attract and retain residents and operate the communities in a manner at least consistent with historical operations; the ability of HCR ManorCare to obtain and maintain regulatory approvals necessary for the closing of the acquisition and the long-term operation of the facilities; changes in management; changes in tax laws and regulations; changes in the financial position or business strategies of HCR ManorCare; changes in rules governing financial reporting; and other risks described from time to time in the Company’s Securities and Exchange Commission filings. The Company assumes no, and hereby disclaims any, obligation to update any of the foregoing or any other forward-looking statements as a result of new information or new or future developments, except as otherwise required by law. These statements should not be relied upon as representing the Company’s views as of any date subsequent to the date of this press release.

Contact

HCP
Thomas M. Herzog
Executive Vice President – Chief Financial Officer
562-733-5309