EXHIBIT 10.43

[EXECUTION COPY]

AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of April 25, 2002

among

LINCARE HOLDINGS INC.,

as Borrower,

CERTAIN SUBSIDIARIES OF THE BORROWER

FROM TIME TO TIME PARTY HERETO,

as Guarantors,

THE SEVERAL LENDERS

FROM TIME TO TIME PARTY HERETO

and

BANK OF AMERICA, N.A.,

as Agent

and

SCOTIABANC, INC.,

as Syndication Agent

and

CREDIT LYONNAIS NEW YORK BRANCH,

as Documentation Agent

Arranged by:

BANC OF AMERICA SECURITIES LLC

as Sole Book Manager

and

SCOTIABANC, INC. and

BANC OF AMERICA SECURITIES LLC

as Joint Lead Arrangers

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

SECTION 1 DEFINITIONS

   1

1.1

  

Definitions

   1

1.2

  

Computation of Time Periods

   27

1.3

  

Accounting Terms

   27

SECTION 2 CREDIT FACILITIES

   27

2.1

  

Revolving Loans

   27

2.2

  

Letter of Credit Subfacility

   29

2.3

  

Swingline Loans

   34

SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES

   36

3.1

  

Default Rate

   36

3.2

  

Extension and Conversion

   36

3.3

  

Prepayments

   37

3.4

  

Termination and Reduction of Revolving Committed Amount

   38

3.5

  

Fees

   38

3.6

  

Capital Adequacy

   39

3.7

  

Limitation on Eurodollar Loans

   39

3.8

  

Illegality

   40

3.9

  

Requirements of Law

   40

3.10

  

Treatment of Affected Revolving Loans

   41

3.11

  

Taxes

   42

3.12

  

Compensation

   44

3.13

  

Pro Rata Treatment

   44

3.14

  

Sharing of Payments

   45

3.15

  

Payments, Computations, Etc

   46

3.16

  

Evidence of Debt

   47

3.17

  

Replacement of Affected Lenders

   48

SECTION 4 GUARANTY

   49

4.1

  

The Guaranty

   49

4.2

  

Obligations Unconditional

   49

4.3

  

Reinstatement

   50

4.4

  

Certain Additional Waivers

   51

4.5

  

Remedies

   51

4.6

  

Rights of Contribution

   51

4.7

  

Continuing Guarantee

   52

SECTION 5 CONDITIONS

   52

5.1

  

Closing Conditions

   52

5.2

  

Conditions to all Extensions of Credit

   54

--------------------------------------------------------------------------------

SECTION 6 REPRESENTATIONS AND WARRANTIES

   55

6.1

  

Financial Condition

   55

6.2

  

No Material Change

   56

6.3

  

Organization and Good Standing

   56

6.4

  

Power; Authorization; Enforceable Obligations

   56

6.5

  

No Conflicts

   57

6.6

  

No Default

   57

6.7

  

Ownership

   57

6.8

  

Indebtedness

   57

6.9

  

Litigation

   57

6.10

  

Taxes

   58

6.11

  

Compliance with Law

   58

6.12

  

ERISA

   58

6.13

  

Subsidiaries

   59

6.14

  

Governmental Regulations, Etc

   59

6.15

  

Purpose of Revolving Loans and Letters of Credit

   60

6.16

  

Environmental Matters

   60

6.17

  

Intellectual Property

   61

6.18

  

Solvency

   61

6.19

  

Investments

   61

6.20

  

Disclosure

   62

6.21

  

No Unusual Restrictions

   62

6.22

  

Reimbursement from Third Party Payors

   62

6.23

  

Fraud and Abuse

   62

6.24

  

Licensing and Accreditation

   63

SECTION 7 AFFIRMATIVE COVENANTS

   63

7.1

  

Information Covenants

   63

7.2

  

Preservation of Existence and Franchises

   65

7.3

  

Books and Records

   66

7.4

  

Compliance with Law

   66

7.5

  

Payment of Taxes and Other Indebtedness

   66

7.6

  

Insurance

   66

7.7

  

Maintenance of Property

   66

7.8

  

Performance of Obligations

   67

7.9

  

Use of Proceeds

   67

7.10

  

Audits/Inspections

   67

7.11

  

Financial Covenants

   67

7.12

  

Additional Guarantors

   67

7.13

  

Pledged Stock

   68

7.14

  

Receivables Financing Further Assurances

   68

SECTION 8 NEGATIVE COVENANTS

   68

8.1

  

Indebtedness

   68

8.2

  

Liens

   70

8.3

  

Nature of Business

   70

--------------------------------------------------------------------------------

8.4

  

Consolidation, Merger, Dissolution, etc

   70

8.5

  

Asset Dispositions

   71

8.6

  

Investments

   71

8.7

  

Restricted Payments

   71

8.8

  

Prepayments of Indebtedness, etc

   71

8.9

  

Transactions with Affiliates

   72

8.10

  

Fiscal Year; Organizational Documents

   72

8.11

  

Limitation on Restricted Actions

   72

8.12

  

Ownership of Subsidiaries; Limitations on Borrower

   72

8.13

  

Sale Leasebacks

   73

8.14

  

No Further Negative Pledges

   73

8.15

  

No Foreign Subsidiaries

   73

SECTION 9 EVENTS OF DEFAULT

   73

9.1

  

Events of Default

   73

9.2

  

Acceleration; Remedies

   76

SECTION 10 AGENCY PROVISIONS

   77

10.1

  

Appointment and Authorization of Agent

   77

10.2

  

Delegation of Duties

   77

10.3

  

Liability of Agent

   78

10.4

  

Reliance by Agent

   78

10.5

  

Notice of Default

   79

10.6

  

Credit Decision; Disclosure of Information by Agent

   79

10.7

  

Indemnification of Agent

   79

10.8

  

Agent in its Individual Capacity

   80

10.9

  

Successor Agent

   80

10.10

  

Other Agents; Book Managers

   81

SECTION 11 MISCELLANEOUS

   81

11.1

  

Notices

   81

11.2

  

Right of Set-Off; Adjustments

   82

11.3

  

Successors and Assigns

   83

11.4

  

No Waiver; Remedies Cumulative

   86

11.5

  

Expenses; Indemnification

   86

11.6

  

Amendments, Waivers and Consents

   87

11.7

  

Counterparts

   88

11.8

  

Headings

   88

11.9

  

Survival

   88

11.10

  

Governing Law; Submission to Jurisdiction; Venue

   89

11.11

  

Severability

   89

11.12

  

Entirety

   89

11.13

  

Binding Effect; Termination

   90

11.14

  

Conflict

   90

11.15

  

Confidentiality

   90

--------------------------------------------------------------------------------

SCHEDULES

Schedule 1.1(a)

   Investments

Schedule 1.1(b)

   Liens

Schedule 1.1(c)

   Existing Letters of Credit

Schedule 2.1(a)

   Lenders

Schedule 6.9

   Litigation

Schedule 6.13

   Subsidiaries

Schedule 8.1

   Indebtedness

EXHIBITS

Exhibit 1.1(a)

   Pledge Agreement

Exhibit 1.1(b)

   Intercreditor Agreement

Exhibit 2.1(b)(i)

   Form of Notice of Borrowing

Exhibit 2.1(e)

   Form of Revolving Note

Exhibit 3.2

   Form of Notice of Extension/Conversion

Exhibit 7.1(c)

   Form of Officer’s Compliance Certificate

Exhibit 7.12

   Form of Joinder Agreement

Exhibit 11.3(b)

   Form of Assignment and Acceptance

--------------------------------------------------------------------------------

AMENDED AND RESTATED CREDIT AGREEMENT

THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of April 25, 2002, (as
amended, modified, restated or supplemented from time to time, the “Credit
Agreement”), is by and among LINCARE HOLDINGS INC., a Delaware corporation (the
“Borrower”), each of the Subsidiaries of the Borrower identified as a
“Guarantor” on the signature pages hereto, the Lenders (as defined herein) from
time to time party hereto and BANK OF AMERICA, N.A., as Agent for the Lenders
(in such capacity, the “Agent”).

W I T N E S S E T H

WHEREAS, the Borrower and each of its Subsidiaries are party to that certain
Three-Year Credit Agreement, dated as of August 23, 1999, as amended from time
to time thereafter (as amended, the “Existing Credit Agreement”), among the
Borrower, each of its Subsidiaries, the lenders party thereto, and Bank of
America, N.A., as the Agent for the Lenders;

WHEREAS, the parties to the Existing Credit Agreement have agreed to amend the
Existing Credit Agreement and for ease of reference have agreed to amend and
restate the Existing Credit Agreement in this Credit Agreement; and

WHEREAS, the Borrower and the Guarantors have requested, and the Lenders have
agreed to provide the requested $200,000,000 five-year revolving credit facility
(the “Credit Facility”) available to the Borrower on the terms and conditions
hereinafter set forth.

NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

SECTION 1

DEFINITIONS

1.1 Definitions.

As used in this Credit Agreement, the following terms shall have the meanings
specified below unless the context otherwise requires:

“Acquisition”, by any Person, means the acquisition by such Person of all of the
Capital Stock or all or substantially all of the Property of another Person,
whether or not involving a merger or consolidation with such other Person.

“Adjusted Base Rate” means the Base Rate plus the Applicable Percentage.

“Adjusted Eurodollar Rate” means the Eurodollar Rate plus the Applicable
Percentage.

--------------------------------------------------------------------------------

“Affiliate” means, with respect to any Person, any other Person (i) directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person or (ii) directly or indirectly owning or holding five
percent (5%) or more of the equity interest in such Person. For purposes of this
definition, “control” when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms “controlling” and “controlled” have meanings correlative to the
foregoing.

“Agent” shall have the meaning assigned to such term in the heading hereof,
together with any successors or assigns.

“Agent’s Fee Letter” means that certain letter agreement, dated as of August 21,
2000, between the Agent and the Borrower, as amended, modified, restated or
supplemented from time to time.

“Agent’s Fees” shall have the meaning assigned to such term in Section 3.5(d).

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

“Applicable Lending Office” means, for each Lender, the office of such Lender
(or of an Affiliate of such Lender) as such Lender may from time to time specify
to the Agent and the Borrower by written notice as the office by which its
Eurodollar Loans are made and maintained.

“Applicable Percentage” means, for purposes of calculating the applicable
interest rate for any day for any Revolving Loan, the applicable rate of the
Unused Fee for any day for purposes of Section 3.5(b) and the applicable rate of
the Letter of Credit Fee for any day for purposes of Section 3.5(c)(i), the
appropriate applicable percentage corresponding to the Leverage Ratio in effect
as of the most recent Calculation Date as set forth below:

 

2

--------------------------------------------------------------------------------

Applicable Percentages

 

Pricing Level

   Leverage
Ratio    For Revolving Loans     For
Letter of
Credit Fee     For
Unused
Fee         Eurodollar
Loans     Base Rate
Loans      

I

   <1.0    1.125 %    0.125 %    1.125 %    0.30 %* 

II

   <1.75

but

>1.0

   1.50 %    0.50 %    1.50 %    0.35 %* 

III

   >1.75    1.75 %    0.75 %    1.75 %    0.40 %* 

 

*

If on any day, the aggregate outstanding principal amount of all Revolving Loans
plus LOC Obligations hereunder is less than the product of (A) one-half
( 1/2) times (B) the Revolving Committed Amount, the applicable Unused Fee (as
shown above) shall be increased by an amount equal to 12.5 basis points.

The Applicable Percentages shall be determined and adjusted quarterly on the
date (each a “Calculation Date”) five Business Days after the date by which the
Borrower is required to provide the officer’s certificate in accordance with the
provisions of Section 7.1(c) for the most recently ended fiscal quarter of the
Consolidated Parties; provided, however, that (i) the initial Applicable
Percentages shall be based on Pricing Level I (as shown above) and shall remain
at Pricing Level I until the Calculation Date for the fiscal quarter of the
Consolidated Parties ending on June 30, 2002, on and after which time the
Pricing Level shall be determined by the Leverage Ratio as of the last day of
the most recently ended fiscal quarter of the Consolidated Parties preceding the
applicable Calculation Date and (ii) if the Borrower fails to provide the
officer’s certificate as required by Section 7.1(c) for the last day of the most
recently ended fiscal quarter of the Consolidated Parties preceding the
applicable Calculation Date, the Applicable Percentage from such Calculation
Date shall be based on Pricing Level III until such time as an appropriate
officer’s certificate is provided, whereupon the Applicable Percentages shall be
determined by the Leverage Ratio as of the last day of the most recently ended
fiscal quarter of the Consolidated Parties preceding such Calculation Date. Each
Applicable Percentage shall be effective from one Calculation Date until the
next Calculation Date. Any adjustment in the Applicable Percentages shall be
applicable to all existing Revolving Loans and Letters of Credit as well as any
new Revolving Loans and Letters of Credit made or issued.

“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.

“Asset Disposition” means any disposition, other than pursuant to an Excluded
Asset Disposition, of any or all of the Property (including without limitation
the Capital Stock of a Subsidiary) of any Consolidated Party whether by sale,
lease, transfer or otherwise, but other than pursuant to any casualty or
condemnation event.

 

3

--------------------------------------------------------------------------------

“Attributed Principal Amount” means, on any day, with respect to any Permitted
Receivables Financing entered into by any Credit Party, the aggregate amount
(with respect to any such transaction, the “Invested Amount”) paid to, or
borrowed by, such Person as of such date under such Permitted Receivables
Financing, minus the aggregate amount received by the applicable Receivables
Financier and applied to the reduction of the Invested Amount under such
Permitted Receivables Financing.

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

“Bankruptcy Code” means the Bankruptcy Code in Title 11 of the United States
Code, as amended, modified, succeeded or replaced from time to time.

“Bankruptcy Event” means, with respect to any Person, the occurrence of any of
the following with respect to such Person: (i) a court or governmental agency
having jurisdiction in the premises shall enter a decree or order for relief in
respect of such Person in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or ordering
the winding up or liquidation of its affairs; or (ii) there shall be commenced
against such Person an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or any case,
proceeding or other action for the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of such Person
or for any substantial part of its Property or for the winding up or liquidation
of its affairs, and such involuntary case or other case, proceeding or other
action shall remain undismissed, undischarged or unbonded for a period of sixty
(60) consecutive days; or (iii) such Person shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of such Person or for any substantial part of its Property
or make any general assignment for the benefit of creditors; or (iv) such Person
shall be unable to, or shall admit in writing its inability to, pay its debts
generally as they become due.

“Base Rate” means, for any day, the rate per annum equal to the higher of
(a) the Federal Funds Rate for such day plus one-half of one percent (.5%) and
(b) the Prime Rate for such day. Any change in the Base Rate due to a change in
the Prime Rate or the Federal Funds Rate shall be effective on the effective
date of such change in the Prime Rate or Federal Funds Rate.

“Base Rate Loan” means any Revolving Loan bearing interest at a rate determined
by reference to the Base Rate.

“Borrower” means the Person identified as such in the heading hereof, together
with any permitted successors and assigns.

 

4

--------------------------------------------------------------------------------

“BRM” means Beta Risk Management Limited, a British Virgin Islands corporation
and a wholly-owned Subsidiary of the Borrower, which may be formed following the
Closing Date.

“Business Day” means a day other than a Saturday, Sunday or other day on which
commercial banks in Charlotte, North Carolina or New York, New York are
authorized or required by law to close, except that, when used in connection
with a Eurodollar Loan, such day shall also be a day on which dealings between
banks are carried on in U.S. dollar deposits in London, England.

“Calculation Date” shall have the meaning assigned to such term in the
definition of “Applicable Percentage” set forth in this Section 1.1.

“Capital Lease” means, as applied to any Person, any lease of any Property
(whether real, personal or mixed) by that Person as lessee which, in accordance
with GAAP, is or should be accounted for as a capital lease on the balance sheet
of that Person.

“Capital Stock” means (i) in the case of a corporation, capital stock, (ii) in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of capital
stock, (iii) in the case of a partnership, partnership interests (whether
general or limited), (iv) in the case of a limited liability company, membership
interests and (v) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.

“Cash Equivalents” means (a) securities issued or directly and fully guaranteed
or insured by the United States of America or any agency or instrumentality
thereof (provided that the full faith and credit of the United States of America
is pledged in support thereof) having maturities of not more than twelve months
from the date of acquisition, (b) U.S. dollar denominated time deposits and
certificates of deposit of (i) any Lender, (ii) any domestic commercial bank of
recognized standing having capital and surplus in excess of $500,000,000 or
(iii) any bank whose short-term commercial paper rating from S&P is at least A-1
or the equivalent thereof or from Moody’s is at least P-1 or the equivalent
thereof (any such bank being an “Approved Bank”), in each case with maturities
of not more than 270 days from the date of acquisition, (c) commercial paper and
variable or fixed rate notes issued by any Approved Bank (or by the parent
company thereof) or any variable rate notes issued by, or guaranteed by, any
domestic corporation rated A-1 (or the equivalent thereof) or better by S&P or
P-1 (or the equivalent thereof) or better by Moody’s and maturing within six
months of the date of acquisition, (d) repurchase agreements with a bank or
trust company (including any of the Lenders) or recognized securities dealer
having capital and surplus in excess of $500,000,000 for direct obligations
issued by or fully guaranteed by the United States of America in which any
Credit Party shall have a perfected first priority security interest (subject to
no other Liens) and having, on the date of purchase thereof, a fair market value
of at least 100% of the amount of the repurchase obligations and
(e) Investments, classified in accordance with GAAP as current assets, in money
market investment programs registered under the Investment Company Act of 1940,
as amended, which are administered by reputable

 

5

--------------------------------------------------------------------------------

financial institutions having capital of at least $500,000,000 and the
portfolios of which are limited to Investments of the character described in the
foregoing subdivisions (a) through (d).

“Change of Control” means the occurrence of any of the following events: (i) any
Person or two or more Persons acting in concert (other than Persons owning 30%
or more of the Voting Stock of the Borrower on the Closing Date) shall have
acquired beneficial ownership, directly or indirectly, of, or shall have
acquired by contract or otherwise, or shall have entered into a contract or
arrangement that, upon consummation, will result in its or their acquisition of,
control over, Voting Stock of the Borrower (or other securities convertible into
such Voting Stock) representing 30% or more of the combined voting power of all
Voting Stock of the Borrower, (ii) any Person or two or more Persons acting in
concert (other than Persons owning 30% or more of the Voting Stock of the
Borrower on the Closing Date) has the ability directly or indirectly, to elect a
majority of the board of directors of the Borrower, (iii) during any period of
up to 12 consecutive months, commencing on the Closing Date, individuals (or
their designees or other individuals appointed by the same designating party)
who at the beginning of such 12 month period were directors of the Borrower
(together with any new directors whose election to the board of directors of the
Borrower or whose nomination for election by the stockholders of the Borrower
was approved by a vote of a majority of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) shall cease for any reason
to constitute a majority of the board of directors of the Borrower or (iv) the
occurrence of a “Change of Control” under the Senior Note Purchase Agreement,
the Senior Notes, or other documents evidencing the Senior Notes.

“Closing Date” means the date hereof.

“CMS” means the Centers for Medicare and Medicaid Services of the United States
Department of Health and Human Services and any successor thereto.

“Code” means the Internal Revenue Code of 1986, as amended, and any successor
statute thereto, as interpreted by the rules and regulations issued thereunder,
in each case as in effect from time to time. References to sections of the Code
shall be construed also to refer to any successor sections.

“Collateral Agent” means Bank of America, N.A., in its capacity as collateral
agent for the benefit of the Lenders and the Senior Noteholders under the Pledge
Agreement and as contemplated by the Intercreditor Agreement, together with its
successors and assigns.

“Commitment” means (i) with respect to each Lender, the commitment of such
Lender in an aggregate principal amount at any time outstanding of up to such
Lender’s Commitment Percentage of the Revolving Committed Amount, (a) to make
Revolving Loans in accordance with the provisions of Section 2.1(a) and (b) to
purchase Participation Interests in Letters of Credit in accordance with the
provisions of Section 2.2(c), (ii) with respect to the Issuing Lender, the LOC
Commitment and (iii) with respect to the Swingline Lender, the Swingline
Commitment.

 

6

--------------------------------------------------------------------------------

“Commitment Percentage” means, for any Lender, the percentage identified as its
Commitment Percentage on Schedule 2.1(a), as such percentage may be modified in
connection with any assignment made in accordance with the provisions of
Section 11.3.

“Consolidated Capital Expenditures” means, for any period, all capital
expenditures of the Consolidated Parties on a consolidated basis for such
period, as determined in accordance with GAAP.

“Consolidated Cash Interest Expense” means, for any period, interest expense
(including the amortization of debt discount and premium, the interest component
under Capital Leases and the implied interest component under Synthetic Leases),
as determined in accordance with GAAP, to the extent the same are paid in cash
during such period.

“Consolidated Cash Taxes” means, for any period, the aggregate of all taxes of
the Consolidated Parties on a consolidated basis for such period, as determined
in accordance with GAAP, to the extent the same are paid in cash during such
period.

“Consolidated EBITDA” means, for any period, the sum of (i) Consolidated Net
Income for such period, plus (ii) an amount which, in the determination of
Consolidated Net Income for such period, has been deducted for (A) Consolidated
Interest Expense, (B) total federal, state, local and foreign income, value
added and similar taxes, (C) depreciation and amortization expense and (D) other
extraordinary non-recurring, non-cash charges, all as determined in accordance
with GAAP.

“Consolidated EBITDAR” means, for any period, the sum of (i) Consolidated EBITDA
for such period, plus (ii) an amount which in the determination of Consolidated
Net Income for such period has been deducted for Consolidated Rent Expense for
such period, all as determined in accordance with GAAP.

“Consolidated Interest Expense” means for any period, interest expense
(including the amortization of debt discount and premium, the interest component
under Capital Leases and the implied interest component under Synthetic Leases
and Permitted Receivables Financings) of the Consolidated Parties on a
consolidated basis for such period, as determined in accordance with GAAP.

“Consolidated Net Income” means, for any period, net income (excluding
extraordinary items) after taxes for such period of the Consolidated Parties on
a consolidated basis, as determined in accordance with GAAP.

“Consolidated Net Worth” means, as of any date, shareholders’ equity or net
worth of the Consolidated Parties on a consolidated basis, as determined in
accordance with GAAP.

“Consolidated Parties” means a collective reference to the Borrower and its
Subsidiaries, and “Consolidated Party” means any one of them.

 

7

--------------------------------------------------------------------------------

“Consolidated Rent Expense” means, for any period, with respect to the
Consolidated Parties on a consolidated basis, all rent payable under an
Operating Lease of real property, as determined in accordance with GAAP.

“Consolidated Scheduled Funded Debt Payments” means, as of the end of each
fiscal quarter of the Consolidated Parties, for the Consolidated Parties on a
consolidated basis, the sum of all scheduled payments of principal on Funded
Indebtedness for the applicable period ending on such date (including the
principal component of payments due on Capital Leases during the applicable
period ending on such date); it being understood that Consolidated Scheduled
Funded Debt Payments shall not include voluntary prepayments or the mandatory
prepayments required pursuant to Section 3.3.

“Continue”, “Continuation”, and “Continued” shall refer to the continuation
pursuant to Section 3.2 or Sections 3.7 through 3.9, inclusive, of a Eurodollar
Loan from one Interest Period to the next Interest Period.

“Contract Provider” means any Person or any employee, agent or subcontractor of
such Person who provides professional health care services under or pursuant to
any contract with any Consolidated Party.

“Convert”, “Conversion”, and “Converted” shall refer to a conversion pursuant to
Section 3.2 or Sections 3.7 through 3.12, inclusive, of a Base Rate Loan into a
Eurodollar Loan.

“Credit Documents” means a collective reference to this Credit Agreement, the
Revolving Notes, if any, the LOC Documents, each Joinder Agreement, the Agent’s
Fee Letter, the Pledge Agreement and all other related agreements and documents
issued or delivered hereunder or thereunder or pursuant hereto or thereto (in
each case as the same may be amended, modified, restated, supplemented,
extended, renewed or replaced from time to time), and “Credit Document” means
any one of them.

“Credit Parties” means a collective reference to the Borrower and the
Guarantors, and “Credit Party” means any one of them.

“Credit Party Obligations” means, without duplication, (i) all of the
obligations of the Credit Parties to the Lenders (including the Swingline Lender
and Issuing Lender) and the Agent, whenever arising, under this Credit
Agreement, the Revolving Notes, if any, the Pledge Agreement or any of the other
Credit Documents (including, but not limited to, any interest accruing after the
occurrence of a Bankruptcy Event with respect to any Credit Party, regardless of
whether such interest is an allowed claim under the Bankruptcy Code) and
(ii) all liabilities and obligations, whenever arising, owing from any Credit
Party to any Lender, or any Affiliate of a Lender, arising under any Hedging
Agreement or any Equity Swap Agreement.

“Default” means any event, act or condition which with notice or lapse of time,
or both, would constitute an Event of Default.

 

8

--------------------------------------------------------------------------------

“Defaulting Lender” means, at any time, any Lender, as determined by the Agent,
that (a) has failed to make a Revolving Loan or purchase a Participation
Interest required pursuant to the term of this Credit Agreement, (b) has failed
to pay to the Agent or any Lender an amount owed by such Lender pursuant to the
terms of this Credit Agreement, or (c) has been deemed insolvent or has become
subject to a bankruptcy or insolvency proceeding or a receiver, trustee or
similar official has been appointed.

“Dollars” and “$” means dollars in lawful currency of the United States of
America.

“Eligible Assignee” means (a) a Lender; (b) an Affiliate of a Lender; (c) an
Approved Fund; and (d) any other Person (other than a natural Person) approved
by the Agent and, unless (x) such Person is taking delivery of an assignment in
connection with physical settlement of a credit derivatives transaction or
(y) an Event of Default has occurred and is continuing, the Borrower (each such
approval not to be unreasonably withheld or delayed).

“Environmental Laws” means any and all lawful and applicable Federal, state,
local and foreign statutes, laws (including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Resource Conservation and Recovery Act of 1976, the Toxic Substances Control
Act, the Water Pollution Control Act, the Clean Air Act and the Hazardous
Materials Transportation Act), regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, grants, franchises, licenses, agreements
or other governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.

“Equity Issuance” means any issuance by any Consolidated Party to any Person
(other than a Credit Party) of (a) shares of its Capital Stock, (b) any shares
of its Capital Stock pursuant to the exercise of options or warrants or (c) any
shares of its Capital Stock pursuant to the conversion of any debt securities to
equity. The term “Equity Issuance” shall not include any Asset Disposition.

“Equity Swap Agreements” means any agreement entered into by the Borrower in
order to manage existing or anticipated risk associated with the repurchase by
the Borrower of shares of its Capital Stock at a predetermined purchase price.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto, as interpreted by the rules and regulations
thereunder, all as the same may be in effect from time to time. References to
sections of ERISA shall be construed also to refer to any successor sections.

“ERISA Affiliate” means an entity which is under common control with any Credit
Party within the meaning of Section 4001(a)(14) of ERISA, or is a member of a

 

9

--------------------------------------------------------------------------------

group which includes the Borrower and which is treated as a single employer
under Sections 414(b) or (c) of the Code.

“ERISA Event” means (i) with respect to any Plan, the occurrence of a Reportable
Event with respect to which the Department of Labor has not waived the reporting
requirement or the substantial cessation of operations (within the meaning of
Section 4062(e) of ERISA); (ii) the withdrawal by any Consolidated Party or any
ERISA Affiliate from a Multiple Employer Plan during a plan year in which it was
a substantial employer (as such term is defined in Section 4001(a)(2) of ERISA),
or the termination of a Multiple Employer Plan; (iii) the distribution of a
notice of intent to terminate or the actual termination of a Plan pursuant to
Section 4041(a)(2) or 4041A of ERISA; (iv) the institution of proceedings to
terminate or the actual termination of a Plan by the PBGC under Section 4042 of
ERISA; (v) any event or condition which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; (vi) the complete or partial withdrawal of any
Consolidated Party or any ERISA Affiliate from a Multiemployer Plan; (vii) the
conditions for imposition of a lien under Section 302(f) of ERISA exist with
respect to any Plan that could reasonably be expected to cause a Material
Adverse Effect; or (viii) the adoption of an amendment to any Plan requiring the
provision of security to such Plan pursuant to Section 307 of ERISA.

“Eurodollar Loan” means any Revolving Loan that bears interest at a rate based
upon the Eurodollar Rate.

“Eurodollar Rate” means, for any Eurodollar Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
 1/100 of 1%) determined by the Agent to be equal to the quotient obtained by
dividing (a) the Interbank Offered Rate for such Eurodollar Loan for such
Interest Period by (b) 1 minus the Eurodollar Reserve Requirement for such
Eurodollar Loan for such Interest Period.

“Eurodollar Reserve Requirement” means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against “Eurocurrency
liabilities” (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the Eurodollar Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks with respect to (i) any
category of liabilities which includes deposits by reference to which the
Adjusted Eurodollar Rate is to be determined, or (ii) any category of extensions
of credit or other assets which include Eurodollar Loans. The Adjusted
Eurodollar Rate shall be adjusted automatically on and as of the effective date
of any change in the Eurodollar Reserve Requirement.

“Event of Default” means such term as defined in Section 9.1.

“Excluded Asset Disposition” means, with respect to any Consolidated Party,
(i) the sale of inventory in the ordinary course of such Consolidated Party’s
business, (ii) the sale or disposition of machinery and equipment no longer used
or useful in the conduct of

 

10

--------------------------------------------------------------------------------

such Consolidated Party’s business, (iii) any Equity Issuance by such
Consolidated Party, (iv) any disposition on account of any loss of, damage to or
destruction of, or any condemnation or other taking for public use of, any
Property of the Consolidated Parties and (v) any sale, lease, transfer or other
disposition of Property by such Consolidated Party to any other Consolidated
Party.

“Executive Officer” of any Person means any of the chief executive officer,
chief operating officer, president, vice president, chief financial officer or
treasurer of such Person.

“Existing Credit Agreement” means that certain Three-Year Credit Agreement,
dated as of August 23, 1999, by and among the Borrower, the Lenders identified
therein and Bank of America, N.A., as Agent (as amended).

“Existing Letters of Credit” means the letters of credit described by date of
issuance, letter of credit number, undrawn amount, name of beneficiary and date
of expiry on Schedule 1.1(c).

“Fees” means all fees payable pursuant to Section 3.5.

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

“Fixed Charge Coverage Ratio” means, as of the end of each fiscal quarter of the
Consolidated Parties for the twelve month period ending on such date, the ratio
of (a) Consolidated EBITDAR for the applicable period minus Consolidated Capital
Expenditures for the applicable period minus Consolidated Cash Taxes for the
applicable period to (b) the sum of (i) Consolidated Cash Interest Expense for
the applicable period plus (ii) Consolidated Scheduled Funded Debt Payments for
the applicable period plus (iii) Consolidated Rent Expense for the applicable
period.

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

“Foreign Subsidiary” means any direct or indirect Subsidiary of the Borrower
which is not incorporated or organized under the laws of any state of the United
States or the District of Columbia.

 

11

--------------------------------------------------------------------------------

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

“Funded Indebtedness” means, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) the outstanding
Attributed Principal Amount under any Permitted Receivables Financing, (c) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made, (d) all
obligations of such Person under conditional sale or other title retention
agreements relating to Property purchased by such Person (other than customary
reservations or retentions of title under agreements with suppliers entered into
in the ordinary course of business), (e) all obligations of such Person issued
or assumed as the deferred purchase price of Property or services purchased by
such Person (other than trade debt incurred in the ordinary course of business
and due within six months of the incurrence thereof) which would appear as
liabilities on a balance sheet of such Person, (f) the principal portion of all
obligations of such Person under Capital Leases, (g) the maximum amount of all
standby letters of credit issued or bankers’ acceptances facilities created for
the account of such Person and, without duplication, all drafts drawn thereunder
(to the extent unreimbursed), (h) all preferred Capital Stock issued by such
Person and required by the terms thereof to be redeemed, or for which mandatory
sinking fund payments are due, by a fixed date, (i) the principal portion of all
obligations of such Person under Synthetic Leases, (j) all Indebtedness of
another Person of the type referred to in clause (a)-(i) above secured by (or
for which the holder of such Funded Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or payable out of the
proceeds of production from, Property owned or acquired by such Person, whether
or not the obligations secured thereby have been assumed, (k) all Guaranty
Obligations of such Person with respect to Indebtedness of the type referred to
in clauses (a)-(i) above of another Person and (l) Indebtedness of the type
referred to in clauses (a)-(i) or (k) above of any partnership or unincorporated
joint venture in which such Person is legally obligated or has a reasonable
expectation of being liable with respect thereto.

“GAAP” means generally accepted accounting principles in the United States
applied on a consistent basis and subject to the terms of Section 1.3.

“Governmental Authority” means any Federal, state, local or foreign court or
governmental agency, authority, instrumentality or regulatory body.

“Guarantors” means each of the Subsidiaries of the Borrower (other than Lincare
of Columbia and BRM), and each Person which may hereafter execute a Joinder
Agreement pursuant to Section 7.12, together with their successors and assigns,
and “Guarantor” means any one of them.

“Guaranty Obligations” means, with respect to any Person, without duplication,
any obligations of such Person (other than endorsements in the ordinary course
of business of negotiable instruments for deposit or collection) guaranteeing or
intended to guarantee any Indebtedness of any other Person in any manner,
whether direct or indirect,

 

12

--------------------------------------------------------------------------------

and including without limitation any obligation, whether or not contingent,
(i) to purchase any such Indebtedness or any Property constituting security
therefor, (ii) to advance or provide funds or other support for the payment or
purchase of any such Indebtedness or to maintain working capital, solvency or
other balance sheet condition of such other Person (including without limitation
keep well agreements, maintenance agreements, comfort letters or similar
agreements or arrangements) for the benefit of any holder of Indebtedness of
such other Person, (iii) to lease or purchase Property, securities or services
primarily for the purpose of assuring the holder of such Indebtedness, or
(iv) to otherwise assure or hold harmless the holder of such Indebtedness
against loss in respect thereof. The amount of any Guaranty Obligation hereunder
shall (subject to any limitations set forth therein) be deemed to be an amount
equal to the outstanding principal amount (or maximum principal amount, if
larger) of the Indebtedness in respect of which such Guaranty Obligation is
made.

“Hedging Agreement” means any interest rate protection agreement.

“Indebtedness” of any Person means, without duplication, (a) all obligations of
such Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, or upon which interest payments
are customarily made, (c) all obligations of such Person under conditional sale
or other title retention agreements relating to Property purchased by such
Person (other than customary reservations or retentions of title under
agreements with suppliers entered into in the ordinary course of business),
(d) all obligations of such Person issued or assumed as the deferred purchase
price of Property or services purchased by such Person which would appear as
liabilities on a balance sheet of such Person, (e) all obligations of such
Person under take-or-pay or similar arrangements or under commodities
agreements, (f) all Indebtedness of others secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on, or payable out of the proceeds of production from,
Property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (g) all Guaranty Obligations of such Person,
(h) the principal portion of all obligations of such Person under Capital
Leases, (i) all obligations of such Person under Hedging Agreements and under
Equity Swap Agreements, (j) the maximum amount of all standby letters of credit
issued or bankers’ acceptances facilities created for the account of such Person
and, without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (k) all preferred Capital Stock issued by such Person and
required by the terms thereof to be redeemed, or for which mandatory sinking
fund payments are due, by a fixed date (l) the principal portion of all
obligations of such Person under Synthetic Leases, (m) the Indebtedness of any
partnership or unincorporated joint venture in which such Person is a general
partner or a joint venturer and (n) the aggregate amount of uncollected accounts
receivable of such Person subject at such time to a sale of receivables (or
similar transaction) regardless of whether such transaction is effected without
recourse to such Person or in a manner that would not be reflected on the
balance sheet of such Person in accordance with GAAP, including without
limitation with respect to any Credit Party, the outstanding Attributed
Principal Amount under any Permitted Receivables Financing.

 

13

--------------------------------------------------------------------------------

“Interbank Offered Rate” means, for any Eurodollar Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100/th/ of 1%) in each case determined by the Agent to be equal to:

(i) the offered rate that appears on the Dow Jones Telerate Screen Page 3750 (or
any successor page) that displays an average British Bankers Association Libor
Rate for deposits in Dollars (for delivery on the first day of the applicable
Interest Period) for a term equivalent to the applicable Interest Period at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of the applicable Interest Period; or

(ii) if for any reason the foregoing rate in clause (i) is unavailable or
undeterminable, the offered rate on such other page or other service that
displays an average British Bankers Association Interest Settlement Rate for
deposits in Dollars (for delivery on the first day of the applicable Interest
Period) for a term equivalent to the applicable Interest Period at approximately
11:00 a.m. (London time) two Business Days prior to the first day of the
applicable Interest Period; or

(iii) if for any reason the foregoing rates in clauses (i) and (ii) are
unavailable or undeterminable, the rate of interest at which deposits in Dollars
for delivery on the first day of the applicable Interest in same day funds in
the approximate amount of the applicable Eurodollar Loan for a term equivalent
to the applicable Interest Period would be offered by the London branch of Bank
of America to major banks in the offshore Dollar market at approximately 11:00
a.m. (London time) two Business Days prior to the first day of the applicable
Interest Period.

“Interest Payment Date” means (a) as to Base Rate Loans (including Swingline
Loans), the first Business Day following the last Business Day of each March,
June, September and December and the Maturity Date and (b) as to Eurodollar
Loans, the last day of each applicable Interest Period and the Maturity Date,
and in addition where the applicable Interest Period for a Eurodollar Loan is
greater than three months, then also the date three months from the beginning of
the Interest Period and each three months thereafter.

“Intercreditor Agreement” means that certain Intercreditor and Collateral Agency
Agreement dated September 6, 2000, a copy of which is attached hereto as Exhibit
1.1(b).

“Interest Period” means, as to Eurodollar Loans, a period of one, two, three or
six months’ duration, as the Borrower may elect, commencing, in each case, on
the date of the borrowing (including continuations and conversions thereof);
provided, however, (a) if any Interest Period would end on a day which is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day (except that where the next succeeding Business Day falls in the
next succeeding calendar month, then on the next preceding Business Day), (b) in
the case of Revolving Loans, no Interest Period shall extend beyond the Maturity
Date and (c) where an Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month in which the

 

14

--------------------------------------------------------------------------------

Interest Period is to end, such Interest Period shall end on the last Business
Day of such calendar month.

“Investment” means (a) the acquisition (whether for cash, property, services,
assumption of Indebtedness, securities or otherwise) of assets, shares of
Capital Stock, bonds, notes, debentures, partnership, joint ventures or other
ownership interests or other securities of any Person, (b) any deposit with, or
advance, loan or other extension of credit to, any Person (other than deposits
made in connection with the purchase of equipment or other assets in the
ordinary course of business) or (c) any other capital contribution to or
investment in such Person, including, without limitation, any Guaranty
Obligations (including any support for a letter of credit issued on behalf of
such Person) incurred for the benefit of such Person. Investments which are
capital contributions or purchases of Capital Stock which have a right to
participate in the profits of the issuer thereof shall be valued at the amount
(or, in the case of any Investment made with Property other than cash, the book
value of such Property) actually contributed or paid (including cash and
non-cash consideration and any assumption of Indebtedness) to purchase such
Capital Stock as of the date of such contribution or payment, less the amount of
all repayments and returns of principal or capital thereon to the extent paid in
cash or Cash Equivalents. Investments which are loans, advances, extensions of
credit or Guaranty Obligations shall be valued at the principal amount of such
loan, advance or extension of credit outstanding as of the date of determination
or, as applicable, the principal amount of the loan or advance outstanding as of
the date of determination actually guaranteed by such Guaranty Obligation.

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

“Joinder Agreement” means a Joinder Agreement substantially in the form of
Exhibit 7.12 hereto, executed and delivered by a new Guarantor in accordance
with the provisions of Section 7.12.

“Lender” means any of the Persons identified as a “Lender” on the signature
pages hereto, and any Person which may become a Lender by way of assignment in
accordance with the terms hereof, together with their successors and permitted
assigns.

“Letter of Credit” means (i) a Letter of Credit issued by the Issuing Lender for
the account of the Borrower in accordance with the terms of Section 2.2 and
(ii) any Existing Letter of Credit, as such Letter of Credit or Existing Letter
of Credit may be amended, modified, extended, renewed or replaced.

“Letter of Credit Fee” shall have the meaning assigned to such term in
Section 3.5(c)(i).

“Leverage Ratio” means, as of the end of each fiscal quarter of the Consolidated
Parties for the twelve month period ending on such date, the ratio of (a) Funded
Indebtedness of the Consolidated Parties on the last day of such period to
(b) Consolidated EBITDA for such period.

 

15

--------------------------------------------------------------------------------

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind (including any agreement to give any
of the foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the Uniform Commercial Code
as adopted and in effect in the relevant jurisdiction or other similar recording
or notice statute, and any lease in the nature thereof).

“Lincare of Columbia” means Lincare of Columbia LP, a South Carolina limited
partnership, together with any successors and permitted assigns.

“LOC Commitment” means the commitment of the Issuing Lender to issue Letters of
Credit in an aggregate face amount at any time outstanding (together with the
amounts of any unreimbursed drawings thereon) of up to the LOC Committed Amount.

“LOC Committed Amount” shall have the meaning assigned to such term in
Section 2.2.

“LOC Documents” means, with respect to any Letter of Credit, such Letter of
Credit, any amendments thereto, any documents delivered in connection therewith,
any application therefor, and any agreements, instruments, guarantees or other
documents (whether general in application or applicable only to such Letter of
Credit) governing or providing for (i) the rights and obligations of the parties
concerned or at risk or (ii) any collateral security for such obligations.

“LOC Obligations” means, at any time, the sum of (i) the maximum amount which
is, or at any time thereafter may become, available to be drawn under Letters of
Credit then outstanding, assuming compliance with all requirements for drawings
referred to in such Letters of Credit plus (ii) the aggregate amount of all
drawings under Letters of Credit honored by the Issuing Lender but not
theretofore reimbursed by the Borrower.

“Material Adverse Effect” means a material adverse effect on (i) the business
condition (financial or otherwise), operating results, liabilities or assets of
the Consolidated Parties taken as a whole, (ii) the ability of the Credit
Parties as a whole to perform any material obligations under the Credit
Documents or (iii) the material rights and remedies of the Agent and the Lenders
under the Credit Documents.

“Materials of Environmental Concern” means any gasoline or petroleum (including
crude oil or any fraction thereof) or petroleum products or any hazardous or
toxic substances, materials or wastes, defined or regulated as such in or under
any Environmental Laws, including, without limitation, asbestos, polychlorinated
biphenyls and urea-formaldehyde insulation.

“Maturity Date” means five years from the Closing Date.

“Medicaid Program” means the medical assistance program operated by Governmental
Authorities set forth in the Medicaid Regulations.

 

16

--------------------------------------------------------------------------------

“Medicaid Supplier” means an entity entitled to receive payments from the
Medicaid Program and authorized to provide services and supplies for Medicaid
patients in accordance with the Medicaid Regulations.

“Medicaid Regulations” means, collectively, (i) all federal statutes (whether
set forth in Title XIX of the Social Security Act or elsewhere) affecting the
medical assistance program established by Title XIX of the Social Security Act
and any statutes succeeding thereto; (ii) all applicable provisions of all
federal rules, regulations, manuals and orders of all Governmental Authorities
promulgated pursuant to or in connection with the statutes described in clause
(i) above and all federal administrative, reimbursement and other guidelines of
all Governmental Authorities having the force of law promulgated pursuant to or
in connection with the statutes described in clause (i) above; (iii) all state
statutes and plans for medical assistance enacted in connection with the
statutes and provisions described in clauses (i) and (ii) above; and (iv) all
applicable provisions of all rules, regulations, manuals and orders of all
Governmental Authorities promulgated pursuant to or in connection with the
statutes described in clause (iii) above and all state administrative,
reimbursement and other guidelines of all Governmental Authorities having the
force of law promulgated pursuant to or in connection with the statutes
described in clause (ii) above, in each case as may be amended, supplemented or
otherwise modified from time to time.

“Medicare Program” means the health insurance program operated by Governmental
Authorities pursuant to the Medicare Regulations.

“Medicare Supplier” means an entity eligible to receive payment from the
Medicare Program and authorized to provide services and supplies for Medicare
patients in accordance with the Medicare Regulations.

“Medicare Regulations” means, collectively, all federal statutes (whether set
forth in Title XVIII of the Social Security Act or elsewhere) affecting the
health insurance program for the aged and disabled established by Title XVIII of
the Social Security Act and any statutes succeeding thereto; together with all
applicable provisions of all rules, regulations, manuals and orders and
administrative, reimbursement and other guidelines having the force of law of
all Governmental Authorities (including, without limitation, Health and Human
Services (“HHS”), CMS, the Office of the Inspector General for HHS, or any
person succeeding to the functions of any of the foregoing) promulgated pursuant
to or in connection with any of the foregoing having the force of law, as each
may be amended, supplemented or otherwise modified from time to time.

“Moody’s” means Moody’s Investors Service, Inc., or any successor or assignee of
the business of such company in the business of rating securities.

“Multiemployer Plan” means a Plan which is a multiemployer plan as defined in
Sections 3(37) or 4001(a)(3) of ERISA.

 

17

--------------------------------------------------------------------------------

“Multiple Employer Plan” means a Plan which any Consolidated Party or any ERISA
Affiliate and at least one employer other than a Consolidated Party or any ERISA
Affiliate are contributing sponsors.

“Net Cash Proceeds” means the aggregate cash proceeds (including cash actually
received by way of deferred payment pursuant to a promissory note, receivable,
or otherwise) received by a Consolidated Party of any Equity Issuance, net of
(a) direct costs (including, without limitation, legal, accounting and
investment banking fees and sales commissions) and (b) taxes paid or payable as
a result thereof; it being understood that “Net Cash Proceeds” shall include,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received by any Consolidated Party in any Equity
Issuance.

“Notice of Borrowing” means a written notice of borrowing in substantially the
form of Exhibit 2.1(b)(i), as required by Section 2.1(b)(i).

“Notice of Extension/Conversion” means the written notice of extension or
conversion in substantially the form of Exhibit 3.2, as required by Section 3.2.

“Operating Lease” means, as applied to any Person, any lease (including, without
limitation, leases which may be terminated by the lessee at any time) of any
Property (whether real, personal or mixed) which is not a Capital Lease other
than any such lease in which that Person is the lessor.

“Other Taxes” shall have the meaning assigned to such term in Section 3.11.

“Participation Interest” means a purchase by a Lender of a participation in
Letters of Credit or LOC Obligations as provided in Section 2.2, in Swingline
Loans as provided in Section 2.3 or in any Revolving Loans as provided in
Section 3.14.

“PBGC” means the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA and any successor thereof.

“Permitted Acquisition” means an Acquisition by the Borrower or any Subsidiary
of the Borrower for the fair market value of the Capital Stock or Property
acquired, provided that (i) the Capital Stock or Property acquired in such
Acquisition relates to a line of business similar to the business of the
Borrower or any of its Subsidiaries, (ii) in the case of an Acquisition of
Capital Stock of another Person, (A) the board of directors (or other comparable
governing body) of such other Person shall have duly approved such Acquisition
and (B) such Person shall become a wholly-owned direct or indirect Subsidiary of
the Borrower, (iii) the representations and warranties made by the Credit
Parties in any Credit Document shall be true and correct in all material
respects at and as if made as of the date of such Acquisition (after giving
effect thereto) except to the extent such representations and warranties
expressly relate to an earlier date and no Default or Event of Default exists as
of the date of such Acquisition (after giving effect thereto) and (iv)(A) if the
aggregate consideration for such Acquisition, exceeds $50,000,000 but is less
than $100,000,000, the Borrower shall have delivered to the Agent a Pro Forma
Compliance Certificate demonstrating that, upon giving effect to the Acquisition
on a Pro

 

18

--------------------------------------------------------------------------------

Forma Basis, the Borrower will be in compliance with all of the financial
covenants set forth in Section 7.11 or (B) if the aggregate consideration
(including cash and non-cash consideration and any assumption of Indebtedness)
for such Acquisition exceeds $100,000,000 or if any such Acquisition would cause
the aggregate consideration for all Acquisitions in any fiscal year to exceed
$250,000,000, the Borrower shall have received the approval of the Required
Lenders, which approval shall be given in the Required Lenders’ sole discretion.

“Permitted Investments” means Investments which are:

(i) cash and Cash Equivalents;

(ii) accounts receivable created, acquired or made by any Consolidated Party in
the ordinary course of business and payable or dischargeable in accordance with
customary trade terms;

(iii) Investments consisting of Capital Stock, obligations, securities or other
property received by any Consolidated Party in settlement of accounts receivable
(created in the ordinary course of business);

(iv) Investments existing as of the Closing Date and set forth in Schedule
1.1(a);

(v) advances or loans to officers, employees, agents, customers or suppliers
that do not exceed $1,000,000 in the aggregate at any one time outstanding for
all of the Consolidated Parties;

(vi) advances or loans to non-officer, non-employee directors that do not exceed
$5,000,000 in the aggregate at any one time outstanding for all of the
Consolidated Parties;

(vii) Investments in any Credit Party;

(viii) Permitted Acquisitions;

(ix) advances in respect of repurchases by the Borrower of its Capital Stock
following the Closing Date in an amount not to exceed $225,000,000;

(x) Investments by any Credit Party in a Receivables Financing SPE made as part
of a Permitted Receivables Financing; and

(xi) additional Investments not included within the foregoing clauses hereof;
provided that the aggregate outstanding amount of all Investments made pursuant
to this clause (xi) shall not at any time exceed an amount equal to 10% of
Consolidated Net Worth as of the end of the most recently completed fiscal year
of the Borrower with respect to which the Agent shall have received the Required
Financial Information.

 

19

--------------------------------------------------------------------------------

“Permitted Liens” means:

(i) Liens in favor of the Agent, for the benefit of the Lenders, to secure the
Credit Party Obligations;

(ii) Liens in favor of the Collateral Agent (for the ratable benefit of the
Lenders and the Senior Noteholders) securing the Credit Party Obligations and
the obligations under the Senior Notes;

(iii) Liens (other than Liens created or imposed under ERISA) for taxes,
assessments or governmental charges or levies not yet due or Liens for taxes
being contested in good faith by appropriate proceedings for which adequate
reserves determined in accordance with GAAP have been established (and as to
which the Property subject to any such Lien is not yet subject to foreclosure,
sale or loss on account thereof);

(iv) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and suppliers and other Liens imposed by law or pursuant
to customary reservations or retentions of title arising in the ordinary course
of business, provided that such Liens secure only amounts not yet due and
payable or, if due and payable, are unfiled and no other action has been taken
to enforce the same or are being contested in good faith by appropriate
proceedings for which adequate reserves determined in accordance with GAAP have
been established (and as to which the Property subject to any such Lien is not
yet subject to foreclosure, sale or loss on account thereof);

(v) Liens (other than Liens created or imposed under ERISA) incurred or deposits
made by any Consolidated Party in the ordinary course of business in connection
with workers’ compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory obligations, bids,
leases, government contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money);

(vi) Liens in connection with attachments or judgments (including judgment or
appeal bonds) provided that the judgments secured shall, within 30 days after
the entry thereof, have been discharged or execution thereof stayed pending
appeal, or shall have been discharged within 30 days after the expiration of any
such stay;

(vii) easements, rights-of-way, restrictions (including zoning restrictions),
minor defects or irregularities in title and other similar charges or
encumbrances not, in any material respect, impairing the use of the encumbered
Property for its intended purposes;

(viii) Liens on Property securing purchase money Indebtedness (including Capital
Leases and Synthetic Leases) to the extent permitted under

 

20

--------------------------------------------------------------------------------

Section 8.1(c), provided that any such Lien attaches to such Property
concurrently with or within 90 days after the acquisition thereof;

(ix) leases or subleases granted to others not interfering in any material
respect with the business of any Consolidated Party;

(x) any interest of title of a lessor under, and Liens arising from UCC
financing statements (or equivalent filings, registrations or agreements in
foreign jurisdictions) relating to, leases permitted by this Credit Agreement;

(xi) normal and customary rights of setoff upon deposits of cash in favor of
banks or other depository institutions;

(xii) Liens of a collection bank arising under Section 4-210 of the Uniform
Commercial Code on items in the course of collection;

(xiii) Liens of sellers of goods to the Borrower and any of its Subsidiaries
arising under Article 2 of the Uniform Commercial Code or similar provisions of
applicable law in the ordinary course of business, covering only the goods sold
and securing only the unpaid purchase price for such goods and related expenses;

(xiv) Liens existing as of the Closing Date and set forth on Schedule 1.1(b);
provided that no such Lien shall at any time be extended to or cover any
Property other than the Property subject thereto on the Closing Date;

(xv) Liens on Property in an aggregate amount not to exceed $8,000,000 securing
obligations of the Borrower under Equity Swap Agreements permitted under
Section 8.1(f);

(xvi) Liens in favor of a Receivables Financing SPE or Receivables Financier
created or deemed to exist in connection with a Permitted Receivables Financing
(including any related filings of any financing statements), but only to the
extent that any such Lien relates to the applicable Transferred Assets actually
sold, contributed, financed or otherwise conveyed or pledged pursuant to such
transaction; and

(xvii) additional Liens not otherwise permitted by the foregoing clauses hereof;
provided that such additional Liens permitted by this clause (xvii) do not
secure Indebtedness of more than $5,000,000.

“Permitted Receivables Financing” means any one or more receivables financings
in which any Credit Party, to the extent permitted by law, sells, conveys or
otherwise contributes any accounts receivable, notes receivable, rights to
future lease payments or residuals or capital (collectively, together with
certain related property relating thereto and the right to collections thereon,
being the “Transferred Assets”) to a Receivables Financing SPE, which
Receivables Financing SPE then either sells (as determined in accordance with
GAAP) undivided interests in such Transferred Assets, and/or grants a

 

21

--------------------------------------------------------------------------------

security interest in such Transferred Assets as security for a loan, to any
Person that is not a Subsidiary or Affiliate of the Borrower (with respect to
any such transaction, the “Receivables Financier”); provided that (i) the
aggregate Attributed Principal Amount for all such receivables financings shall
not at any time exceed $100,000,000, (ii) such receivables financing may include
a grant of a security interest in the Transferred Assets to the Receivables
Financier, which security interest may be a security interest free and clear of
any adverse claim or Lien, (iii) such receivables financing shall not involve
any recourse to any Credit Party for any reason other than (A) repurchases of
non-eligible receivables and (B) indemnifications for losses other than credit
losses related to the receivables sold in such financing, (iv) the Agent shall
be reasonably satisfied with the terms of, structure of and documentation for
any such transaction and (v) the documentation for such transaction shall not be
amended or modified, in any material respect, without the prior written approval
of the Agent.

“Person” means any individual, partnership, joint venture, firm, corporation,
limited liability company, association, trust or other enterprise (whether or
not incorporated) or any Governmental Authority.

“Plan” means any employee benefit plan (as defined in Section 3(3) of ERISA)
which is covered by ERISA and with respect to which any Consolidated Party or
any ERISA Affiliate is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an “employer” within the meaning of
Section 3(5) of ERISA.

“Pledge Agreement” means that certain Second Amended and Restated Pledge
Agreement dated as of September 6, 2000, a copy of which is attached hereto as
Exhibit 1.1(a).

“Pledged Collateral” shall have the meaning assigned to such term in the Pledge
Agreement.

“Prime Rate” means the per annum rate of interest established from time to time
by Bank of America as its prime rate, which rate may not be the lowest rate of
interest charged by Bank of America to its customers.

“Pro Forma Basis” means, for purposes of calculating compliance with each of the
financial covenants set forth in Section 7.11(b) and (c) in respect of a
proposed transaction, that such transaction shall be deemed to have occurred as
of the first day of the four fiscal-quarter period ending as of the most recent
fiscal quarter end preceding the date of such transaction with respect to which
the Agent has received the information required pursuant to Section 7.1. In
connection with any calculation of the financial covenants set forth in
Section 7.11(b) and (c) upon giving effect to a transaction on a Pro Forma
Basis, (a) any Indebtedness incurred by the Borrower in connection with such
transaction (i) shall be deemed to have been incurred as of the first day of the
applicable period and (ii) if such Indebtedness has a floating or formula rate,
shall have an implied rate of interest for the applicable period for purposes of
this definition determined by utilizing the rate which is or would be in effect
with respect to such Indebtedness as at the relevant date of determination and
(b) income statement items (whether positive or

 

22

--------------------------------------------------------------------------------

negative) attributable to the Property acquired in such transaction or to the
Acquisition comprising such transaction, as applicable, shall be included to the
extent relating to the relevant period.

“Pro Forma Compliance Certificate” means a certificate of an Executive Officer
of the Borrower delivered to the Agent in connection with any Acquisition as
referred to in the definition of “Permitted Acquisition” set forth in this
Section 1.1, as applicable, and containing reasonably detailed calculations,
upon giving effect to the applicable transaction on a Pro Forma Basis, of the
Leverage Ratio and Consolidated Net Worth as of the most recent fiscal quarter
end preceding the date of the applicable transaction with respect to which the
Agent shall have received the Required Financial Information.

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.

“Receivables Financier” shall have the meaning assigned to such term in the
definition of “Permitted Receivables Financing” set forth in this Section 1.1.

“Receivables Financing SPE” shall mean, in respect of any Permitted Receivables
Financing, any Subsidiary or Affiliate of the Borrower to which any Credit Party
sells, contributes or otherwise conveys any Transferred Assets in connection
with such Permitted Receivables Financing.

“Register” shall have the meaning given such term in Section 11.3(c).

“Regulation T, U, or X” means Regulation T, U or X, respectively, of the Board
of Governors of the Federal Reserve System as from time to time in effect and
any successor to all or a portion thereof.

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping or disposing into the
environment (including the abandonment or discarding of barrels, containers and
other closed receptacles containing any Materials of Environmental Concern).

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the notice requirement has been
waived by regulation.

“Required Financial Information” means, with respect to the applicable
Calculation Date, (i) the financial statements of the Consolidated Parties
required to be delivered pursuant to Section 7.1(a) or (b) for the fiscal period
or quarter ending as of such Calculation Date, and (ii) the certificate of an
Executive Officer of the Borrower required by Section 7.1(c) to be delivered
with the financial statements described in clause (i) above.

“Required Lenders” means, at any time, Lenders holding in the aggregate more
than 50% of (i) the Commitments (and Participation Interests therein), or
(ii) if the Commitments have been terminated, the outstanding Revolving Loans
and Participation

 

23

--------------------------------------------------------------------------------

Interests (including the Participation Interests of the Issuing Lender in any
Letters of Credit and the Participation Interests of the Swingline Lender in any
Swingline Loans), provided that the Commitments of and the outstanding principal
amount of Revolving Loans and Participation Interests owing to a Defaulting
Lender shall be excluded for purposes hereof in making a determination of
Required Lenders. In addition to the foregoing, “Required Lenders” shall further
require the vote of at least three (3) of the Lenders party hereto.

“Requirement of Law” means, as to any Person, the certificate of incorporation
and by-laws or other organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its material property is subject.

“Restricted Payment” means (i) any dividend or other distribution, direct or
indirect, on account of any shares of any class of Capital Stock of any
Consolidated Party, now or hereafter outstanding, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of Capital Stock of any
Consolidated Party, now or hereafter outstanding, and (iii) any payment made to
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire shares of any class of Capital Stock of any Consolidated
Party, now or hereafter outstanding.

“Revolving Committed Amount” means TWO HUNDRED MILLION DOLLARS ($200,000,000),
as such amount may be reduced from time to time as provided in Section 3.4.

“Revolving Loans” shall have the meaning assigned to such term in
Section 2.1(a), but in any event shall include any portion of any Revolving Loan
bearing interest at the Adjusted Base Rate or the Adjusted Eurodollar Rate and
referred to as a Base Rate Loan or a Eurodollar Loan.

“Revolving Note” shall have the meaning assigned to such term in Section 2.1(e).

“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw Hill
Companies, Inc., or any successor or assignee of the business of such division
in the business of rating securities.

“Sale and Leaseback Transaction” means any arrangement pursuant to which any
Consolidated Party, directly or indirectly, becomes liable as lessee, guarantor
or other surety with respect to any lease, whether an Operating Lease or a
Capital Lease, of any Property (a) which such Consolidated Party has sold or
transferred (or is to sell or transfer) to a Person which is not a Consolidated
Party or (b) which such Consolidated Party intends to use for substantially the
same purpose as any other Property which has been sold or transferred (or is to
be sold or transferred) by such Consolidated Party to another Person which is
not a Consolidated Party in connection with such lease.

 

24

--------------------------------------------------------------------------------

“Senior Note Purchase Agreement” means that certain Note Purchase Agreement
dated as of September 1, 2000 by and among the Borrower and each of the
respective Senior Noteholders.

“Senior Noteholders” means a collective reference to the holders from time to
time of the Senior Notes and “Senior Noteholder” means any one of them.

“Senior Notes” means a collective reference to the Borrower’s senior secured
notes in an aggregate principal amount of $125,000,000, consisting of
(a) $30,000,000 8.91% Senior Secured Notes, Series A due September 15, 2003,
(b) $50,000,000 9.01% Senior Secured Notes, Series B due September 15, 2004 and
(c) $45,000,000 9.11% Senior Secured Notes, Series C due September 15, 2005
(each as amended, modified, extended, renewed or restated from time to time).

“Single Employer Plan” means any Plan which is covered by Title IV of ERISA, but
which is not a Multiemployer Plan or a Multiple Employer Plan.

“Social Security Act” means the Social Security Act as set forth in Title 42 of
the United States Code, as amended, and any successor statute thereto, as
interpreted by the rules and regulations issued thereunder, in each case as in
effect from time to time. References to sections of the Social Security Act
shall be construed also to refer to any successor sections.

“Solvent” or “Solvency” means, with respect to any Person as of a particular
date, that on such date (i) such Person is able to pay its debts and other
liabilities, contingent obligations and other commitments as they mature in the
normal course of business, (ii) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person’s ability to
pay as such debts and liabilities mature in their ordinary course, (iii) such
Person is not engaged in a business or a transaction, and is not about to engage
in a business or a transaction, for which such Person’s Property would
constitute unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which such Person is engaged or is to
engage, (iv) the fair value of the Property of such Person is greater than the
total amount of liabilities, including, without limitation, contingent
liabilities and obligations, of such Person and (v) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured. In computing the amount of contingent liabilities
at any time, it is intended that such liabilities will be computed at the amount
which, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.

“Subsidiary” means, as to any Person, (a) any corporation more than 50% of whose
Capital Stock of any class or classes having by the terms thereof ordinary
voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time, any class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time owned by such Person directly or indirectly
through Subsidiaries, and (b) any partnership, association,

 

25

--------------------------------------------------------------------------------

limited liability company, joint venture or other entity in which such Person
directly or indirectly through Subsidiaries has more than 50% equity interest at
any time.

“Swingline Commitment” means the commitment of the Swingline Lender to make
Swingline Loans in an aggregate principal amount at any time outstanding of up
to the Swingline Committed Amount.

“Swingline Committed Amount” shall have the meaning assigned to such term in
Section 2.3(a).

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

“Swingline Loan” shall have the meaning assigned to such term in Section 2.3(a).

“Synthetic Lease” means any tax retention operating lease, off-balance sheet
loan or similar off-balance sheet financing product where such transaction is
considered borrowed money indebtedness for tax purposes but is classified as an
Operating Lease in accordance with GAAP.

“Taxes” means such term as is defined in Section 3.11.

“Transferred Assets” shall have the meaning assigned to such term in the
definition of “Permitted Receivables Financing” set forth in this Section 1.1.

“Unused Fee” shall have the meaning assigned to such term in Section 3.5(b).

“Unused Fee Calculation Period” shall have the meaning assigned to such term in
Section 3.5(b).

“Unused Revolving Committed Amount” means, for any period, the amount by which
(a) the then applicable Revolving Committed Amount exceeds (b) the daily average
sum for such period of (i) the outstanding aggregate principal amount of all
Revolving Loans (but not including any Swingline Loans) plus (ii) the
outstanding aggregate principal amount of all LOC Obligations.

“Upfront Fee” shall have the meaning assigned to such term in Section 3.5(a).

“Voting Stock” means, with respect to any Person, Capital Stock issued by such
Person the holders of which are ordinarily, in the absence of contingencies,
entitled to vote for the election of directors (or persons performing similar
functions) of such Person, even though the right so to vote has been suspended
by the happening of such a contingency.

“Wholly Owned Subsidiary” of any Person means any Subsidiary 100% of whose
Voting Stock or other equity interests is at the time owned by such Person
directly or indirectly through other Wholly Owned Subsidiaries.

 

26

--------------------------------------------------------------------------------

1.2 Computation of Time Periods.

For purposes of computation of periods of time hereunder, the word “from” means
“from and including” and the words “to” and “until” each mean “to but
excluding.”

1.3 Accounting Terms.

Except as otherwise expressly provided herein, all accounting terms used herein
shall be interpreted, and all financial statements and certificates and reports
as to financial matters required to be delivered to the Lenders hereunder shall
be prepared, in accordance with GAAP applied on a consistent basis. All
calculations made for the purposes of determining compliance with this Credit
Agreement shall (except as otherwise expressly provided herein) be made by
application of GAAP applied on a basis consistent with the most recent annual or
quarterly financial statements delivered pursuant to Section 7.1 (or, prior to
the delivery of the first financial statements pursuant to Section 7.1,
consistent with the financial statements as at December 31, 2001); provided,
however, if (a) the Borrower shall object to determining such compliance on such
basis at the time of delivery of such financial statements due to any change in
GAAP or the rules promulgated with respect thereto or (b) the Agent or the
Required Lenders shall so object in writing within 60 days after delivery of
such financial statements, then such calculations shall be made on a basis
consistent with the most recent financial statements delivered by the Borrower
to the Lenders as to which no such objection shall have been made.

Notwithstanding the above, the parties hereto acknowledge and agree that, for
purposes of all calculations made under the financial covenants set forth in
Section 7.11 (including without limitation for purposes of the definitions of
“Applicable Percentage” and “Pro Forma Basis” set forth in Section 1.1), in
connection with any merger or consolidation as referred to in Section 8.4 or any
Acquisition as referred to in the definition of “Permitted Acquisition” set
forth in Section 1.1, income statement items (whether positive or negative)
attributable to any Person or Property acquired in any Permitted Acquisition
shall, to the extent not otherwise included in such income statements items for
the Consolidated Parties in accordance with GAAP or in accordance with any
defined terms set forth in Section 1.1, be included to the extent relating to
any period applicable in such calculations.

SECTION 2

CREDIT FACILITIES

2.1 Revolving Loans.

(a) Commitment. Subject to the terms and conditions hereof and in reliance upon
the representations and warranties set forth herein, each Lender severally
agrees to make available to the Borrower such Lender’s Commitment Percentage of
the revolving credit loans requested by the Borrower in Dollars (the “Revolving
Loans”) from time to time from the Closing Date until the Maturity Date, or such
earlier date as the Commitments shall have been terminated as provided herein
for the purposes hereinafter set forth; provided, however, that (i) with regard
to each Lender individually, such Lender’s share of outstanding Revolving Loans
and Swingline Loans and LOC

 

27

--------------------------------------------------------------------------------

Obligations shall not exceed such Lender’s Commitment Percentage of the
Commitment Amount, and (ii) with regard to the Lenders collectively, the
aggregate principal amount of outstanding Revolving Loans, Swingline Loans and
LOC Obligations shall not exceed the Revolving Committed Amount.

Revolving Loans may consist of Base Rate Loans or Eurodollar Loans, or a
combination thereof, as the Borrower may request, and may be repaid and
reborrowed in accordance with the provisions hereof; provided, however, that no
more than ten (10) Eurodollar Loans shall be outstanding hereunder at any time.
For purposes hereof, Eurodollar Loans with different Interest Periods shall be
considered as separate Eurodollar Loans, even if they begin on the same date,
although borrowings, extensions and conversions may, in accordance with the
provisions hereof, be combined at the end of existing Interest Periods to
constitute a new single Eurodollar Loan with a single Interest Period.

(b) Revolving Loan Borrowings.

(i) Notice of Borrowing. The Borrower shall request a Revolving Loan borrowing
by written notice (or telephonic notice promptly confirmed in writing) to the
Agent not later than 11:00 A.M. (Charlotte, North Carolina time) on the Business
Day prior to the date of the requested borrowing in the case of Base Rate Loans,
and on the third Business Day prior to the date of the requested borrowing in
the case of Eurodollar Loans. Each such request for borrowing shall be
irrevocable and shall specify (A) that a Revolving Loan is requested, (B) the
date of the requested borrowing (which shall be a Business Day), (C) the
aggregate principal amount to be borrowed, and (D) whether the borrowing shall
be comprised of Base Rate Loans, Eurodollar Loans or a combination thereof, and
if Eurodollar Loans are requested, the Interest Period(s) therefor. If the
Borrower shall fail to specify in any such Notice of Borrowing (I) an applicable
Interest Period in the case of a Eurodollar Loan, then such notice shall be
deemed to be a request for an Interest Period of one month, or (II) the type of
Revolving Loan requested, then such notice shall be deemed to be a request for a
Base Rate Loan hereunder. The Agent shall give notice to each affected Lender
promptly upon receipt of each Notice of Borrowing pursuant to this
Section 2.1(b)(i), the contents thereof and each such Lender’s share of any
borrowing to be made pursuant thereto.

(ii) Minimum Amounts. Each Eurodollar Loan or Base Rate Loan that is a Revolving
Loan shall be in a minimum aggregate principal amount of $1,000,000 and integral
multiples of $100,000 in excess thereof (or the remaining amount of the
Revolving Committed Amount, if less).

(iii) Advances. Each Lender will make its Commitment Percentage of each
Revolving Loan borrowing available to the Agent for the account of the Borrower
as specified in Section 3.15(a), or in such other manner as the Agent may
specify in writing, by 1:00 P.M. (Charlotte, North Carolina time) on the date
specified in the applicable Notice of Borrowing in Dollars and in funds
immediately available to the Agent. Such borrowing will then be made available
to the Borrower by the Agent by crediting the account of the Borrower on the
books of such office with the aggregate of the amounts made available to the
Agent by the Lender.

 

28

--------------------------------------------------------------------------------

(c) Repayment. The principal amount of all Revolving Loans shall be due and
payable in full on the Maturity Date, unless accelerated sooner pursuant to
Section 9.2.

(d) Interest. Subject to the provisions of Section 3.1,

(i) Base Rate Loans. During such periods as Revolving Loans shall be comprised
in whole or in part of Base Rate Loans, such Base Rate Loans shall bear interest
at a per annum rate equal to the Adjusted Base Rate.

(ii) Eurodollar Loans. During such periods as Revolving Loans shall be comprised
in whole or in part of Eurodollar Loans, such Eurodollar Loans shall bear
interest at a per annum rate equal to the Adjusted Eurodollar Rate.

Interest on Revolving Loans shall be payable in arrears on each applicable
Interest Payment Date (or at such other times as may be specified herein).

(e) Revolving Notes. Any Lender may request that Revolving Loans made by it be
evidenced by a duly executed promissory note of the Borrower to such Lender in
an original principal amount equal to such Lender’s Commitment Percentage of the
Committed Amount and in substantially the form of Exhibit 2.1(e), with
appropriate insertions as to date and principal amount (each such promissory
note a “Revolving Note”).

2.2 Letter of Credit Subfacility.

(a) Issuance. Subject to the terms and conditions hereof and of the LOC
Documents, if any, and any other terms and conditions which the Issuing Lender
may reasonably require and in reliance upon the representations and warranties
set forth herein, the Issuing Lender agrees to issue, and each Lender severally
agrees to participate in the issuance by the Issuing Lender of, standby Letters
of Credit in Dollars from time to time from the Closing Date until the Maturity
Date as the Borrower may request, in a form acceptable to the Issuing Lender;
provided, however, that (i) the LOC Obligations outstanding shall not at any
time exceed TWENTY MILLION DOLLARS ($20,000,000) (the “LOC Committed Amount”);
(ii) with regard to each Lender individually, such Lender’s share of outstanding
Revolving Loans and Swingline Loans and LOC Obligations shall not exceed such
Lender’s Commitment Percentage of the Revolving Committed Amount; and (iii) with
regard to the Lenders collectively, the aggregate principal amount of
outstanding Revolving Loans, Swingline Loans and LOC Obligations shall not
exceed the Revolving Committed Amount. No Letter of Credit shall (x) have an
original expiry date more than one year from the date of issuance or (y) as
originally issued or as extended, have an expiry date extending beyond the date
five (5) Business Days prior to the Maturity Date. Each Letter of Credit shall
comply with the related LOC Documents. The issuance and expiry dates of each
Letter of Credit shall be a Business Day.

(b) Notice and Reports. The request for the issuance of a Letter of Credit shall
be submitted by the Borrower to the Issuing Lender at least three (3) Business
Days

 

29

--------------------------------------------------------------------------------

prior to the requested date of issuance. The Issuing Lender will, at least
quarterly and more frequently upon request, deliver to each of the Lenders, with
a copy to the Borrower, a detailed report specifying the Letters of Credit which
are then issued and outstanding and any activity with respect thereto which may
have occurred since the date of the prior report, and including therein, among
other things, the beneficiary, the face amount and the expiry date, as well as
any payment or expirations which may have occurred.

(c) Participation. Each Lender, upon issuance of a Letter of Credit (or, in the
case of each Existing Letter of Credit, on the Closing Date), shall be deemed to
have purchased without recourse a Participation Interest from the Issuing Lender
in such Letter of Credit and the obligations arising thereunder and any
collateral relating thereto, in each case in an amount equal to its pro rata
share of the obligations under such Letter of Credit (based on the respective
Commitment Percentages of the Lenders) and shall absolutely, unconditionally and
irrevocably assume and be obligated to pay to the Issuing Lender and discharge
when due, its pro rata share of the obligations arising under such Letter of
Credit. Without limiting the scope and nature of each Lender’s Participation
Interest in any Letter of Credit, to the extent that the Issuing Lender has not
been reimbursed as required hereunder or under any such Letter of Credit, each
such Lender shall pay to the Issuing Lender its pro rata share of such
unreimbursed drawing in same day funds on the day of notification by the Issuing
Lender of an unreimbursed drawing pursuant to the provisions of subsection
(d) below. The obligation of each Lender to so reimburse the Issuing Lender
shall be absolute and unconditional and shall not be affected by the occurrence
of a Default, an Event of Default or any other occurrence or event. Any such
reimbursement shall not relieve or otherwise impair the obligation of the
Borrower to reimburse the Issuing Lender under any Letter of Credit, together
with interest as hereinafter provided.

(d) Reimbursement. In the event of any drawing under any Letter of Credit, the
Issuing Lender will promptly notify the Borrower. Unless the Borrower shall
immediately notify the Issuing Lender that the Borrower intends to otherwise
reimburse the Issuing Lender for such drawing, the Borrower shall be deemed to
have requested that the Lenders make a Revolving Loan in the amount of the
drawing as provided in subsection (e) below on the related Letter of Credit, the
proceeds of which will be used to satisfy the related reimbursement obligations.
The Borrower promises to reimburse the Issuing Lender on the day of drawing
under any Letter of Credit (either with the proceeds of a Revolving Loan
obtained hereunder or otherwise) in same day funds. If the Borrower shall fail
to reimburse the Issuing Lender as provided hereinabove, the Borrower promises
to pay the Issuing Lender interest on the unreimbursed amount of such drawing on
demand at a per annum rate equal to the Adjusted Base Rate plus 2%. The
Borrower’s reimbursement obligations hereunder shall be absolute and
unconditional under all circumstances irrespective of any rights of setoff,
counterclaim or defense to payment the Borrower may claim or have against the
Issuing Lender, the Agent, the Lenders, the beneficiary of the Letter of Credit
drawn upon or any other Person, including without limitation any defense based
on any failure of the Borrower or any other Credit Party to receive
consideration or the legality, validity, regularity or unenforceability of the
Letter of Credit. The Issuing Lender will promptly notify the other Lenders of
the amount of any unreimbursed drawing and each Lender shall promptly pay to the
Agent for the

 

30

--------------------------------------------------------------------------------

account of the Issuing Lender in Dollars and in immediately available funds, the
amount of such Lender’s pro rata share of such unreimbursed drawing. Such
payment shall be made on the day such notice is received by such Lender from the
Issuing Lender if such notice is received at or before 2:00 P.M. (Charlotte,
North Carolina time) otherwise such payment shall be made at or before 12:00
Noon (Charlotte, North Carolina time) on the Business Day next succeeding the
day such notice is received. If such Lender does not pay such amount to the
Issuing Lender in full upon such request, such Lender shall, on demand, pay to
the Agent for the account of the Issuing Lender interest on the unpaid amount
during the period from the date of such drawing until such Lender pays such
amount to the Issuing Lender in full at a rate per annum equal to, if paid
within two (2) Business Days of the date that such Lender is required to make
payments of such amount pursuant to the preceding sentence, the Federal Funds
Rate and thereafter at a rate equal to the Base Rate. Each Lender’s obligation
to make such payment to the Issuing Lender, and the right of the Issuing Lender
to receive the same, shall be absolute and unconditional, shall not be affected
by any circumstance whatsoever and without regard to the termination of this
Credit Agreement or the Commitments hereunder, the existence of a Default or
Event of Default or the acceleration of the obligations of the Borrower
hereunder and shall be made without any offset, abatement, withholding or
reduction whatsoever. Simultaneously with the making of each such payment by a
Lender to the Issuing Lender, such Lender shall, automatically and without any
further action on the part of the Issuing Lender or such Lender, acquire a
Participation Interest in an amount equal to such payment (excluding the portion
of such payment constituting interest owing to the Issuing Lender) in the
related unreimbursed drawing portion of the LOC Obligation and in the interest
thereon and in the related LOC Documents, and shall have a claim against the
Borrower with respect thereto.

(e) Repayment with Revolving Loans. On any day on which the Borrower shall have
requested, or been deemed to have requested, a Revolving Loan advance to
reimburse a drawing under a Letter of Credit, the Agent shall give notice to the
Lenders that a Revolving Loan has been requested or deemed requested by the
Borrower to be made in connection with a drawing under a Letter of Credit, in
which case a Revolving Loan advance comprised of Base Rate Loans (or Eurodollar
Loans to the extent the Borrower has complied with the procedures of
Section 2.1(b)(i) with respect thereto) shall be immediately made to the
Borrower by all Lenders (notwithstanding any termination of the Commitments
pursuant to Section 9.2) pro rata based on the respective Commitment Percentages
of the Lenders (determined before giving effect to any termination of the
Commitments pursuant to Section 9.2) and the proceeds thereof shall be paid
directly to the Issuing Lender for application to the respective LOC
Obligations. Each such Lender hereby irrevocably agrees to make its pro rata
share of each such Revolving Loan immediately upon any such request or deemed
request in the amount, in the manner and on the date specified in the preceding
sentence notwithstanding (i) the amount of such borrowing may not comply with
the minimum amount for advances of Revolving Loans otherwise required hereunder,
(ii) whether any conditions specified in Section 5.2 are then satisfied,
(iii) whether a Default or an Event of Default then exists, (iv) failure for any
such request or deemed request for Revolving Loan to be made by the time
otherwise required hereunder, (v) whether the date of such borrowing is a date
on which Revolving Loans are otherwise permitted to be made hereunder or
(vi) any termination of the Commitments relating thereto immediately prior to or

 

31

--------------------------------------------------------------------------------

contemporaneously with such borrowing. In the event that any Revolving Loan
cannot for any reason be made on the date otherwise required above (including,
without limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower or any Credit Party), then each
such Lender hereby agrees that it shall forthwith purchase (as of the date such
borrowing would otherwise have occurred, but adjusted for any payments received
from the Borrower on or after such date and prior to such purchase) from the
Issuing Lender such Participation Interests in the outstanding LOC Obligations
as shall be necessary to cause each such Lender to share in such LOC Obligations
ratably (based upon the respective Commitment Percentages of the Lenders
(determined before giving effect to any termination of the Commitments pursuant
to Section 9.2)), provided that at the time any purchase of Participation
Interests pursuant to this sentence is actually made, the purchasing Lender
shall be required to pay to the Issuing Lender, to the extent not paid to the
Issuing Lender by the Borrower in accordance with the terms of subsection
(d) above, interest on the principal amount of Participation Interests purchased
for each day from and including the day upon which such borrowing would
otherwise have occurred to but excluding the date of payment for such
Participation Interests, at the rate equal to, if paid within two (2) Business
Days of the date of the Revolving Loan advance, the Federal Funds Rate, and
thereafter at a rate equal to the Base Rate.

(f) Renewal, Extension. The renewal or extension of any Letter of Credit shall,
for purposes hereof, be treated in all respects the same as the issuance of a
new Letter of Credit hereunder.

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

(h) Indemnification; Nature of Issuing Lender’s Duties.

(i) In addition to its other obligations under this Section 2.2, the Borrower
hereby agrees to pay, and protect, indemnify and save each Lender harmless from
and against, any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys’ fees) that such Lender may
incur or be subject to as a consequence, direct or indirect, of (A) the issuance
of any Letter of Credit or (B) the failure of the Issuing Lender to honor a
drawing under a Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto government or
Governmental Authority (all such acts or omissions, herein called “Government
Acts”).

 

32

--------------------------------------------------------------------------------

(ii) As between the Borrower and the Lenders (including the Issuing Lender), the
Borrower shall assume all risks of the acts, omissions or misuse of any Letter
of Credit by the beneficiary thereof. No Lender (including the Issuing Lender)
shall be responsible: (A) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in connection
with the application for and issuance of any Letter of Credit, even if it should
in fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B) for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, that may prove to be invalid or ineffective for any reason; (C) for
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not they be
in cipher; (D) for any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under a Letter of Credit or of the
proceeds thereof; and (E) for any consequences arising from causes beyond the
control of such Lender, including, without limitation, any Government Acts. None
of the above shall affect, impair, or prevent the vesting of the Issuing
Lender’s rights or powers hereunder.

(iii) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by any Lender
(including the Issuing Lender), under or in connection with any Letter of Credit
or the related certificates, if taken or omitted in good faith, shall not put
such Lender under any resulting liability to the Borrower or any other Credit
Party. It is the intention of the parties that this Credit Agreement shall be
construed and applied to protect and indemnify each Lender (including the
Issuing Lender) against any and all risks involved in the issuance of the
Letters of Credit, all of which risks are hereby assumed by the Borrower (on
behalf of itself and each of the other Credit Parties), including, without
limitation, any and all Government Acts. No Lender (including the Issuing
Lender) shall, in any way, be liable for any failure by such Lender or anyone
else to pay any drawing under any Letter of Credit as a result of any Government
Acts or any other cause beyond the control of such Lender.

(iv) Nothing in this subsection (h) is intended to limit the reimbursement
obligations of the Borrower contained in subsection (d) above. The obligations
of the Borrower under this subsection (h) shall survive the termination of this
Credit Agreement. No act or omissions of any current or prior beneficiary of a
Letter of Credit shall in any way affect or impair the rights of the Lenders
(including the Issuing Lender) to enforce any right, power or benefit under this
Credit Agreement.

(v) Notwithstanding anything to the contrary contained in this subsection (h),
the Borrower shall have no obligation to indemnify any Lender (including the
Issuing Lender) in respect of any liability incurred by such Lender (A) arising
solely out of the gross negligence or willful misconduct of such Lender, as
determined by a court of competent jurisdiction, or (B) caused by such

 

33

--------------------------------------------------------------------------------

Lender’s failure to pay under any Letter of Credit after presentation to it of a
request strictly complying with the terms and conditions of such Letter of
Credit, as determined by a court of competent jurisdiction, unless such payment
is prohibited by any law, regulation, court order or decree.

(i) Responsibility of Issuing Lender. It is expressly understood and agreed that
the obligations of the Issuing Lender hereunder to the Lenders are only those
expressly set forth in this Credit Agreement; provided, however, that nothing
set forth in this Section 2.2 shall be deemed to prejudice the right of any
Lender to recover from the Issuing Lender any amounts made available by such
Lender to the Issuing Lender pursuant to this Section 2.2 in the event that it
is determined by a court of competent jurisdiction that the payment with respect
to a Letter of Credit constituted gross negligence or willful misconduct on the
part of the Issuing Lender.

(j) Limitation on Obligation of the Issuing Lender. Notwithstanding anything
contained herein to the contrary, the Issuing Lender shall not be under any
obligation to issue, renew or extend any Letter of Credit if any order, judgment
or decree of any Governmental Authority or arbitrator shall by its terms purport
to enjoin or restrain the Issuing Lender from issuing a Letter of Credit, or any
applicable law, rule or regulation or any request or directive (having the force
of law) from any governmental authority with jurisdiction over the Issuing
Lender shall prohibit, or request that the Issuing Lender refrain from, the
issuance of letters of credit generally or any such Letter of Credit in
particular, or shall impose upon the Issuing Lender with respect to any such
Letter of Credit any restriction, reserve or capital requirement (for which the
Issuing Lender is not otherwise compensated hereunder) not in effect on the
Closing Date, or shall impose upon the Issuing Lender any unreimbursed loss,
costs or expense which was not applicable on the Closing Date and which the
Issuing Lender should deem material to it in good faith.

(k) Conflict with LOC Documents. In the event of any conflict between this
Credit Agreement and any LOC Document (including any letter of credit
application), this Credit Agreement shall control as among the parties hereto.

2.3 Swingline Loans.

(a) Swingline Commitment. Subject to the terms and conditions hereof and in
reliance upon the representations and warranties herein set forth, the Swingline
Lender, in its individual capacity, agrees to make certain revolving credit
loans to the Borrower (each a “Swingline Loan” and, collectively, the “Swingline
Loans”) from time to time from the Closing Date until the Maturity Date for the
purposes hereinafter set forth; provided, however, (i) the aggregate principal
amount of Swingline Loans outstanding at any time shall not exceed TWENTY
MILLION DOLLARS ($20,000,000) (the “Swingline Committed Amount”), and (ii) the
sum of the aggregate principal amount of Revolving Loans outstanding plus LOC
Obligations plus obligations in respect of Swingline Loans outstanding at any
time shall not exceed the aggregate Revolving Committed Amount. Swingline Loans
hereunder shall be made as a Base Rate Loan in accordance with the provisions of
this Section 2.3, and may be repaid and reborrowed in accordance with the
provisions hereof.

 

34

--------------------------------------------------------------------------------

(b) Swingline Loan Advances.

(i) Notices; Disbursement. Whenever the Borrower desires a Swingline Loan
advance hereunder, the Borrower shall give written notice (or telephone notice
promptly confirmed in writing) to the Swingline Lender not later than 1:00 P.M.
(Charlotte, North Carolina time) on the Business Day of the requested Swingline
Loan advance. Each such notice shall be irrevocable and shall specify (A) that a
Swingline Loan advance is requested, (B) the date of the requested Swingline
Loan advance (which shall be a Business Day) and (C) the principal amount of the
Swingline Loan advance requested. Each Swingline Loan shall be made as a Base
Rate Loan and shall have such maturity date as set forth in clause (iii) below.
The Swingline Lender shall make each Swingline Loan available to the Borrower by
3:00 P.M., (Charlotte, North Carolina time), on the Business Day of the
requested Borrowing.

(ii) Minimum Amount. Each Swingline Loan shall be in a minimum principal amount
of $1,000,000 and in integral multiples of $100,000 in excess thereof (or the
remaining amount of the Swingline Committed Amount, if less).

(iii) Repayment of Swingline Loans. The principal amount of all Swingline Loans
shall be due and payable on the earlier of (A) a date that is seven (7) Business
Days from the date of advance thereof or (B) the Maturity Date. The Swingline
Lender may, at any time, in its sole discretion, by written notice to the
Borrower and the Lenders, demand repayment of its Swingline Loans by way of a
Revolving Loan advance, in which case the Borrower shall be deemed to have
requested a Revolving Loan advance comprised solely of Base Rate Loans in the
amount of such Swingline Loans; provided, however, that any such demand shall be
deemed to have been given one Business Day prior to the Maturity Date and on the
date of the occurrence of any Event of Default described in Section 9.1 and upon
acceleration of the Indebtedness hereunder and the exercise of remedies in
accordance with the provisions of Section 9.2. Each Lender hereby irrevocably
agrees to make its pro rata share of each such Revolving Loan in the amount, in
the manner and on the date specified in the preceding sentence notwithstanding
(A) the amount of such borrowing may not comply with the minimum amount for
advances of Revolving Loans otherwise required hereunder, (B) whether any
conditions specified in Section 5.2 are then satisfied, (C) whether a Default or
Event of Default then exists, (D) failure of any such request or deemed request
for Revolving Loan to be made by the time otherwise required hereunder,
(E) whether the date of such borrowing is a date on which Revolving Loans are
otherwise permitted to be made hereunder or (F) any termination of the
Commitments relating thereto immediately prior to or contemporaneously with such
borrowing. In the event that any Revolving Loan cannot for any reason be made on
the date otherwise required above (including, without limitation, as a result of
the commencement of a proceeding under the Bankruptcy Code with respect to the
Borrower), then each Lender hereby agrees that it shall forthwith purchase (as
of the date such borrowing would otherwise have occurred, but adjusted for any
payments received from the Borrower on or after such date and prior to such
purchase) from the Swingline Lender such

 

35

--------------------------------------------------------------------------------

participations in the outstanding Swingline Loans as shall be necessary to cause
each such Lender to share in such Swingline Loans ratably based upon its
Commitment Percentage of the Revolving Committed Amount, provided that (A) all
interest payable on the Swingline Loans shall be for the account of the
Swingline Lender until the date as of which the respective participation is
purchased and (B) at the time any purchase of participations pursuant to this
sentence is actually made, the purchasing Lender shall be required to pay to the
Swingline Lender in accordance with the terms of subsection (c)(ii) hereof,
interest on the principal amount of participation purchased for each day from
and including the day upon which such borrowing would otherwise have occurred to
but excluding the date of payment for such participation, at the rate equal to
the Federal Funds Rate.

(c) Interest on Swingline Loans.

(i) Subject to the provisions of Section 3.1, each Swingline Loan shall bear
interest at the rate per annum equal to the Adjusted Base Rate in accordance
with the provisions of Section 2.3(b).

(ii) Interest on Swingline Loans shall be payable in arrears on each applicable
Interest Payment Date (or at such other times as may be specified herein).

(d) Swingline Note. The Swingline Lender may request that Swingline Loans made
by it be evidenced by a duly executed promissory note of the Borrower to the
Swingline Lender in an original principal amount equal to the Swingline Lender’s
Commitment Percentage.

SECTION 3

OTHER PROVISIONS RELATING TO CREDIT FACILITIES

3.1 Default Rate.

Upon the occurrence, and during the continuance, of an Event of Default, (i) the
principal of and, to the extent permitted by law, accrued and unpaid interest on
the Revolving Loans and any other amounts owing hereunder or under the other
Credit Documents shall bear interest, payable on demand, at a per annum rate 2%
greater than the rate which would otherwise be applicable (or if no rate is
applicable, whether in respect of interest, fees or other amounts, then the
Adjusted Base Rate plus 2%) and (ii) the Letter of Credit Fee shall accrue at a
per annum rate 2% greater than the rate which would otherwise be applicable.

3.2 Extension and Conversion.

Subject to the terms of Section 5.2, the Borrower shall have the option, on any
Business Day, to extend existing Revolving Loans into a subsequent permissible
Interest Period or to convert Revolving Loans into Revolving Loans of another
interest rate type; provided, however, that (i) except as provided in
Section 3.8, Eurodollar Loans may be converted into Base Rate Loans only on the
last day of the Interest Period applicable thereto, (ii) Eurodollar Loans may be

 

36

--------------------------------------------------------------------------------

extended, and Base Rate Loans may be converted into Eurodollar Loans, only if no
Default or Event of Default is in existence on the date of extension or
conversion, (iii) Revolving Loans extended as, or converted into, Eurodollar
Loans shall be subject to the terms of the definition of “Interest Period” set
forth in Section 1.1 and shall be in such minimum amounts as provided in, with
respect to Revolving Loans, Section 2.1(b)(ii), (iv) no more than 10 Eurodollar
Loans shall be outstanding hereunder at any time (it being understood that, for
purposes hereof, Eurodollar Loans with different Interest Periods shall be
considered as separate Eurodollar Loans, even if they begin on the same date,
although borrowings, extensions and conversions may, in accordance with the
provisions hereof, be combined at the end of existing Interest Periods to
constitute a new Eurodollar Loan with a single Interest Period), (v) any request
for extension or conversion of a Eurodollar Loan which shall fail to specify an
Interest Period shall be deemed to be a request for an Interest Period of one
month and (vi) Swingline Loans may not be extended or converted pursuant to this
Section 3.2. Each such extension or conversion shall be effected by the Borrower
by giving a Notice of Extension/Conversion (or telephonic notice promptly
confirmed in writing) to the office of the Agent specified in Section 11.1, or
at such other office as the Agent may designate in writing, prior to 11:00 A.M.
(Charlotte, North Carolina time) on the Business Day of, in the case of the
conversion of a Eurodollar Loan into a Base Rate Loan, and on the third Business
Day prior to, in the case of the extension of a Eurodollar Loan as, or
conversion of a Base Rate Loan into, a Eurodollar Loan, the date of the proposed
extension or conversion, specifying the date of the proposed extension or
conversion, the Revolving Loans to be so extended or converted, the types of
Revolving Loans into which such Revolving Loans are to be converted and, if
appropriate, the applicable Interest Periods with respect thereto. Each request
for extension or conversion shall be irrevocable and shall constitute a
representation and warranty by the Borrower of the matters specified in
subsections (b), (c), (d) and (e) of Section 5.2. In the event the Borrower
fails to request extension or conversion of any Eurodollar Loan in accordance
with this Section, or any such conversion or extension is not permitted or
required by this Section, then such Eurodollar Loan shall be automatically
converted into a Base Rate Loan at the end of the Interest Period applicable
thereto. The Agent shall give each Lender notice as promptly as practicable of
any such proposed extension or conversion affecting any Revolving Loan.

3.3 Prepayments.

(a) Voluntary Prepayments. The Borrower shall have the right to prepay Revolving
Loans in whole or in part from time to time; provided, however, that each
partial prepayment of Revolving Loans (other than Swingline Loans) shall be in a
minimum principal amount of $2,000,000 and integral multiples of $500,000.
Prepayment upon the Revolving Loans shall be made first to Base Rate Loans and
then to Eurodollar Loans in direct order of Interest Period maturities.

(b) Revolving Committed Amount. If at any time, the sum of the aggregate
principal amount of outstanding Revolving Loans plus Swingline Loans plus LOC
Obligations outstanding shall exceed the Revolving Committed Amount, the
Borrower immediately shall prepay the Revolving Loans and (after all Revolving
Loans have been repaid) cash collateralize the LOC Obligations, in an amount
sufficient to eliminate such excess.

 

37

--------------------------------------------------------------------------------

(c) Generally. Within the parameters of the applications set forth above,
prepayments shall be applied first to Base Rate Loans and then to Eurodollar
Loans in direct order of Interest Period maturities. All prepayments under this
Section 3.3(b) shall be subject to Section 3.12, but otherwise without premium
or penalty.

3.4 Termination and Reduction of Revolving Committed Amount.

(a) The Borrower may from time to time permanently reduce or terminate the
Revolving Committed Amount in whole or in part (in minimum aggregate amounts of
$5,000,000 or in integral multiples of $1,000,000 in excess thereof (or, if
less, the full remaining amount of the then applicable Revolving Committed
Amount)) upon three Business Days’ prior written notice to the Agent; provided,
however, no such termination or reduction shall be made which would cause the
aggregate principal amount of outstanding Revolving Loans, Swingline Loans and
LOC Obligations to exceed the Revolving Committed Amount, unless, concurrently
with such termination or reduction, the Revolving Loans are repaid to the extent
necessary to eliminate such excess. The Agent shall promptly notify each
affected Lender of receipt by the Agent of any notice from the Borrower pursuant
to this Section 3.4(a).

(b) Maturity Date. The Commitments of the Lenders, the Swingline Commitment of
the Swingline Lender and the LOC Commitment of the Issuing Lender shall
automatically terminate on the Maturity Date.

(c) General. The Borrower shall pay to the Agent for the account of the Lenders
in accordance with the terms of Section 3.5(b), on the date of each reduction of
the Revolving Committed Amount, the Unused Fee accrued through the date of such
termination or reduction on the amount of the Revolving Committed Amount so
terminated or reduced.

3.5 Fees.

(a) Upfront Fees. The Borrower agrees to pay to the Agent for the benefit of the
Lenders in immediately available funds on or before the Closing Date an upfront
fee (the “Upfront Fee”) in the amount provided in the Agent’s Fee Letter.

(b) Unused Fee. In consideration of the Commitments of the Lenders hereunder,
the Borrower agrees to pay to the Agent for the account of each Lender a fee
(the “Unused Fee”) on the Unused Revolving Committed Amount computed at a per
annum rate for each day during the applicable Unused Fee Calculation Period
(hereinafter defined) at a rate equal to the Applicable Percentage in effect
from time to time. The Unused Fee shall commence to accrue on the Closing Date
and shall be due and payable in arrears on the last business day of each March,
June, September and December (and any date that the Revolving Committed Amount
is reduced as provided in Section 3.4(a) and the Maturity Date) for the
immediately preceding quarter (or portion thereof) (each such quarter or portion
thereof for which the Unused Fee is payable hereunder being herein referred to
as an “Unused Fee Calculation Period”), beginning with the first of such dates
to occur after the Closing Date.

 

38

--------------------------------------------------------------------------------

(c) Letter of Credit Fees.

(i) Letter of Credit Issuance Fee. In consideration of the issuance of Letters
of Credit hereunder, the Borrower promises to pay to the Agent for the account
of each Lender a fee (the “Letter of Credit Fee”) on such Lender’s Commitment
Percentage of the average daily maximum amount available to be drawn under each
such Letter of Credit computed at a per annum rate for each day from the date of
issuance to the date of expiration equal to the Applicable Percentage. The
Letter of Credit Fee will be payable quarterly in arrears on the last Business
Day of each March, June, September and December for the immediately preceding
quarter (or a portion thereof).

(ii) Issuing Lender Fees. In addition to the Letter of Credit Fee payable
pursuant to clause (i) above the Borrower promises to pay to the Issuing Lender
for its own account without sharing by the other Lenders (A) a letter of credit
fronting fee, computed at a per annum rate for each day from the date of
issuance to the date of expiration of each Letter of Credit of one-eighth of one
percent ( 1 /8%) on the maximum amount available to be drawn under each Letter
of Credit on such day, which fee shall be payable quarterly in arrears on the
last Business Day of each March, June, September and December for the
immediately preceding quarter (or a portion thereof) and (B) other customary
charges from time to time of the Issuing Lender with respect to the issuance,
amendment, transfer, administration, cancellation and conversion of, and
drawings under, such Letters of Credit.

(d) Administrative Fees. The Borrower agrees to pay to the Agent, for its own
account, an annual administrative fee and such other fees, if any, referred to
in the Agent’s Fee Letter (collectively, the “Agent Fees”).

3.6 Capital Adequacy.

If any Lender has determined, after the date hereof, that the adoption or the
becoming effective of, or any change in, or any change by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof in the interpretation or administration of, any
applicable law, rule or regulation regarding capital adequacy, or compliance by
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency has or would have the effect of reducing the rate of return on such
Lender’s capital or assets as a consequence of its commitments or obligations
hereunder to a level below that which such Lender could have achieved but for
such adoption, effectiveness, change or compliance (taking into consideration
such Lender’s policies with respect to capital adequacy), then, upon notice from
such Lender to the Borrower, the Borrower shall be obligated to pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction. Each determination by any such Lender of amounts owing under this
Section shall, absent manifest error, be conclusive and binding on the parties
hereto.

3.7 Limitation on Eurodollar Loans.

If on or prior to the first day of any Interest Period for any Eurodollar Loan:

 

39

--------------------------------------------------------------------------------

(a) the Agent reasonably determines (which determination shall be conclusive)
that by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period; or

(b) the Required Lenders reasonably determine (which determination shall be
conclusive) and notify the Agent that the Eurodollar Rate will not adequately
and fairly reflect the cost to the Lenders of funding Eurodollar Loans for such
Interest Period;

then the Agent shall give the Borrower prompt notice thereof, and so long as
such condition remains in effect, the Lenders shall be under no obligation to
make additional Eurodollar Loans, Continue Eurodollar Loans, or to convert Base
Rate Loans into Eurodollar Loans and the Borrower shall, on the last day(s) of
the then current Interest Period(s) for the outstanding Eurodollar Loans, either
prepay such Eurodollar Loans or convert such Eurodollar Loans into Base Rate
Loans in accordance with the terms of this Credit Agreement.

3.8 Illegality.

Notwithstanding any other provision of this Credit Agreement, in the event that
it becomes unlawful for any Lender or its Applicable Lending Office to make,
maintain, or fund Eurodollar Loans hereunder, then such Lender shall promptly
notify the Borrower thereof and such Lender’s obligation to make or Continue
Eurodollar Loans and to convert Base Rate Loans into Eurodollar Loans shall be
suspended until such time as such Lender may again make, maintain, and fund
Eurodollar Loans (in which case the provisions of Section 3.10 shall be
applicable).

3.9 Requirements of Law.

(a) If, after the date hereof, the adoption of any applicable law, rule, or
regulation, or any change in any applicable law, rule, or regulation, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank, or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such Governmental Authority, central bank, or comparable agency:

(i) shall subject such Lender (or its Applicable Lending Office) to any tax,
duty, or other charge with respect to any Eurodollar Loans, its Revolving Notes,
if any, or its obligation to make Eurodollar Loans, or change the basis of
taxation of any amounts payable to such Lender (or its Applicable Lending
Office) under this Credit Agreement or its Revolving Notes, if any, in respect
of any Eurodollar Loans (other than taxes imposed on the overall net income of
such Lender by the jurisdiction in which such Lender has its principal office or
such Applicable Lending Office);

(ii) shall impose, modify, or deem applicable any reserve, special deposit,
assessment, or similar requirement (other than the Eurodollar Reserve
Requirement utilized in the determination of the Adjusted Eurodollar Rate)
relating to any extensions of credit or other assets of, or any deposits with or
other liabilities or

 

40

--------------------------------------------------------------------------------

commitments of, such Lender (or its Applicable Lending Office), including the
Commitment of such Lender hereunder; or

(iii) shall impose on such Lender (or its Applicable Lending Office) or on the
United States market for certificates of deposit or the London interbank market
any other condition affecting this Credit Agreement or its Revolving Notes, if
any, or any of such extensions of credit or liabilities or commitments;

and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, converting into, continuing, or
maintaining any Eurodollar Loans or to reduce any sum received or receivable by
such Lender (or its Applicable Lending Office) under this Credit Agreement or
its Revolving Notes, if any, with respect to any Eurodollar Loans, then the
Borrower shall pay to such Lender on demand such amount or amounts as will
compensate such Lender for such increased cost or reduction. If any Lender
requests compensation by the Borrower under this Section 3.9(a), the Borrower
may, by notice to such Lender (with a copy to the Agent), suspend the obligation
of such Lender to make or Continue Eurodollar Loans, or to convert Base Rate
Loans into Eurodollar Loans, until the event or condition giving rise to such
request ceases to be in effect (in which case the provisions of Section 3.10
shall be applicable); provided that such suspension shall not affect the right
of such Lender to receive the compensation so requested.

(b) Each Lender shall promptly notify the Borrower and the Agent of any event of
which it has knowledge, occurring after the date hereof, which will entitle such
Lender to compensation pursuant to this Section 3.9 and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Lender, be otherwise disadvantageous to it. Any Lender claiming compensation
under this Section 3.9 shall furnish to the Borrower and the Agent a statement
setting forth the additional amount or amounts to be paid to it hereunder which
shall be conclusive in the absence of manifest error. In determining such
amount, such Lender may use any reasonable averaging and attribution methods.

3.10 Treatment of Affected Revolving Loans.

If the obligation of any Lender to make any Eurodollar Loan or to continue, or
to convert Base Rate Loans into, Eurodollar Loans shall be suspended pursuant to
Section 3.8 or 3.9 hereof, such Lender’s Eurodollar Loans shall be automatically
converted into Base Rate Loans on the last day(s) of the then current Interest
Period(s) for such Eurodollar Loans (or, in the case of a conversion required by
Section 3.8 hereof, on such earlier date as such Lender may specify to the
Borrower with a copy to the Agent) and, unless and until such Lender gives
notice as provided below that the circumstances specified in Section 3.8 or 3.9
hereof that gave rise to such conversion no longer exist:

(a) to the extent that such Lender’s Eurodollar Loans have been so converted,
all payments and prepayments of principal that would otherwise be applied to
such Lender’s Eurodollar Loans shall be applied instead to its Base Rate Loans;
and

(b) all Revolving Loans that would otherwise be made or continued by such Lender
as Eurodollar Loans shall be made or continued instead as Base Rate Loans, and

 

41

--------------------------------------------------------------------------------

all Base Rate Loans of such Lender that would otherwise be converted into
Eurodollar Loans shall remain as Base Rate Loans.

If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 3.8 or 3.9 hereof that gave rise to the
conversion of such Lender’s Eurodollar Loans pursuant to this Section 3.10 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans made by other Lenders are
outstanding, such Lender’s Base Rate Loans shall be automatically converted, on
the first day(s) of the next succeeding Interest Period(s) for such outstanding
Eurodollar Loans, to the extent necessary so that, after giving effect thereto,
all Revolving Loans held by the Lenders holding Eurodollar Loans and by such
Lender are held pro rata (as to principal amounts, interest rate basis, and
Interest Periods) in accordance with their respective Commitments.

3.11 Taxes.

(a) Any and all payments by the Borrower to or for the account of any Lender or
the Agent hereunder or under any other Credit Document shall be made free and
clear of and without deduction for any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender and the Agent, taxes
imposed on its income, and franchise taxes imposed on it, by the jurisdiction
under the laws of which such Lender (or its Applicable Lending Office) or the
Agent (as the case may be) is organized or any political subdivision thereof
(all such non-excluded taxes, duties, levies, imposts, deductions, charges,
withholdings, and liabilities being hereinafter referred to as “Taxes”). If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable under this Credit Agreement or any other Credit Document to any
Lender or the Agent, (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 3.11) such Lender or the Agent
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law, and (iv) the Borrower
shall furnish to the Agent, at its address referred to in Section 11.1, the
original or a certified copy of a receipt evidencing payment thereof.

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

(c) The Borrower agrees to indemnify each Lender and the Agent for the full
amount of Taxes and Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 3.11) paid by such Lender or the Agent (as the case may be) and any
liability (including penalties, interest, and expenses) arising therefrom or
with respect thereto.

 

42

--------------------------------------------------------------------------------

(d) Each Lender organized under the laws of a jurisdiction outside the United
States, on or prior to the date of its execution and delivery of this Credit
Agreement in the case of each Lender listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the Borrower
or the Agent (but only so long as such Lender remains lawfully able to do so),
shall provide the Borrower and the Agent with (i) Internal Revenue Service Form
W-8ECI or W-8BEN, as appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Lender is entitled to benefits
under an income tax treaty to which the United States is a party which reduces
the rate of withholding tax on payments of interest or certifying that the
income receivable pursuant to this Credit Agreement is effectively connected
with the conduct of a trade or business in the United States, (ii) Internal
Revenue Service Form W-8 or W-9, as appropriate, or any successor form
prescribed by the Internal Revenue Service, and (iii) any other form or
certificate required by any taxing authority (including any certificate required
by Sections 871(h) and 881(c) of the Internal Revenue Code), certifying that
such Lender is entitled to an exemption from or a reduced rate of tax on
payments pursuant to this Credit Agreement or any of the other Credit Documents.

(e) For any period with respect to which a Lender has failed to provide the
Borrower and the Agent with the appropriate form pursuant to Section 3.11(d)
(unless such failure is due to a change in treaty, law, or regulation occurring
subsequent to the date on which a form originally was required to be provided),
such Lender shall not been titled to indemnification under Section 3.11(a) or
3.11(b) with respect to Taxes imposed by the United States; provided, however,
that should a Lender, which is otherwise exempt from or subject to a reduced
rate of withholding tax, become subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such steps as such
Lender shall reasonably request to assist such Lender to recover such Taxes.

(f) If the Borrower is required to pay additional amounts to or for the account
of any Lender pursuant to this Section 3.11, then such Lender will agree to use
reasonable efforts to change the jurisdiction of its Applicable Lending Office
so as to eliminate or reduce any such additional payment which may thereafter
accrue if such change, in the judgment of such Lender, is not otherwise
disadvantageous to such Lender.

(g) Within thirty (30) days after the date of any payment of Taxes, the Borrower
shall furnish to the Agent the original or a certified copy of a receipt
evidencing such payment.

(h) Without prejudice to the survival of any other agreement of the Borrower
hereunder, the agreements and obligations of the Borrower contained in this
Section 3.11 shall survive the repayment of the Revolving Loans, LOC Obligations
and other obligations under the Credit Documents and the termination of the
Commitments hereunder.

 

43

--------------------------------------------------------------------------------

3.12 Compensation.

Upon the request of any Lender, the Borrower shall pay to such Lender such
amount or amounts as shall be sufficient (in the reasonable opinion of such
Lender) to compensate it for any loss, cost, or reasonable expense (including
loss of anticipated profits) incurred by it as a result of:

(a) any payment, prepayment, or conversion of a Eurodollar Loan for any reason
(including, without limitation, the acceleration of the Revolving Loans pursuant
to Section 9.2) on a date other than the last day of the Interest Period for
such Revolving Loan; or

(b) any failure by the Borrower for any reason (including, without limitation,
the failure of any condition precedent specified in Section 5 to be satisfied)
to borrow, convert, continue, or prepay a Eurodollar Loan on the date for such
borrowing, conversion, continuation, or prepayment specified in the relevant
notice of borrowing, prepayment, continuation, or conversion under this Credit
Agreement.

With respect to Eurodollar Loans, such indemnification may include an amount
equal to the excess, if any, of (a) the amount of interest which would have
accrued on the amount so prepaid, or not so borrowed, converted or continued,
for the period from the date of such prepayment or of such failure to borrow,
convert or continue to the last day of the applicable Interest Period (or, in
the case of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the applicable
rate of interest for such Eurodollar Loans provided for herein over (b) the
amount of interest (as reasonably determined by such Lender) which would have
accrued to such Lender on such amount by placing such amount on deposit for a
comparable period with leading banks in the interbank Eurodollar market. The
covenants of the Borrower set forth in this Section 3.12 shall survive the
repayment of the Revolving Loans, LOC Obligations and other obligations under
the Credit Documents and the termination of the Commitments hereunder.

3.13 Pro Rata Treatment.

Except to the extent otherwise provided herein:

(a) Revolving Loans. Each Revolving Loan, each payment or prepayment of
principal of any Revolving Loan or reimbursement obligations arising from
drawings under Letters of Credit, each payment of interest on the Revolving
Loans or reimbursement obligations arising from drawings under Letters of
Credit, each payment of Unused Fees, each payment of the Letter of Credit Fee,
each reduction of the Revolving Committed Amount and each conversion or
extension of any Revolving Loan, shall be allocated pro rata among the Lenders
in accordance with the respective principal amounts of their outstanding
Revolving Loans and Participation Interests.

(b) Advances. No Lender shall be responsible for the failure or delay by any
other Lender in its obligation to make its ratable share of a borrowing
hereunder; provided, however, that the failure of any Lender to fulfill its
obligations hereunder shall not relieve any other Lender of its obligations
hereunder. Unless the Agent shall have

 

44

--------------------------------------------------------------------------------

been notified by any Lender prior to the date of any requested borrowing that
such Lender does not intend to make available to the Agent its ratable share of
such borrowing to be made on such date, the Agent may assume that such Lender
has made such amount available to the Agent on the date of such borrowing, and
the Agent in reliance upon such assumption, may (in its sole discretion but
without any obligation to do so) make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the Agent,
the Agent shall be able to recover such corresponding amount from such Lender.
If such Lender does not pay such corresponding amount forthwith upon the Agent’s
demand therefor, the Agent will promptly notify the Borrower, and the Borrower
shall immediately pay such corresponding amount to the Agent. The Agent shall
also be entitled to recover from the Lender or the Borrower, as the case may be,
interest on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to the Borrower to the date
such corresponding amount is recovered by the Agent at a per annum rate equal to
(i) from the Borrower at the applicable rate for the applicable borrowing
pursuant to the Notice of Borrowing or (ii) from a Lender at the Federal Funds
Rate.

3.14 Sharing of Payments.

The Lenders agree among themselves that, in the event that any Lender shall
obtain payment in respect of any Revolving Loan, LOC Obligations or any other
obligation owing to such Lender under this Credit Agreement through the exercise
of a right of setoff, banker’s lien or counterclaim, or pursuant to a secured
claim under Section 506 of Title 11 of the United States Code or other security
or interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, in excess of its pro rata share of such
payment as provided for in this Credit Agreement, such Lender shall promptly
purchase from the other Lenders a Participation Interest in such Revolving
Loans, LOC Obligations and other obligations in such amounts, and make such
other adjustments from time to time, as shall be equitable to the end that all
Lenders share such payment in accordance with their respective ratable shares as
provided for in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of setoff, banker’s lien, counterclaim or other event as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by repurchase of a
Participation Interest theretofore sold, return its share of that benefit
(together with its share of any accrued interest payable with respect thereto)
to each Lender whose payment shall have been rescinded or otherwise restored.
The Borrower agrees that any Lender so purchasing such a Participation Interest
may, to the fullest extent permitted by law, exercise all rights of payment,
including setoff, banker’s lien or counterclaim, with respect to such
Participation Interest as fully as if such Lender were a holder of such
Revolving Loan, LOC Obligations or other obligation in the amount of such
Participation Interest. Except as otherwise expressly provided in this Credit
Agreement, if any Lender or the Agent shall fail to remit to the Agent or any
other Lender an amount payable by such Lender or the Agent to the Agent or such
other Lender pursuant to this Credit Agreement on the date when such amount is
due, such payments shall be made together with interest thereon for each date
from the date such amount is due until the date such amount is paid to the Agent
or such other Lender at a rate per annum equal to the Federal Funds Rate. If
under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section 3.14 applies,
such Lender shall, to the extent

 

45

--------------------------------------------------------------------------------

practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders under this Section 3.14 to share in
the benefits of any recovery on such secured claim.

3.15 Payments, Computations, Etc.

(a) Except as otherwise specifically provided herein, all payments hereunder
shall be made to the Agent in Dollars and in immediately available funds,
without setoff, deduction, counterclaim or withholding of any kind, at the
Agent’s office specified in Section 11.1 not later than 2:00 P.M. (Charlotte,
North Carolina time) on the date when due. Payments received after such time
shall be deemed to have been received on the next succeeding Business Day. The
Agent may (but shall not be obligated to) debit the amount of any such payment
which is not made by such time to any ordinary deposit account of the Borrower
maintained with the Agent (with notice to the Borrower). The Borrower shall, at
the time it makes any payment under this Credit Agreement, specify to the Agent
the Revolving Loans, LOC Obligations, Fees, interest or other amounts payable by
the Borrower hereunder to which such payment is to be applied (and in the event
that it fails so to specify, or if such application would be inconsistent with
the terms hereof, the Agent shall distribute such payment to the Lenders in such
manner as the Agent may determine to be appropriate in respect of obligations
owing by the Borrower hereunder, subject to the terms of Section 3.13(a)). The
Agent will distribute such payments to such Lenders, if any such payment is
received prior to 12:00 Noon (Charlotte, North Carolina time) on a Business Day
in like funds as received prior to the end of such Business Day and otherwise
the Agent will distribute such payment to such Lenders on the next succeeding
Business Day. Whenever any payment hereunder shall be stated to be due on a day
which is not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day (subject to accrual of interest and Fees for the period
of such extension), except that in the case of Eurodollar Loans, if the
extension would cause the payment to be made in the next following calendar
month, then such payment shall instead be made on the next preceding Business
Day. Except as expressly provided otherwise herein, all computations of interest
and fees shall be made on the basis of actual number of days elapsed over a year
of 360 days, except with respect to computation of interest on Base Rate Loans
which (unless the Base Rate is determined by reference to the Federal Funds
Rate) shall be calculated based on a year of 365 or 366 days, as appropriate.
Interest shall accrue from and include the date of borrowing, but exclude the
date of payment.

(b) Allocation of Payments After Event of Default. Notwithstanding any other
provisions of this Credit Agreement to the contrary, after the occurrence and
during the continuance of an Event of Default, all amounts collected or received
by the Agent or any Lender on account of the Credit Party Obligations or any
other amounts outstanding under any of the Credit Documents or in respect of the
Pledged Collateral shall be paid over or delivered as follows:

FIRST, to the payment of all reasonable out-of-pocket costs and expenses
(including without limitation reasonable attorneys’ fees) of the Agent in
connection with enforcing the rights of the Lenders under the Credit Documents;

 

46

--------------------------------------------------------------------------------

SECOND, to payment of any fees owed to the Agent;

THIRD, to the payment of all reasonable out-of-pocket costs and expenses
(including without limitation, reasonable attorneys’ fees) of each of the
Lenders in connection with enforcing its rights under the Credit Documents or
otherwise with respect to the Credit Party Obligations owing to such Lender;

FOURTH, to the payment of all of the Credit Party Obligations consisting of
accrued fees and interest;

FIFTH, to the payment of the outstanding principal amount of the Credit Party
Obligations (including the payment or cash collateralization of the outstanding
LOC Obligations);

SIXTH, to all other Credit Party Obligations and other obligations which shall
have become due and payable under the Credit Documents or otherwise and not
repaid pursuant to clauses “FIRST” through “FIFTH” above; and

SEVENTH, to the payment of the surplus, if any, to the Borrower or whoever else
may be lawfully entitled to receive such surplus.

In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Revolving
Loans and LOC Obligations held by such Lender bears to the aggregate then
outstanding Revolving Loans and LOC Obligations) of amounts available to be
applied pursuant to clauses “THIRD”, “FOURTH”, “FIFTH” and “SIXTH” above; and
(iii) to the extent that any amounts available for distribution pursuant to
clause “FIFTH” above are attributable to the issued but undrawn amount of
outstanding Letters of Credit, such amounts shall be held by the Agent in a cash
collateral account and applied (A) first, to reimburse the Issuing Lender from
time to time for any drawings under such Letters of Credit and (B) then,
following the expiration of all Letters of Credit, to all other obligations of
the types described in clauses “FIFTH” and “SIXTH” above in the manner provided
in this Section 3.15(b).

3.16 Evidence of Debt.

a) Each Lender shall maintain an account or accounts evidencing each Revolving
Loan made by such Lender to the Borrower from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Credit Agreement. Each Lender shall maintain the accuracy of its
account or accounts and to promptly update its account or accounts from time to
time, as necessary.

(b) The Agent shall maintain the Register pursuant to Section 11.3(c), and a
subaccount for each Lender, in which Register and subaccounts (taken together)
shall be recorded (i) the amount, type and Interest Period of each such
Revolving Loan hereunder, (ii) the amount of any principal or interest due and
payable or to become due and payable to each Lender hereunder and (iii) the
amount of any sum received by the Agent

 

47

--------------------------------------------------------------------------------

hereunder from or for the account of the Borrower and each Lender’s share
thereof. The Agent shall maintain the accuracy of the subaccounts referred to in
the preceding sentence and to promptly update such subaccounts from time to
time, as necessary.

(c) The entries made in the accounts, Register and subaccounts maintained
pursuant to subsection (b) of this Section 3.16 (and, if consistent with the
entries of the Agent, subsection (a)) shall be prima facie evidence of the
existence and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of any Lender or the Agent to maintain any
such account, such Register or such subaccount, as applicable, or any error
therein, shall not in any manner affect the obligation of the Borrower to repay
the Revolving Loans made by such Lender in accordance with the terms hereof.

3.17 Replacement of Affected Lenders.

If any Lender having a Commitment becomes a Defaulting Lender or if any Lender
is owed increased costs under Section 3.8, Section 3.9, or Section 3.6, or the
Borrower is required to make any payments under Section 3.11 to any Lender in
excess of those to the other Lenders, the Borrower shall have the right, if no
Event of Default then exists, to replace such Lender (the “Replaced Lender”)
with one or more other Eligible Assignee or Eligible Assignees, none of whom
shall constitute a Defaulting Lender at the time of such replacement
(collectively, the “Replacement Lender”) reasonably acceptable to the Agent,
provided that (i) at the time of any replacement pursuant to this Section 3.17,
the Replaced Lender and Replacement Lender shall enter into one or more
assignment agreements, in form and substance reasonably satisfactory to such
parties and the Agent, pursuant to which the Replacement Lender shall acquire
all or a portion, as the case may be, of the Commitments and outstanding Loans
of, and participation in Letters of Credit and Swingline Loans by, the Replaced
Lender hereunder and (ii) all obligations of the Borrower owing to the Replaced
Lender relating to the Loans so replaced (including, without limitation, such
increased costs and excluding those specifically described in clause (i) above
in respect of which the assignment purchase price has been, or is concurrently
being paid) shall be paid in full to such Replaced Lender concurrently with such
replacement. Upon the execution of the respective assignment documentation, the
payment of amounts referred to in clauses (i) and (ii) above and, if so
requested by the Replacement Lender, delivery to the Replacement Lender of an
appropriate Revolving Note executed by the Borrower, the Replacement Lender
shall become a Lender hereunder and the Replaced Lender shall cease to
constitute a Lender hereunder with respect to such replaced Revolving Loans,
except with respect to indemnification provisions under this Agreement, which
shall survive as to such Replaced Lender. Notwithstanding anything to the
contrary contained above, (1) the Lender that acts as the Issuing Lender may not
be replaced hereunder at any time that it has Letters of Credit outstanding
hereunder unless arrangements satisfactory to the Issuing Lender (including the
furnishing of a back-up standby letter of credit in form and substance, and
issued by an issuer satisfactory to such Issuing Lender or the depositing of
cash collateral into a cash collateral account maintained with the Agent in
amounts and pursuant to arrangements satisfactory to such Issuing Lender) have
been made with respect to such outstanding Letters of Credit and (2) the Lender
that acts as the Agent may not be replaced hereunder except in accordance with
the terms of

 

48

--------------------------------------------------------------------------------

Section 10.7. The Replaced Lender shall be required to deliver for cancellation
its applicable Revolving Notes, to the extent applicable, to be canceled on the
date of replacement, or if any such Revolving Note is lost or unavailable, such
other assurances or indemnification therefor as the Borrower may reasonably
request.

SECTION 4

GUARANTY

4.1 The Guaranty.

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

Notwithstanding any provision to the contrary contained herein or in any other
of the Credit Documents, Hedging Agreements or Equity Swap Agreements, to the
extent the obligations of a Guarantor shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because of any
applicable state or federal law relating to fraudulent conveyances or transfers)
then the obligations of each Guarantor hereunder shall be limited to the maximum
amount that is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).

4.2 Obligations Unconditional.

The obligations of the Guarantors under Section 4.1 are joint and several,
absolute and unconditional, irrespective of the value, genuineness, validity,
regularity or enforceability of any of the Credit Documents, Hedging Agreements
or Equity Swap Agreements, or any other agreement or instrument referred to
therein, or any substitution, release, impairment or exchange of any other
guarantee of or security for any of the Credit Party Obligations, and, to the
fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this
Section 4.2 that the obligations of the Guarantors hereunder shall be absolute
and unconditional under any and all circumstances. Each Guarantor agrees that
such Guarantor shall have no right of subrogation, indemnity, reimbursement or
contribution against the Borrower or any other Guarantor of the Credit Party
Obligations for amounts paid under this Section 4 until such time as the Lenders
(and any Affiliates of Lenders entering into Hedging

 

49

--------------------------------------------------------------------------------

Agreements or Equity Swap Agreements) have been paid in full, all Commitments
under this Credit Agreement have been terminated and no Person or Governmental
Authority shall have any right to request any return or reimbursement of funds
from the Lenders in connection with monies received under the Credit Documents,
Hedging Agreements or Equity Swap Agreements. Without limiting the generality of
the foregoing, it is agreed that, to the fullest extent permitted by law, the
occurrence of any one or more of the following shall not alter or impair the
liability of any Guarantor hereunder which shall remain absolute and
unconditional as described above:

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

(b) any of the acts mentioned in any of the provisions of any of the Credit
Documents, any Hedging Agreement, any Equity Swap Agreement or any other
agreement or instrument referred to in the Credit Documents, Hedging Agreements
or Equity Swap Agreements shall be done or omitted;

(c) the maturity of any of the Credit Party Obligations shall be accelerated, or
any of the Credit Party Obligations shall be modified, supplemented or amended
in any respect, or any right under any of the Credit Documents, any Hedging
Agreement, any Equity Swap Agreement or any other agreement or instrument
referred to in the Credit Documents, Hedging Agreements or Equity Swap
Agreements shall be waived or any other guarantee of any of the Credit Party
Obligations or any security therefor shall be released, impaired or exchanged in
whole or in part or otherwise dealt with;

(d) any Lien granted to, or in favor of, the Agent or any Lender or Lenders as
security for any of the Credit Party Obligations shall fail to attach or be
perfected; or

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

With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever (except notices expressly provided for in the Credit Documents), and
any requirement that the Agent or any Lender exhaust any right, power or remedy
or proceed against any Person under any of the Credit Documents, any Hedging
Agreement, Equity Swap Agreement or any other agreement or instrument referred
to in the Credit Documents, Hedging Agreements or Equity Swap Agreement, or
against any other Person under any other guarantee of, or security for, any of
the Credit Party Obligations.

4.3 Reinstatement.

The obligations of the Guarantors under this Section 4 shall be automatically
reinstated if and to the extent that for any reason any payment by or on behalf
of any Person in respect of the Credit Party Obligations is rescinded or must be
otherwise restored by any holder of any of the Credit Party Obligations, whether
as a result of any proceedings in bankruptcy or reorganization

 

50

--------------------------------------------------------------------------------

or otherwise, and each Guarantor agrees that it will indemnify the Agent and
each Lender on demand for all reasonable costs and expenses (including, without
limitation, fees and expenses of counsel) incurred by the Agent or such Lender
in connection with such rescission or restoration, including any such costs and
expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.

4.4 Certain Additional Waivers.

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

4.5 Remedies.

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

4.6 Rights of Contribution.

The Guarantors hereby agree as among themselves that, if any Guarantor shall
make an Excess Payment (as defined below), such Guarantor shall have a right of
contribution from each other Guarantor in an amount equal to such other
Guarantor’s Contribution Share (as defined below) of such Excess Payment. The
payment obligations of any Guarantor under this Section 4.6 shall be subordinate
and subject in right of payment to the prior payment in full to the Agent and
the Lenders of the Guaranteed Obligations, and none of the Guarantors shall
exercise any right or remedy under this Section 4.6 against any other Guarantor
until payment and satisfaction in full of all of such Guaranteed Obligations.
For purposes of this Section 4.6, (a) “Guaranteed Obligations” shall mean any
obligations arising under the other provisions of this Section 4; (b) “Excess
Payment” shall mean the amount paid by any Guarantor in excess of its Pro Rata
Share of any Guaranteed Obligations; (c) “Pro Rata Share” shall mean, for any
Guarantor in respect of any payment of Guaranteed Obligations, the ratio
(expressed as a percentage) as of the date of such payment of Guaranteed
Obligations of (i) the amount by which the aggregate present fair salable value
of all of its assets and properties exceeds the amount of all debts and
liabilities of such Guarantor (including contingent, subordinated, unmatured,
and unliquidated liabilities, but excluding the obligations of such Guarantor
hereunder) to (ii) the amount by which the aggregate present fair salable value
of all assets and other properties of the

 

51

--------------------------------------------------------------------------------

Borrower and all of the Guarantors exceeds the amount of all of the debts and
liabilities (including contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of the Borrower and the Guarantors
hereunder) of the Borrower and all of the Guarantors; provided, however, that,
for purposes of calculating the Pro Rata Shares of the Guarantors in respect of
any payment of Guaranteed Obligations, any Guarantor that became a Guarantor
subsequent to the date of any such payment shall be deemed to have been a
Guarantor on the date of such payment and the financial information for such
Guarantor as of the date such Guarantor became a Guarantor shall be utilized for
such Guarantor in connection with such payment; and (d) “Contribution Share”
shall mean, for any Guarantor in respect of any Excess Payment made by any other
Guarantor, the ratio (expressed as a percentage) as of the date of such Excess
Payment of (i) the amount by which the aggregate present fair salable value of
all of its assets and properties exceeds the amount of all debts and liabilities
of such Guarantor (including contingent, subordinated, unmatured, and
unliquidated liabilities, but excluding the obligations of such Guarantor
hereunder) to (ii) the amount by which the aggregate present fair salable value
of all assets and other properties of the Borrower and all of the Guarantors
other than the maker of such Excess Payment exceeds the amount of all of the
debts and liabilities (including contingent, subordinated, unmatured, and
unliquidated liabilities, but excluding the obligations of the Borrower and the
Guarantors hereunder) of the Borrower and all of the Guarantors other than the
maker of such Excess Payment; provided, however, that, for purposes of
calculating the Contribution Shares of the Guarantors in respect of any Excess
Payment, any Guarantor that became a Guarantor subsequent to the date of any
such Excess Payment shall be deemed to have been a Guarantor on the date of such
Excess Payment and the financial information for such Guarantor as of the date
such Guarantor became a Guarantor shall be utilized for such Guarantor in
connection with such Excess Payment. This Section 4.6 shall not be deemed to
affect any right of subrogation, indemnity, reimbursement or contribution that
any Guarantor may have under applicable law against the Borrower in respect of
any payment of Guaranteed Obligations. Notwithstanding the foregoing, all rights
of contribution against any Guarantor shall terminate from and after such time,
if ever, that such Guarantor shall be relieved of its obligations pursuant to
Section 8.4.

4.7 Continuing Guarantee.

The guarantee in this Section 4 is a guaranty of payment and not of collection,
is a continuing guarantee, and shall apply to all Credit Party Obligations
whenever arising.

SECTION 5

CONDITIONS

5.1 Closing Conditions.

The obligation of the Lenders to enter into this Credit Agreement and to make
the initial Revolving Loans or Swingline Loans or of the Issuing Lender to issue
the initial Letter of Credit, whichever shall occur first, shall be subject to
satisfaction of the following conditions (in form and substance acceptable to
the Lenders):

 

52

--------------------------------------------------------------------------------

(a) Executed Credit Documents. Receipt by the Agent of duly executed copies of
(i) this Credit Agreement and (ii) the Revolving Notes, if any.

(b) Corporate Documents. Receipt by the Agent of the following:

(i) Charter Documents. Copies of the articles or certificates of incorporation
or other charter documents of each Credit Party certified to be true and
complete as of a recent date by the appropriate Governmental Authority of the
state or other jurisdiction of its incorporation and certified by a secretary or
assistant secretary of such Credit Party to be true and correct as of the
Closing Date.

(ii) Bylaws. A copy of the bylaws of each Credit Party certified by a secretary
or assistant secretary of such Credit Party to be true and correct as of the
Closing Date.

(iii) Resolutions. Copies of resolutions of the Board of Directors of each
Credit Party approving and adopting the Credit Documents to which it is a party,
the transactions contemplated therein and authorizing execution and delivery
thereof, certified by a secretary or assistant secretary of such Credit Party to
be true and correct and in force and effect as of the Closing Date.

(iv) Good Standing. To the extent received by the Borrower prior to the Closing
Date and subject to Section 7.15 thereafter, copies of (A) certificates of good
standing, existence or its equivalent with respect to each Credit Party
certified as of a recent date by the appropriate Governmental Authorities of the
state or other jurisdiction of incorporation and each other jurisdiction in
which the failure to so qualify and be in good standing could reasonably be
expected to have a Material Adverse Effect and (B) to the extent available, a
certificate indicating payment of all corporate or comparable franchise taxes
certified as of a recent date by the appropriate governmental taxing
authorities.

(v) Incumbency. An incumbency certificate of each Credit Party certified by a
secretary or assistant secretary to be true and correct as of the Closing Date.

(c) Pledge of Stock. The Agent shall have received all stock certificates
evidencing the Capital Stock pledged to the Agent pursuant to the Pledge
Agreement, together with duly executed in blank undated stock powers attached
thereto.

(d) Opinions of Counsel. The Agent shall have received an opinion, or opinions,
in form and substance satisfactory to the Agent dated as of the Closing Date
from counsel to the Credit Parties.

(e) Corporate Structure. The corporate capital and ownership structure of the
Borrower and its Subsidiaries shall be as described in Schedule 6.13.

(f) Consent. Receipt by the Agent of evidence that all governmental, shareholder
and material third party consents and approvals necessary or desirable in

 

53

--------------------------------------------------------------------------------

connection with the financings and other transactions contemplated hereby and
expiration of all applicable waiting periods without any action being taken by
any authority that could reasonably be likely to restrain, prevent or impose any
material adverse conditions on such transactions or that could reasonably be
likely to seek or threaten any of the foregoing, and no law or regulation shall
be applicable which in the judgment of the Agent could reasonably be likely to
have such effect.

(g) Litigation. Except as disclosed in Schedule 6.9, there shall not exist any
pending or threatened action, suit, investigation or proceeding against a
Consolidated Party which could reasonably be expected to have a Material Adverse
Effect.

(h) Officer’s Certificates. The Agent shall have received a certificate or
certificates executed by the chief financial officer of the Borrower on behalf
of the Borrower as of the Closing Date stating that (i) the Borrower and each of
the Borrower’s Subsidiaries is in compliance with all existing financial
obligations, (ii) all governmental, shareholder and third party consents and
approvals, if any, with respect to the Credit Documents and the transactions
contemplated thereby have been obtained, (iii) no action, suit, investigation or
proceeding is pending or threatened in any court or before any arbitrator or
governmental instrumentality that purports to affect the Borrower, any of the
Borrower’s Subsidiaries, or any transaction contemplated by the Credit
Documents, if such action, suit, investigation or proceeding could reasonably be
expected to have a Material Adverse Effect and (iv) immediately after giving
effect to this Credit Agreement, the other Credit Documents and all the
transactions contemplated therein to occur on such date, (A) the Borrower and
each of the Borrower’s Subsidiaries is Solvent, (B) no Default or Event of
Default exists, (C) all representations and warranties contained herein and in
the other Credit Documents are true and correct in all material respects, and
(D) the Credit Parties are in compliance with each of the financial covenants
set forth in Section 7.11.

(i) Existing Credit Agreement. Receipt by the Agent of satisfactory evidence of
the repayment of all loans and obligations under the Existing Credit Agreement
and the termination of the commitments thereunder.

(j) Other Indebtedness. Receipt by the Agent of satisfactory evidence that the
Credit Parties shall have no Funded Indebtedness other than the Indebtedness
permitted under Section 8.1.

(k) Fees and Expenses. Payment by the Credit Parties of all fees and expenses
owed by them to the Lenders and the Agent, including, without limitation,
payment to the Agent of the fees set forth in the Fee Letter.

5.2 Conditions to all Extensions of Credit.

The obligations of each Lender to make, convert or extend any Revolving Loan or
Swingline Loan and of the Issuing Lender to issue any Letter of Credit
(including the initial Revolving Loans and the initial Letter of Credit) are
subject to satisfaction of the following conditions in addition to satisfaction
on the Closing Date of the conditions set forth in Section 5.1:

 

54

--------------------------------------------------------------------------------

(a) The Borrower shall have delivered (i) in the case of any Revolving Loan an
appropriate Notice of Borrowing or Notice of Extension/Conversion or (ii) in the
case of any Letter of Credit, the Issuing Lender shall have received an
appropriate request for issuance in accordance with the provisions of
Section 2.2(b);

(b) The representations and warranties set forth in Section 6 shall, subject to
the limitations set forth therein, be true and correct in all material respects
as of such date (except for those which expressly relate to an earlier date);

(c) There shall not have been commenced against any Credit Party an involuntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or any case, proceeding or other action for the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of such Person or for any substantial part of its Property or
for the winding up or liquidation of its affairs, and such involuntary case or
other case, proceeding or other action shall remain undismissed, undischarged or
unbonded;

(d) No Default or Event of Default shall exist and be continuing either prior to
or after giving effect thereto; and

(e) Immediately after giving effect to the making of such Revolving Loan or
Swingline Loan (and the application of the proceeds thereof) or to the issuance
of such Letter of Credit, as the case may be, (i) the aggregate principal amount
of outstanding Revolving Loans, Swingline Loans and LOC Obligations shall not
exceed the Revolving Committed Amount, (ii) the aggregate principal amount of
LOC Obligations shall not exceed the LOC Committed Amount and (iii) the
aggregate principal amount of Swingline Loans shall not exceed the Swingline
Committed Amount.

The delivery of each Notice of Borrowing, and each request for a Letter of
Credit pursuant to Section 2.2(b) shall constitute a representation and warranty
by the Borrower of the correctness of the matters specified in subsections (b),
(c), (d) and (e) above.

SECTION 6

REPRESENTATIONS AND WARRANTIES

The Credit Parties hereby represent to the Agent and each Lender that:

6.1 Financial Condition.

The audited consolidated balance sheets and income statements of the
Consolidated Parties for the fiscal year ended 2001 have been prepared in
accordance with GAAP and present fairly in all material respects (on the basis
disclosed in the footnotes to such financial statements) the financial
condition, results of operations and cash flows of the applicable parties as of
such date and for such periods. Since December 31, 2001, there has been no sale,
transfer or other disposition by any Consolidated Party of any material part of
the business or property of the

 

55

--------------------------------------------------------------------------------

Consolidated Parties, taken as a whole, and no purchase or other acquisition by
any of them of any business or property (including any capital stock of any
other person) material in relation to the consolidated financial condition of
the Consolidated Parties, taken as a whole, in each case, which, is not
(x) reflected in the foregoing financial statements or in the notes thereto or
(y) otherwise permitted by the terms of this Credit Agreement and communicated
to the Agent.

6.2 No Material Change.

Since December 31, 2001, (a) there has been no development or event relating to
or affecting a Consolidated Party which has had or could reasonably to expected
to have a Material Adverse Effect and (b) except as otherwise permitted under
this Credit Agreement, no dividends or other distributions have been declared,
paid or made upon the Capital Stock in a Consolidated Party nor has any of the
Capital Stock in a Consolidated Party been redeemed, retired, purchased or
otherwise acquired for value (other than (i) approximately $14,000,000 of
Capital Stock of the Borrower repurchased by the Borrower prior to the Closing
Date and (ii) up to approximately $8,000,000 of Capital Stock of the Borrower
which may be repurchased by the Borrower prior to the Closing Date).

6.3 Organization and Good Standing.

Each of the Consolidated Parties (a) is duly organized, validly existing and is
in good standing under the laws of the jurisdiction of its incorporation or
organization, (b) has the corporate or other necessary power and authority, and
the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged
and (c) is duly qualified as a foreign entity and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification, other than in such
jurisdictions where the failure to be so qualified and in good standing could
reasonably be expected to have a Material Adverse Effect.

6.4 Power; Authorization; Enforceable Obligations.

Each of the Credit Parties has the corporate or other necessary power and
authority, and the legal right, to make, deliver and perform the Credit
Documents to which it is a party, and in the case of the Borrower, to obtain
extensions of credit hereunder, and has taken all necessary corporate action to
authorize the borrowings and other extensions of credit on the terms and
conditions of this Credit Agreement and to authorize the execution, delivery and
performance of the Credit Documents to which it is a party. No consent or
authorization of, filing with, notice to or other similar act by or in respect
of, any Governmental Authority or any other Person is required to be obtained or
made by or on behalf of any Credit Party in connection with the borrowings or
other extensions of credit hereunder or with the execution, delivery,
performance, validity or enforceability of the Credit Documents to which such
Credit Party is a party. This Credit Agreement has been, and each other Credit
Document to which any Credit Party is a party will be, duly executed and
delivered on behalf of the Credit Parties. This Credit Agreement constitutes,
and each other Credit Document to which any Credit Party is a party when
executed and delivered will constitute, a legal, valid and binding obligation of
such Credit Party enforceable against such party in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws

 

56

--------------------------------------------------------------------------------

affecting the enforcement of creditors’ rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).

6.5 No Conflicts.

Neither the execution and delivery of the Credit Documents, nor the consummation
of the transactions contemplated therein, nor performance of and compliance with
the terms and provisions thereof by such Credit Party will (a) violate or
conflict with any provision of its articles or certificate of incorporation or
organization or bylaws or other organizational or governing documents of such
Person, (b) violate, contravene or materially conflict with any Requirement of
Law or any other law, regulation (including, without limitation, Regulation U or
Regulation X), order, writ, judgment, injunction, decree or permit applicable to
it, (c) violate, contravene or conflict with contractual provisions of, or cause
an event of default under, any indenture, loan agreement, mortgage, deed of
trust, contract or other agreement or instrument to which it is a party or by
which it may be bound, the violation of which could reasonably be expected to
have a Material Adverse Effect, or (d) result in or require the creation of any
Lien (other than those contemplated in or created in connection with the Credit
Documents) upon or with respect to its properties.

6.6 No Default.

No Consolidated Party is in default in any respect under any contract, lease,
loan agreement, indenture, mortgage, security agreement or other agreement or
obligation to which it is a party or by which any of its properties is bound
which default could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred or exists except as previously
disclosed in writing to the Lenders.

6.7 Ownership.

Each Consolidated Party is the owner of, and has good and marketable title to,
or a valid leasehold interest in, all of its material assets and none of such
assets is subject to any Lien other than Permitted Liens.

6.8 Indebtedness.

Except as otherwise permitted under Section 8.1, the Consolidated Parties have
no Indebtedness.

6.9 Litigation.

Except as disclosed in Schedule 6.9, there are no actions, suits or legal,
equitable, arbitration or administrative proceedings, pending or, to the
knowledge of any Credit Party, threatened against any Consolidated Party which
could reasonably be expected to have a Material Adverse Effect.

 

57

--------------------------------------------------------------------------------

6.10 Taxes.

Each Consolidated Party has filed, or caused to be filed, all tax returns
(federal, state, local and foreign) required to be filed and paid (a) all
amounts of taxes shown thereon to be due (including interest and penalties) and
(b) all other taxes, fees, assessments and other governmental charges (including
mortgage recording taxes, documentary stamp taxes and intangibles taxes) owing
by it, except for such taxes (i) which are not yet delinquent or (ii) that are
being contested in good faith and by proper proceedings, and against which
adequate reserves are being maintained in accordance with GAAP. No Credit Party
is aware as of the Closing Date of any proposed tax assessments against it or
any other Consolidated Party.

6.11 Compliance with Law.

Each Consolidated Party is in compliance with all Requirements of Law and all
other laws, rules, regulations, orders and decrees (including without limitation
Environmental Laws) applicable to it, or to its properties, unless such failure
to comply could not reasonably be expected to have a Material Adverse Effect.
Without limiting the generality of the foregoing, each Consolidated Party
represents that (i) current billing policies, arrangements, protocols and
instructions comply with requirements of Medicare, Medicaid, and CHAMPUS
programs and any other heath care program operated or financed in whole or in
part by and federal, state, or local government (each a “Medical Reimbursement
Program” and collectively, the “Medical Reimbursement Programs”) and are
administered by properly trained personnel except where any such failure to
comply could not reasonably be expected to result in either (A) exclusion from a
Medical Reimbursement Program, or (B) loss of 5% or more of annual consolidated
revenues of the Consolidated Parties and (ii) current compensation arrangements
with physicians comply with state and federal anti-kick back fraud and abuse,
and Stark I and II requirements except where any such failure to comply could
not reasonably be expected to result in either (A) an exclusion from a Medical
Reimbursement Program, or (B) loss of 5% or more of annual consolidated revenues
of the Consolidated Parties.

6.12 ERISA.

(a) During the five-year period prior to the date on which this representation
is made or deemed made: (i) no ERISA Event has occurred, and, to the best
knowledge of the Credit Parties, no event or condition has occurred or exists as
a result of which any ERISA Event could reasonably be expected to occur, with
respect to any Plan; (ii) no material “accumulated funding deficiency,” as such
term is defined in Section 302 of ERISA and Section 412 of the Code, whether or
not waived, has occurred with respect to any Plan; (iii) to the best knowledge
of the Credit Parties, each Plan has been maintained, operated, and funded in
compliance with its own terms and in material compliance with the provisions of
ERISA, the Code, and any other applicable federal or state laws; and (iv) no
lien in favor of the PBGC or a Plan has arisen or is reasonably likely to arise
on account of any Plan.

(b) The actuarial present value of all “benefit liabilities” (as defined in
Section 4001(a)(16) of ERISA), whether or not vested, under each Single Employer
Plan, as of the last annual valuation date prior to the date on which this
representation is made or deemed made (determined, in each case, utilizing the
actuarial assumptions used in

 

58

--------------------------------------------------------------------------------

such Plan’s most recent actuarial valuation report), did not, by any material
amount, exceed as of such valuation date the fair market value of the assets of
such Plan.

(c) Neither any Consolidated Party nor any ERISA Affiliate has incurred, or, to
the best knowledge of the Credit Parties, could be reasonably expected to incur,
any material withdrawal liability under ERISA to any Multiemployer Plan or
Multiple Employer Plan. Neither any Consolidated Party nor any ERISA Affiliate
would become subject to any material withdrawal liability under ERISA if any
Consolidated Party or any ERISA Affiliate were to withdraw completely from all
Multiemployer Plans and Multiple Employer Plans as of the valuation date most
closely preceding the date on which this representation is made or deemed made.
Neither any Consolidated Party nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization (within the
meaning of Section 4241 of ERISA), is insolvent (within the meaning of
Section 4245 of ERISA), or has been terminated (within the meaning of Title IV
of ERISA), and no Multiemployer Plan is, to the best knowledge of the Credit
Parties, reasonably expected to be in reorganization, insolvent, or terminated.

(d) No prohibited transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) or breach of fiduciary responsibility has occurred
with respect to a Plan which has subjected or may subject any Consolidated Party
or any ERISA Affiliate to any material liability under Sections 406, 409,
502(i), or 502(l) of ERISA or Section 4975 of the Code, or under any agreement
or other instrument pursuant to which any Consolidated Party or any ERISA
Affiliate has agreed or is required to indemnify any person against any such
liability.

(e) Neither any Consolidated Party nor any ERISA Affiliates has any material
liability with respect to “expected post-retirement benefit obligations” within
the meaning of the Financial Accounting Standards Board Statement 106.

6.13 Subsidiaries.

Set forth on Schedule 6.13 is a complete and accurate list of all Subsidiaries
of each Consolidated Party. Information on Schedule 6.13 includes jurisdiction
of incorporation or organization, the number of shares of each class of Capital
Stock outstanding, the number and percentage of outstanding shares of each class
owned (directly or indirectly) by such Consolidated Party; and the number and
effect, if exercised, of all outstanding options, warrants, rights of conversion
or purchase and all other similar rights with respect thereto. The outstanding
Capital Stock of all such Subsidiaries is validly issued, fully paid and
non-assessable and is owned by each such Consolidated Party, directly or
indirectly, free and clear of all Liens (other than those arising under or
contemplated in connection with the Credit Documents). Other than as set forth
in Schedule 6.13, no Consolidated Party other than the Borrower has outstanding
any securities convertible into or exchangeable for its Capital Stock nor does
any such Person have outstanding any rights to subscribe for or to purchase or
any options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to its Capital Stock.

6.14 Governmental Regulations, Etc.

 

59

--------------------------------------------------------------------------------

(a) None of the transactions contemplated by this Credit Agreement (including,
without limitation, the direct or indirect use of the proceeds of the Loans)
will violate or result in a violation of the Securities Act, the Securities
Exchange Act or any of Regulations U and X. If requested by any Lender or the
Agent, the Borrower will furnish to the Agent and each Lender a statement, in
conformity with the requirements of FR Form U-1 referred to in Regulation U,
that no part of the Letters of Credit or proceeds of the Loans will be used,
directly or indirectly, for the purpose of “buying” or “carrying” any “margin
stock” within the meaning of Regulations U and X.

(b) None of the Consolidated Parties is (i) an “investment company”, or a
company “controlled” by “investment company”, within the meaning of the
Investment Company Act of 1940, as amended, (ii) a “holding company” as defined
in, or otherwise subject to regulation under, the Public Utility Holding Company
Act of 1935, as amended or (iii) subject to regulation under any other Federal
or state statute or regulation which limits its ability to incur Indebtedness.

6.15 Purpose of Revolving Loans and Letters of Credit.

The proceeds of the Revolving Loans hereunder shall be used solely by the
Borrower to (a) on the Closing Date to refinance existing Indebtedness of the
Borrower under the Existing Credit Agreement and (b) on and after the Closing
Date, to (i) pay the redemption price for the Capital Stock of the Borrower as
permitted hereunder and (ii) to provide for ongoing working capital and general
corporate purposes (including Acquisitions) of the Borrower and its
Subsidiaries. The Letters of Credit shall be used only for or in connection with
appeal bonds, reimbursement obligations arising in connection with surety and
reclamation bonds, reinsurance, domestic or international trade transactions,
and obligations not otherwise aforementioned relating to transactions entered
into by the applicable account party in the ordinary course of business.

6.16 Environmental Matters.

Except as could not reasonably be expected to have a Material Adverse Effect:

(a) Each of the facilities and properties owned, leased or operated by The
Consolidated Parties (the “Properties”) and all operations at the Properties are
in compliance with all applicable Environmental Laws, and there is no violation
of any material Environmental Law with respect to the Properties or the
businesses operated by the Consolidated Parties (the “Businesses”), and there
are no conditions relating to the Businesses or Properties, that could give rise
to any material liability under any applicable Environmental Laws.

(b) To the best knowledge of the Credit Parties, none of the Properties
contains, or has previously contained, any Materials of Environmental Concern
at, on or under the Properties in amounts or concentrations that constitute or
constituted a violation of, or could give rise to liability under, Environmental
Laws.

(c) No Consolidated Party has received any written or verbal notice of, or
inquiry from any Governmental Authority regarding, any violation, alleged
violation,

 

60

--------------------------------------------------------------------------------

non-compliance, liability or potential liability regarding environmental matters
or compliance with Environmental Laws with regard to any of the Properties or
the Businesses, nor does any Consolidated Party have knowledge or reason to
believe that any such notice will be received or is being threatened.

(d) Materials of Environmental Concern have not been transported or disposed of
from the Properties, or generated, treated, stored or disposed of at, on or
under any of the Properties or any other location, in each case by or on behalf
of any Consolidated Party in violation of, or in a manner that could give rise
to liability under, any applicable Environmental Law.

(e) No judicial proceeding or governmental or administrative action is pending
or, to the best knowledge of any Credit Party, threatened, under any
Environmental Law to which any Consolidated Party is or will be named as a
party, nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to the
Consolidated Parties, the Properties or the Businesses.

(f) There has been no release or, threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations (including, without limitation, disposal) of any Consolidated
Party in connection with the Properties or otherwise in connection with the
Businesses, in violation of or in amounts or in a manner that could give rise to
a material liability under Environmental Laws.

6.17 Intellectual Property.

Each Consolidated Party owns, or has the legal right to use, all trademarks,
tradenames, copyrights, technology, know-how and processes (the “Intellectual
Property”) necessary for each of them to conduct its business as currently
conducted except for those the failure to own or have such legal right to use
could not reasonably be expected to have a Material Adverse Effect. No claim has
been asserted and is pending by any Person challenging or questioning the use of
any such Intellectual Property or the validity or effectiveness of any such
Intellectual Property, nor does any Credit Party know of any such claim, and to
the Credit Parties’ knowledge the use of such Intellectual Property by any
Consolidated Party does not infringe on the rights of any Person, except for
such claims and infringements that in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

6.18 Solvency.

Each Credit Party is and, after consummation of the transactions contemplated by
this Credit Agreement, will be Solvent.

6.19 Investments.

All Investments of each Consolidated Party are Permitted Investments.

 

61

--------------------------------------------------------------------------------

6.20 Disclosure.

Neither this Credit Agreement nor any financial statements delivered to the
Lenders nor any other document, certificate or statement furnished to the
Lenders by or on behalf of any Consolidated Party in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained therein or herein not misleading.

6.21 No Unusual Restrictions.

No Consolidated Party is a party to any agreement or instrument or subject to
any other obligation or any charter or corporate restriction or any provision of
any applicable law, rule or regulation which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.

6.22 Reimbursement from Third Party Payors.

The accounts receivable of the Consolidated Parties have been and will continue
to be adjusted to reflect the reimbursement policies (both those most recently
published in writing as well as those not in writing which have been verbally
communicated) of third party payors such as Medicare, Medicaid, Blue Cross/Blue
Shield, private insurance companies, health maintenance organizations, preferred
provider organizations, alternative delivery systems, managed care systems,
government contracting agencies and other third party payors, except any which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect. In particular, accounts receivable relating to such
third party payors do not and shall not exceed amounts any obligee is entitled
to receive under any capitation arrangement, fee schedule, discount formula,
cost-based reimbursement or other adjustment or limitation to its usual charges
payors, except any which, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.

6.23 Fraud and Abuse.

Neither the Consolidated Parties nor, to the knowledge of the officers of the
Consolidated Parties, any of their officers or directors, or, to the knowledge
of any officer of the Consolidated Parties, no Contract Providers, have engaged
in any activities which are prohibited under federal Medicare and Medicaid
statutes, 42 U.S.C. (S)1320a-7b, or 42 U.S.C. (S)1395nn or the regulations
promulgated pursuant to such statutes or related state or local statutes or
regulations, or which are prohibited by binding rules of professional conduct,
including but not limited to the following: (i) knowingly and willfully making
or causing to be made a false statement or representation of a material fact in
any applications for any benefit or payment; (ii) knowingly and willfully making
or causing to be made any false statement or representation of a material fact
for use in determining rights to any benefit or payment; (iii) failing to
disclose knowledge by a claimant of the occurrence of any event affecting the
initial or continued right to any benefit or payment on its own behalf or on
behalf of another, with intent to secure such benefit or payment fraudulently;
(iv) knowingly and willfully soliciting or receiving any remuneration (including
any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in
cash or in kind or offering to pay such remuneration (a) in return for referring
an individual to a Person for the furnishing or arranging for the furnishing of
any item or service for which payment may be made

 

62

--------------------------------------------------------------------------------

in whole or in part by Medicare, Medicaid or other applicable third party
payors, or (b) in return for purchasing, leasing or ordering or arranging for or
recommending the purchasing, leasing or ordering of any good, facility, service,
or item for which payment may be made in whole or in part by Medicare, Medicaid
or other applicable third party payors.

6.24 Licensing and Accreditation.

Each of the Consolidated Parties and, to the knowledge of the officers of the
Consolidated Parties, each Contract Provider, has, to the extent applicable:
(i) obtained (or been duly assigned) all required certificates of need or
determinations of need as required by the relevant state Governmental Authority
for the acquisition, construction, expansion of, investment in or operation of
its businesses as currently operated; (ii) obtained and maintains in good
standing all required licenses; (iii) to the extent prudent and customary in the
industry in which it is engaged, obtained and maintains accreditation from all
generally recognized accrediting agencies; and (iv) entered into and maintains
in good standing its status as a Medicare Supplier and as a Medicaid Supplier.
To the knowledge of the officers of the Consolidated Parties, each Contract
Provider is duly licensed (where license is required) by each state or state
agency or commission, or any other Governmental Authority having jurisdiction
over the provisions of such services by such Person in the locations in which
the Consolidated Parties conduct business, required to enable such Person to
provide the professional services provided by such Person and otherwise as is
necessary to enable the Consolidated Parties to operate as currently operated
and as presently contemplated to be operated. To the knowledge of the officers
of the Consolidated Parties, all such required licenses are in full force and
effect on the date hereof and have not been revoked or suspended or otherwise
limited in any material respect.

SECTION 7

AFFIRMATIVE COVENANTS

Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect or any amounts payable hereunder or under any other
Credit Document shall remain outstanding, and until all of the Commitments
hereunder shall have terminated:

7.1 Information Covenants.

The Borrower will furnish, or cause to be furnished, to the Agent and each of
the Lenders:

(a) Annual Financial Statements. As soon as available, and in any event within
90 days after the close of each fiscal year of the Consolidated Parties, a
consolidated balance sheet and income statement of the Consolidated Parties, as
of the end of such fiscal year, together with related consolidated statements of
operations and retained earnings and of cash flows for such fiscal year, setting
forth in comparative form consolidated figures for the preceding fiscal year,
all such financial information described above to be in reasonable form and
detail, audited by independent certified public accountants of recognized
national standing reasonably acceptable to the Agent and whose opinion shall be
to the effect that such financial statements have been prepared in

 

63

--------------------------------------------------------------------------------

accordance with GAAP (except for changes with which such accountants concur) and
shall not be limited as to the scope of the audit or qualified as to the status
of the Consolidated Parties as a going concern.

(b) Quarterly Financial Statements. As soon as available, and in any event
within 45 days after the close of each fiscal quarter of the Consolidated
Parties (other than the fourth fiscal quarter, in which 90 days after the end
thereof) a consolidated balance sheet and income statement of the Consolidated
Parties, as of the end of such fiscal quarter, together with related
consolidated statements of operations and retained earnings and of cash flows
for such fiscal quarter in each case setting forth in comparative form
consolidated figures for the corresponding period of the preceding fiscal year,
all such financial information described above to be in reasonable form and
detail and reasonably acceptable to the Agent, and accompanied by a certificate
of the chief financial officer of the Borrower to the effect that such quarterly
financial statements fairly present in all material respects the financial
condition of the Consolidated Parties and have been prepared in accordance with
GAAP, subject to changes resulting from normal year-end audit adjustments.

(c) Officer’s Certificate. At the time of delivery of the financial statements
provided for in Sections 7.1(a) and 7.1(b) above, a certificate of the chief
financial officer of the Borrower substantially in the form of Exhibit 7.1(c),
(i) demonstrating compliance with the financial covenants contained in
Section 7.11 by calculation thereof as of the end of each such fiscal period and
(ii) stating that no Default or Event of Default exists, or if any Default or
Event of Default does exist, specifying the nature and extent thereof and what
action the Credit Parties propose to take with respect thereto.

(d) Auditor’s Reports. Promptly upon receipt thereof, a copy of any other report
or “management letter” submitted by independent accountants to any Consolidated
Party in connection with any annual, interim or special audit of the books of
such Person.

(e) Reports. Promptly upon transmission or receipt thereof, (i) copies of any
filings and registrations with, and reports to or from, the Securities and
Exchange Commission, or any successor agency, and copies of all financial
statements, proxy statements, notices and reports as any Consolidated Party
shall send to its shareholders or to a holder of any Indebtedness owed by any
Consolidated Party in its capacity as such a holder and (ii) upon the request of
the Agent, all reports and written information to and from the United States
Environmental Protection Agency, or any state or local agency responsible for
environmental matters, the United States Occupational Health and Safety
Administration, or any state or local agency responsible for health and safety
matters, or any successor agencies or authorities concerning environmental,
health or safety matters.

(f) Notices. Upon obtaining knowledge thereof, each Credit Party will give
written notice to the Agent promptly of (i) the occurrence of an event or
condition consisting of a Default or Event of Default, specifying the nature and
existence thereof and what action the Credit Parties propose to take with
respect thereto, and (ii) the occurrence of any of the following with respect to
any Consolidated Party (A) the pendency or commencement of any litigation,
arbitral or governmental proceeding against such Person which if adversely
determined could reasonably be expected to have

 

64

--------------------------------------------------------------------------------

a Material Adverse Effect, (B) the institution of any proceedings against such
Person with respect to, or the receipt of notice by such Person of potential
liability or responsibility for violation, or alleged violation of any federal,
state or local law, rule or regulation, including but not limited to,
Environmental Laws, the violation of which could reasonably be expected to have
a Material Adverse Effect, (C) any notice or determination concerning the
imposition of any withdrawal liability by a Multiemployer Plan against such
Person or any ERISA Affiliate, the determination that a Multiemployer Plan is,
or is expected to be, in reorganization within the meaning of Title IV of ERISA
or the termination of any Plan or (D) the institution of any investigation or
proceedings against such Person (or, to the knowledge of the Borrower’s
officers, any Contract Provider) to suspend, revoke or terminate or which may
result in the termination of its status as a Medicaid Supplier or its status as
a Medicare Supplier or exclusion from any Medical Reimbursement Program,
promptly deliver to the Agent written notice thereof stating the nature and
status of such litigation, dispute, proceeding, investigation, levy, execution
or other process.

(g) ERISA. Upon obtaining knowledge thereof, the Borrower will give written
notice to the Agent promptly (and in any event within five business days) of:
(i) of any event or condition, including, but not limited to, any Reportable
Event, that constitutes, or might reasonably lead to, an ERISA Event; (ii) with
respect to any Multiemployer Plan, the receipt of notice as prescribed in ERISA
or otherwise of any withdrawal liability assessed against the Borrower or any of
its ERISA Affiliates, or of a determination that any Multiemployer Plan is in
reorganization or insolvent (both within the meaning of Title IV of ERISA);
(iii) the failure to make full payment on or before the due date (including
extensions) thereof of all amounts which any Consolidated Party or any ERISA
Affiliate is required to contribute to each Plan pursuant to its terms and as
required to meet the minimum funding standard set forth in ERISA and the Code
with respect thereto; or (iv) any change in the funding status of any Plan that
could reasonably be expected to have a Material Adverse Effect, together with a
description of any such event or condition or a copy of any such notice and a
statement by the chief financial officer of the Borrower briefly setting forth
the details regarding such event, condition, or notice, and the action, if any,
which has been or is being taken or is proposed to be taken by the Credit
Parties with respect thereto. Promptly upon request, the Credit Parties shall
furnish the Agent and the Lenders with such additional information concerning
any Plan as may be reasonably requested, including, but not limited to, copies
of each annual report/return (Form 5500 series), as well as all schedules and
attachments thereto required to be filed with the Department of Labor and/or the
Internal Revenue Service pursuant to ERISA and the Code, respectively, for each
“plan year” (within the meaning of Section 3(39) of ERISA).

(h) Other Information. With reasonable promptness upon any such request, such
other information regarding the business, properties or financial condition of
any Consolidated Party as the Agent or the Required Lenders may reasonably
request.

7.2 Preservation of Existence and Franchises.

Except as a result of or in connection with a dissolution, merger or disposition
of a Subsidiary permitted under Section 8.4 or Section 8.5, each Credit Party
will, and will cause

 

65

--------------------------------------------------------------------------------

each of its Subsidiaries to, do all things necessary to preserve and keep in
full force and effect its existence, rights, franchises and authority.

7.3 Books and Records.

Each Credit Party will, and will cause each of its Subsidiaries to, keep
complete and accurate books and records of its transactions in accordance with
good accounting practices on the basis of GAAP (including the establishment and
maintenance of appropriate reserves).

7.4 Compliance with Law.

Each Credit Party will, and will cause each of its Subsidiaries to, comply with
all laws, rules, regulations and orders, and all applicable restrictions imposed
by all Governmental Authorities, applicable to it and its Property if
noncompliance with any such law, rule, regulation, order or restriction could
reasonably be expected to have a Material Adverse Effect.

7.5 Payment of Taxes and Other Indebtedness.

Each Credit Party will, and will cause each of its Subsidiaries to, pay and
discharge (a) all taxes, assessments and governmental charges or levies imposed
upon it, or upon its income or profits, or upon any of its properties, before
they shall become delinquent, (b) all lawful claims (including claims for labor,
materials and supplies) which, if unpaid, might give rise to a Lien upon any of
its properties, and (c) except as prohibited hereunder, all of its other
Indebtedness as it shall become due; provided, however, that no Consolidated
Party shall be required to pay any such tax, assessment, charge, levy, claim or
Indebtedness which is being contested in good faith by appropriate proceedings
and as to which adequate reserves therefor have been established in accordance
with GAAP, unless the failure to make any such payment (i) could give rise to an
immediate right to foreclose on a Lien securing such amounts or (ii) could
reasonably be expected to have a Material Adverse Effect.

7.6 Insurance.

Each Credit Party will, and will cause each of its Subsidiaries to, at all times
maintain in full force and effect insurance (including worker’s compensation
insurance, liability insurance, casualty insurance and business interruption
insurance) in such amounts, covering such risks and liabilities and with such
deductibles or self-insurance retentions as required by law and as determined in
good faith by the Borrower’s Board of Directors and furnish to the Agent, upon
written request, full information as to the insurance carried.

7.7 Maintenance of Property.

Each Credit Party will, and will cause each of its Subsidiaries to, maintain and
preserve its properties and equipment material to the conduct of its business in
good repair, working order and condition, normal wear and tear and casualty and
condemnation excepted, and will make, or cause to be made, in such properties
and equipment from time to time all repairs, renewals, replacements, extensions,
additions, betterments and improvements thereto as may be needed or proper, to
the extent and in the manner customary for companies in similar businesses.

 

66

--------------------------------------------------------------------------------

7.8 Performance of Obligations.

Each Credit Party will, and will cause each of its Subsidiaries to, perform in
all material respects all of its obligations under the terms of all material
agreements, indentures, mortgages, security agreements or other debt instruments
to which it is a party or by which it is bound.

7.9 Use of Proceeds.

The Borrower will use the proceeds of the Revolving Loans and will use the
Letters of Credit solely for the purposes set forth in Section 6.15.

7.10 Audits/Inspections.

Upon reasonable notice and during normal business hours, each Credit Party will,
and will cause each of its Subsidiaries to, permit representatives appointed by
the Agent, including, without limitation, independent accountants, agents,
attorneys, and appraisers to visit and inspect its property, including its books
and records, its accounts receivable and inventory, its facilities and its other
business assets, and to make photocopies or photographs thereof and to write
down and record any information such representative obtains and shall permit the
Lenders or their representatives to investigate and verify the accuracy of
information provided to the Agent and to discuss all such matters with the
officers, employees and representatives of such Person.

7.11 Financial Covenants.

(a) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio, as of the last
day of each fiscal quarter of the Consolidated Parties, shall be greater than or
equal to 2.75 to 1.0.

(b) Leverage Ratio. The Leverage Ratio, as of the last day of each fiscal
quarter of the Consolidated Parties, shall be less than or equal to 2.50 to 1.0.

(c) Consolidated Net Worth. The Consolidated Net Worth shall at all times be
greater than or equal to $554,218,000, increased by the sum of (i) on a
cumulative basis as of the end of each fiscal quarter of the Borrower,
commencing with the fiscal quarter ending March 31, 2002, an amount equal to 50%
of Consolidated Net Income (to the extent positive) for the fiscal quarter then
ended plus (ii) an amount equal to 75% of the Net Cash Proceeds from any Equity
Issuance occurring after the Closing Date minus (iii) the aggregate price paid
for all Restricted Payments by the Borrower permitted under Section 8.7.

7.12 Additional Guarantors.

As soon as practicable and in any event within 30 days after any Person becomes
a Subsidiary of any Credit Party, the Borrower shall provide the Agent with
written notice thereof setting forth information in reasonable detail describing
all of the assets of such Person and shall (a) except with respect to Lincare of
Columbia, BRM or any Receivables Financing SPE, (i) cause such Person to execute
a Joinder Agreement in substantially the same form as Exhibit 7.12 and (ii) if
such Person has any Subsidiaries (A) deliver all of the Capital Stock of such

 

67

--------------------------------------------------------------------------------

Subsidiaries (together with undated stock powers signed in blank) to the Agent
and (B) execute a pledge agreement in substantially the form of the Pledge
Agreement and otherwise in a form acceptable to the Agent and (b) cause 100% of
the Capital Stock of such Person to be delivered to the Agent (together with
undated stock powers signed in blank), and pledged to the Agent pursuant to an
appropriate pledge agreement(s) in substantially the form of the Pledge
Agreement and otherwise in form acceptable to the Agent (provided, however, that
the pledge of the Capital Stock of a Receivables Financing SPE may be subject to
certain restrictions pursuant to the Permitted Receivables Financing).

7.13 Pledged Stock.

Except with respect to the Capital Stock of Lincare of Columbia and BRM, the
Credit Parties will cause 100% of the issued and outstanding Capital Stock of
each direct and indirect Subsidiary of the Borrower, to be subject at all times
to a first priority, perfected Lien in favor of the Agent pursuant to the terms
and conditions of the Pledge Agreement or such other security documents as the
Agent shall reasonably request.

7.14 Receivables Financing Further Assurances.

Following the consummation of any sale of Transferred Assets by a Receivables
Financing SPE to a Receivables Financier, each of the applicable Credit Parties
in its capacity as an owner of the Capital Stock of a Receivables Financing SPE
will take such action to cause, to the extent it is legally able to do so in its
capacity as an owner of Capital Stock, a Receivables Financing SPE to dividend,
distribute or otherwise transfer to the Credit Parties any Property (including
cash) of such Receivables Financing SPE not required to be pledged to the
Receivables Financier or required to be held by such Receivables Financing SPE
by the terms of the Permitted Receivables Financing.

SECTION 8

NEGATIVE COVENANTS

Each Credit Party hereby covenants and agrees that, so long as this Credit
Agreement is in effect or any amounts payable hereunder or under any other
Credit Document shall remain outstanding, and until all of the Commitments
hereunder shall have terminated:

8.1 Indebtedness.

The Credit Parties will not permit any Consolidated Party to contract, create,
incur, assume or permit to exist any Indebtedness, except:

(a) Indebtedness arising under this Credit Agreement and the other Credit
Documents;

(b) Indebtedness of the Borrower and its Subsidiaries set forth in Schedule 8.1;

 

68

--------------------------------------------------------------------------------

(c) purchase money Indebtedness (including Capital Leases) or Synthetic Leases
hereafter incurred by the Borrower or any of its Subsidiaries to finance the
purchase of fixed assets provided that (i) the total of all such Indebtedness
for all such Persons taken together shall not exceed an aggregate principal
amount equal to 10% of Consolidated Net Worth (determined as of the end of the
most recently completed fiscal year) at any one time outstanding (including any
such Indebtedness referred to in subsection (b) above); (ii) such Indebtedness
when incurred shall not exceed the purchase price of the asset(s) financed; and
(iii) no such Indebtedness shall be refinanced for a principal amount in excess
of the principal balance outstanding thereon at the time of such refinancing;

(d) obligations of the Borrower or any of its Subsidiaries in respect of Hedging
Agreements entered into in order to manage existing or anticipated interest rate
or exchange rate risks and not for speculative purposes;

(e) obligations of the Borrower in respect of repurchases of its Capital Stock
to the extent permitted by Sections 8.6 and 8.7;

(f) obligations of the Borrower under Equity Swap Agreements provided that
(i) the term of any such Equity Swap Agreements shall not exceed 6 months and
(ii) the notional amount of all such obligations shall not exceed $45,000,000 in
the aggregate at any time outstanding;

(g) unsecured Indebtedness payable to the seller of the Capital Stock or
Property acquired in a Permitted Acquisition representing all or a portion of
the purchase price of the Capital Stock or Property so acquired;

(h) Indebtedness owing by one Credit Party to another Credit Party;

(i) other Indebtedness hereafter incurred by the Borrower not exceeding
$50,000,000 in aggregate principal amount at any time outstanding;

(j) Indebtedness of the Borrower arising under the Senior Note Purchase
Agreement and the Senior Notes in an aggregate principal amount of up to
$150,000,000 (and renewals, refinancings and extensions thereof on terms and
conditions no less favorable to the Borrower than the terms and conditions of
the Senior Note Purchase Agreement and the Senior Notes as in effect on the
Closing Date);

(k) Guaranty Obligations of any Guarantor with respect to the Indebtedness of
the Borrower permitted under Section 8.1(i) or Section 8.1(j); and

(l) obligations of the Borrower or any of its Subsidiaries in connection with
any Permitted Receivables Financing, to the extent such obligations constitute
Indebtedness.

 

69

--------------------------------------------------------------------------------

8.2 Liens.

The Credit Parties will not permit any Consolidated Party to contract, create,
incur, assume or permit to exist any Lien with respect to any of its Property,
whether now owned or after acquired, except for Permitted Liens; provided,
however, that the terms of this Section 8.2 shall not be applicable to Capital
Stock of the Borrower which constitute treasury shares held by the Borrower.

8.3 Nature of Business.

The Credit Parties will not permit any Consolidated Party to substantively alter
the character or conduct of the business conducted by such Person as of the
Closing Date.

8.4 Consolidation, Merger, Dissolution, etc.

The Credit Parties will not permit any Consolidated Party to enter into any
transaction of merger or consolidation or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution); provided that, notwithstanding the
foregoing provisions of this Section 8.4, (a) the Borrower may merge or
consolidate with any of its Subsidiaries provided that (i) either (A) the
Borrower is the continuing or surviving corporation or (B) the Person formed by
or surviving any such merger or consolidation (1) is a corporation organized or
existing under the laws of the U.S., any state thereof or the District of
Columbia and (2) expressly assumes all the obligations of the Borrower under the
Credit Documents pursuant to an agreement(s) reasonably satisfactory to the
Agent, (ii) immediately after the transaction, on a Pro Forma Basis, the Credit
Parties will be in compliance with the financial covenant set forth in
Section 7.11(c), (iii) the Credit Parties shall cause to be executed and
delivered such documents, instruments and certificates as the Agent may request
in order to maintain the perfection and priority of the Liens on the assets of
the Credit Parties and (iv) after giving effect to such transaction, no Default
or Event of Default exists, (b) any Credit Party other than the Borrower may
merge or consolidate with any other Credit Party other than the Borrower
provided that (i) the Credit Parties shall cause to be executed and delivered
such documents, instruments and certificates as the Agent may request in order
to maintain the perfection and priority of the Liens on the assets of the Credit
Parties and (ii) after giving effect to such transaction, no Default or Event of
Default exists and (c) the Borrower or any Subsidiary of the Borrower may merge
with any Person other than a Consolidated Party in connection with a Permitted
Acquisition provided that (i) either (A) the Borrower is the continuing or
surviving corporation or (B) the Person formed by or surviving any such merger
or consolidation (1) is a corporation organized or existing under the laws of
the U.S., any state thereof or the District of Columbia and (2) expressly
assumes all the obligations of the Borrower or such Subsidiary, as the case may
be, under the Credit Documents pursuant to an agreement(s) reasonably
satisfactory to the Agent, (ii) immediately after the transaction, on a Pro
Forma Basis, the Credit Parties will be in compliance with the financial
covenant set forth in Section 7.11(c), (iii) the Credit Parties shall cause to
be executed and delivered such documents, instruments and certificates as the
Agent may request in order to maintain the perfection and priority of the Liens
on the assets of the Credit Parties and (iv) after giving effect to such
transaction, no Default or Event of Default exists.

 

70

--------------------------------------------------------------------------------

8.5 Asset Dispositions.

The Credit Parties will not permit any Consolidated Party to sell, lease,
transfer or otherwise dispose of any Property (including without limitation
pursuant to any sale/leaseback transaction or securitization transaction) other
than (i) the sale of inventory in the ordinary course of business for fair
consideration, (ii) the sale or disposition of assets no longer used or useful
in the conduct of such Person’s business, (iii) Sale and Leaseback Transactions
permitted under Section 8.13, (iv) any sale of Transferred Assets by a Credit
Party to a Receivables Financing SPE, which Receivables Financing SPE then sells
to a Receivables Financier in connection with a Permitted Receivables Financing
and (v) other sales of assets, provided that the aggregate book value of assets
sold or otherwise disposed of pursuant to clause (v) in any given fiscal year
does not exceed an amount equal to 10% of Consolidated Net Worth (determined as
of the end of the most recently completed fiscal year).

Upon a sale of Capital Stock of a Consolidated Party not prohibited by this
Section 8.5, the Agent shall (to the extent applicable) deliver to the Credit
Parties, upon the Credit Parties’ request and at the Credit Parties’ expense,
such documentation as is reasonably necessary to evidence the release of such
Consolidated Party from all of its obligations, if any, under the Credit
Documents.

8.6 Investments.

The Credit Parties will not permit any Consolidated Party to make Investments in
or to any Person, except for Permitted Investments.

8.7 Restricted Payments.

The Credit Parties will not permit any Consolidated Party to, directly or
indirectly, declare, order, make or set apart any sum for or pay any Restricted
Payment, except, so long as no Default or Event of Default shall have occurred
or would occur as a result thereof, (a) to make dividends payable solely in the
same class of Capital Stock of such Person, (b) to make dividends or other
distributions payable to any Credit Party (directly or indirectly through
Subsidiaries), (c) repurchases, distributions, dividends or redemptions by the
Borrower in respect of its Capital Stock, provided that the aggregate price for
all such repurchases, distributions, dividends or redemptions after the Closing
Date shall not exceed $225,000,000 and (d) as permitted by Section 8.8.

8.8 Prepayments of Indebtedness, etc.

The Credit Parties will not permit any Consolidated Party to (i) after the
issuance thereof, amend or modify (or permit the amendment or modification of)
any of the terms of any Indebtedness if such amendment or modification would add
or change any terms in a manner adverse to the issuer of such Indebtedness, or
shorten the final maturity or average life to maturity or require any payment to
be made sooner than originally scheduled or increase the interest rate
applicable thereto or change any subordination provision thereof or (ii) if any
Default or Event of Default has occurred and is continuing or would be directly
or indirectly caused as a result thereof, make (or give any notice with respect
thereto) any voluntary or optional payment or prepayment or redemption or
acquisition for value of (including without limitation, by way of depositing
money or securities with the trustee with respect thereto before due for the
purpose of

 

71

--------------------------------------------------------------------------------

paying when due), refund, refinance or exchange of any other Indebtedness of
such Consolidated Party.

8.9 Transactions with Affiliates.

The Credit Parties will not permit any Consolidated Party to enter into or
permit to exist any transaction or series of transactions with any officer,
director, shareholder, Subsidiary or Affiliate of such Person other than
(a) transactions permitted by Section 8.1, Section 8.4, Section 8.6 or
Section 8.7, (b) normal compensation and reimbursement of expenses of officers
and directors and (c) except as otherwise specifically limited in this Credit
Agreement, other transactions which are entered into in the ordinary course of
such Person’s business on terms and conditions substantially as favorable to
such Person as would be obtainable by it in a comparable arms-length transaction
with a Person other than an officer, director, shareholder, Subsidiary or
Affiliate.

8.10 Fiscal Year; Organizational Documents.

The Credit Parties will not permit any Consolidated Party to change its fiscal
year or amend, modify or change its articles of incorporation or organization
(or corporate charter or other similar organizational document) or bylaws or
operating agreement (or other similar document) in any manner adverse to the
Lenders without the prior written consent of the Required Lenders.

8.11 Limitation on Restricted Actions.

The Credit Parties will not permit any Consolidated Party to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Person to (a) pay
dividends or make any other distributions to any Credit Party on its Capital
Stock or with respect to any other interest or participation in, or measured by,
its profits, (b) pay any Indebtedness or other obligation owed to any Credit
Party, (c) make loans or advances to any Credit Party, (d) sell, lease or
transfer any of its properties or assets to any Credit Party, (e) grant a Lien
on its properties or assets whether now owned or hereafter acquired or (f) act
as a Guarantor and pledge its assets pursuant to the Credit Documents or any
renewals, refinancings, exchanges, refundings or extension thereof, except (in
respect of any of the matters referred to in clauses (a)-(d) above) for such
encumbrances or restrictions existing under or by reason of (i) this Credit
Agreement and the other Credit Documents, (ii) the Senior Note Purchase
Agreement and the Senior Notes, or (iii) applicable law.

8.12 Ownership of Subsidiaries; Limitations on Borrower.

Notwithstanding any other provisions of this Credit Agreement to the contrary,
the Credit Parties will not permit any Consolidated Party to (a) permit any
Person (other than the Borrower or any Wholly-Owned Subsidiary of the Borrower)
to own any Capital Stock of any Subsidiary of the Borrower, (b) permit any
Subsidiary of the Borrower to issue Capital Stock (except to the Borrower or to
a Wholly-Owned Subsidiary of the Borrower), (c) permit, create, incur, assume or
suffer to exist any Lien thereon, in each case (i) except to qualify directors
where required by applicable law or to satisfy other requirements of applicable
law with respect to the ownership of Capital Stock of Subsidiaries, (ii) except
as a result of or in connection with a dissolution, merger

 

72

--------------------------------------------------------------------------------

or disposition of a Subsidiary not prohibited under Section 8.4 or Section 8.5
or (iii) except for Permitted Liens and (d) notwithstanding anything to the
contrary contained in clause (b) above, permit any Subsidiary of the Borrower to
issue any shares of preferred Capital Stock to any Person other than a Credit
Party.

8.13 Sale Leasebacks.

The Credit Parties will not permit any Consolidated Party to enter into any Sale
and Leaseback Transaction other than a Sale and Leaseback Transaction with
respect to the corporate headquarters office building to be built by the
Borrower in Clearwater, Florida, provided that value of the Property subject to
such transaction shall not exceed $20,000,000 in the aggregate.

8.14 No Further Negative Pledges.

Except (a) pursuant to this Credit Agreement and the other Credit Documents,
(b) pursuant to the Senior Note Purchase Agreement and the Senior Notes,
(c) pursuant to the documents executed in connection with any Permitted
Receivables Financing (but only to the extent that the related prohibitions
against other encumbrances pertain to the applicable Transferred Assets actually
sold, contributed, financed or otherwise conveyed or pledged pursuant to such
Permitted Receivables Financing), and (d) pursuant to any document or instrument
governing Indebtedness incurred pursuant to Section 8.1(c), provided that any
such restriction contained therein relates only to the asset or assets
constructed or acquired in connection therewith, the Credit Parties will not
permit any Consolidated Party to enter into, assume or become subject to any
agreement prohibiting or otherwise restricting the creation or assumption of any
Lien upon its properties or assets, whether now owned or hereafter acquired, or
requiring the grant of any security for such obligation if security is given for
some other obligation.

8.15 No Foreign Subsidiaries.

The Credit Parties will not create, acquire or permit to exist any Foreign
Subsidiary except for BRM.

SECTION 9

EVENTS OF DEFAULT

9.1 Events of Default.

An Event of Default shall exist upon the occurrence of any of the following
specified events (each an “Event of Default”):

(a) Payment. Any Credit Party shall

(i) default in the payment when due of any principal of any Revolving Loans or
Swingline Loans or of any reimbursement obligations arising from drawings under
Letters of Credit, or

 

73

--------------------------------------------------------------------------------

(ii) default, and such default shall continue for three (3) or more Business
Days, in the payment when due of any interest on the Revolving Loans or on any
reimbursement obligations arising from drawings under Letters of Credit, or of
any Fees or other amounts owing hereunder, under any of the other Credit
Documents or in connection herewith or therewith; or

(b) Representations. Any representation, warranty or statement made or deemed to
be made by any Credit Party herein, in any of the other Credit Documents, or in
any statement or certificate delivered or required to be delivered pursuant
hereto or thereto shall prove untrue in any material respect on the date as of
which it was made or deemed to have been made; or

(c) Covenants. Any Credit Party shall

(i) default in the due performance or observance of any term, covenant or
agreement contained in Sections 7.2, 7.9, 7.11 or 8.1 through 8.15, inclusive;

(ii) default in the due performance or observance of any term, covenant or
agreement contained in Section 7.1 and such default shall continue unremedied
for a period of at least 5 business days after the earlier of a responsible
officer of a Credit Party becoming aware of such default or notice thereof by
the Agent; or

(iii) default in the due performance or observance by it of any term, covenant
or agreement (other than those referred to in subsections (a), (b), (c)(i) or
(c)(ii) of this Section 9.1) contained in this Credit Agreement and such default
shall continue unremedied for a period of at least 30 days after the earlier of
a responsible officer of a Credit Party becoming aware of such default or notice
thereof by the Agent.

(d) Other Credit Documents. (i) Any Credit Party shall default in the due
performance or observance of any term, covenant or agreement in any of the other
Credit Documents (subject to applicable grace or cure periods, if any) or
repudiate its obligations thereunder, or (ii) except as a result of or in
connection with a dissolution, merger or disposition of a Subsidiary not
prohibited under Section 8.4 or Section 8.5, any Credit Document shall fail to
be in full force and effect or to give the Agent and/or the Lenders the Liens,
rights, powers and privileges purported to be created thereby, or any Credit
Party shall so state in writing; or

(e) Guaranties. Except as the result of or in connection with a dissolution,
merger or disposition of a Subsidiary permitted under Section 8.4, the guaranty
given by any Guarantor hereunder (including any Person after the Closing Date in
accordance with Section 7.12) or any provision thereof shall cease to be in full
force and effect, or any Guarantor (including any Person after the Closing Date
in accordance with Section 7.12) hereunder or any Person acting by or on behalf
of such Guarantor shall deny or disaffirm such Guarantor’s obligations under
such guaranty, or any Guarantor shall default in the

 

74

--------------------------------------------------------------------------------

due performance or observance of any term, covenant or agreement on its part to
be performed or observed pursuant to any guaranty; or

(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with respect to any
Consolidated Party; or

(g) Defaults under Other Agreements.

(i) Any Consolidated Party shall default in the performance or observance
(beyond the applicable grace period with respect thereto, if any) of any
material obligation or condition of any contract or lease material to the
Consolidated Parties, taken as a whole.

(ii) With respect to any Indebtedness (other than Indebtedness outstanding under
this Credit Agreement) in excess of $2,500,000 in the aggregate for the
Consolidated Parties taken as a whole, (A) any Consolidated Party shall
(1) default in any payment (beyond the applicable grace period with respect
thereto, if any) with respect to any such Indebtedness, or (2) default (after
giving effect to any applicable grace period) in the observance or performance
of any term, covenant or agreement relating to such Indebtedness or contained in
any instrument or agreement evidencing, securing or relating thereto, or any
other event or condition shall occur or condition exist, the effect of which
default or other event or condition is to cause, or permit, the holder or
holders of such Indebtedness (or trustee or agent on behalf of such holders) to
cause (determined without regard to whether any notice or lapse of time is
required), any such Indebtedness to become due prior to its stated maturity; or
(B) any such Indebtedness shall be declared due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment, prior to the
stated maturity thereof.

(h) Judgments. One or more judgments or decrees shall be entered against one or
more of the Consolidated Parties involving a liability of $2,500,000 or more in
the aggregate (to the extent not paid or fully covered by insurance provided by
a carrier who has acknowledged coverage and has, in the reasonable judgment of
the Agent, the ability to perform) and any such judgments or decrees shall not
have been vacated, discharged or stayed or bonded pending appeal within 60 days
from the entry thereof; or

(i) ERISA. Any of the following events or conditions, if such event or condition
could reasonably be expected to have a Material Adverse Effect (i) any
“accumulated funding deficiency,” as such term is defined in Section 302 of
ERISA and Section 412 of the Code, whether or not waived, shall exist with
respect to any Plan, or any lien shall arise on the assets of any Consolidated
Party or any ERISA Affiliate in favor of the PBGC or a Plan; (ii) an ERISA Event
shall occur with respect to a Single Employer Plan, which is, in the reasonable
opinion of the Agent, likely to result in the termination of such Plan for
purposes of Title IV of ERISA; (iii) an ERISA Event shall occur with respect to
a Multiemployer Plan or Multiple Employer Plan, which is, in the reasonable
opinion of the Agent, likely to result in (A) the termination of such Plan for
purposes of Title IV of ERISA, or (B) any Consolidated Party or any ERISA
Affiliate incurring any liability in connection with a withdrawal from,
reorganization of (within the meaning of Section 4241 of ERISA), or insolvency
or (within the meaning of

 

75

--------------------------------------------------------------------------------

Section 4245 of ERISA) such Plan; or (iv) any prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) or breach of
fiduciary responsibility shall occur which may subject any Consolidated Party or
any ERISA Affiliate to any liability under Sections 406, 409, 502(i), or 502(l)
of ERISA or Section 4975 of the Code, or under any agreement or other instrument
pursuant to which any Consolidated Party or any ERISA Affiliate has agreed or is
required to indemnify any person against any such liability; or

(j) Ownership. There shall occur a Change of Control.

(k) Invalidity. The Credit Documents or any provision thereof shall cease to be
in full force and effect in any material respect (other than in accordance with
their respective terms) or any Credit Party or any Person acting by or on behalf
of any Credit Party shall deny or disaffirm any Credit Party Obligation under
the Credit Documents.

9.2 Acceleration; Remedies.

Upon the occurrence of an Event of Default, and at any time thereafter unless
and until such Event of Default has been waived by the requisite Lenders
(pursuant to the voting requirements of Section 11.6) or cured to the
satisfaction of the requisite Lenders (pursuant to the voting procedures in
Section 11.6), the Agent shall, upon the request and direction of the Required
Lenders, by written notice to the Credit Parties take any of the following
actions:

(a) Termination of Commitments. Declare the Commitments terminated whereupon the
Commitments shall be immediately terminated.

(b) Acceleration. Declare the unpaid principal of and any accrued interest in
respect of all Revolving Loans, Swingline Loans, any reimbursement obligations
arising from drawings under Letters of Credit and any and all other indebtedness
or obligations of any and every kind owing by the Borrower to the Agent and/or
any of the Lenders hereunder to be due whereupon the same shall be immediately
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.

(c) Cash Collateral. Direct the Borrower to pay (and the Borrower agrees that
upon receipt of such notice, or upon the occurrence of an Event of Default under
Section 9.1(f), it will immediately pay) to the Agent additional cash, to be
held by the Agent, for the benefit of the Lenders, in a cash collateral account
as additional security for the LOC Obligations in respect of subsequent drawings
under all then outstanding Letters of Credit in an amount equal to the maximum
aggregate amount which may be drawn under all Letters of Credits then
outstanding.

(d) Enforcement of Rights. Enforce any and all rights and interests created and
existing under the Credit Documents including, without limitation, all rights
and remedies existing under the Pledge Agreement, all rights and remedies
against a Guarantor and all rights of set-off.

 

76

--------------------------------------------------------------------------------

Notwithstanding the foregoing, if an Event of Default specified in
Section 9.1(f) shall occur, then the Commitments shall automatically terminate
and all Revolving Loans, Swingline Loans, all reimbursement obligations arising
from drawings under Letters of Credit, all accrued interest in respect thereof,
all accrued and unpaid Fees and other indebtedness or obligations owing to the
Agent and/or any of the Lenders hereunder automatically shall immediately become
due and payable without the giving of any notice or other action by the Agent or
the Lenders.

SECTION 10

AGENCY PROVISIONS

10.1 Appointment and Authorization of Agent.

(a) Each Lender hereby irrevocably (subject to Section 10.9) appoints,
designates and authorizes Bank of America as the Agent under this Agreement and
the other Loan Documents and authorizes Bank of America, as the Agent to take
such action on its behalf under the provisions of this Credit Agreement and each
other Credit Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Credit Agreement or any other
Credit Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere herein or in
any other Credit Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the Agent
have or be deemed to have any fiduciary relationship with any Lender or
participant, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Credit Agreement or any other
Credit Document or otherwise exist against the Agent. Without limiting the
generality of the foregoing sentence, the use of the term “agent” herein and in
the other Credit Documents with reference to the Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead, such term is used merely as a
matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties.

(b) The Issuing Lender shall act on behalf of the Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith until such
time (and except for so long) as the Agent may agree at the request of the
Required Lenders to act for the Issuing Lender with respect thereto; provided,
however, that the Issuing Lender shall have all of the benefits and immunities
(i) provided to the Agent in this Section 10 with respect to any acts taken or
omissions suffered by the Issuing Lender in connection with Letters of Credit
issued by it or proposed to be issued by it and the application and agreements
for letters of credit pertaining to the Letters of Credit as fully as if the
term “Agent” as used in this Section 10 included the Issuing Lender with respect
to such acts or omissions, and (ii) as additionally provided herein with respect
to the Issuing Lender.

10.2 Delegation of Duties.

The Agent may execute any of its duties under this Credit Agreement or any other
Credit Document by or through agents, employees or attorneys-in-fact and shall
be entitled to advice of

 

77

--------------------------------------------------------------------------------

counsel and other consultants or experts concerning all matters pertaining to
such duties. The Agent shall not be responsible for the negligence or misconduct
of any agent or attorney-in-fact that it selects in the absence of gross
negligence or willful misconduct.

10.3 Liability of Agent.

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

10.4 Reliance by Agent.

(a) The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, communication, signature, resolution, representation,
notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to any Credit Party), independent accountants and other experts selected
by the Agent. The Agent shall be fully justified in failing or refusing to take
any action under any Credit Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Credit
Agreement or any other Credit Document in accordance with a request or consent
of the Required Lenders or all the Lenders, if required hereunder, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders and participants. Where this Credit Agreement expressly
permits or prohibits an action unless the Required Lenders otherwise determine,
the Agent shall, and in all other instances, the Agent may, but shall not be
required to, initiate any solicitation for the consent or a vote of the Lenders.

(b) For purposes of determining compliance with the conditions specified in
Section 5.1, each Lender that has signed this Credit Agreement shall be deemed
to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Lender for consent,
approval, acceptance or satisfaction,

 

78

--------------------------------------------------------------------------------

or required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender.

10.5 Notice of Default.

The Agent shall not be deemed to have knowledge or notice of the occurrence of
any Default or Event of Default, except with respect to defaults in the payment
of principal, interest and fees required to be paid to the Agent for the account
of the Lenders, unless the Agent shall have received written notice from a
Lender or the Borrower referring to this Credit Agreement, describing such
Default or Event of Default and stating that such notice is a “notice of
default.” The Agent will notify the Lenders of its receipt of any such notice.
The Agent shall take such action with respect to such Default or Event of
Default as may be directed by the Required Lenders in accordance with Section 9;
provided, however, that unless and until the Agent has received any such
direction, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Lenders.

10.6 Credit Decision; Disclosure of Information by Agent.

Each Lender acknowledges that no Agent-Related Person has made any
representation or warranty to it, and that no act by the Agent hereinafter
taken, including any consent to and acceptance of any assignment or review of
the affairs of any Credit Party or any Affiliate thereof, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Lender as to any matter, including whether Agent-Related Persons have disclosed
material information in their possession. Each Lender represents to the Agent
that it has, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Credit
Parties and their respective Subsidiaries, and all applicable bank or other
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Credit Agreement and to extend credit to the
Borrower and the other Credit Parties hereunder. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Credit Agreement and the other Credit
Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and other
condition and creditworthiness of the Borrower and the other Credit Parties.
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Agent herein, the Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of any of the Credit Parties or any of their
respective Affiliates which may come into the possession of any Agent-Related
Person.

10.7 Indemnification of Agent.

Whether or not the transactions contemplated hereby are consummated, the Lenders
shall indemnify upon demand each Agent-Related Person (to the extent not
reimbursed by or on behalf of any Credit Party and without limiting the
obligation of any Credit Party to do so), pro

 

79

--------------------------------------------------------------------------------

rata, and hold harmless each Agent-Related Person from and against any and all
Indemnified Liabilities incurred by it; provided, however, that no Lender shall
be liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities resulting from such Person’s gross negligence or willful
misconduct; provided, however, that no action taken in accordance with the
directions of the Required Lenders shall be deemed to constitute gross
negligence or willful misconduct for purposes of this Section. Without
limitation of the foregoing, each Lender shall reimburse the Agent upon demand
for its ratable share of any costs or out-of-pocket expenses (including attorney
costs) incurred by the Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Credit Agreement, any other
Credit Document, or any document contemplated by or referred to herein, to the
extent that the Agent is not reimbursed for such expenses by or on behalf of the
Borrower. The undertaking in this Section shall survive termination of the
Commitments, the payment of all Credit Party Obligations hereunder and the
resignation or replacement of the Agent.

10.8 Agent in its Individual Capacity.

Bank of America and its Affiliates may make loans to, issue letters of credit
for the account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory, underwriting
or other business with each of the Credit Parties and their respective
Affiliates as though Bank of America were not the Agent or the Issuing Lender
hereunder and without notice to or consent of the Lenders. The Lenders
acknowledge that, pursuant to such activities, Bank of America or its Affiliates
may receive information regarding any Credit Party or its Affiliates (including
information that may be subject to confidentiality obligations in favor of such
Credit Party or such Affiliate) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to its Revolving
Loans, Bank of America shall have the same rights and powers under this Credit
Agreement as any other Lender and may exercise such rights and powers as though
it were not the Agent or the Issuing Lender, and the terms “Lender” and
“Lenders” include Bank of America in its individual capacity.

10.9 Successor Agent.

The Agent may resign as Agent upon thirty (30) days’ notice to the Lenders. If
the Agent resigns under this Credit Agreement, the Required Lenders shall
appoint from among the Lenders a successor Agent for the Lenders which successor
Agent shall be consented to by the Borrower at all times other than during the
existence of an Event of Default (which consent of the Borrower shall not be
unreasonably withheld or delayed). If no successor Agent is appointed prior to
the effective date of the resignation of the Agent, the Agent may appoint, after
consulting with the Lenders and the Borrower, a successor Agent from among the
Lenders. Upon the acceptance of its appointment as successor Agent hereunder,
such successor Agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term “Agent” shall mean such successor Agent and the
retiring Agent’s appointment, powers and duties as Agent shall be terminated.
After any retiring Agent’s resignation hereunder as Agent, the provisions of
this Section 10 and Sections 11.4 and 11.9 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this Credit
Agreement. If no successor Agent has accepted appointment as Agent by the date
which is thirty (30) days following a retiring Agent’s

 

80

--------------------------------------------------------------------------------

notice of resignation, the retiring Agent’s resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
the Agent hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above.

10.10 Other Agents; Book Managers.

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

SECTION 11

MISCELLANEOUS

11.1 Notices.

Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below, (c) the Business Day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (d) the fifth Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address, in the case of the Borrower, Guarantors and
the Agent, set forth below, and, in the case of the Lenders, set forth on
Schedule 2.1(a), or at such other address as such party may specify by written
notice to the other parties hereto:

(a) if to any Credit Party:

Lincare Holdings Inc.

19387 U.S. 19 North

Clearwater, Florida 33764

Attn: Chief Financial Officer

Telephone: (727) 530-7700

Telecopy: (727) 532-9692

with a copy to:

Lincare Holdings Inc.

19387 U.S. 19 North

Clearwater, Florida 33764

Attn: Legal Department

Telephone: (727) 530-7700

Telecopy: (727) 532-9692

 

81

--------------------------------------------------------------------------------

(b) if to the Agent (for notices regarding borrowings, payments, conversions,
fees, interest, and other administrative matter):

Bank of America, N.A.

Independence Center, 15/th/ Floor

NC1-001-15-04, 101 North Tryon Street

Charlotte, North Carolina 28255

Attn: Agency Services - Richard Wright

Telephone: 704-387-2472

Telecopy: 704-409-0127

(c) if to the Administrative Agent for all other notices (including with respect
to delivery of financial statements, compliance certificates, Defaults and
Events of Default, amendments, waivers and modifications of the Credit Documents
and assignments):

Bank of America, N.A.

Agency Management

1455 Market Street, CA5-704-05-19

San Francisco, CA 94103

Attention: Cassandra McCain

Telephone: (415) 436-3400

Telecopy: (415) 503-5133

with a copy to:

Bank of America, N. A.

Location Code: NC1-007-17-11

100 North Tryon, 17/th/ Floor

Charlotte, North Carolina 28202

Attention: Phil Durand

Telephone: (704) 386-4955

Telecopy: (704) 388-6002

(d) if to any other Lender, to it at its address (or telecopy number) set forth
in its Administrative Questionnaire.

Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Credit Agreement shall be deemed to have been given on the date of
receipt.

11.2 Right of Set-Off; Adjustments.

Upon the occurrence and during the continuance of any Event of Default, each
Lender (and each of its Affiliates) is hereby authorized at any time and from
time to time, to the fullest

 

82

--------------------------------------------------------------------------------

extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender (or any of its Affiliates) to or
for the credit or the account of any Credit Party against any and all of the
obligations of such Person now or hereafter existing under this Credit
Agreement, under the Revolving Notes, if any, under any other Credit Document or
otherwise, irrespective of whether such Lender shall have made any demand
hereunder or thereunder and although such obligations may be unmatured. Each
Lender agrees promptly to notify any affected Credit Party after any such
set-off and application made by such Lender; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section 11.2 are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) that such Lender may have.

11.3 Successors and Assigns.

(a) The provisions of this Credit Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
each Lender (and any attempted assignment or transfer by the Borrower without
such consent shall be null and void). Nothing in this Credit Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
and, to the extent expressly contemplated hereby, the Indemnitees) any legal or
equitable right, remedy or claim under or by reason of this Credit Agreement.

(b) Any Lender may assign to one or more Eligible Assignees all or a portion of
its rights and obligations under this Credit Agreement (including all or a
portion of its Commitments and the Revolving Loans (including for purposes of
this subsection (b), participations in LOC Obligations and in Swingline Loans)
at the time owing to it); provided that (i) except in the case of an assignment
of the entire remaining amount of the assigning Lender’s Commitment and the
Revolving Loans at the time owing to it or in the case of an assignment to a
Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender,
the aggregate amount of the Commitment (which for this purpose includes
Revolving Loans outstanding thereunder) subject to each such assignment,
determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Agent, shall not be less than $5,000,000 and in
integral multiples of $100,000 in excess thereof, unless each of the Agent and,
so long as no Event of Default has occurred and is continuing, the Borrower
otherwise consents (each such consent not to be unreasonably withheld or
delayed), (ii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Credit Agreement with respect to the Revolving Loans or the Commitments
assigned, except that this clause (ii) shall not apply to rights in respect of
outstanding Swingline Loans, and (iii) the parties to each assignment shall
execute and deliver to the Agent an Assignment and Acceptance, together with a
processing and recordation fee of $3,500. Subject to acceptance and recording
thereof by the Agent pursuant to subsection (c) of this Section, from and after
the effective date specified in each Assignment and Acceptance, the Eligible
Assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such

 

83

--------------------------------------------------------------------------------

Assignment and Acceptance, have the rights and obligations of a Lender under
this Credit Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Acceptance, be released from its
obligations under this Credit Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender’s rights and obligations under
this Credit Agreement, such Lender shall cease to be a party hereto but shall
continue to be entitled to the benefits of Sections 3.9, 3.11, 3.12, and 11.5).
Upon request, the Borrower (at its expense) shall execute and deliver new or
replacement Revolving Notes to the assigning Lender and the assignee Lender. Any
assignment or transfer by a Lender of rights or obligations under this Credit
Agreement that does not comply with this subsection shall be treated for
purposes of this Credit Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with subsection (d) of this Section.

(c) The Agent, acting solely for this purpose as an agent of the Borrower, shall
maintain at the Agent’s principal office in Charlotte, North Carolina a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amount of the Revolving Loans and LOC Obligations owing to, each
Lender pursuant to the terms hereof from time to time (the “Register”). The
entries in the Register shall be conclusive, and the Borrower, the 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 Credit
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.

(d) Any Lender may, without the consent of, or notice to, the Borrower or the
Agent, sell participations to one or more banks or other entities (a
“Participant”) in all or a portion of such Lender’s rights and/or obligations
under this Credit Agreement (including all or a portion of its Commitments
and/or the Revolving Loans (including such Lender’s participations in LOC
Obligations and/or Swingline Loans) owing to it); provided that (i) such
Lender’s obligations under this Credit Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations and (iii) the Borrower, the Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Credit
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 Credit Agreement and to approve any amendment, modification or
waiver of any provision of this Credit 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 that would
(i) postpone any date upon which any payment of money is scheduled to be paid to
such Participant, (ii) reduce the principal, interest, fees or other amounts
payable to such Participant or (iii) release all or substantially all of the
Guarantors from their obligations under Credit Agreement and the other Credit
Documents. Subject to subsection (e) of this Section, the Borrower agrees that
each Participant shall be entitled to the benefits of Sections 3.6, 3.9, 3.11
and 3.12 to the same extent as if it were a Lender and had acquired its interest
by assignment pursuant to subsection (b) of this Section. To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 11.2 as

 

84

--------------------------------------------------------------------------------

though it were a Lender, provided such Participant agrees to be subject to
Section 3.14 as though it were a Lender.

(e) A Participant shall not be entitled to receive any greater payment under
Sections 3.6, 3.9 or 3.11 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 3.11 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 3.11(b) as
though it were a Lender.

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

(g) If the consent of the Borrower to an assignment or to an Eligible Assignee
is required hereunder (including a consent to an assignment which does not meet
the minimum assignment threshold specified in clause (i) of the proviso to the
first sentence of Section 11.3(b)), the Borrower shall be deemed to have given
its consent five (5) Business Days after the date notice thereof has been
delivered by the assigning Lender (through the Agent) unless such consent is
expressly refused by the Borrower prior to such fifth Business Day.

(h) Notwithstanding anything to the contrary contained herein, if at any time
Bank of America assigns all of its Commitments and Revolving Loans pursuant to
subsection (b) above, Bank of America may, (i) upon thirty (30) days’ notice to
the Borrower and the Lenders, resign as Issuing Lender and/or (ii) upon five
(5) Business Days’ notice to the Borrower, terminate the Swingline Commitment.
In the event of any such resignation as Issuing Lender or termination of the
Swingline Commitment, the Borrower shall be entitled to appoint from among the
Lenders a successor Issuing Lender or Swingline Lender hereunder; provided,
however, that no failure by the Borrower to appoint any such successor shall
affect the resignation of Bank of America as Issuing Lender or the termination
of the Swingline Commitment, as the case may be. Bank of America shall retain
all the rights and obligations of the Issuing Lender hereunder with respect to
all Letters of Credit outstanding as of the effective date of its resignation as
Issuing Lender and all LOC Obligations with respect thereto (including the right
to require the Lenders to make Base Rate Loans or fund participations in Letters
of Credit pursuant to Section 2.2(c)). If Bank of America terminates the
Swingline Commitment, it shall retain all the rights of the Swingline Lender
provided for hereunder with respect to Swingline Loans made by it and
outstanding as of the effective date of such termination, including the right to
require the Lenders to make Base Rate Loans or fund participations in
outstanding Swingline Loans pursuant to Section 2.3(b)(iii).

 

85

--------------------------------------------------------------------------------

11.4 No Waiver; Remedies Cumulative.

No failure or delay on the part of the Agent or any Lender in exercising any
right, power or privilege hereunder or under any other Credit Document and no
course of dealing between the Agent or any Lender and any of the Credit Parties
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder or under any other Credit Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights and remedies
provided herein are cumulative and not exclusive of any rights or remedies which
the Agent or any Lender would otherwise have. No notice to or demand on any
Credit Party in any case shall entitle the Borrower or any other Credit Party to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Agent or the Lenders to any other or
further action in any circumstances without notice or demand.

11.5 Expenses; Indemnification.

(a) The Borrower agrees to pay on demand all costs and expenses of the Agent in
connection with the syndication, preparation, execution, delivery,
administration, modification, and amendment of this Credit Agreement, the other
Credit Documents, and the other documents to be delivered hereunder, including,
without limitation, the reasonable fees and expenses of counsel for the Agent
with respect thereto and with respect to advising the Agent as to its rights and
responsibilities under the Credit Documents. The Borrower further agrees to pay
on demand all reasonable costs and expenses of the Agent and the Lenders, if
any, in connection with the enforcement (whether through negotiations, legal
proceedings, or otherwise) of the Credit Documents and the other documents to be
delivered hereunder.

(b) Whether or not the transactions contemplated hereby are consummated, the
Credit Parties agree to indemnify, save and hold harmless each Agent-Related
Person, each Lender and their respective Affiliates, directors, officers,
employees, counsel, agents and attorneys-in-fact (collectively the
“Indemnitees”) from and against: (i) any and all claims, demands, actions or
causes of action that are asserted against any Indemnitee by any Person (other
than the Agent or any Lender) relating directly or indirectly to a claim,
demand, action or cause of action that such Person asserts or may assert against
any Credit Party, any Affiliate of any Credit Party or any of their respective
officers or directors; (ii) any and all claims, demands, actions or causes of
action that may at any time (including at any time following repayment of the
Credit Party Obligations and the resignation or removal of the Agent or the
replacement of any Lender) be asserted or imposed against any Indemnitee,
arising out of or relating to, the Credit Documents, any predecessor loan
documents, the Commitments, the use or contemplated use of the proceeds of any
Loan or Letter of Credit, the relationship of any Credit Party, the Agent and
the Lenders under this Credit Agreement or any other Credit Document, or any
actual or alleged breach of any Environmental Law; (iii) any administrative or
investigative proceeding by any Governmental Authority arising out of or related
to a claim, demand, action or cause of action described in subsection (i) or
(ii) above; and (iv) any and all liabilities (including liabilities under
indemnities), losses, costs or expenses (including reasonable attorney costs)
that any Indemnitee suffers or incurs as a result of the assertion of any
foregoing claim, demand, action, cause of action or proceeding, or as a result
of the preparation of any defense in connection with any foregoing claim,
demand, action, cause of action or proceeding, in all cases, whether or not
arising out of the negligence of an Indemnitee, and whether or not an Indemnitee
is a party to

 

86

--------------------------------------------------------------------------------

such claim, demand, action, cause of action or proceeding (all the foregoing,
collectively, the “Indemnified Liabilities”); provided that no Indemnitee shall
be entitled to indemnification for any claim caused by its own gross negligence
or willful misconduct or for any loss asserted against it by another Indemnitee.
The agreements in this Section shall survive the termination of the Commitments
and repayment of all the Credit Party Obligations.

11.6 Amendments, Waivers and Consents.

Neither this Credit Agreement nor any other Credit Document nor any of the terms
hereof or thereof may be amended, changed, waived, discharged or terminated
unless such amendment, change, waiver, discharge or termination is in writing
entered into by, or approved in writing by, the Required Lenders and the
Borrower, provided, however, that:

(a) without the consent of each Lender affected thereby, no such amendment,
change or waiver shall:

(i) extend the final maturity of any Loan or the time of payment of any
reimbursement obligation, or any portion thereof, arising from drawings under
Letters of Credit, or extend or waive the principal payment of any Loan, or any
portion thereof;

(ii) reduce the rate or extend the time of payment of interest (other than as a
result of waiving the applicability of any post-default increase in interest
rates) thereon or Fees or costs hereunder;

(iii) reduce or waive the principal amount of any Loan (except for the waiver of
a mandatory prepayment required by Section 3.3(b) hereof) or of any
reimbursement obligation, or any portion thereof, arising from drawings under
Letters of Credit;

(iv) increase the Commitment of a Lender over the amount thereof in effect (it
being understood and agreed that a waiver of any Default or Event of Default or
mandatory reduction in the Commitments shall not constitute a change in the
terms of any Commitment of any Lender);

(v) release all or substantially all of the Pledged Collateral;

(vi) except as the result of or in connection with a dissolution, merger or
disposition of a Subsidiary permitted under Section 8.4, release the Borrower or
substantially all of the other Credit Parties from its or their obligations
under the Credit Documents;

(vii) amend, modify or waive any provision of this Section 11.6 or Section 3.14;

(viii) reduce any percentage specified in, or otherwise modify, the definition
of Required Lenders; or

 

87

--------------------------------------------------------------------------------

(ix) consent to the assignment or transfer by the Borrower or all or
substantially all of the other Credit Parties of any of its or their rights and
obligations under (or in respect of) the Credit Documents except as permitted
thereby;

(b) without the consent of the Agent, no provision of Section 10 may be amended;

(c) without the consent of the Issuing Lender, no provision of Section 2.2 may
be amended.

(d) without the consent of the Swingline Lender, no provision of Section 2.3 may
be amended.

Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, each Lender is entitled to vote as
such Lender sees fit on any bankruptcy reorganization plan that affects the
Revolving Loans, and each Lender acknowledges that the provisions of
Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent
provisions set forth herein.

11.7 Counterparts.

This Credit Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart for each of the parties hereto. Delivery by facsimile by any of
the parties hereto of an executed counterpart of this Credit Agreement shall be
as effective as an original executed counterpart hereof and shall be deemed a
representation that an original executed counterpart hereof will be delivered.

11.8 Headings.

The headings of the sections and subsections hereof are provided for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Credit Agreement.

11.9 Survival.

All indemnities set forth herein, including, without limitation, in
Section 2.2(i), 3.11, 3.12, 10.5 or 11.5 shall survive the execution and
delivery of this Credit Agreement, the making of the Revolving Loans, the
issuance of the Letters of Credit, the repayment of the Revolving Loans, LOC
Obligations and other obligations under the Credit Documents and the termination
of the Commitments hereunder, and all representations and warranties made by the
Credit Parties herein shall survive delivery of the Revolving Notes, if any, and
the making of the Revolving Loans hereunder.

 

88

--------------------------------------------------------------------------------

11.10 Governing Law; Submission to Jurisdiction; Venue.

(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Any legal action or proceeding with respect to this Credit Agreement or any
other Credit Document may be brought in the courts of the State of North
Carolina in Mecklenburg County, or the State of New York in New York County or
of the United States for the Western District of North Carolina or the Southern
District of New York, and, by execution and delivery of this Credit Agreement,
each of the Credit Parties hereby irrevocably accepts for itself and in respect
of its property, generally and unconditionally, the nonexclusive jurisdiction of
such courts. Each of the Credit Parties further irrevocably consents to the
service of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to it at the address set out for notices pursuant to
Section 11.1, such service to become effective three (3) days after such
mailing. Nothing herein shall affect the right of the Agent or any Lender to
serve process in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against any Credit Party in any other
jurisdiction.

(b) Each of the Credit Parties hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Credit Agreement or any
other Credit Document brought in the courts referred to in subsection (a) above
and hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.

(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT, THE LENDERS, THE BORROWER
AND THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS CREDIT
AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

11.11 Severability.

If any provision of any of the Credit Documents is determined to be illegal,
invalid or unenforceable, such provision shall be fully severable and the
remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.

11.12 Entirety.

This Credit Agreement together with the other Credit Documents represent the
entire agreement of the parties hereto and thereto, and supersede all prior
agreements and

 

89

--------------------------------------------------------------------------------

understandings, oral or written, if any, including any commitment letters or
correspondence relating to the Credit Documents or the transactions contemplated
herein and therein.

11.13 Binding Effect; Termination.

(a) This Credit Agreement shall become effective at such time on or after the
Closing Date when it shall have been executed by the Borrower, the Guarantors
and the Agent, and the Agent shall have received copies hereof (telefaxed or
otherwise) which, when taken together, bear the signatures of each Lender, and
thereafter this Credit Agreement shall be binding upon and inure to the benefit
of the Borrower, the Guarantors, the Agent and each Lender and their respective
successors and assigns.

(b) The term of this Credit Agreement shall be until no Revolving Loans, LOC
Obligations or any other amounts payable hereunder or under any of the other
Credit Documents shall remain outstanding, no Letters of Credit shall be
outstanding, all of the Credit Party Obligations have been irrevocably satisfied
in full and all of the Commitments hereunder shall have expired or been
terminated.

11.14 Conflict.

To the extent that there is a conflict or inconsistency between any provision
hereof, on the one hand, and any provision of any Credit Document, on the other
hand, this Credit Agreement shall control.

11.15 Confidentiality.

Each of the Agent and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates’ directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential); (b) to the extent requested by any regulatory authority; (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process; (d) to any other party to this Credit Agreement; (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Credit Agreement or the enforcement of rights
hereunder; (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any Eligible Assignee of or Participant
in, or any prospective Eligible Assignee of or Participant in, any of its rights
or obligations under this Credit Agreement or (ii) any direct or indirect
contractual counterparty or prospective counterparty (or such contractual
counterparty’s or prospective counterparty’s professional advisor) to any credit
derivative transaction relating to obligations of the Borrower; (g) with the
consent of the Borrower; (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) becomes
available to the Agent or any Lender on a nonconfidential basis from a source
other than the Borrower; or (i) to the National Association of Insurance
Commissioners or any other similar organization or any nationally recognized
rating agency that requires access to information about a Lender’s or its
Affiliates’ investment portfolio in connection with ratings issued with respect
to such Lender or its Affiliates. For the purposes of this Section,
“Information” means all information received from the Borrower relating to the
Borrower or its

 

90

--------------------------------------------------------------------------------

business, other than any such information that is available to the Agent or any
Lender on a nonconfidential basis prior to disclosure by the Borrower.

[remainder of page intentionally left blank]

 

91

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this
Credit Agreement to be duly executed and delivered as of the date first above
written.

 

BORROWER:     LINCARE HOLDINGS INC.,     a Delaware corporation     By:  

/s/ Paul G. Gabos

    Name:  

Paul G. Gabos

    Title:  

Chief Financial Officer

GUARANTORS:     LINCARE INC.,     a Delaware corporation     By:  

/s/ Paul G. Gabos

    Name:  

Paul G. Gabos

    Title:  

Chief Financial Officer

    LINCARE PROCUREMENT INC.,     a Delaware corporation     By:  

/s/ Paul G. Gabos

    Name:  

Paul G. Gabos

    Title:  

Chief Financial Officer, Secretary & Treasurer

    LINCARE ASSET MANAGEMENT LP,     a Nevada limited partnership     By:
Lincare Holdings Inc., a Delaware corporation, its general partner     By:  

/s/ Paul G. Gabos

    Name:  

Paul G. Gabos

    Title:  

Chief Financial Officer

    LINCARE OF NEW YORK INC.,     a New York corporation     By:  

/s/ Paul G. Gabos

    Name:  

Paul G. Gabos

    Title  

Chief Financial Officer, Secretary & Treasurer

--------------------------------------------------------------------------------

    LINCARE PHARMACY SERVICES INC.,     a Delaware corporation     By:  

/s/ Paul G. Gabos

    Name:  

Paul G. Gabos

    Title:  

Chief Financial Officer, Secretary & Treasurer

   

LINCARE LICENSING INC.,

a Delaware corporation

    By:  

/s/ Paul G. Gabos

    Name:  

Paul G. Gabos

    Title:  

Chief Financial Officer, Secretary & Treasurer

   

CONVACARE SERVICES INC.,

an Indiana corporation

    By:  

/s/ Paul G. Gabos

    Name:  

Paul G. Gabos

    Title:  

Chief Financial Officer, Secretary & Treasurer

   

LINCARE TRAVEL INC.,

a Delaware corporation

    By:  

/s/ Paul G. Gabos

    Name:  

Paul G. Gabos

    Title:  

Chief Financial Officer, Secretary & Treasurer

   

MED 4 HOME INC.,

a Delaware corporation

    By:  

/s/ Paul G. Gabos

    Name:  

Paul G. Gabos

    Title:  

Chief Financial Officer, Secretary & Treasurer

   

ALPHA RESPIRATORY, INC.,

a Delaware corporation

    By:  

/s/ Paul G. Gabos

    Name:  

Paul G. Gabos

    Title:  

Chief Financial Officer, Secretary & Treasurer

--------------------------------------------------------------------------------

AGENT:     BANK OF AMERICA, N. A.,     individually in its capacity as Agent    
By:  

/s/ Philip S. Durand

    Name:  

Philip S. Durand

    Title:  

Managing Director

LENDERS:     BANK OF AMERICA, N. A.,     individually in its capacity as a
Lender     By:  

/s/ Philip S. Durand

    Name:  

Philip S. Durand

    Title:  

Managing Director

--------------------------------------------------------------------------------

    CREDIT LYONNAIS NEW YORK BRANCH,     as a Lender     By:  

/s/ Charles Heidreick

    Name:  

Charles Heidreick

    Title:  

Senior Vice President

--------------------------------------------------------------------------------

    U.S. BANK NATIONAL ASSOCIATION,     as a Lender     By:  

/s/ S. W. Choppin

    Name:  

S. W. Choppin

    Title:  

SVP

--------------------------------------------------------------------------------

    BANK LEUMI USA,     as a Lender     By:  

/s/ Gloria Bucher

    Name:  

Gloria Bucher

    Title:  

Senior Vice President/Managing Director

--------------------------------------------------------------------------------

    NATIONAL CITY BANK OF KENTUCKY,     as a Lender     By:  

/s/ Deroy Scott

    Name:  

Deroy Scott

    Title:  

Sr. Vice President

--------------------------------------------------------------------------------

    SCOTIABANC, INC.,     as a Lender     By:  

/s/ Dana Maloney

    Name:  

Dana Maloney

    Title:  

Relationship Manager

--------------------------------------------------------------------------------

Schedule 1.1(a)

INVESTMENTS

 

Real Property @ 4245 South High School Rd, Indianapolis, IN

   $ 20,000

Headquarters facility and land

     18,784,000

Investment in Partnership (80% Equity Interest) - Lincare of Columbia

     1,697,000       

Total

   $ 20,501,000       

--------------------------------------------------------------------------------

Schedule 1.1(b)

LIENS

 

Ford Motor Credit - vehicle leases

   $ 7,814,000

Leaseplan - vehicle leases

     10,134,000

Wheels Inc. - vehicle leases

     33,000

WorldCom - long distance & frame relay contract

     22,634,000

Pitney Bowes & Ascom Hasler - postage meter contracts

     700,000       

Total

   $ 41,315,000       

--------------------------------------------------------------------------------

Schedule 1.1(c)

EXISTING LETTERS OF CREDIT

L/C 3704840

Issuance Date: 12/21/93

Issuing Lender: Bank of America

Expiry Date: 11/25/2002

Beneficiary: The Travelers Indemnity Co.

Original Amount: $5,500,000.00

Current Amount: $5,500,000.00

L/C 3047589

Issuance Date: 4/02/2002

Issuing Lender: Bank of America

Expiry Date: 4/05/2003

Beneficiary: The State of Florida

Original Amount: $60,000

Current Amount: $60,000

--------------------------------------------------------------------------------

Schedule 2.1(a)

LENDER ADDRESSES AND COMMITMENTS

 

Lender

   Five Year Revolving
Commitment    Commitment Percentage  

Bank of America, N.A.

   $ 60,000,000    30 % 

Attn: Richard Wright

     

Agency Services

     

Independence Center, 15th Floor

     

101 N. Tryon Street

     

Charlotte, North Carolina 28255

     

Ph: (704) 387-2472

     

Fax: (704) 409-0127

     

ScotiaBanc Inc.

   $ 60,000,000    30 % 

Attn: Dana Maloney

     

600 Peachtree Street, N.E.

     

Suite 2700

     

Atlanta, GA 30308

     

Ph: (404) 877-1524

     

Fax: (404) 888-8998

     

Credit Lyonnais New York Branch

   $ 35,000,000    17.5 % 

Attn: Gener David

     

Client Banking Services

     

1301 Avenue of the Americas

     

New York, NY 10019

     

Ph: (212) 261-7741

     

Fax: (212) 459-3181

     

U.S. Bank National Association

   $ 25,000,000    12.5 % 

Attn: S.W. Choppin

     

150 4th Avenue North

     

Nashville, TN 37219

     

Ph: (615) 251-9225

     

Fax: (615) 251-0729

           —     

National City Bank of Kentucky

   $ 10,000,000    5 % 

Attn: Deroy Scott

     

101 South Fifth Street

     

Louisville, KY 40206

     

Ph: (502) 581-7821

     

Fax: (502) 581-4424

     

Bank Leumi USA

   $ 10,000,000    5 % 

Attn: Joung Hee Hong

     

579 Fifth Avenue

     

New York, NY 10017

     

Ph: (212) 407-4469

     

Fax: (212) 407-4317

                   

Total

   $ 200,000,000    100 %               

--------------------------------------------------------------------------------

Schedule 6.9

LITIGATION

NONE.

--------------------------------------------------------------------------------

Schedule 6.13

SUBSIDIARIES

 

Subsidiary Name

  

Jurisdiction of
Incorporation/
Organization

  

Total Number of
Shares Authorized

  

Total Number of
Shares Outstanding

  

Ownership by
Consolidated Party

  

Outstanding
Options,
Warrants,
Rights, Etc.

Lincare Inc.

   Delaware   

1,000 Common

1,000 Preferred

  

500 Common

-0- Preferred

  

500 Common

Lincare Holdings Inc.

   -0-

Lincare Procurement Inc.

   Delaware    1,000 Common    1,000 Common   

1,000 Common

Lincare Holdings Inc.

   -0-

Lincare Travel Inc.

   Delaware    1,000 Common    1,000 Common    1,000 Common Lincare Holdings
Inc.    -0-

Convacare Services, Inc.

   Indiana    2,000,000 Common    1,280,500 Common   

1,280,500 Common

Lincare Holdings Inc.

   Note 1

Lincare of New York Inc.

   New York    100 Common    100 Common   

100 Common

Lincare Inc.

   -0-

Lincare Licensing Inc.

   Delaware    1,000 Common    1,000 Common   

1,000 Common

Lincare Inc.

   -0-

Lincare Pharmacy Services Inc.

   Delaware    1,000 Common    1,000 Common   

1,000 Common

Lincare Inc.

   -0-

Lincare Asset Management Limited Partnership

   Nevada    1% General Partnership Interest 99% Limited Partnership Interest   
1% General Partnership Interest 99% Limited Partnership Interest   

1 % General Partnership Interest
Lincare Holdings Inc.
99% Limited Partnership Interest

Lincare Inc.

   -0-

Med4Home Inc.

   Delaware    1,000 Common    1,000 Common   

1,000 Common

Lincare Inc.

   -0-

Alpha Respiratory Inc.

   Delaware    1,000 Common    1,000 Common    1,000 Common Lincare Inc.    -0-

Lincare of
Columbia, L.P.

   South Carolina    80% General Partnership Interest 20% Limited Partnership
Interest    80% General Partnership Interest 20% Limited Partnership Interest   
80% General Partnership Interest Lincare Inc.    -0-

Note 1: Pre-emptive rights provided to shareholder(s) by Article V, Section 2(i)
of the Articles of Incorporation. As the sole shareholder of Convacare Services,
Inc., Borrower is the sole beneficiary of such rights.

--------------------------------------------------------------------------------

Schedule 8.1

INDEBTEDNESS

 

Ford Motor Credit - vehicle leases

   $ 7,814,000

Leaseplan - vehicle leases

     10,134,000

Wheels Inc. - vehicle leases

     33,000

WorldCom - long distance & frame relay contract

     22,634,000

Pitney Bowes & Ascom Hasler - postage meter contracts

     700,000

ADP 5 year Licensing Agreement & fees (Express 8.0 software)

     25,000       

Total

   $ 41,340,000       

--------------------------------------------------------------------------------

EXHIBIT 1.1 (a)

SECOND AMENDED AND RESTATED PLEDGE AGREEMENT

THIS SECOND AMENDED AND RESTATED PLEDGE AGREEMENT (this “Pledge Agreement”) is
entered into as of September 6, 2000 among LINCARE HOLDINGS INC., a Delaware
corporation (the “Borrower”), certain Subsidiaries of the Borrower (individually
a “Guarantor”, and collectively, the “Guarantors”; together with the Borrower,
individually a “Pledgor”, and collectively the “Pledgors”) and BANK OF AMERICA,
N.A., in its capacity as collateral agent (in such capacity, the “Collateral
Agent”) for (i) for the lenders from time to time party to the Credit Agreement
described below (the “Lenders”) and (ii) the Senior Noteholders (as defined
below).

RECITALS

WHEREAS, pursuant to that certain Three-Year Credit Agreement, dated as of
August 23, 1999, amended pursuant to a First Amendment to Three-Year Credit
Agreement dated as of June 20, 2000, and as further amended pursuant to a Second
Amendment to Three-Year Credit Agreement dated as of August 21, 2000 (as so
previously amended and as the same may be amended, modified, extended, renewed
or replaced from time to time hereafter, the “Credit Agreement”), among the
Borrower, the Guarantors, the Lenders and Bank of America, N.A., as agent for
such Lenders (the “Administrative Agent”), the Lenders have established a
$240,000,000 three-year credit facility in favor of the Borrower;

WHEREAS, pursuant to that certain Note Purchase Agreement dated as of
September 1, 2000 (as amended, modified, extended, renewed or restated from time
to time hereafter, the “Senior Note Purchase Agreement”) by and among the
Borrower and each of the respective purchasers identified therein (collectively,
the “Senior Noteholders”), the Borrower issued and sold to the Senior
Noteholders $30,000,000 aggregate principal amount of its 8.91% Senior Secured
Notes, Series A due September 15, 2003, $50,000,000 aggregate principal amount
of its 9.01% Senior Secured Notes, Series B due September 15, 2004 and
$45,000,000 aggregate principal amount of its 9.11% Senior Secured Notes, Series
C due September 15, 2005 (as amended, modified, extended, renewed or restated
from time to time, the “Senior Notes”, such term to include any such notes
issued in substitution therefor pursuant to the terms of the Senior Note
Purchase Agreement);

WHEREAS, the Lenders and the Senior Noteholders have each required that the
Pledgors amend and restate that certain Amended and Restated Pledge Agreement,
dated as of August 21, 2000 (the “Existing Pledge Agreement”) to secure the
Borrower’s obligations to the Lenders and the Senior Noteholders, respectively,
in accordance with the terms of this Pledge Agreement; and

WHEREAS, pursuant to that certain Intercreditor and Collateral Agency Agreement
dated as of the date hereof among the Senior Noteholders, the Administrative
Agent, on behalf of the Lenders, and the Collateral Agent (as amended, modified,
extended, renewed, restated or replaced from time to time, the “Intercreditor
Agreement”), the Senior Noteholders and the Administrative Agent, on behalf of
the Lenders, have appointed the Collateral Agent as agent for purposes of
(a) perfecting a security interest in the Pledged Collateral (as defined below)
and (b) exercising such other actions and rights with respect to the Pledged
Collateral provided to the Collateral Agent hereunder and thereunder.

--------------------------------------------------------------------------------

NOW, THEREFORE, in consideration of these premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

1. Definitions. As used in this Pledge Agreement, the following terms shall have
the meanings specified below unless the context otherwise requires:

“Administrative Agent” shall have the meaning assigned thereto in the Recitals
hereof, together with any successors and assigns.

“Affiliate” shall have the meaning assigned to such term in the Credit Agreement
as in effect as of the date hereof.

“Bank Credit Documents” means the Credit Documents (as defined in the Credit
Agreement as in effect as of the date hereof).

“Bankruptcy Code” means the Bankruptcy Code in Title 11 of the United States
Code, as amended, modified, succeeded or replaced from time to time.

“Bankruptcy Event” means, with respect to any Person, the occurrence of any of
the following: (i) the entry of a decree or order for relief by a court or
governmental agency in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or the appointment
by a court or governmental agency of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property or the ordering of the winding up or
liquidation of its affairs by a court or governmental agency; or (ii) the
commencement against such Person of an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or of
any case, proceeding or other action for the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar official) of
such Person or for any substantial part of its Property or for the winding up or
liquidation of its affairs, and such involuntary case or other case, proceeding
or other action shall remain undismissed for a period of sixty (60) consecutive
days, or the repossession or seizure by a creditor of such Person of a
substantial part of its Property; or (iii) such Person shall commence a
voluntary case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment of or the
taking possession by a receiver, liquidator, assignee, creditor in possession,
custodian, trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property or make any general assignment for the benefit
of creditors; or (iv) such Person shall be unable to, or shall admit in writing
its inability to, pay its debts generally as they become due.

“Collateral Agent” shall have the meaning assigned thereto in the Recitals
hereof, together with any successors and assigns.

 

2

--------------------------------------------------------------------------------

“Commitments” shall have the meaning assigned thereto in the Credit Agreement.

“Credit Agreement” shall have the meaning assigned thereto in the Recitals
hereof.

“Credit Agreement Obligations” means, without duplication, (i) all of the
obligations of the Borrower and the Guarantors to the Lenders (including the
Issuing Lender, as defined in the Credit Agreement) and the Administrative
Agent, whenever arising, under the Bank Credit Documents (including, but not
limited to, any interest accruing after the occurrence of a Bankruptcy Event
with respect to the Borrower or any Guarantor, regardless of whether such
interest is an allowed claim under the Bankruptcy Code) and (ii) all liabilities
and obligations, whenever arising, owing from the Borrower or any Guarantor to
any Lender, or any Affiliate of a Lender, arising under any Hedging Agreement or
any Equity Swap Agreement (as defined in the Credit Agreement) entered into in
connection with the loans evidenced by the Bank Credit Documents.

“Event of Default” means (i) any “Event of Default” under and as defined in the
Credit Agreement or (ii) any “Event of Default” under and as defined in the
Senior Note Purchase Agreement.

“Financing Documents” means a collective reference to the Bank Credit Documents
and the Senior Note Documents.

“GAAP” means generally accepted accounting principles in the United States
applied on a consistent basis.

“Hedging Agreement” shall have the meaning assigned to such term in the Credit
Agreement as in effect as of the date hereof.

“Intercreditor Agreement” shall have the meaning assigned thereto in the
Recitals hereof.

“Letter of Credit” shall have the meaning assigned to such term in the Credit
Agreement as in effect as of the date hereof.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind, including, without limitation, any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement, and any lease in the nature thereof.

“Make-Whole Amount” shall have the meaning assigned to such term in the Senior
Note Purchase Agreement as in effect as of the date hereof.

“Permitted Liens” means any Liens permitted in accordance with both Section 8.2
of the Credit Agreement and Section 10.6 of the Senior Note Purchase Agreement.

“Person” means any individual, partnership, joint venture, firm, corporation,
limited liability company, trust or other enterprise (whether or not
incorporated) or any government authority.

 

3

--------------------------------------------------------------------------------

“Pledge Agreement” shall have the meaning assigned thereto in the introductory
paragraph hereof.

“Pledged Shares” shall have the meaning assigned thereto in Section 2(a) hereof.

“Pledged Collateral” shall have the meaning assigned thereto in Section 2
hereof.

“Pledgors” shall have the meaning assigned thereto in the introductory paragraph
hereof.

“Pledgor Obligations” means a collective reference to the Credit Agreement
Obligations, the Senior Note Obligations and all indebtedness, liabilities,
obligations and expenses of any kind or nature owing from any Pledgor to the
Collateral Agent, in its capacity as such, in connection with (i) this Pledge
Agreement and the Intercreditor Agreement and (ii) collecting and enforcing such
obligations.

“Required Secured Parties” means, at the time of any determination hereunder,
(a) Lenders holding in the aggregate more than 50% of the Commitments, or if
such Commitments have been terminated, 50% of the principal amount of the Credit
Agreement Obligations then outstanding (including the outstanding LOC
Obligations, as defined in the Credit Agreement) and (b) Senior Noteholders
holding in the aggregate more than 50% of the principal amount of the Senior
Note Obligations then outstanding.

“Secured Party” means the Administrative Agent, on behalf of the Lenders, the
Collateral Agent, a Lender or a Senior Noteholder. The Administrative Agent, on
behalf of the Lenders, the Collateral Agent, the Lenders and the Senior
Noteholders are sometimes collectively referred to herein as the “Secured
Parties”.

“Senior Note Obligations” means a collective reference to the unpaid principal
of, interest on and applicable Make-Whole Amount, if any, in respect of the
Senior Notes and all other obligations and liabilities of the Borrower and the
Guarantors to the Senior Noteholders (including, but not limited to, any
interest accruing after the occurrence of a Bankruptcy Event with respect to the
Borrower or any Guarantor, regardless of whether such interest is an allowed
claim under the Bankruptcy Code), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, the Senior Note Purchase
Agreement or any Senior Note or any other document made, delivered or given in
connection therewith, whether on account of principal, interest, fees,
Make-Whole Amount, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Senior Noteholders that
are required to be paid by the Borrower or any Guarantor pursuant to the terms
of this Pledge Agreement, the Senior Note Purchase Agreement, the Senior Notes,
the Intercreditor Agreement or any other Senior Note Document).

“Senior Note Documents” means the Senior Note Purchase Agreement, the Senior
Notes, the Pledge Agreement and the Subsidiary Guaranty (as defined in the
Senior Note Purchase Agreement as in effect as of the date hereof).

 

4

--------------------------------------------------------------------------------

“Senior Note Purchase Agreement” shall have the meaning assigned thereto in the
introductory paragraph hereof.

“Subsidiary” means, as to any Person, (a) any corporation more than 50% of whose
stock of any class or classes having by the terms thereof ordinary voting power
to elect a majority of the directors of such corporation (irrespective of
whether or not at the time, any class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time owned by such Person directly or indirectly through Subsidiaries, and
(b) any partnership, limited liability company, association, joint venture or
other entity in which such person directly or indirectly through Subsidiaries
has more than a 50% equity interest at any time.

“UCC” means the Uniform Commercial Code as in effect in the State of New York.

2. Pledge and Grant of Security Interest. To secure the prompt payment and
performance in full when due, whether by lapse of time or otherwise, of the
Pledgor Obligations, each Pledgor hereby pledges and assigns to the Collateral
Agent, for the benefit of the Secured Parties, and grants to the Collateral
Agent, for the benefit of the Secured Parties, a continuing security interest
in, and a right to set off against, any and all right, title and interest of
such Pledgor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (collectively, the “Pledged Collateral”):

(a) Pledged Shares. 100% (or, if less, the full amount owned by such Pledgor) of
the issued and outstanding shares of capital stock owned by such Pledgor of each
Subsidiary (other than Lincare of Columbia) set forth on Schedule 2(a) attached
hereto, in each case together with the certificates (or other agreements or
instruments), if any, representing such shares, and all options and other
rights, contractual or otherwise, with respect thereto (collectively, together
with the shares of capital stock described in Section 2(b) and 2(c) below, the
“Pledged Shares”), including, but not limited to, the following:

(y) all shares, securities, membership interests or other equity interests
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares, or
resulting from a stock split, revision, reclassification or other exchange
therefor, and any subscriptions, warrants, rights or options issued to the
holder of, or otherwise in respect of, the Pledged Shares; and

(z) without affecting the obligations of the Pledgors under any provision
prohibiting such action hereunder or under the Financing Documents, in the event
of any consolidation or merger involving the issuer of any Pledged Shares and in
which such issuer is not the surviving corporation, all shares of each class of
the capital stock of the successor corporation formed by or resulting from such
consolidation or merger payable to or received by such Pledgor as consideration
for such merger.

(b) Additional Shares. 100% (or, if less, the full amount owned by such Pledgor)
of the issued and outstanding shares of capital stock owned by such Pledgor of
any Person which hereafter becomes a Subsidiary, including, without limitation,
the certificates representing such shares.

 

5

--------------------------------------------------------------------------------

(c) Proceeds. All proceeds and products of the foregoing, however and whenever
acquired and in whatever form.

Without limiting the generality of the foregoing, it is hereby specifically
understood and agreed that each Pledgor may from time to time hereafter deliver
additional shares of stock to the Collateral Agent as collateral security for
the Pledgor Obligations. Upon delivery to the Collateral Agent, such additional
shares of stock shall be deemed to be part of the Pledged Collateral and shall
be subject to the terms of this Pledge Agreement whether or not Schedule 2(a) is
amended to refer to such additional shares.

3. Delivery of the Pledged Collateral. Each Pledgor hereby agrees that:

(a) Each Pledgor shall deliver to the Collateral Agent (i) simultaneously with
or prior to the execution and delivery of this Pledge Agreement, all
certificates representing the Pledged Shares of such Pledgor and (ii) promptly
upon the receipt thereof by or on behalf of a Pledgor, all other certificates
and instruments constituting Pledged Collateral of a Pledgor. Prior to delivery
to the Collateral Agent, all such certificates and instruments constituting
Pledged Collateral of a Pledgor shall be held in trust by such Pledgor for the
benefit of the Collateral Agent pursuant hereto. All such certificates shall be
delivered in suitable form for transfer by delivery or shall be accompanied by
duly executed instruments of transfer or assignment in blank, substantially in
the form provided in Exhibit 3(a) attached hereto.

(b) Additional Securities. If such Pledgor shall receive by virtue of its being
or having been the owner of any Pledged Collateral, any (i) stock certificate,
including without limitation, any certificate representing a stock dividend or
distribution in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination of shares,
stock splits, spin-off or split-off, promissory notes or other instrument;
(ii) option or right, whether as an addition to, substitution for, or an
exchange for, any Pledged Collateral or otherwise; (iii) dividends payable in
securities; or (iv) distributions of securities in connection with a partial or
total liquidation, dissolution or reduction of capital, capital surplus or
paid-in surplus, then such Pledgor shall receive such stock certificate,
instrument, option, right or distribution in trust for the benefit of the
Collateral Agent, shall segregate it from such Pledgor’s other property and
shall deliver it forthwith to the Collateral Agent in the exact form received
together with any necessary endorsement and/or appropriate stock power duly
executed in blank, substantially in the form provided in Exhibit 3(a), to be
held by the Collateral Agent as Pledged Collateral and as further collateral
security for the Pledgor Obligations.

(c) Financing Statements. Each Pledgor shall execute and deliver to the
Collateral Agent such UCC or other applicable financing statements as may be
reasonably requested by the Collateral Agent in order to perfect and protect the
security interest created hereby in the Pledged Collateral of such Pledgor.

 

6

--------------------------------------------------------------------------------

(d) Acknowledgment and Consent; Authorization and Transaction Statements. If
necessary to perfect the Collateral Agent’s security interest in any Pledged
Collateral consisting of uncertificated Pledged Shares, concurrently with the
execution of this Pledge Agreement, (i) each Pledgor shall send to each issuer
of such uncertificated Pledged Shares (each an “Issuer”) an Authorization
Statement substantially in the form provided in Exhibit 3(d)(i) (each an
“Authorization Statement”) and (ii) such Pledgor shall cause each such Issuer
to, and each such Issuer shall, deliver to the Collateral Agent (A) an
Acknowledgment and Consent substantially in the form provided in Exhibit
3(d)(ii)(A) (each an “Acknowledgment and Consent”) and (B) a Transaction
Statement substantially in the form provided in Exhibit 3(d)(ii)(B) (each a
“Transaction Statement”), confirming that such Issuer has registered the pledge
effected by this Pledge Agreement on its books. Each Pledgor hereby authorizes
and instructs each Issuer that is a party to this Pledge Agreement to comply
with any instruction received by it from the Collateral Agent in writing that
(y) states that an Event of Default has occurred and is continuing and (z) is
otherwise in accordance with the terms of this Pledge Agreement, without any
other or further instructions from such Pledgor, and such Pledgor agrees to
indemnify such Issuer for any loss, damage or liability incurred by such Issuer
in acting upon such instructions of the Collateral Agent.

4. Representations and Warranties. Each Pledgor hereby represents and warrants
to the Collateral Agent, for the benefit of the Secured Parties, that so long as
any of the Pledgor Obligations remain outstanding or any Financing Document or
any Hedging Agreement between any Pledgor and any Lender, or any Affiliate of a
Lender, is in effect or any Letter of Credit shall remain outstanding, and until
all of the Commitments shall have been terminated:

(a) Authorization of Pledged Shares. The Pledged Shares are duly authorized and
validly issued, are fully paid and nonassessable and are not subject to the
preemptive rights of any Person. All other shares of stock constituting Pledged
Collateral will be duly authorized and validly issued, fully paid and
nonassessable and not subject to the preemptive rights of any Person.

(b) Title. Each Pledgor has good and indefeasible title to the Pledged
Collateral of such Pledgor and will at all times be the legal and beneficial
owner of such Pledged Collateral free and clear of any Lien, other than
Permitted Liens. There exists no “adverse claim” within the meaning of
Section 8-302 of the UCC with respect to the Pledged Shares of such Pledgor.

(c) Exercising of Rights. The exercise by the Collateral Agent of its rights and
remedies hereunder will not violate any material law or governmental regulation
or any material contractual restriction binding on or affecting a Pledgor or any
of its property.

(d) Pledgor’s Authority. No authorization, approval or action by, and no notice
or filing with any federal, state, local, provincial or foreign court,
governmental agency, authority, instrumentality or regulatory body or any
securities exchange or self-regulatory organization, or with the issuer of any
Pledged Stock is required either (i) for the pledge made by a Pledgor or for the
granting of the security interest by a Pledgor pursuant to this Pledge Agreement
or (ii) for the exercise by the Collateral Agent of its rights and remedies
hereunder (except as may be required by laws affecting the offering and sale of
securities).

 

7

--------------------------------------------------------------------------------

(e) Security Interest/Priority. This Pledge Agreement creates a valid security
interest in favor of the Collateral Agent, for the benefit of the Secured
Parties, in the Pledged Collateral. The taking possession by the Collateral
Agent of the certificates representing the Pledged Shares and all other
certificates and instruments constituting Pledged Collateral will perfect and
establish the first priority of the Collateral Agent’s security interest in the
Pledged Shares and such certificates and instruments and, upon the filing of UCC
financing statements or registration of the Collateral Agent’s security interest
on the books and records of the Issuers of any uncertificated Pledged Shares,
the Collateral Agent shall have a first priority perfected security interest in
all other Pledged Collateral represented by such Pledged Shares and instruments
securing the Pledgor Obligations. Except as set forth in this Section 4(e), no
action is necessary to perfect or otherwise protect such security interest.

(f) No Other Capital Stock. As of the date of this Pledge Agreement, no Pledgor
owns any capital stock other than as set forth on Schedule 2(a) attached hereto.

(g) Partnership and Limited Liability Company Interests. Except as previously
disclosed to the Collateral Agent, none of the Pledged Shares consisting of
partnership or limited liability company interests (i) is dealt in or traded on
a securities exchange or in a securities market, (ii) by its terms expressly
provides that it is a security governed by Article 8 of the UCC, (iii) is an
investment company security, (iv) is held in a securities account or
(v) constitutes a “security” or a “financial asset” as such terms are defined in
Article 8 of the UCC.

5. Covenants. Each Pledgor hereby covenants, that so long as any of the Pledgor
Obligations remain outstanding or any Financing Document or Hedging Agreement
between any Pledgor and any Lender, or any Affiliate of a Lender, is in effect
or any Letter of Credit shall remain outstanding, and until all of the
Commitments shall have been terminated, such Pledgor shall:

(a) Books and Records. Mark its books and records (and shall cause the issuer of
the Pledged Shares of such Pledgor to mark its books and records) to reflect the
security interest granted to the Collateral Agent, for the benefit of the
Secured Parties, pursuant to this Pledge Agreement

(b) Defense of Title. Warrant and defend title to and ownership of the Pledged
Collateral of such Pledgor at its own expense against the claims and demands of
all other parties claiming an interest therein, keep the Pledged Collateral free
from all Liens, except for Permitted Liens, and not sell, exchange, transfer,
assign, lease or otherwise dispose of Pledged Collateral of such Pledgor or any
interest therein, except as permitted under Financing Documents.

(c) Further Assurances. Promptly execute and deliver at its expense all further
instruments and documents and take all farther action that may be reasonably
necessary and desirable or that the Collateral Agent may reasonably request in
order to (i) perfect and

 

8

--------------------------------------------------------------------------------

protect the security interest created hereby in the Pledged Collateral of such
Pledgor (including without limitation, the execution and filing of UCC financing
statements and any and all action necessary to satisfy the Collateral Agent that
the Collateral Agent has obtained a first priority perfected security interest
in any capital stock); (ii) enable the Collateral Agent to exercise and enforce
its rights and remedies hereunder in respect of the Pledged Collateral of such
Pledgor; and (iii) otherwise effect the purposes of this Pledge Agreement,
including, without limitation and if requested by the Collateral Agent,
delivering to the Collateral Agent irrevocable proxies in respect of the Pledged
Collateral of such Pledgor.

(d) Amendments. Not make or consent to any amendment or other modification or
waiver with respect to any of the Pledged Collateral of such Pledgor or enter
into any agreement or allow to exist any restriction with respect to any of the
Pledged Collateral of such Pledgor other than pursuant hereto or as may be
permitted under the Financing Documents.

(e) Compliance with Securities Laws. File all reports and other information now
or hereafter required to be filed by such Pledgor with the United States
Securities and Exchange Commission and any other state, federal or foreign
agency in connection with the ownership of the Pledged Collateral of such
Pledgor.

(f) Issuance or Acquisition of Capital Stock. Not, without providing 30 days
prior written notice to the Collateral Agent and without executing and
delivering, or causing to be executed and delivered, to the Collateral Agent
such agreements, documents and instruments as the Collateral Agent may require,
issue or acquire any capital stock consisting of an interest in a partnership or
a limited liability company that (i) is dealt in or traded on a securities
exchange or in a securities market, (ii) by its terms expressly provides that it
is a security governed by Article 8 of the UCC, (iii) is an investment company
security, (iv) is held in a securities account or (v) constitutes a “security”
or a “financial asset” as such terms are defined in Article 8 of the UCC.

6. Performance of Obligations and Advances by Collateral Agent. On failure of
any Pledgor to perform any of the covenants and agreements contained herein and
upon written notice to such Pledgor, the Collateral Agent may, at its sole
option and in its sole discretion, perform the same and in so doing may expend
such sums as the Collateral Agent may reasonably deem advisable in the
performance thereof, including, without limitation, the payment of any insurance
premiums, the payment of any taxes, a payment to obtain a release of a Lien or
potential Lien, expenditures made in defending against any adverse claim and all
other expenditures which the Collateral Agent may make for the protection of the
security hereof or which may be compelled to make by operation of law. All such
sums and amounts so expended shall be repayable by the Pledgors on a joint and
several basis promptly upon timely notice thereof and demand therefor, shall
constitute additional Pledgor Obligations and shall bear interest from the date
said amounts are expended at the greater of (a) the default rate specified in
Section 3.1 of the Credit Agreement for Revolving Loans that are Base Rate Loans
(as such terms are defined in the Credit Agreement) and (b) the default rate, if
any, specified in the Senior Note Purchase Agreement and/or the Senior Notes. No
such performance of any covenant or agreement by the Collateral Agent on behalf
of any Pledgor, and no such advance or expenditure therefor, shall relieve the
Pledgors of any default

 

9

--------------------------------------------------------------------------------

under the terms of this Pledge Agreement, the Financing Documents or any Hedging
Agreement between any Pledgor and any Lender, or any Affiliate of a Lender. The
Collateral Agent may make any payment hereby authorized in accordance with any
bill, statement or estimate procured from the appropriate public office or
holder of the claim to be discharged without inquiry into the accuracy of such
bill, statement or estimate or into the validity of any tax assessment, sale,
forfeiture, tax lien, title or claim except to the extent such payment is being
contested in good faith by a Pledgor in appropriate proceedings and against
which adequate reserves are being maintained in accordance with GAAP.

7. Remedies.

(a) General Remedies. Upon the occurrence of an Event of Default and during the
continuation thereof, the Collateral Agent shall have, in respect of the Pledged
Collateral of any Pledgor, in addition to the rights and remedies provided
herein, in the Financing Documents, in any Hedging Agreements between any
Pledgor and any Lender, or any Affiliate of a Lender, or by law, the rights and
remedies of a secured party under the UCC or any other applicable law.

(b) Sale of Pledged Collateral. Upon the occurrence of an Event of Default and
during the continuation thereof, without limiting the generality of this Section
and without notice, the Collateral Agent, at the direction of the Required
Secured Parties, or in its own discretion in accordance with the terms of the
Intercreditor Agreement, may sell or otherwise dispose of or realize upon the
Pledged Collateral, or any part thereof, in one or more parcels, at public or
private sale, at any exchange or broker’s board or elsewhere, at such price or
prices and on such other terms as the Collateral Agent may deem commercially
reasonable, for cash, credit or for future delivery or otherwise in accordance
with applicable law. To the extent permitted by law, any Lender may in such
event, bid for the purchase of such securities. Each Pledgor agrees that, to the
extent notice of sale shall be required by law and has not been waived by such
Pledgor, any requirement of reasonable notice shall be met if notice, specifying
the place of any public sale or the time after which any private sale is to be
made, is personally served on or mailed, postage prepaid, to the Borrower and
such Pledgor (if other than the Borrower) in accordance with the notice
provisions of Section 15 at least 10 days before the time of such sale. The
Collateral Agent shall not be obligated to make any sale of Pledged Collateral
of such Pledgor regardless of notice of sale having been given. The Collateral
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.

(c) Private Sale. Upon the occurrence of an Event of Default and during the
continuation thereof, the Pledgors recognize that the Collateral Agent may deem
it impracticable to effect a public sale of all or any part of the Pledged
Shares or any of the securities constituting Pledged Collateral and that the
Collateral Agent may, therefore, determine to make one or more private sales of
any such securities to a restricted group of purchasers who will be obligated to
agree, among other things, to acquire such securities for their own account, for
investment and not with a view to the distribution or resale thereof. Each
Pledgor acknowledges that any such private sale may be at prices and on terms
less

 

10

--------------------------------------------------------------------------------

favorable to the seller than the prices and other terms which might have been
obtained at a public sale and, notwithstanding the foregoing, agrees that such
private sale shall be deemed to have been made in a commercially reasonable
manner and that the Collateral Agent shall have no obligation to delay sale of
any such securities for the period of time necessary to permit the issuer of
such securities to register such securities for public sale under the Securities
Act of 1933. Each Pledgor further acknowledges and agrees that any offer to sell
such securities which has been (i) publicly advertised on a bona fide basis in a
newspaper or other publication of general circulation in the financial community
of New York, New York (to the extent that such offer may be advertised without
prior registration under the Securities Act of 1933), or (ii) made privately in
the manner described above shall be deemed to involve a “public sale” under the
UCC, notwithstanding that such sale may not constitute a “public offering” under
the Securities Act of 1933, and the Collateral Agent may, in such event, bid for
the purchase of such securities.

(d) Retention of Pledged Collateral. In addition to the rights and remedies
hereunder, upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent may, after providing the notices required by
Section 9-505(2) of the UCC or otherwise complying with the requirements of
applicable law of the relevant jurisdiction, retain all or any portion of the
Pledged Collateral in satisfaction of the Pledgor Obligations. Unless and until
the Collateral Agent shall have provided such notices, however, the Collateral
Agent shall not be deemed to have retained any Pledged Collateral in
satisfaction of any Pledgor Obligations for any reason.

(e) Deficiency. In the event that the proceeds of any sale, collection or
realization are insufficient to pay all amounts to which the Collateral Agent or
the Secured Parties are legally entitled, the Pledgors shall be jointly and
severally liable for the deficiency, together with interest thereon at the
greater of (i) the default rate specified in Section 3.1 of the Credit Agreement
for Revolving Loans that are Base Rate Loans (as such terms are defined in the
Credit Agreement) and (ii) the default rate, if any, specified in the Senior
Note Purchase Agreement and/or the Senior Notes, and together with the costs of
collection and the reasonable fees of any attorneys employed by the Collateral
Agent to collect such deficiency. Any surplus remaining after the full payment
and satisfaction of the Pledgor Obligations shall be returned to the Pledgors or
to whomsoever a court of competent jurisdiction shall determine to be entitled
thereto.

8. Rights of the Collateral Agent; Compensation and Reimbursement of Collateral
Agent.

(a) Power of Attorney. In addition to other powers of attorney contained herein,
each Pledgor hereby designates and appoints the Collateral Agent, on behalf of
the Secured Parties, and each of its designees or agents as attorney-in-fact of
such Pledgor, irrevocably and with power of substitution, with authority to take
any or all of the following actions upon the occurrence and during the
continuance of an Event of Default:

(i) to demand, collect, settle, compromise, adjust and give discharges and
releases concerning the Pledged Collateral of such Pledgor, all as the
Collateral Agent may reasonably determine;

 

11

--------------------------------------------------------------------------------

(ii) to commence and prosecute any actions at any court for the purposes of
collecting any of the Pledged Collateral of such Pledgor and enforcing any other
right in respect thereof;

(iii) to defend, settle or compromise any action brought and, in connection
therewith, give such discharge or release as the Collateral Agent may deem
reasonably appropriate;

(iv) to pay or discharge taxes, liens, security interests, or other encumbrances
levied or placed on or threatened against the Pledged Collateral of such
Pledgor;

(v) to direct any parties liable for any payment under any of the Pledged
Collateral to make payment of any and all monies due and to become due
thereunder directly to the Collateral Agent or as the Collateral Agent shall
direct;

(vi) to receive payment of and receipt for any and all monies, claims, and other
amounts due and to become due at any time in respect of or arising out of any
Pledged Collateral of such Pledgor;

(vii) to sign and endorse any drafts, assignments, proxies, stock powers,
verifications, notices and other documents relating to the Pledged Collateral of
such Pledgor;

(viii) to settle, compromise or adjust any suit, action or proceeding described
above and, in connection therewith, to give such discharges or releases as the
Collateral Agent may deem reasonably appropriate;

(ix) execute and deliver all assignments, conveyances, statements, financing
statements, renewal financing statements, pledge agreements, affidavits, notices
and other agreements, instruments and documents that the Collateral Agent may
reasonably determine necessary in order to perfect and maintain the security
interests and liens granted in this Pledge Agreement and in order to fully
consummate all of the transactions contemplated therein;

(x) to exchange any of the Pledged Collateral of such Pledgor or other property
upon any merger, consolidation, reorganization, recapitalization or other
readjustment of the issuer thereof and, in connection therewith, deposit any of
the Pledged Collateral of such Pledgor with any committee, depository, transfer
agent, registrar or other designated agency upon such terms as the Collateral
Agent may determine;

 

12

--------------------------------------------------------------------------------

(xi) to vote for a shareholder resolution, or to sign an instrument in writing,
sanctioning the transfer of any or all of the Pledged Shares of such Pledgor
into the name of the Collateral Agent or one or more of the Secured Parties or
into the name of any transferee to whom the Pledged Shares of such Pledgor or
any part thereof may be sold pursuant to Section 7 hereof; and

(xii) to do and perform all such other acts and things as the Collateral Agent
may reasonably deem to be necessary, proper or convenient in connection with the
Pledged Collateral of such Pledgor.

This power of attorney is a power coupled with an interest and shall be
irrevocable (i) for so long as any of the Pledgor Obligations remain
outstanding, any Financing Document or any Hedging Agreement between any Pledgor
and any Lender, or any Affiliate of a Lender, is in effect or any Letter of
Credit shall remain outstanding and (ii) until all of the Commitments shall have
been terminated. The Collateral Agent shall be under no duty to exercise or
withhold the exercise of any of the rights, powers, privileges and options
expressly or implicitly granted to the Collateral Agent in this Pledge
Agreement, and shall not be liable for any failure to do so or any delay in
doing so. The Collateral Agent shall not be liable for any act or omission or
for any error of judgment or any mistake of fact or law in its individual
capacity or its capacity as attomey-in-fact except acts or omissions resulting
from its gross negligence or willful misconduct. This power of attorney is
conferred on the Collateral Agent solely to protect, preserve and realize upon
its security interest in Pledged Collateral.

(b) Assignment by the Collateral Agent. The Collateral Agent, in accordance with
Section 5.5 of the Intercreditor Agreement, may assign the Pledgor Obligations
and any portion thereof and/or the Pledged Collateral and any portion thereof to
a successor Collateral Agent, and the assignee shall be entitled to all of the
rights and remedies of the Collateral Agent under this Pledge Agreement in
relation thereto. Upon the request of any such successor Collateral Agent,
however, at the expense of the Pledgors, the Pledgors shall promptly execute and
deliver such instruments of conveyance and further assurance reflecting terms
consistent with the terms of the Intercreditor Agreement then in effect and this
Pledge Agreement and do such other things as may reasonably be required for more
fully and certainly vesting and confirming in such successor Collateral Agent
its interest in the Collateral and all such rights, powers, duties and
obligations of the predecessor Collateral Agent hereunder.

(c) The Collateral Agent’s Duty of Care. Other than the exercise of reasonable
care to assure the safe custody of the Pledged Collateral while being held by
the Collateral Agent hereunder, the Collateral Agent shall have no duty or
liability to preserve rights pertaining thereto, it being understood and agreed
that the Pledgors shall be responsible for preservation of all rights in the
Pledged Collateral of such Pledgor, and the Collateral Agent shall be relieved
of all responsibility for Pledged Collateral upon surrendering it or tendering
the surrender of it to the Pledgors. The Collateral Agent shall be deemed to
have exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if such Pledged Collateral is accorded treatment
substantially equal to that which the Collateral

 

13

--------------------------------------------------------------------------------

Agent accords its own property, which shall be no less than the treatment
employed by a reasonable and prudent agent in the industry, it being understood
that the Collateral Agent shall not have responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities, tenders
or other matters relating to any Pledged Collateral, whether or not the
Collateral Agent has or is deemed to have knowledge of such, matters; or
(ii) taking any necessary steps to preserve rights against any parties with
respect to any Pledged Collateral.

(d) Voting Rights in Respect of the Pledged Collateral.

(i) So long as no Event of Default shall have occurred and be continuing, to the
extent permitted by law, each Pledgor may exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral of such Pledgor or any
part thereof for any purpose not inconsistent with the terms of this Pledge
Agreement or the Financing Documents; and

(ii) Upon the occurrence and during the continuance of an Event of Default, all
rights of a Pledgor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant to paragraph (i) of this
Section shall cease and all such rights shall thereupon become vested in the
Collateral Agent which shall then have the sole right to exercise such voting
and other consensual rights.

(e) Dividend Rights in Respect of the Pledged Collateral.

(i) So long as no Event of Default shall have occurred and be continuing and
subject to Section 3(b) hereof, each Pledgor may receive and retain any and all
dividends (other than stock dividends and other dividends constituting Pledged
Collateral which are addressed hereinabove) or interest paid in respect of the
Pledged Collateral to the extent they are allowed under the Financing Documents.

(ii) Upon the occurrence and during the continuance of an Event of Default:

(A) all rights of a Pledgor to receive the dividends, distributions and interest
payments which it would otherwise be authorized to receive and retain pursuant
to subsection (i) of this Section, upon written notice to the Borrower and such
Pledgor (if other than the Borrower), shall cease and all such rights shall
thereupon be vested in the Collateral Agent which shall then have the sole,
right to receive and hold as Pledged Collateral such dividends, distributions
and interest payments; and

(B) all dividends, distributions and interest payments which are received by a
Pledgor contrary to the provisions of subsection (A) of this Section shall be
received in trust for the benefit of the Collateral Agent, shall be segregated
from other property or funds of such Pledgor, and shall be forthwith paid over
to the Collateral Agent as Pledged Collateral in the exact form received, to be
held by the Collateral Agent as Pledged Collateral and as further collateral
security for the Pledgor Obligations.

 

14

--------------------------------------------------------------------------------

(f) Release of Pledged Collateral. At the direction of (i) the Required Secured
Parties (or as otherwise required by the respective Financing Documents), or if
such direction is not required pursuant to the terms of the Intercreditor
Agreement or any Financing Document, then in the Collateral Agent’s sole
discretion, the Collateral Agent may release any of the Pledged Collateral from
this Pledge Agreement or may substitute any of the Pledged Collateral for other
Pledged Collateral without altering, varying or diminishing in any way the
force, effect, lien, pledge or security interest of this Pledge Agreement as to
any Pledged Collateral not expressly released or substituted, and this Pledge
Agreement shall continue as a first priority lien on all Pledged Collateral not
expressly released or substituted. Notwithstanding anything to the contrary
contained herein, the Collateral Agent, without the direction of the Secured
Parties, shall be entitled to release or substitute any of the Pledged
Collateral of any Pledgor for other Pledged Collateral upon any merger,
consolidation or recapitalization of the issuer of any of the Pledged Shares.

(g) Compensation and Reimbursement of Collateral Agent. The Pledgors further
agree:

(i) to pay to the Collateral Agent all of its out-of-pocket expenses in
connection with the preparation, execution and delivery of this Pledge Agreement
and the Intercreditor Agreement and the transactions contemplated hereby and
thereby, including but not limited to the reasonable charges and disbursements
of its special counsel;

(ii) to pay to the Collateral Agent from time to time reasonable compensation
for all services rendered by it hereunder or under the Intercreditor Agreement;

(iii) to reimburse the Collateral Agent upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Collateral Agent in
accordance with any provision of this Pledge Agreement or the Intercreditor
Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel); and

(iv) to indemnify the Collateral Agent for, and to hold it harmless against, any
loss, liability or expense incurred without gross negligence or willful
misconduct on its part, arising out of or in connection with this Pledge
Agreement or the Intercreditor Agreement or any action taken or omitted by it
hereunder or thereunder or in connection herewith or therewith, including, but
not limited to, the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder or thereunder, and any loss, liability, expense or claim
arising out of its possession, management, control, use or operation of the
Pledged Collateral.

 

15

--------------------------------------------------------------------------------

9. Rights of Secured Parties. Following the occurrence of an Event of Default,
in the event the Collateral Agent (after having received written instructions
from the Required Secured Parties in accordance with the terms of the
Intercreditor Agreement) refuses or fails to comply with such written
instructions for a period of thirty (30) days after such written instructions
shall have been received by the Collateral Agent, any Secured Party shall (after
having received written instructions from the Required Secured Parties) have the
right to carry out such written instructions on behalf of the Secured Parties in
accordance with the terms of the Intercreditor Agreement; it being understood
that no Secured Party shall have any right in any manner whatsoever to enforce
any right under this Pledge Agreement, except in the manner herein provided, and
that all judicial proceedings or any other action to enforce any provision
hereof shall be instituted and maintained in the manner herein provided and for
the benefit of the Secured Parties, as provided for herein.

10. Application of Proceeds. Upon the occurrence and during the continuance of
an Event of Default, any payments in respect of the Pledgor Obligations and any
proceeds of any Pledged Collateral, when received by the Collateral Agent or any
of the Secured Parties in cash or its equivalent, will be applied in reduction
of the Pledgor Obligations in the order set forth in Section 4.3 of the
Intercreditor Agreement, and each Pledgor irrevocably waives the right to direct
the application of such payments and proceeds and acknowledges and agrees that
the Collateral Agent shall have the continuing and exclusive right to apply and
reapply any and all such payments and proceeds in the Collateral Agent’s sole
discretion, notwithstanding any entry to the contrary upon any of its books and
records.

11. Costs. At all times hereafter, the Pledgors agree to promptly pay upon
demand any and all reasonable documented costs and expenses of the Collateral
Agent (a) as required under the Financing Documents and (b) as necessary to
protect the Pledged Collateral or to exercise any rights or remedies under this
Pledge Agreement or with respect to any Pledged Collateral. All of the foregoing
costs and expenses shall constitute Pledgor Obligations hereunder.

12. Continuing Agreement.

(a) This Pledge Agreement shall be a continuing agreement in every respect and
shall remain in full force and effect so long as any of the Pledgor Obligations
remain outstanding or any Financing Document or Hedging Agreement between any
Pledgor and any Lender, or any Affiliate of a Lender, is in effect or any Letter
of Credit shall remain outstanding, and until all of the Commitments thereunder
shall have terminated (other than any obligations with respect to the
indemnities and the representations and warranties set forth in the Financing
Documents). Upon such payment and termination, this Pledge Agreement shall be
automatically terminated and the Collateral Agent shall, upon the request and at
the expense of the Pledgors, (i) return all certificates representing the
Pledged Shares, all other certificates and instruments constituting Pledged
Collateral and all instruments of transfer or assignment which have been
delivered to the Collateral Agent pursuant to this Pledge Agreement and
(ii) forthwith release all of its liens and security interests hereunder and
shall promptly execute and deliver all UCC termination statements and/or other
documents reasonably requested by the Pledgors evidencing such termination.
Notwithstanding the foregoing, all releases and indemnities provided hereunder
shall survive termination of this Pledge Agreement.

 

16

--------------------------------------------------------------------------------

(b) This Pledge Agreement shall continue to be effective or be automatically
reinstated, as the case may be, if at any time payment, in whole or in part, of
any of the Pledgor Obligations is rescinded or must otherwise be restored or
returned by the Collateral Agent or any Secured Party as a preference,
fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar
law, all as though such payment had not been made; provided that in the event
payment of all or any part of the Pledgor Obligations is rescinded or must be
restored or returned, all reasonable costs and expenses (including without
limitation any reasonable legal fees and disbursements) incurred by the
Collateral Agent or any Secured Party in defending and enforcing such
reinstatement shall be deemed to be included as a part of the Pledgor
Obligations.

13. Amendments; Waivers; Modifications. This Pledge Agreement and the provisions
hereof may not be amended, waived, supplemented or otherwise modified except by
a written instrument executed by the Pledgors and the Collateral Agent;
provided, however, that the Collateral Agent may not enter into any such
amendment, waiver, supplement or modification without the prior written consent
of the Required Secured Parties.

14. Successors in Interest. This Pledge Agreement shall create a continuing
security interest in the Pledged Collateral and shall be binding upon each
Pledgor, its successors and assigns and shall inure, together with the rights
and remedies of the Collateral Agent and the Secured Parties hereunder, to the
benefit of the Collateral Agent and the Secured Parties and their successors and
permitted assigns; provided, however, that none of the Pledgors may assign its
rights or delegate its duties hereunder without the prior written consent of the
Required Secured Parties. To the fullest extent permitted by law, each Pledgor
hereby releases the Collateral Agent and each Secured Party, and its successors
and assigns, from any liability for any act or omission relating to this Pledge
Agreement or the Pledged Collateral, except for any liability arising from the
gross negligence or willful misconduct of the Collateral Agent, or such Secured
Party, or its officers, employees or agents.

15. Notices. All notices required or permitted to be given under this Pledge
Agreement shall be given at the address set forth below, or at such other
address as may be designated in a written notice to the other party hereto:

if to the Pledgors:

Lincare Holdings Inc.

19337 U.S. 19 North

Suite 500

Clearwater, Florida 33764

Attn: Chief Financial Officer

Telephone: (727)530-7700

Telecopy:   (727)532-9692

 

17

--------------------------------------------------------------------------------

with a copy to:

Lincare Holdings Inc.

19337 U.S. 19 North

Suite 500

Clearwater, Florida 33764

Attn: Legal Department

Telephone: (727) 530-7700

Telecopy:   (727)532-9692

if to the Collateral Agent:

Bank of America, N.A.

as Collateral Agent

Independence Center, 15th Floor

NC1-001-15-04

101 North Tryon Street

Charlotte, North Carolina 28255

Attn:   Agency Services — James Young

Telephone: 704-386-9372

Telecopy:   704-409-0030

16. Counterparts. This Pledge Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Pledge Agreement to produce or
account for more than one such counterpart.

17. Headings. The headings of the sections and subsections hereof are provided
for convenience only and shall not in any way affect the meaning or construction
of any provision of this Pledge Agreement.

18. Governing Law: Submission to Jurisdiction: Venue.

(a) THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK. Any legal action or proceeding with respect
to this Pledge Agreement may be brought in the courts of the State of North
Carolina in Mecklenburg County, or of the United States for the Western District
of North Carolina (or in any other court located in the jurisdiction in which
the Collateral Agent maintains its chief executive office), and, by execution
and delivery of this Pledge Agreement, each Pledgor hereby irrevocably accepts
for itself and in respect of its property, generally and unconditionally, the
jurisdiction of such courts. Each Pledgor further irrevocably consents to the
service of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to it at the address set forth in Section 15 hereof, such
service to become effective 30 days after such mailing. Nothing herein shall
affect the right of the Collateral Agent to serve process in any other manner
permitted by law or to commence legal proceedings or to otherwise proceed
against any Pledgor in any other jurisdiction.

 

18

--------------------------------------------------------------------------------

(b) Each Pledgor hereby irrevocably waives any objection which it may now or
hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Pledge Agreement brought
in the courts referred to in subsection (a) hereof and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum.

19. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE
PARTIES TO THIS PLEDGE AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS PLEDGE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

20. Severability. If any provision of any of this Pledge Agreement is determined
to be illegal, invalid or unenforceable, such provision shall be fully severable
and the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.

21. Entirety. This Pledge Agreement, the Financing Documents and any Hedging
Agreements between any Pledgor and any Lender, or any Affiliate of a Lender,
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Financing Documents, any
Hedging Agreements between any Pledgor and any Lender, or any Affiliate of a
Lender, or the transactions contemplated herein and therein.

22. Survival. All representations and warranties of the Pledgors hereunder shall
survive the execution and delivery of this Pledge Agreement, the Financing
Documents and any Hedging Agreements between any Pledgor and any Lender, or any
Affiliate of a Lender, the delivery of the Senior Notes and the making of the
Loans under the Credit Agreement and the issuance of the Letters of Credit under
the Credit Agreement.

23. Other Security. To the extent that any of the Pledgor Obligations are now or
hereafter secured by property other than the Pledged Collateral (including,
without limitation, real and other personal property owned by a Pledgor), or by
a guarantee, endorsement or property of any other Person, then the Collateral
Agent and the Secured Parties shall have the right to proceed against such other
property, guarantee or endorsement upon the occurrence and during the
continuance of any Event of Default, and the Collateral Agent and the Secured
Parties have the right, in their sole discretion, to determine which rights,
security, liens, security interests or remedies the Collateral Agent and the
Secured Parties shall at any time pursue, relinquish, subordinate, modify or
take with respect thereto, without in any way modifying or affecting any of them
or any of the Collateral Agent’s and the Secured Parties’ rights or the Pledgor
Obligations under this Pledge Agreement, the Financing Documents or under any
Hedging Agreement between any Pledgor and any Lender, or any Affiliate of a
Lender.

 

19

--------------------------------------------------------------------------------

24. Joint and Several Obligations of Pledgors.

(a) Each of the Pledgors is accepting joint and several liability hereunder in
consideration of the financial accommodation to be provided by the Secured
Parties under the Financing Documents, for the mutual benefit, directly and
indirectly, of each of the Pledgors and in consideration of the undertakings of
each of the Pledgors to accept joint and several liability for the obligations
of each of them.

(b) Each of the Pledgors jointly and severally hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Pledgors with respect to the payment and
performance of all of the Pledgor Obligations arising under this Pledge
Agreement, the Financing Documents and any Hedging Agreements between any
Pledgor and any Lender, or any Affiliate of a Lender, it being the intention of
the parties hereto that all the Pledgor Obligations shall be the joint and
several obligations of each of the Pledgors without preferences or distinction
among them.

(c) Notwithstanding any provision to the contrary contained herein, in the
Financing Documents or in any Hedging Agreement between any Pledgor and any
Lender, or any Affiliate of a Lender, the obligations of each Pledgor shall be
limited to an aggregate amount equal to the largest amount that would not render
such obligations subject to avoidance under Section 548 of the Bankruptcy Code
or any comparable provisions of any applicable state law.

[remainder of page intentionally left blank]

 

20

--------------------------------------------------------------------------------

Each of the parties hereto has caused a counterpart of this Pledge Agreement to
be duly executed and delivered as of the date first above written.

 

BORROWER:     LINCARE HOLDINGS INC.       By:   /s/ Paul G. Gabos       Name:   
Paul G. Gabos       Title:    Chief Financial Officer/Secretary GUARANTORS:    

LINCARE INC.

LINCARE PROCUREMENT INC.

LINCARE ASSET MANAGEMENT LP

By: Lincare Holdings Inc., a
Delaware corporation, its general
partner

LINCARE OF NEW YORK INC.

LINCARE PHARMACY SERVICES INC.

LINCARE LICENSING INC.

CONVACARE SERVICES INC.

LINCARE TRAVEL INC.

      By:   /s/ Paul G. Gabos       Name:    Paul G. Gabos       Title:    Chief
Financial Officer/Secretary

Accepted and agreed to as of the date first above written.

 

BANK OF AMERICA, N.A., as Collateral Agent By:   /s/ Philip S. Durand Name:  
Philip S. Durand Title:   Principal

 

21

--------------------------------------------------------------------------------

Schedule 2(a)

to

Pledge Agreement

dated as of September 6, 2000

in favor of Bank of America, N.A.

as Collateral Agent

PLEDGED STOCK

Pledgor: LINCARE HOLDINGS INC.

 

Name of Subsidiary

   Number of
Shares    Certificate
Number    Percentage
Ownership  

Lincare Inc.

   500    5    100 % 

Lincare Procurement Inc.

   1,000    1    100 % 

Lincare Travel Inc.

   1,000    1    100 % 

Convacare Services Inc.

   1,280,500    128    100 % 

Pledgor: LINCARE INC.

        

Name of Subsidiary

                

Lincare of New York Inc.

   100    1    100 % 

Lincare Pharmacy Services Inc.

   1,000    2    100 % 

Lincare Licensing Inc.

   1,000    2    100 % 

Pledgor: LINCARE HOLDINGS INC.

        

Name of Subsidiary

                

Lincare Asset Management LP

         1% General             Partnership Interest   

Pledgor: LINCARE INC.

         99% General             Partnership Interest            

Name of Subsidiary

                

Lincare Asset Management LP

        

 

22

--------------------------------------------------------------------------------

Exhibit 3(a)

to

Pledge Agreement

dated as of September 6, 2000

in favor of Bank of America, N.A.

as Collateral Agent

Irrevocable Stock Power

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to

the following shares of capital stock of
                                                 , a
                                                  corporation:

 

No. of Shares

   Certificate No.

and irrevocably appoints                                          
                                                                 its agent and
attorney-in-fact to transfer all or any part of such capital stock and to take
all necessary and appropriate action to effect any such transfer. The agent and
attorney-in-fact may substitute and appoint one or more persons to act for him.
The effectiveness of a transfer pursuant to this stock power shall be subject to
any and all transfer restrictions referenced on the face of the certificates
evidencing such interest or in the certificate of incorporation or bylaws of the
subject corporation, to the extent they may from time to time exist.

 

  By:     Name:     Title:    

 

23

--------------------------------------------------------------------------------

Exhibit 3(d)(i)

to

Pledge Agreement

dated as of September 6, 2000 in favor of

Bank of America, N.A.,

as Collateral Agent

Form of Authorization Statement

[INSERT DATE]

 

To: [INSERT]

 

     You are hereby instructed to register the pledge of the following
uncertificated security:

 

     All member or other ownership interests of the undersigned in [INSERT
ISSUER] in favor of:

Bank of America, N.A.

as Collateral Agent

Independence Center, 15th Floor

NC1-001-15-04

101 North Tryon Street

Charlotte, North Carolina 28255

Attn: Agency Services – James Young

Telephone: 704-386-9372

Telecopy: 704-409-0030

 

24

--------------------------------------------------------------------------------

You are hereby authorized and instructed to comply with any instruction you
receive from the Collateral Agent in writing that (i) states that an Event of
Default (as defined in the Pledge Agreement has occurred and is continuing and
(ii) is otherwise in accordance with the terms of the Pledge Agreement, without
any other or further instructions from [name of Pledgor]. [Name of Pledgor]
agrees to indemnify you for any loss, damage or liability incurred by you in
acting upon such instructions of the Collateral Agent.

 

Very truly yours, [INSERT] By:     Name:     Title:    

 

25

--------------------------------------------------------------------------------

Exhibit 3(d)(ii)(A)

to

Pledge Agreement

dated as of September 6, 2000 in favor of

Bank of America, N.A.,

as Collateral Agent

Acknowledgment and Consent

The undersigned Issuer referred to in the foregoing Pledge Agreement hereby
acknowledges receipt of a copy thereof and agrees to be bound thereby and to
comply with the terms thereof insofar as such terms are applicable to it. Each
Issuer agrees to notify the Collateral Agent promptly in writing of the
occurrence of any of the events described in Section 3(b) of the Pledge
Agreement.

 

[INSERT ISSUER] By:     Name:     Title:      

 

26

--------------------------------------------------------------------------------

Exhibit 3(d)(ii)(B)

to

Pledge Agreement

dated as of September 6, 2000 in favor of

Bank of America, N.A.,

as Collateral Agent

Form of Transaction Statement

[INSERT DATE]

 

To: [INSERT PLEDGOR]

and

Bank of America, N.A.,

as Collateral Agent

Independence Center, 15th Floor

NC1-001-15-04

101 North Tryon Street

Charlotte, North Carolina 28255

Attn: Agency Services — James Young

Telephone: 704-386-9372

Telecopy: 704-409-0030

This statement is to advise you that a pledge of the following uncertificated
securities has been registered in the name of Bank of America, N.A., as
Collateral Agent:

 

  1. Uncertificated security: All member or other ownership interests of [INSERT
PLEDGOR] in the undersigned.

 

  2. Registered Owner:

[INSERT PLEDGOR]

Taxpayer Identification Number:                                        
          

 

27

--------------------------------------------------------------------------------

  3. Registered Pledgee:

Bank of America, N.A.,

as Collateral Agent

Independence Center, 15th Floor

NC1-001-15-04

101 North Tryon Street

Charlotte, North Carolina 28255

Attn: Agency Services — James Young

Telephone: 704-386-9372

Telecopy: 704-409-0030

Taxpayer Identification Number:                                        
          

 

  4. There are no liens, restrictions or other encumbrances on the interest of
[INSERT PLEDGOR] in the undersigned, and no adverse claims to which the
uncertificated security is or may be subject are known to the undersigned.

 

  5. The pledge was registered on [INSERT DATE OF REGISTRATION].

THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEES AS OF THE TIME
OF ITS ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO RIGHTS ON THE
RECIPIENT. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT NOR A SECURITY.

 

Very truly yours,

 

[INSERT ISSUER]

By:     Name:     Title:      

 

28

--------------------------------------------------------------------------------

EXHIBIT 1.1 (b)

INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT

This INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT (the “Intercreditor
Agreement”), dated as of September 6, 2000, is by and among BANK OF AMERICA,
N.A., as collateral agent (in such capacity, the “Collateral Agent”) for the
Secured Parties (as hereinafter defined), BANK OF AMERICA, N.A., as
Administrative Agent (in such capacity, the “Administrative Agent”) on behalf of
the Lenders (as hereinafter defined) and the SENIOR NOTEHOLDERS (as hereinafter
defined).

R E C I T A L S:

A. Pursuant to that certain Three-Year Credit Agreement, dated as of August 23,
1999, as amended pursuant to a First Amendment to Three-Year Credit Agreement
dated as of June 20, 2000 and as further amended pursuant to a Second Amendment
to Three-Year Credit Agreement (the “Second Amendment to Credit Agreement”)
dated as of August 21, 2000 (as so previously amended and as from time to time
hereafter may be amended, modified, extended, renewed, restated or replaced,
including any increase in the amount thereof, the “Bank Credit Agreement”),
among Lincare Holdings Inc., a Delaware corporation (the “Company”), the
Guarantors (as hereinafter defined), the Lenders and the Administrative Agent,
the Lenders have agreed to establish a $240,000,000 credit facility in favor of
the Company.

B. Pursuant to the Note Purchase Agreement dated as of September 1, 2000 (as
from time to time hereafter amended, modified, extended, renewed, restated or
replaced, the “Senior Note Purchase Agreement”) by and among the Company and
each of the respective purchasers identified therein (collectively, the “Senior
Noteholders”), the Company issued and sold to the Senior Noteholders $30,000,000
aggregate principal amount of its 8.91% Senior Secured Notes, Series A due
September 15, 2003, $50,000,000 aggregate principal amount of its 9.01% Senior
Secured Notes, Series B due September 15, 2004 and $45,000,000 aggregate
principal amount of its 9.11% Senior Secured Notes, Series C due September 15,
2005 (as amended, modified, extended, renewed or restated from time to time, the
“Senior Notes”, such term to include any such notes issued in substitution
therefor pursuant to the terms of the Senior Note Purchase Agreement).

C. A portion of the proceeds from the Senior Notes has been applied to pay the
outstanding loans and other obligations under that certain 364-Day Credit
Agreement, dated as of August 21, 2000 (the “364-Day Credit Agreement”), among
the Company, the Guarantors, the lenders party thereto and Bank of America,
N.A., as administrative agent, and the commitments of such lenders under the
364-Day Credit Agreement have been terminated.

D. The Credit Party Obligations under and as defined in the Bank Credit
Agreement have been unconditionally guaranteed by the Bank Guarantors (as
hereinafter defined) under the Bank Credit Agreement and the Senior Notes have
been unconditionally guaranteed by the Senior Note Guarantors (as hereinafter
defined) pursuant to the Senior Note Guaranty (as hereinafter defined).

--------------------------------------------------------------------------------

E. The Administrative Agent, on behalf of the Lenders, and the Senior
Noteholders are entering into this Intercreditor Agreement to, among other
things, (i) authorize Bank of America, N.A. to act as the Collateral Agent on
behalf of all Secured Parties (as hereinafter defined) regarding the Pledged
Collateral (as hereinafter defined), (ii) define the rights, duties, authority
and responsibilities of the Collateral Agent and the relationship among the
Secured Parties regarding the relative rights and priorities with respect to the
Pledged Collateral and (iii) provide for the sharing of any amounts otherwise
recovered under any Guaranty (as hereinafter defined).

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged, the
parties hereto agree as follows:

SECTION 1 DEFINITIONS.

The following terms shall have the meanings assigned to them below in this
Section 1 or as otherwise defined in the provisions of this Intercreditor
Agreement:

“Act” shall have the meaning assigned thereto in Section 4.5 hereof.

“Administrative Agent” shall have the meaning assigned thereto in the
introductory paragraph hereto, together with any successors and assigns.

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling (including but not limited to all directors and officers
of such Person), controlled by or under direct or indirect common control with
such Person. A Person shall be deemed to control a corporation if such Person
possesses, directly or indirectly, the power (a) to vote 10% or more of the
securities having ordinary voting power for the election of directors or
trustees of such corporation or (b) to direct or cause direction of the
management and policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise.

“Bank Credit Agreement” shall have the meaning assigned thereto in the Recitals
hereof.

“Bank Credit Agreement Obligations” means, without duplication, (i) all of the
obligations of the Credit Parties to the Lenders (including the Issuing Lender)
and the Administrative Agent, whenever arising, under the Bank Credit Documents
(including, but not limited to, any interest accruing after the occurrence of a
Bankruptcy Event with respect to any Credit Party, regardless of whether such
interest is an allowed claim under the Bankruptcy Code) and (ii) all liabilities
and obligations, whenever arising, owing from any Credit Party to any Lender, or
any Affiliate of a Lender, arising under any Hedging Agreement or any Equity
Swap Agreement entered into in connection with the loans evidenced by the Bank
Credit Documents.

“Bank Credit Documents” means (i) the Bank Credit Agreement, (ii) the Letters of
Credit, (iii) the Pledge Agreement and (iv) the Revolving Notes, the LOC
Documents, each Joinder Agreement and the Agent’s Fee Letter, each as defined in
the Bank Credit Agreement as in effect on the date hereof.

 

2

--------------------------------------------------------------------------------

“Bank Guarantor” means any Subsidiary of the Company as may from time to time
become a guarantor under the Bank Credit Agreement in accordance with the
provisions of the Bank Credit Agreement.

“Bank Guaranties” means the guaranty of the Bank Guarantors made pursuant to
Section 4 of the Bank Credit Agreement, and shall include each additional
guaranty or joinder delivered pursuant to the requirements of the Bank Credit
Agreement.

“Bankruptcy Code” means the Bankruptcy Code in Title 11 of the United States
Code, as amended, modified, succeeded or replaced from time to time.

“Bankruptcy Event” means, with respect to any Person, the occurrence of any of
the following: (i) the entry of a decree or order for relief by a court or
governmental agency in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or the appointment
by a court or governmental agency of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property or the ordering of the winding up or
liquidation of its affairs by a court or governmental agency; or (ii) the
commencement against such Person of an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or of
any case, proceeding or other action for the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar official) of
such Person or for any substantial part of its Property or for the winding up or
liquidation of its affairs, and such involuntary case or other case, proceeding
or other action shall remain undismissed for a period of sixty (60) consecutive
days, or the repossession or seizure by a creditor of such Person of a
substantial part of its Property; or (iii) such Person shall commence a
voluntary case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment of or the
taking possession by a receiver, liquidator, assignee, creditor in possession,
custodian, trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property or make any general assignment for the benefit
of creditors; or (iv) such Person shall be unable to, or shall admit in writing
its inability to, pay its debts generally as they become due.

“Business Day” means any day other than a Saturday, a Sunday, a legal holiday or
a day on which banking institutions are authorized or required by law or other
governmental action to close in Charlotte, North Carolina or New York, New York.

“Collateral Agent” shall have the meaning assigned thereto in the introductory
paragraph hereto.

“Company” shall have the meaning assigned thereto in the Recitals hereof.

“Credit Parties” means a collective reference to the Company and the Guarantors.

 

3

--------------------------------------------------------------------------------

“Equity Swap Agreements” means any agreement entered into by the Company in
order to manage existing or anticipated risk associated with the repurchase by
the Company of shares of its capital stock at a predetermined purchase price.

“Event of Default” means (i) any “Event of Default” under and as defined in the
Bank Credit Agreement or (ii) any “Event of Default” under and as defined in the
Senior Note Purchase Agreement.

“Financing Documents” means a collective reference to (i) the Bank Credit
Documents, (ii) any Hedging Agreement or any Equity Swap Agreement entered into
in connection with the loans evidenced by the Bank Credit Documents and
(iii) the Senior Note Documents.

“Guaranties” means a collective reference to the Bank Guaranties and the Senior
Note Guaranty, and “Guaranty” means any one of them.

“Guarantors” means a collective reference to the Bank Guarantors and the Senior
Note Guarantors, and “Guarantor” means any one of them.

“Hedging Agreement” means any interest rate protection agreements, foreign
currency exchange agreements, currency swap agreements, commodity purchase or
option agreements or other interest or exchange rate hedging agreements.

“Intercreditor Agreement” shall have the meaning assigned thereto in the
introductory paragraph hereto.

“Issuing Lender” means Bank of America, N.A. in its capacity as issuer of
Letters of Credit under the Bank Credit Agreement.

“Lender” means each of the Persons identified as a “Lender” on the signature
pages to the Second Amendment to Credit Agreement, the Issuing Lender and any
Person that hereafter becomes a lender party to the Bank Credit Agreement in
accordance with the terms thereof, together with their successors and assigns.
For the purposes of this Intercreditor Agreement and the Pledge Agreement, the
term “Lender” shall include any Affiliate of any Lender which has entered into a
Hedging Agreement or an Equity Swap Agreement with any Credit Party.

“Letter of Credit” means a letter of credit issued for the account of a Credit
Party by the Issuing Lender under the Bank Credit Agreement, as any such letter
of credit may be amended, modified, extended, renewed or replaced.

“Letter of Credit Collateral Account” shall have the meaning assigned thereto in
Section 5.3(c) hereof.

“LOC Obligations” means, at any time, the sum of (i) the maximum amount which
is, or at any time thereafter may become, available to be drawn under Letters of
Credit then outstanding, assuming compliance with all requirements for drawings
referred to in such Letters of Credit plus (ii) the aggregate amount of all
drawings under Letters of Credit honored by the Issuing Lender but not
theretofore reimbursed.

 

4

--------------------------------------------------------------------------------

“Make-Whole Amount” shall have the meaning assigned to such term in the Senior
Note Purchase Agreement as in effect on the date hereof.

“Notice of Event of Default” means a written notice issued to the Collateral
Agent with a copy to the Company by any Secured Party certifying that an Event
of Default arising under Section 9.1 of the Bank Credit Agreement or Section 11
of the Senior Note Purchase Agreement has occurred and is continuing.

“Obligations” means a collective reference to the Bank Credit Agreement
Obligations and the Senior Note Obligations.

“Person” means any individual, partnership, joint venture, firm, corporation,
limited liability company, trust or other enterprise (whether or not
incorporated) or any government authority.

“Pledge Agreement” means that certain Second Amended and Restated Pledge
Agreement dated as of the date hereof among the Company, the Guarantors and the
Collateral Agent, for the ratable benefit of the Secured Parties, as amended or
modified from time to time.

“Pledged Collateral” shall have the meaning assigned thereto in the Pledge
Agreement.

“Pledged Shares” means a collective reference to the shares of capital stock
pledged to the Collateral Agent, for the ratable benefit of the Secured Parties,
pursuant to the terms of the Pledge Agreement.

“Proceeds” shall have the meaning assigned thereto in Section 4.3.

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.

“Required Secured Parties” means, at the time of any determination hereunder,
(a) Lenders holding in the aggregate a majority of (i) the Commitments (as
defined in the Bank Credit Agreement) or (ii) if such Commitments have been
terminated, the outstanding principal amount of the Bank Credit Agreement
Obligations and (b) Senior Noteholders holding in the aggregate a majority of
the outstanding principal amount of the Senior Note Obligations.

“Second Amendment to Credit Agreement” shall have the meaning assigned thereto
in the Recitals hereof.

“Secured Parties” means a collective reference to the Administrative Agent, on
behalf of the Lenders, the Collateral Agent, each of the Lenders and each of the
Senior Noteholders, and “Secured Party means any one of them.

 

5

--------------------------------------------------------------------------------

“Senior Note Documents” means the Senior Note Purchase Agreement, the Senior
Notes, the Pledge Agreement and the Senior Note Guaranty (as in effect on the
date hereof).

“Senior Note Guarantor” means any Subsidiary of the Company as may from time to
time become a guarantor under the Senior Note Guaranty in accordance with the
provisions of the Senior Note Purchase Agreement.

“Senior Note Guaranty” means the guaranty agreement of the Senior Note
Guarantors in favor of the Senior Noteholders dated as of September 1, 2000, as
amended or modified from time to time, and shall include each additional
guaranty or joinder delivered pursuant to the requirements of the Senior Note
Purchase Agreement.

“Senior Note Obligations” means a collective reference to the unpaid principal
of, interest on and applicable Make-Whole Amount, if any, in respect of the
Senior Notes and all other obligations and liabilities of the Company and the
Senior Note Guarantors to the Senior Noteholders (including, but not limited to,
any interest accruing after the occurrence of a Bankruptcy Event with respect to
any Credit Party, regardless of whether such interest is an allowed claim under
the Bankruptcy Code), whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, the Senior Note Purchase Agreement or any Senior Note
or any other document made, delivered or given in connection therewith, whether
on account of principal, interest, fees, Make-Whole Amount, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and disbursements
of counsel to the Senior Noteholders that are required to be paid by the Company
or any Senior Note Guarantor pursuant to the terms of the Senior Note Purchase
Agreement, the Senior Notes, this Intercreditor Agreement or any other Senior
Note Document).

“Senior Note Purchase Agreement” shall have the meaning assigned thereto in the
Recitals hereof.

“Senior Noteholders” means a collective reference to the holders from time to
time of the Senior Notes. Each such noteholder may be referred to individually
herein as a “Senior Noteholder”.

“Senior Notes” shall have the meaning assigned thereto in the Recitals hereof.

“Subsidiary” means, as to any Person, (a) any corporation more than 50% of whose
stock of any class or classes having by the terms thereof ordinary voting power
to elect a majority of the directors of such corporation (irrespective of
whether or not at the time, any class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time owned by such Person directly or indirectly through Subsidiaries, and
(b) any partnership, limited liability company, association, joint venture or
other entity in which such person directly or indirectly through Subsidiaries
has more than a 50% equity interest at any time.

“Unfunded LOC Exposure” means, at any time, the aggregate undrawn amount of all
outstanding Letters of Credit at such time.

 

6

--------------------------------------------------------------------------------

“Uniform Commercial Code” means the Uniform Commercial Code as in effect from
time to time in the State of New York.

SECTION 2 APPOINTMENT AND AUTHORITY OF COLLATERAL AGENT.

(a) Each of the Administrative Agent, on behalf of the Lenders, and the Senior
Noteholders hereby (i) appoints Bank of America, N.A. to act as Collateral Agent
on behalf of such Person with such powers and discretion as are specifically
delegated to the Collateral Agent by the terms of this Intercreditor Agreement
and the Pledge Agreement, together with such other powers as are reasonably
incidental thereto and (ii) authorizes the Collateral Agent to execute the
Pledge Agreement in the name of and for the benefit of such Person, and Bank of
America, N.A. hereby accepts such appointment and shall have all of the rights
and obligations of the Collateral Agent hereunder and under the Pledge
Agreement.

(b) Each of the Administrative Agent, on behalf of the Lenders, and the Senior
Noteholders hereby appoints the Collateral Agent as agent for the purposes of
perfecting the security interest in the Pledged Collateral and Bank of America,
N.A. hereby acknowledges that it shall hold the certificates, if any,
representing the Pledged Shares for the ratable benefit of all Secured Parties.

(c) Subject to the requirements of Section 4.2 hereof, the Administrative Agent,
on behalf of the Lenders, and the Noteholders hereby authorize, and each Secured
Party shall be deemed to authorize, the Collateral Agent to take such action on
their behalf hereunder and under the provisions of the Pledge Agreement and any
other instrument and agreement referred to therein or now or hereafter delivered
thereunder and to exercise such powers thereunder as are specifically delegated
to or required of the Collateral Agent by the terms thereof, subject to the
provisions hereof.

SECTION 3 PRIORITY OF LIENS; SHARING OF GUARANTIES.

Notwithstanding any contrary provision contained in the Uniform Commercial Code,
any applicable law or judicial decision or the Financing Documents, or whether
any Secured Party has possession of all or any part of the Pledged Collateral,
as among the Secured Parties, the respective rights of each Secured Party in
respect of liens and security interests existing under the Pledge Agreement
shall at all times remain on a parity with one another without preference,
priority or distinction and shall be shared as provided herein, and any
payments, proceeds or other distributions realized or received in respect
thereof shall be shared by the Secured Parties and distributed in accordance
with the rights and priorities set forth in this Intercreditor Agreement. Any
payments or proceeds received by the Collateral Agent or any Secured Party by
way of right of setoff or banker’s lien or counterclaim (whether by law,
contract or otherwise) shall be deemed to be Proceeds and shall be shared by the
Secured Parties and distributed in accordance with the rights and priorities set
forth in this Intercreditor Agreement. All payments made pursuant to the terms
of any Guaranty shall be shared among the Secured Parties as provided herein.

 

7

--------------------------------------------------------------------------------

  SECTION 4 ENFORCEMENT AGAINST PLEDGED COLLATERAL: APPLICATION OF PROCEEDS FROM
PLEDGED COLLATERAL AND GUARANTIES.

Section 4.1 Limit on Enforcement.

The liens and security interests granted and provided for in the Pledge
Agreement shall not be enforced as against any of the Pledged Collateral except
at the direction of the Required Secured Parties upon the occurrence of an Event
of Default and in compliance with the provisions hereof. As long as any
Obligations exist or may become outstanding pursuant to the terms of the
Financing Documents, the provisions of this Intercreditor Agreement shall
provide the exclusive method by which any Secured Party may exercise rights and
remedies under the Pledge Agreement.

Section 4.2 Enforcement.

The Administrative Agent, on behalf of the Lenders, and each Senior Noteholder
agrees that it will, upon becoming aware of the occurrence of any Event of
Default, give the Collateral Agent and each other Secured Party immediate
written notice of such Event of Default which notice shall constitute a Notice
of Event of Default. Upon the occurrence of any Event of Default and the
Collateral Agent’s receipt of a Notice of Event of Default for the same, the
Collateral Agent, at the direction of the Required Secured Parties, shall seek
to realize upon the security interests and liens granted to the Collateral Agent
under the Pledge Agreement in such manner as shall be directed by the Required
Secured Parties. Whether before or after any Event of Default, subject to the
terms and conditions hereof, the Collateral Agent shall follow the instructions
of the Required Secured Parties with respect to the preservation, protection,
collection or realization upon any Pledged Collateral. If the Collateral Agent
has requested instructions from the Required Secured Parties at a time when a
Notice of Event of Default shall be outstanding and the Required Secured Parties
have not responded to such request within 30 days thereafter, the Collateral
Agent may take (unless any Secured Party shall have given the Collateral Agent
notification that the Required Secured Parties have not agreed upon the actions
to be taken by the Collateral Agent, in which case the Collateral Agent shall
take no action until instructions of the Required Secured Parties are received),
but shall have no obligation to take, any and all actions under the Pledge
Agreement or otherwise, including foreclosure of any lien or any other exercise
of remedies, as the Collateral Agent shall determine to be in the best interests
of the Secured Parties and to maximize both the value of the Pledged Collateral
and the present value of the recovery by each of the Secured Parties on the
Obligations; provided, however, if instructions are thereafter received from the
Required Secured Parties, then any subsequent actions of the Collateral Agent
shall be subject to such instructions.

Section 4.3 Application of Proceeds.

The proceeds and avails of any sale of the Pledged Collateral, or any part
thereof, and the proceeds and avails of any right or remedy under the Pledge
Agreement, and any and all amounts

 

8

--------------------------------------------------------------------------------

at any time recovered by any Secured Party from any Guarantor as a result of the
enforcement by such Secured Party of its rights and remedies under any Guaranty
(collectively, the “Proceeds”) in all cases shall be shared by the Secured
Parties (as specified in this Section 4.3), within five (5) Business Days after
receipt thereof by any Secured Party or the Collateral Agent, and shall be paid
to and applied as follows:

(a) FIRST, to the payment of all unreimbursed costs and expenses of the
Collateral Agent, in its capacity as such, incurred in connection with the
execution of its duties as Collateral Agent, in exercising or attempting to
exercise any right or remedy hereunder or under the Pledge Agreement or in
taking possession of, protecting, preserving or disposing of any item of Pledged
Collateral, and all amounts against or for which the Collateral Agent, in its
capacity as such, is to be indemnified or reimbursed hereunder or under the
Pledge Agreement;

(b) SECOND, after payment in full of the amounts set forth in clause (a) above,
to the payment of any fees owed by the Credit Parties to the Collateral Agent;

(c) THIRD, after payment in full of the amounts set forth in clause (b) above,
to the payment of the costs and expenses of the Secured Parties incurred in
connection with the enforcement of this Intercreditor Agreement and the Pledge
Agreement, ratably based on the proportion that such unpaid costs and expenses
constituting each of the Bank Credit Agreement Obligations and the Senior Note
Obligations bears to the sum of all such unpaid costs and expenses at the time
due and payable;

(d) FOURTH, after payment in full of the amounts set forth in clause (c) above,
to the payment of all of the Obligations consisting of accrued commitment fees
(to the extent a legal commitment to lend money existed at the time such fees
accrued), accrued letter of credit fees and accrued interest (including, without
limitation, the Make-Whole Amount, if any, then owing to the Senior Noteholders
under the Senior Note Purchase Agreement), ratably based on the proportion that
such fees and interest constituting each of the Bank Credit Agreement
Obligations and the Senior Note Obligations bears to the sum of all such fees
and interest at the time due and payable;

(e) FIFTH, after payment in full of the amounts set forth in clause (d) above,
to the payment of the outstanding principal amount of the Obligations (including
the payment or cash collateralization of the outstanding LOC Obligations,
subject to the terms of Section 5.3(c)) ratably based on the proportion that
such principal constituting each of the Bank Credit Agreement Obligations and
the Senior Note Obligations bears to the sum of all such principal at the time
due and payable;

(f) SIXTH, after payment in full of all amounts set forth in clause (e) above,
to the payment to the Administrative Agent, in its capacity as such, the Lenders
and the Senior Noteholders, ratably, in accordance with the respective amounts
of (i) all other Bank Credit Agreement Obligations and (ii) all other Senior
Note Obligations, to be applied in the manner specified the Bank Credit
Documents or the Senior Note Documents, as applicable; and

 

9

--------------------------------------------------------------------------------

(g) LAST, after payment in full of all amounts set forth in clause (g) above, to
the payment of the surplus, if any, to the Company or any other Credit Party,
any of their respective successors or to whomsoever may be lawfully entitled to
receive the same.

The Administrative Agent, on behalf of the Lenders, and the Senior Noteholders
agree among themselves that, in the event that any Secured Party by any means
and/or for any reason shall obtain Proceeds in excess of its ratable share of
such Proceeds, such Secured Party shall promptly transfer such proceeds to the
Collateral Agent for distribution in accordance with the order set forth above.
It is understood and agreed that the Company shall be liable for any deficiency
between the amount of the Proceeds and the aggregate amount of the Obligations
secured thereby.

In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (ii) each of the Secured Parties shall receive an
amount equal to its pro rata share (based on the proportion that the then
outstanding Obligations held by such Secured Party bears to the aggregate then
outstanding Obligations) of amounts available to be applied pursuant to clauses
“THIRD”, “FOURTH”, “FIFTH” and “SIXTH” above.

Section 4.4 Determination of Amounts of Obligations.

Whenever the Collateral Agent is required to determine the existence or amount
of any of the Obligations or any portion thereof or the existence of any Event
of Default for any purposes of this Intercreditor Agreement, it shall be
entitled, absent manifest error, to make such determination on the basis of one
or more certificates of any Secured Party (with respect to the Obligations owed
to such Secured Party); provided, however, that if, notwithstanding the request
of the Collateral Agent, any Secured Party shall fail or refuse within ten
Business Days of such request to certify as to the existence or amount of any
Obligations or any portion thereof owed to it or the existence of any Event of
Default, the Collateral Agent shall be entitled to determine such existence or
amount by such method as the Collateral Agent may, in its reasonable discretion,
determine, including by reliance upon a certificate of the Company; provided
further, that, promptly following determination of any such amount, the
Collateral Agent shall notify such Secured Party of such determination and
thereafter shall correct any error that such Secured Party brings to the
attention of the Collateral Agent. The Collateral Agent may rely conclusively,
and shall be fully protected in so relying, on any determination made by it in
accordance with the provisions of the preceding sentence (or as otherwise
directed by a court of competent jurisdiction) and shall have no liability to
any of the Credit Parties or its Subsidiaries, any Secured Party or any other
Person as a result of any action taken by the Collateral Agent, based upon such
determination prior to receipt of notice of any error in such determination.

Section 4.5 Acts of Secured Parties.

Any request, demand, authorization, direction, notice, consent, waiver or other
action permitted or required by this Intercreditor Agreement to be given or
taken by the Secured Parties or any portion thereof (including the Required
Secured Parties) may be and, at the request of the

 

10

--------------------------------------------------------------------------------

Collateral Agent, shall be embodied in and evidenced by one or more instruments
satisfactory in form and substance to the Collateral Agent and signed by or on
behalf of such Persons and, except as otherwise expressly provided in any such
instrument, any such action shall become effective when such instrument or
instruments shall have been delivered to the Collateral Agent. The instrument or
instruments evidencing any action (and the action embodied therein and evidenced
thereby) are sometimes referred to herein as an “Act” of the Persons signing
such instrument or instruments. The Collateral Agent shall be entitled to rely
absolutely upon an Act of any Secured Party if such Act purports to be taken by
or on behalf of such Secured Party, and nothing in this Section 4.5 or elsewhere
in this Intercreditor Agreement shall be construed to require any Secured Party
to demonstrate that it has been authorized to take any action which it purports
to be taking, the Collateral Agent being entitled to rely conclusively, and
being fully protected in so relying, on any Act of such Secured Party.

SECTION 5 THE COLLATERAL AGENT.

The Collateral Agent accepts the duties hereunder and under the Pledge Agreement
and agrees to perform the same, but only upon the terms and conditions hereof
and of the Pledge Agreement, including the following:

Section 5.1 Duties of Collateral Agent.

(a) The Collateral Agent, upon receipt of an appropriate Notice of Event of
Default from any Secured Party, shall promptly furnish copies of the same to the
other Secured Parties.

(b) The Collateral Agent shall not have any duty or obligation to manage,
control, use, sell, dispose of or otherwise deal with the Pledged Collateral or
to otherwise take or refrain from taking any action under, or in connection
with, this Intercreditor Agreement or the Pledge Agreement, except, subject to
Section 5.7, as expressly provided by the terms and conditions of this
Intercreditor Agreement or the Pledge Agreement. The Collateral Agent may take,
but shall have no obligation to take, any and all such actions under the Pledge
Agreement or otherwise as it shall deem to be in the best interests of the
Secured Parties in order to maintain the Pledged Collateral and protect and
preserve the Pledged Collateral and the rights of the Secured Parties; provided,
however, that, except as otherwise expressly provided herein, in the absence of
written instructions (which may relate to the exercise of specific remedies or
to the exercise of remedies in general) from the Required Secured Parties the
Collateral Agent shall not foreclose on any lien or security interest on the
Pledged Collateral or exercise any other remedies available to it under the
Pledge Agreement with respect to the Pledged Collateral or any part thereof.

(c) The Collateral Agent shall not be responsible in any manner whatsoever for
the correctness of any recitals, statements, representations or warranties
contained herein or in the Pledge Agreement. The Collateral Agent makes no
representation as to the value or condition of the Pledged Collateral or any
part thereof, as to the title of any

 

11

--------------------------------------------------------------------------------

of the Credit Parties to the Pledged Collateral, as to the security afforded by
this Intercreditor Agreement or the Pledge Agreement or as to the validity,
execution, enforceability, legality or sufficiency of this Intercreditor
Agreement or any other Financing Document, and the Collateral Agent shall incur
no liability or responsibility in respect of any such matters. The Collateral
Agent shall not be required to ascertain or inquire as to the performance by any
of the Credit Parties of its obligations under any of the Financing Documents.

(d) The Collateral Agent shall not be responsible for insuring the Pledged
Collateral, for the payment of taxes, charges, assessments or liens upon the
Pledged Collateral or otherwise as to the maintenance of the Pledged Collateral,
except as provided in the immediately following sentence when the Collateral
Agent has possession of the Pledged Collateral. The Collateral Agent shall have
no duty to any of the Credit Parties or any of their Subsidiaries or to the
Secured Parties as to any Pledged Collateral in its possession or control or in
the possession or control of any agent or nominee of the Collateral Agent or any
income thereon or as to the preservation of rights against prior parties or any
other rights pertaining thereto, except the duty to accord such Pledged
Collateral in its possession substantially the same care as it accords its own
assets and the duty to account for monies received by it.

(e) The Collateral Agent may execute any of the powers granted under this
Intercreditor Agreement or the Pledge Agreement and perform any duty hereunder
or thereunder either directly or by or through agents or attorneys-in-fact, and
shall not be responsible for the gross negligence or willful misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.

(f) In the event (i) the Collateral Agent shall have received any written
request from any of the Credit Parties for consent or approval to any matter
relating to any Pledged Collateral or the Credit Party’s obligations with
respect thereto or (ii) there shall be due from the Collateral Agent under the
provisions of the Pledge Agreement any performance or the delivery of any
instrument, then, in each such event, the Collateral Agent shall send to each of
the Secured Parties a notice setting forth in reasonable detail (x) an account
of the matter as to which such consent has been requested or the performance or
instrument required to be so delivered, as the case may be, and (y) the
Collateral Agent’s proposed course of action with respect thereto. No such
consent of the Secured Parties shall be required with respect to any action
taken in accordance with the provisions of Section 4.2 hereof or with respect to
any consent, determination or other matter that is, in the Collateral Agent’s
reasonable judgment, ministerial or administrative in nature.

(g) The Collateral Agent shall not be deemed to have actual, constructive,
direct or indirect notice or knowledge of the occurrence of any Event of Default
unless and until the Collateral Agent shall have received a Notice of Event of
Default or a notice from any of the Credit Parties to the Collateral Agent in
its capacity as Collateral Agent indicating that an Event of Default has
occurred. The Collateral Agent shall have no obligation either prior to or after
receiving such notice to inquire whether an Event of

 

12

--------------------------------------------------------------------------------

Default has, in fact, occurred and shall be entitled to rely conclusively, and
shall be fully protected in so relying, on any notice so furnished to it.
Subject in all cases to the provisions of Section 4.2, the Collateral Agent may
(but shall not be obligated to) take action hereunder on the basis of the
occurrence of an Event of Default, whether or not the Collateral Agent has
received any Notice of Event of Default stating that such Event of Default has
occurred; provided that any such action taken by the Collateral Agent without
direction from the Required Secured Parties shall be limited to actions that the
Collateral Agent determines to be necessary to protect and preserve the Pledged
Collateral and the rights of the Secured Parties; provided further, that the
Collateral Agent shall promptly notify all Secured Parties in writing of any
action taken without direction from the Required Secured Parties.

(h) The Collateral Agent may, without obtaining the consent of any of the
Secured Parties, exchange any of the Pledged Collateral of a Credit Party or
other property upon any merger, consolidation, reorganization, recapitalization
or other readjustment of the issuer thereof and, in connection therewith,
deposit any of the Pledged Collateral of such Credit Party with any committee,
depository, transfer agent, registrar or other designated agency upon such terms
as the Collateral Agent may determine. The Collateral Agent shall promptly
notify all Secured Parties in writing of any such action taken without the
consent from the Required Secured Parties.

(i) The Collateral Agent may, without obtaining the consent of any of the
Secured Parties, release any of the Pledged Collateral in connection with
transactions permitted by (i) Sections 8.4 and 8.5 of the Bank Credit Agreement
(or otherwise permitted by any amendments, waivers or consents executed in
accordance with the terms of the Bank Credit Documents) and (ii) Sections 10.7,
10.8 and 10.9 of the Senior Note Purchase Agreement (or as otherwise permitted
by any amendments, waivers or consents executed in accordance with the terms of
the Senior Note Documents), and execute any releases or other documentation
evidencing the same upon such terms and conditions as the Collateral Agent may
determine. The Collateral Agent shall promptly notify all Secured Parties in
writing of any such action taken without the consent from the Required Secured
Parties.

Section 5.2 Collateral Agent’s Liability.

No provision of this Intercreditor Agreement shall be construed to relieve the
Collateral Agent from liability for its own grossly negligent action, grossly
negligent failure to act, or its own willful misconduct, except that:

(a) the Collateral Agent shall not be liable except for the performance of such
duties as are specifically set forth in this Intercreditor Agreement or in the
Pledge Agreement, and no implied covenants or obligations shall be read into
this Intercreditor Agreement or the Pledge Agreement against the Collateral
Agent, but the duties and obligations of the Collateral Agent shall be
determined solely by the express provisions of this Intercreditor Agreement and
the Pledge Agreement;

 

13

--------------------------------------------------------------------------------

(b) the Collateral Agent may rely upon the authenticity of, and the truth of the
statements and the correctness of the opinions expressed in, and shall be
protected in acting upon, any resolution, officer’s certificate, opinion of
counsel, note, request, notice, consent, waiver, order, signature guaranty,
notarial seal, stamp, acknowledgment, verification, appraisal, report, stock
certificate, or other paper or document believed by the Collateral Agent to be
genuine and to have been signed, affixed or presented by the proper party or
parties and the Collateral Agent shall not assume, and shall not be deemed to
have assumed, any obligation towards or relationship of agency, fiduciary or
trust with or for any other Person;

(c) whenever the Collateral Agent, or any of its agents, representatives,
experts or counsel, shall consider it necessary or desirable that any matter be
proved or established, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by an officer’s certificate; provided, however, that the Collateral
Agent, or such agent, representative, expert or counsel, may require such
further and additional evidence and make such further investigation as it or
they may consider reasonable;

(d) the Collateral Agent shall not be liable with respect to any action taken or
omitted, to be taken by it in accordance with any direction or request of a
Secured Party pursuant to the terms of this Intercreditor Agreement or the
Pledge Agreement;

(e) the Collateral Agent shall not be liable for any error of judgment made in
good faith by an officer, director, employee or agent of the Collateral Agent;
and

(f) whether or not an Event of Default shall have occurred, the Collateral Agent
shall not be under any obligation to take or refrain from taking any action
under this Intercreditor Agreement or the Pledge Agreement (i) which may tend to
involve it in any expense or liability, unless and until it is requested in
writing so to do by the Required Secured Parties and furnished, from time to
time as it may require, with satisfactory security and indemnity or (ii) which
may conflict with any provisions of law, this Intercreditor Agreement, the
Pledge Agreement or any order of any court or administrative agency.

Section 5.3 Status of Moneys Received.

(a) Pending the disbursement thereof pursuant to the terms of this Intercreditor
Agreement, all monies received by the Collateral Agent following the enforcement
of the liens and security interests granted and provided for in the Pledge
Agreement shall be held for the purposes for which they were received, in
segregated accounts, and shall, if held by the Collateral Agent for more than
one (1) Business Day, be invested by the Collateral Agent in investments
permitted by Section 5.3(b) below. The Collateral Agent and any affiliated
corporation may become the owner of any of the Obligations and be interested in
any financial transaction with any of the Credit Parties or any affiliated
corporation, or the Collateral Agent may act as depository or otherwise in
respect to other securities of any of the Credit Parties or any affiliated
corporation, all with the same rights which it would have if it was not the
Collateral Agent.

 

14

--------------------------------------------------------------------------------

(b) The Collateral Agent will, in accordance with Section 5.3(a), invest and
reinvest any funds held by the Collateral Agent following the enforcement of the
liens and security interest granted and provided for in the Pledge Agreement in
direct obligations of the United States of America or obligations for which the
full faith and credit of the United States is pledged to provide for the payment
of principal and interest, maturing not more than 90 days from the date of such
investment. Earnings on monies so invested shall constitute proceeds of Pledged
Collateral for purposes of this Intercreditor Agreement.

(c) The Collateral Agent shall establish and maintain at its offices in
Charlotte, North Carolina (or such other office as the Collateral Agent may
determine) an account (the “Letter of Credit Collateral Account”) into which it
shall deposit all amounts that the Collateral Agent shall receive pursuant to
the terms of Section 4.3 on account of the Unfunded LOC Exposure with respect to
Letters of Credit then outstanding. The Collateral Agent shall establish
sub-accounts in the Letter of Credit Collateral Account with respect to each
such outstanding Letter of Credit. All amounts deposited in the Letter of Credit
Collateral Account shall be allocated between, and deposited in, the respective
sub-accounts therein pro rata in accordance with the Unfunded LOC Exposure with
respect to the related Letters of Credit. If, on or after the date on which any
funds are deposited in the Letter of Credit Collateral Account, any such Letter
of Credit is drawn upon by the beneficiary thereof, the Collateral Agent shall,
upon the written request of the Administrative Agent, apply any funds in the
sub-account with respect to such Letter of Credit to the reimbursement of any
drawing under such Letter of Credit honored by the Issuing Lender as if such
reimbursement were being made by the Company pursuant to the Bank Credit
Agreement (but not in an amount in excess of the amount of such drawing). At the
time of any expiration or cancellation of any such outstanding Letter of Credit,
or any other reduction in the amount available to be drawn thereunder (other
than as a result of reimbursement of a drawing on such Letter of Credit pursuant
to the terms hereof), the amount of funds in the sub-account with respect to
such Letter of Credit (or, in the case of any partial reduction in the amount
available to be drawn thereunder, a pro rata portion of such funds) shall be
released from such sub- account, and the funds so released shall be paid to the
Secured Parties in accordance with the terms of Section 4.3.

Section 5.4 Resignation or Termination of Collateral Agent.

The Collateral Agent may resign at any time by giving written, notice to the
Secured Parties. Upon any such resignation, the Required Secured Parties shall
have the right to appoint a successor Collateral Agent. Upon the acceptance of
any appointment as a Collateral Agent hereunder by a successor, such successor
Collateral Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Collateral Agent, and the
retiring Collateral Agent shall be discharged from its duties and obligations as
a Collateral Agent, as appropriate, under this Intercreditor Agreement, the
Pledge Agreement and the other Financing Documents and

 

15

--------------------------------------------------------------------------------

the provisions of this Section 5.4 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was a Collateral Agent under this
Intercreditor Agreement. If no successor Collateral Agent has accepted
appointment as Collateral Agent within sixty (60) days after the retiring
Collateral Agent’s giving notice of resignation, the retiring Collateral Agent’s
resignation shall nevertheless become effective and the Required Secured Parties
shall perform all duties of the Collateral Agent under this Intercreditor
Agreement, the Pledge Agreement and the other Financing Documents until such
time, if any, as the Required Secured Parties appoint a successor Collateral
Agent as provided for above. Subject to the foregoing terms of this Section 5.4,
there shall at all times be a Person serving as Collateral Agent hereunder. If
the Collateral Agent shall (i) take any action expressly prohibited by this
Intercreditor Agreement (other than where the failure to take such action would
entail a violation of applicable law) or (ii) fail or refuse to perform or
commence performing any act set forth in written instructions delivered pursuant
to, and in accordance with the terms and conditions of, this Intercreditor
Agreement (other than where such nonperformance is beyond the control of the
Collateral Agent or where such performance would entail a violation of
applicable law or conflict with the provisions of this Intercreditor Agreement
or any Financing Document), and such failure continues for a period of 15 days
from the date of receipt of said written instructions, the Collateral Agent may
be removed by the Required Secured Parties (excluding, for purposes of such
calculation of Required Senior Parties only, the portion of the Obligations held
by the Collateral Agent in its capacity as a Lender or a Senior Noteholder). In
such event, the Required Secured Parties shall have the right to appoint a
successor Collateral Agent subject to, if no Event of Default has occurred and
is continuing, approval by the Company (such approval not to be unreasonably
withheld or delayed).

Section 5.5 Succession of Successor Collateral Agent.

Any successor Collateral Agent appointed hereunder shall execute, acknowledge
and deliver to the Company and the predecessor Collateral Agent an instrument
accepting such appointment, and thereupon such successor Collateral Agent,
without any further act, deed, conveyance or transfer, shall become vested with
the title to the Pledged Collateral, and with all the rights, powers, duties and
obligations of the predecessor Collateral Agent hereunder, with like effect as
if originally named as Collateral Agent herein.

Upon the request of any such successor Collateral Agent, however, at the expense
of the Credit Parties, the predecessor Collateral Agent shall promptly execute
and deliver such instruments of conveyance and further assurance reflecting
terms consistent with the terms of this Intercreditor Agreement and the Pledge
Agreement then in effect and do such other things as may reasonably be required
for more fully and certainly vesting and confirming in such successor Collateral
Agent its interest in the Pledged Collateral and all such rights, powers, duties
and obligations of the predecessor Collateral Agent hereunder, and the
predecessor Collateral Agent shall also promptly assign and deliver to the
successor Collateral Agent any Pledged Collateral subject to the lien and
security interest of the Pledge Agreement which may then be in the possession of
the predecessor Collateral Agent.

 

16

--------------------------------------------------------------------------------

Section 5.6 Indemnification of Collateral Agent.

The Collateral Agent shall be indemnified by the Secured Parties (to the extent
not reimbursed under Section 8(g) of the Pledge Agreement), ratably on the basis
of the respective principal or face amounts of the Obligations then outstanding,
for any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against the
Collateral Agent arising out of the actions of the Collateral Agent under this
Intercreditor Agreement or the Pledge Agreement or the transactions contemplated
thereby or the enforcement of any of the terms thereof or of any such other
documents including, without limitation, all expenses, compensation,
disbursements, advances, losses or liabilities of the type described in
Section 8(g) of the Pledge Agreement, provided that no Secured Party shall be
liable for any of the foregoing to the extent they arise from the Collateral
Agent’s gross negligence or willful misconduct. Each Secured Party shall be
subrogated to the rights of the Collateral Agent with respect to all amounts
paid by it pursuant to this paragraph, and all such amounts shall constitute
Bank Credit Agreement Obligations or Senior Note Obligations, as the case may
be.

Notwithstanding any other provision of this Intercreditor Agreement or the
Pledge Agreement, the Collateral Agent shall in all cases be fully justified in
failing or refusing to act hereunder unless it shall be indemnified to its
satisfaction by the Secured Parties against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such
action.

Section 5.7 Self Dealing.

The Collateral Agent shall have the same rights and powers under the Financing
Documents as any other Secured Party and may exercise or refrain from exercising
the same as though it were not the Collateral Agent. Without limiting the
generality of the foregoing, the Collateral Agent or any holding company, trust
company or corporation in or with which the Collateral Agent or the Collateral
Agent’s stockholders may be interested or affiliated, or any officer or director
of the Collateral Agent, or of any other such entity, or any agent appointed by
the Collateral Agent, may have commercial relations or otherwise deal with any
of the Credit Parties, or any Secured Party, or with any other corporation
having relations with any of the Credit Parties or any Secured Party, and with
any other entity, whether or not affiliated with the Collateral Agent.

SECTION 6 AGREEMENTS AMONG THE CREDITORS.

Section 6.1 Independent Actions by Secured Parties.

This Intercreditor Agreement shall not limit or affect in any way the rights of
the Secured Parties under the Financing Documents to which such Secured Parties
are party, including, without limitation, the rights of the Secured Parties to
(a) amend any of the terms of the Financing Documents to which it is a party or
(b) waive any obligations or responsibilities of the Company or any Guarantor
required by the terms of the applicable Financing Documents. Furthermore,
nothing contained in this Intercreditor Agreement shall prohibit any Secured
Party from (i) accelerating the maturity of, or demanding payment from any of
the Credit Parties on, any Obligation of the Credit Parties to such Secured
Party or taking any action in respect of any

 

17

--------------------------------------------------------------------------------

Guaranty, (ii) instituting legal action against any of the Credit Parties to
obtain a judgment or other legal process in respect of such Obligation,
(iii) imposing a default rate of interest in accordance with the applicable
Financing Documents, (iv) filing to commence a proceeding against the Company or
any Guarantor under the Bankruptcy Code and filing claims or otherwise
participating in any voluntary or involuntary bankruptcy proceedings, including
the right to participate in any hearing or proceeding considering whether such
Secured Party has received or will receive “adequate protection” under the
Bankruptcy Code or (v) raising any defenses in any action in which it has been
made a party defendant or has been joined as a third party, except that the
Collateral Agent may direct and control any defense to the extent directly
relating to the Pledged Collateral or the Pledge Agreement, subject to and in
accordance with the provisions of this Intercreditor Agreement.

Section 6.2 Relation of Secured Parties.

This Intercreditor Agreement is entered into solely for the purposes set forth
herein, and does not create any responsibility among the Secured Parties to
advise any other Secured Party of information known to such Secured Party
regarding the financial condition of the Company or any Guarantor or of any
other circumstances bearing upon the risk of nonpayment of any Obligation.
Nothing contained in this Intercreditor Agreement is or is intended to be for
the benefit of the Company or any Guarantor and nothing contained herein shall
limit or in any way modify any of the obligations of the Company or any
Guarantor to the Secured Parties.

SECTION 7 MISCELLANEOUS.

Section 7.1 Entire Agreement.

This Intercreditor Agreement represents the entire agreement among the Secured
Parties with respect to the matters described in Recital E hereto.

Section 7.2 Notices.

Notices hereunder shall be given to the Administrative Agent at its address or
telecopy number as set forth on the signature pages hereto and to the Senior
Noteholders at their addresses or telecopy numbers as set forth on Schedule A
hereto, or at such other address or telecopy number as may be designated by any
such party in a written notice to the Collateral Agent. Notices hereunder shall
be given to the Credit Parties at the address and telecopy number set forth in
Section 15 of the Pledge Agreement or at such other address or telecopy number
as may be designated by any such Credit Party in a written notice to the
Collateral Agent. All such notices and other communications to a party hereto
shall have been duly given and shall be effective (a) when delivered, (b) when
transmitted via telecopy (or other facsimile device) to the number provided for
such party, (c) the Business Day following the day on which the same has been
delivered prepaid or pursuant to an invoice arrangement to a reputable national
overnight air courier service, or (d) the third Business Day following the day
on which the same is sent by certified or registered mail, postage prepaid, in
each case to such party at the address or telecopy number provided for such
party.

 

18

--------------------------------------------------------------------------------

Section 7.3 Successors and Assigns.

This Intercreditor Agreement shall be binding upon and inure to the benefit of
each of the Secured Parties and their respective successors and assigns, whether
so expressed or not, and, in particular, shall inure to the benefit of and be
enforceable by any future holder or holders of any Obligations, and the term
“Secured Party” shall include any such subsequent holder of Obligations,
wherever the context permits. Without limiting the foregoing, the rights and
obligations of any Lender or Senior Noteholder under this Intercreditor
Agreement shall be assigned automatically, without the need for the execution of
any document or any other action, to, and the term “Lender”, or “Senior
Noteholder” as used in this Intercreditor Agreement shall include, any assignee,
transferee or successor of such Lender under the Bank Credit Agreement or such
Senior Noteholder under the Senior Note Purchase Agreement, as the case may be,
and any such assignee, transferee or successor shall automatically become bound
by and entitled to the benefits of this Intercreditor Agreement. No Secured
Party will sell, transfer or otherwise dispose of any interest in the
Obligations unless such purchaser or transferee shall agree in writing to be
bound by the terms of this Intercreditor Agreement, it being understood and
agreed that any assignment or participation of the Bank Credit Agreement
Obligations pursuant to the terms of the Bank Credit Agreement shall be deemed
to satisfy the requirements of this Section 7.3.

Section 7.4 Amendments, Modifications, Waivers.

All amendments, modifications and waivers of any provision of this Intercreditor
Agreement shall be effective only if the same shall be in writing and signed by
the Required Secured Parties; provided, however, that (a) no such modification
or amendment shall adversely affect any of the Collateral Agent’s rights,
immunities or rights to indemnification hereunder or under the Pledge Agreement
or expand its duties hereunder or under the Pledge Agreement, without the prior
written consent of the Collateral Agent, (b) no such modification or amendment
shall modify any provision hereof which is intended to provide for the equal and
ratable security of all outstanding Obligations without the prior written
consent of all Secured Parties and (c) no such modification or amendment shall
change the definition of “Required Secured Parties” or Section 4 or this
Section 7.4 without the prior written consent of all Secured Parties. No waiver
of any provision of this Intercreditor Agreement and no consent to any departure
by any party hereto from the provisions hereof shall be effective unless such
waiver or consent shall be set forth in a written instrument executed by the
party against which it is sought to be enforced, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. Except in connection with transactions permitted by
(i) Sections 8.4 and 8.5 of the Bank Credit Agreement (or otherwise permitted by
any amendments, waivers or consents executed in accordance with the terms of the
Bank Credit Documents) and (ii) Sections 10.7, 10.8 and 10.9 of the Senior Note
Purchase Agreement (or as otherwise permitted by any amendments, waivers or
consents executed in accordance with the terms of the Senior Note Documents),
the Collateral Agent shall not release any of the Pledged Collateral nor enter
into any amendment, modification or waiver of any provision of the Pledge
Agreement without the prior written consent of the Required Secured Parties.

 

19

--------------------------------------------------------------------------------

Section 7.5 Governing Law.

This Intercreditor Agreement shall be governed by and construed in accordance
with the laws of the State of New York.

Section 7.6 Counterparts.

This Intercreditor Agreement may be executed in any number of counterparts, all
of which taken together shall constitute one agreement, and any of the parties
hereto may execute this Intercreditor Agreement by signing any such counterpart.

Section 7.7 Severability.

In case any one or more of the provisions contained in this Intercreditor
Agreement shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions of this
Intercreditor Agreement shall not in any way be affected or impaired thereby.

Section 7.8 Terms.

Whenever the context and construction so requires, all words used in the
singular number herein shall be deemed to have been used in the plural, and vice
versa.

Section 7.9 Purchase of Pledged Collateral.

Any Secured Party may purchase Pledged Collateral at any public sale of such
Pledged Collateral pursuant to the Pledge Agreement, but only to the extent such
action does not contravene any requirement of law.

Section 7.10 Effect of Bankruptcy or Insolvency.

This Intercreditor Agreement shall continue in effect notwithstanding the
bankruptcy or insolvency of any party hereto or the Company or any Guarantor.

Section 7.11 Collateral Agent’s Fee.

The Collateral Agent shall be entitled to collect from the Company an
administrative fee in consideration of performing its obligations hereunder.
Such fee shall be in such amount as may be agreed to from time to time by the
Company and the Collateral Agent but shall not, for purposes of this
Intercreditor Agreement, exceed $50,000 per annum. The Credit Parties agree to
pay such fee.

Section 7.12 Certain Expenses.

The Credit Parties agree to pay directly each Secured Party’s out-of-pocket
expenses in connection with the preparation, execution and delivery of this
Intercreditor Agreement and the

 

20

--------------------------------------------------------------------------------

transactions contemplated hereby and all such expenses of any Secured Party
relating to any proposed amendment, waivers or consents, whether or not
consummated, pursuant to the provisions hereof.

[remainder of page intentionally left blank]

 

21

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, each of the parties hereto has caused this Intercreditor
Agreement to be executed as of the date first above written.

 

COLLATERAL AGENT:     BANK OF AMERICA, N.A., in its capacity as
Collateral Agent       By:   /s/ Philip S. Durand       Name:    Philip S.
Durand       Title:    Principal      

 

Address for Notices:

 

Bank of America, N.A.

101 North Tryon Street

15th Floor

Charlotte, North Carolina 28255

Attn: Agency Services

Fax: 704-409-0030

ADMINISTRATIVE AGENT:     BANK OF AMERICA, N.A., in its capacity as
Administrative Agent on behalf of the Lenders       By:   /s/ Philip S. Durand  
    Name:    Philip S. Durand       Title:    Principal      

 

Address for Notices:

 

Bank of America, N.A.

101 North Tryon Street

15th Floor

Charlotte, North Carolina 28255

Attn: Agency Services

Fax: 704-409-0030

 

AGENCY AGREEMENT

--------------------------------------------------------------------------------

NOTEHOLDERS:

 

ALLSTATE LIFE INSURANCE COMPANY By:   /s/ Jeffrey A. Mazer Name:   Jeffrey A.
Mazer Title:     By:   /s/ David A. Walsh Name:   David A. Walsh Title:    
Authorized Signatories ALLSTATE INSURANCE COMPANY By:   /s/ Jeffrey A. Mazer
Name:   Jeffrey A. Mazer Title:     By:   /s/ David A. Walsh Name:   David A.
Walsh Title:     Authorized Signatories

 

AGENCY AGREEMENT

--------------------------------------------------------------------------------

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA By:   /s/ Diane Hom Name:
  Diane Hom Title:   Director-Private Placements

 

AGENCY AGREEMENT

--------------------------------------------------------------------------------

CONNECTICUT GENERAL LIFE INSURANCE COMPANY By:    Cigna Investments, Inc.
(authorized agent) By:   /s/ Lawrence A. Drake Name:   Lawrence A. Drake Title:
  Managing Director LIFE INSURANCE COMPANY OF NORTH AMERICA By:    Cigna
Investments, Inc. (authorized agent) By:   /s/ Lawrence A. Drake Name:  
Lawrence A. Drake Title:   Managing Director

 

AGENCY AGREEMENT

--------------------------------------------------------------------------------

MONY LIFE INSURANCE COMPANY By:   /s/ Suzanne E. Walton Name:   Suzanne E.
Walton Title:   Managing Director

 

AGENCY AGREEMENT

--------------------------------------------------------------------------------

UNITED OF OMAHA LIFE INSURANCE COMPANY By:   /s/ Edwin H. Garrison Jr Name:  
Edwin H. Garrison Jr Title:   First Vice President

 

AGENCY AGREEMENT

--------------------------------------------------------------------------------

NATIONWIDE LIFE INSURANCE COMPANY By:   /s/ Mark W. Poeppelman Name:   Mark W.
Poeppelman Title:   Associate Vice President

 

NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY By:   /s/ Mark W. Poeppelman Name:
  Mark W. Poeppelman Title:   Associate Vice President

 

AGENCY AGREEMENT

--------------------------------------------------------------------------------

The undersigned hereby acknowledge and agree to the terms of this Intercreditor
Agreement.

 

COMPANY:     LINCARE HOLDINGS INC.     By:   /s/ Paul G. Gabos     Name:   Paul
G. Gabos     Title:   Chief Financial Officer/Secretary

 

GUARANTORS:    

LINCARE INC.

LINCARE PROCUREMENT INC.

LINCARE ASSET MANAGEMENT LP

By: Lincare Holdings Inc., a

Delaware corporation, its general

partner

LINCARE OF NEW YORK INC.

LINCARE PHARMACY SERVICES INC.

LINCARE LICENSING INC.

CONVACARE SERVICES INC.

LINCARE TRAVEL INC.

    By:   /s/ Paul G. Gabos     Name:   Paul G. Gabos     Title:   Chief
Financial Officer/Secretary

 

AGENCY AGREEMENT

--------------------------------------------------------------------------------

SCHEDULE A

NOTICE INFORMATION FOR SENIOR NOTEHOLDERS

 

     Principal Amount of Notes to be Purchased

Name of Purchaser

   Series A    Series B    Series C

ALLSTATE LIFE INSURANCE COMPANY

   $ 4,000,000    $ 3,000,000    $ 5,000,000      6,000,000      7,000,000   

Register Notes in name of: Allstate Life Insurance Company

 

(1)    All payments by Fedwire transfer of immediately available funds,
identifying the name of the Issuer, the Private Placement Number preceded by
“DPP” and the payment as principal, interest or premium, in the format as
follows:    BBK =   

Harris Trust and Savings Bank

ABA #071000288

   BNF =   

Allstate Life Insurance Company

Collection Account #168-117-0

   ORG =   

Lincare Holdings Inc.

OBI – DPP - [enter appropriate PPN – Series A: 532791 A* 1;

                                Series B: 532791 A@ 9; Series C: 532791 A# 7]

Payment Due Date (MM/DD/YY)

P _______ (Enter “P” and amount of principal being remitted, e.g., P5000000.00)

I _______ (Enter “I” and amount of interest being remitted, e.g., I225000.00)

(2)   

All notices of scheduled payments and written confirmations of such wire
transfers to be sent to:

 

Allstate Insurance Company

Investment Operations – Private Placements

3075 Sanders Road, STE G4A

Northbrook, IL 60062-7127

Telephone: (847) 402-2769

Telecopy: (847) 326-5040

(3)    Securities to be delivered to:   

Citibank, Federal Savings Bank

500 W. Madison Street

Floor 6, Zone 4

Chicago, Illinois 60661-2591

Attention: Ellen Lorden

For Allstate Life Insurance Company/Safekeeping Account No. 846627

(4)    All financial reports, compliance certificates and all other written
communications, including notice of prepayments, to be sent to:   

Allstate Life Insurance Company

Private Placements Department

3075 Sanders Road, STE G3A

Northbrook, Illinois 60062-7127

Telephone: (847) 402-8922

Telecopy: (847) 402-3092

Tax ID No. 36-2554642

 

AGENCY AGREEMENT

--------------------------------------------------------------------------------

     Principal Amount of Notes to be Purchased

Name of Purchaser

       Series A            Series B            Series C    

ALLSTATE INSURANCE COMPANY

         $ 5,000,000

Register Notes in name of: Allstate Insurance Company

 

(1)    All payments by Fedwire transfer of immediately available funds,
identifying the name of the Issuer, the Private Placement Number preceded by
“DPP” and the payment as principal, interest or premium, in the format as
follows:    BBK =   

Harris Trust and Savings Bank

ABA #071000288

   BNF =   

Allstate Insurance Company

Collection Account #168-114-7

   ORG =   

Lincare Holdings Inc.

OBI - DPP- 532791 A# 7

Payment Due Date (MM/DD/YY)

P ________ (Enter “P” and amount of principal being remitted, e.g., P5000000.00)

I ________ (Enter “I” and amount of interest being remitted, e.g., I225000.00)

(2)    All notices of scheduled payments and written confirmations of such wire
transfers to be sent to:   

Allstate Insurance Company

Investment Operations — Private Placements

3075 Sanders Road, STE G4A

Northbrook, IL 60062-7127

Telephone: (847)402-2769

Telecopy: (847) 326-5040

(3)    Securities to be delivered to:   

Citibank, Federal Savings Bank

500 W. Madison Street

Floor 6, Zone 4

Chicago, Illinois 60661-2591

Attention: Ellen Lorden

For Allstate Insurance Company/Safekeeping Account No. 846626

(4)    All financial reports, compliance certificates and all other written
communications, including notice of prepayments, to be sent to:   

Allstate Life Insurance Company

Private Placements Department

3075 Sanders Road, STE G3A

Northbrook, Illinois 60062-7127

Telephone: (847) 402-8922

Telecopy: (847) 402-3092

Tax ID No. 36-0719665

 

AGENCY AGREEMENT

--------------------------------------------------------------------------------

     Principal Amount of Notes to be Purchased

Name of Purchaser

       Series A            Series B            Series C    

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

         $ 30,000,000

Register Notes in name of: Teachers Insurance and Annuity Association of America

 

(1)    All payments on or in respect of the Notes shall be made in immediately
available funds at the opening of business on the due date by electronic funds
transfer through the Automated Clearing House System to:   

Chase Manhattan Bank

ABA No. 021-000-021

Account of: Teachers Insurance and Annuity Association of America

Account No.: 900-9-000200

For further credit to the TIAA Account Number G07040

   Reference:    PPN: 532791 A# 7, Lincare Holdings Inc. 9.11% Senior Secured
Notes, Series C due September 15, 2005, P&I Breakdown (2)    Contemporaneous
with the above electronic funds transfer, advice setting forth (1) the full
name, private placement number and interest rate of the Note, (2) allocation of
payment between principal, interest, premium and any special payment, and (3)
name and address of Bank (or Trustee) from which wire transfer was sent, shall
be delivered, mailed or faxed to:   

Teachers Insurance and Annuity Association of America

730 Third Avenue

New York, NY 10017-3206

Attention: Securities Accounting Division

Telephone: (212) 916-6004

Fax: (212) 916-6955

(3)    All other communications shall be delivered or mailed to:   

Teachers Insurance and Annuity Association of America

730 Third Avenue

New York, NY 10017-3206

Attention: Securities Division

   Telephone:   

(212) 916-6748 (Diane Horn)

(212) 490-9000 (General Number)

   Fax:    (212) 916-6582 (Team Fax Number) (4)    Deliver Securities to:   

Louis Richter

Teachers Insurance and Annuity Association

730 Third Avenue

New York, NY 10017-3206

Telephone: (212) 916-4227 .

Tax ID No. 13-1624203

 

AGENCY AGREEMENT

--------------------------------------------------------------------------------

     Principal Amount of Notes to be Purchased

Name of Purchaser

       Series A            Series B            Series C    

CONNECTICUT GENERAL LIFE INSURANCE COMPANY

      $ 5,300,000    $ 2,500,000         3,400,000            2,500,000         
  1,600,000            1,000,000            1,000,000            200,000   

Register Notes in name of: CIG & Co.

 

(1)    All payments by federal wire transfer of immediately available funds to:
  

Chase NYC/CTR/

BNF = CIGNA Private Placements/AC = 9009001802

ABA #021000021

   with the following accompanying information:   

OBI = Lincare Holdings Inc.; [9.01% Senior Secured Notes, Series B; PPN: 532791
A@ 9, due

September 15, 2004 OR 9.11% Senior Secured Notes, Series C; PPN: 532791 A# 7]
due

September 15, 2005]; [application (as among principal, premium and interest of
the payment being made); contact name and phone]

(2)    Notices related to payments:   

CIG & Co.

c/o CIGNA Investments, Inc.

Attention: Securities Processing – S-309

900 Cottage Grove Road

Hartford, CT 06152-2309

  

CIG & Co.

c/o CIGNA Investments, Inc.

Attention: Private Securities – S-307

Operations Group

900 Cottage Grove Road

Hartford, CT 06152-2307

Fax: (860) 726-7203

   with a copy to:   

Chase Manhattan Bank

Private Placement Servicing

P.O. Box 1508

Bowling Green Station

New York, NY 10081

Attention: CIGNA Private Placements

Fax: (212) 552-3107/1005

(3)    All other communications:   

CIG & Co.

c/o CIGNA Investments, Inc.

 

AGENCY AGREEMENT

--------------------------------------------------------------------------------

  

Attention: Private Securities Division – S-307

900 Cottage Grove Road

Hartford, CT 06152-2307

Fax: (860) 726-7203

(4)    Deliver the originals of all the securities, together with CIGNA’s
“Transmittal of Securities to Custodian” Form directly to CIGNA’s custodian:   

The Chase Manhattan Bank

Attn: Jennifer John

4 New York Plaza, 11th Floor

New York, NY 10004

Tax ID #13-3574027

 

AGENCY AGREEMENT

--------------------------------------------------------------------------------

     Principal Amount of Notes to be Purchased

Name of Purchaser

   Series A    Series B    Series C

LIFE INSURANCE COMPANY OF NORTH AMERICA

      $ 2,500,000   

Register Notes in name of: CIG & Co.

 

(1)    All payments by federal wire transfer of immediately available funds to:
  

Chase NYC/CTR/

  

BNF = CIGNA Private Placements/AC = 9009001802

  

ABA #021000021

   with the following accompanying information:   

OBI = Lincare Holdings Inc.; 9.01% Senior Secured Notes, Series B; PPN: 532791
A@ 9, due September 15, 2004; [application (as among principal, premium and
interest of the payment being made); contact name and phone]

(2)    Notices related to payments:   

CIG & Co.

  

c/o CIGNA Investments, Inc.

  

Attention: Securities Processing – S-309

  

900 Cottage Grove Road

  

Hartford, CT 06152-2309

  

CIG & Co.

  

c/o CIGNA Investments, Inc.

  

Attention: Private Securities – S-307

  

Operations Group

  

900 Cottage Grove Road

  

Hartford, CT 06152-2307

  

Fax: (860) 726-7203

   with a copy to:   

Chase Manhattan Bank

  

Private Placement Servicing

  

P.O. Box 1508

  

Bowling Green Station

  

New York, NY 10081

  

Attention: CIGNA Private Placements

  

Fax: (212) 552-3107/1005

(3)    All other communications:   

CIG & Co.

  

c/o CIGNA Investments, Inc.

Attention: Private Securities Division – S-307

  

900 Cottage Grove Road

  

Hartford, CT 06152-2307

  

Fax: (860) 726-7203

 

AGENCY AGREEMENT

--------------------------------------------------------------------------------

(4)    Deliver the originals of all the securities, together with CIGNA’s
“Transmittal of Securities to Custodian Form directly to CIGNA’s custodian:   

The Chase Manhattan Bank

Attn: Jennifer John

4 New York Plaza, 11th Floor

New York, NY 10004

Tax ID #13-3574027

 

AGENCY AGREEMENT

--------------------------------------------------------------------------------

      Principal Amount of Notes to be Purchased

Name of Purchaser

   Series A    Series B    Series C

MONY LIFE INSURANCE COMPANY

      $ 17,500,000    $ 2,500,000

Register Notes in name of: MONY Life Insurance Company

 

(1) All payments in respect of the Notes to be made by bank wire or intra-bank
transfer of Federal or other funds (identifying as: [9.01% Senior Secured Notes,
Series B; PPN: 532791 A@ 9, due September 15, 2004 OR 9.11% Senior Secured
Notes, Series C; PPN: 532791 A# 7, due September 15, 2005] and the application
of the payment as between interest, principal and premium) to:

Chase Manhattan Bank

ABA #021000021

for credit to Private Income Processing Account No. 544-755102

 

(2) All notices and confirmations relating to payments

 

  A. If by registered mail, certified mail or federal express:

The Chase Manhattan Bank

4 New York Plaza, 13th Floor

New York, NY 10004

Attn: Income Processing –J. Piperato

If by regular mail:

The Chase Manhattan Bank

Dept. 3492

P.O. Box 50000

Newark, NY 07101-8006

 

  B. With a second copy to:

Telecopy confirms and notices:

(212)708-2152

Attention: Securities Custody Division

M.D. 6-39A

Mailing confirms and notices:

MONY Life Insurance Company

1740 Broadway

New York, NY 10019

Attention: Securities Custody Division

M.D. 6-39A

 

(3) Address for all other communications:

MONY Life Insurance Company

1740 Broadway

New York, NY 10019

Attention: Capital Management Unit

Telecopy No.: (212) 708-2491

 

AGENCY AGREEMENT

--------------------------------------------------------------------------------

(4) Deliver Notes to:

Rekasha Robinson-McLymont

MONY Life Insurance Company

1740 Broadway

7th Floor

New York, NY 10019

Tax ID No. 13-1632487

 

AGENCY AGREEMENT

--------------------------------------------------------------------------------

      Principal Amount of Notes to be Purchased

Name of Purchaser

   Series A    Series B    Series C

UNITED OF OMAHA LIFE INSURANCE COMPANY

   $ 15,000,000      

Register Notes in name of: United of Omaha Life Insurance Company

 

(1) All principal and interest payments on the Notes shall be made by wire
transfer of immediately available funds to:

Chase Manhattan Bank

ABA #021000021

Private Income Processing

For credit to:

United of Omaha Life Insurance Company

Account #900-9000200

a/c: GO7097

Cusip/PPN: 532791 A* 1

Interest Amount:

Principal Amount:

 

(2) Address for delivery of bonds:

The Chase Manhattan Bank

North America Insurance – 6th Floor

Attn: Mary Jo McCoy

3 Chase Metrotech Center

Brooklyn, NY 11245

 

(3) Address for all notices in respect of payment of Principal and Interest,
Corporate Actions, and Reorganization Notifications:

The Chase Manhattan Bank

4 New York Plaza – 11th Floor

New York, NY 10004

Attn: Income Processing – J. Piperato

a/c: G07097

 

(4) Address for all other communications (i.e., Quarterly/Annual reports, Tax
filings, Modifications, Waivers regarding the indenture):

4 – Investment Loan Administration

United of Omaha Life Insurance Company

Mutual of Omaha Plaza

Omaha, NE 68175-1011

Tax ID No. 47-0322111

 

AGENCY AGREEMENT

--------------------------------------------------------------------------------

      Principal Amount of Notes to be Purchased

Name of Purchaser

   Series A    Series B    Series C

NATIONWIDE LIFE INSURANCE COMPANY

   $ 5,000,000    $ 3,000,000   

Register Notes in name of: Nationwide Life Insurance Company

 

(1)    Wiring instructions:   

The Bank of New York

ABA #021-000-018

BNF: IOC566

F/A/O Nationwide Life Insurance Company

Attn: P&I Department

PPN: enter appropriate PPN – Series A: 532791 A* 1; Series B: 532791 A@ 9

Security Description: Lincare Holdings Inc. [8.91% Senior Secured Notes, Series
A, due September 15,

2003 OR 9.01% Senior Secured Notes, Series B, due September 15, 2004]

(2)    All notices of payments on or in respect to the security should be sent
to:   

Nationwide Life Insurance Company

c/o The Bank of New York

P.O. Box 19266

Attn: P&I Department

Newark, NJ 07195

   With a copy to:   

Nationwide Life Insurance Company

Attn: Investment Accounting

One Nationwide Plaza (1-32-05)

Columbus, Ohio 43215-2220

(3)    Send notices and communications to:   

Nationwide Life Insurance Company

One Nationwide Plaza (1-33-07)

Columbus Ohio, 43215-2220

Attention: Corporate Fixed-Income Securities

(4)    The original note should be delivered to:   

The Bank of New York

One Wall Street

3rd Floor – Window A

New York, NY 10286

F/A/O Nationwide Life Insurance Co. Acct #267829

Tax ID No. 31-4156830

 

AGENCY AGREEMENT

--------------------------------------------------------------------------------

     Principal Amount of Notes to be Purchased

Name of Purchaser

   Series A    Series B    Series. C

NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY

      $ 2,000,000   

Register Notes in name of: Nationwide Life and Annuity Insurance Company

 

(1)        Wiring  instructions:   

The Bank of New York

ABA #021-000-018

BNF: IOC566

F/A/O Nationwide Life and Annuity Insurance Company

Attn: P&I Department

PPN: 532791 A@ 9

Security Description: Lincare Holdings Inc. 9.01% Senior Secured Notes, Series
B, due September 15, 2004

(2)        All notices of payments on or in respect to the security should be
sent to:   

Nationwide Life and Annuity Insurance Company

c/o The Bank of New York

P.O. Box 19266

Attn: P&I Department

Newark, NJ 07195

   With a copy to:   

Nationwide Life and Annuity Insurance Company

Attn: Investment Accounting

One Nationwide Plaza (1-32-05)

Columbus, Ohio 43215-2220

(3)        Send notices and communications to:   

Nationwide Life and Annuity Insurance Company

One Nationwide Plaza (1-33-07)

Columbus Ohio, 43215-2220

Attention: Corporate Fixed-Income Securities

(4)        The original note should be delivered to:   

The Bank of New York

One Wall Street

3rd Floor – Window A

New York, NY 10286

F/A/O Nationwide Life Insurance Co. Acct #267861

Tax ID No. 31-1000740

 

AGENCY AGREEMENT

--------------------------------------------------------------------------------

Exhibit 2.1(b)(i)

FORM OF NOTICE OF BORROWING

Bank of America, N. A.,

as Agent for the Lenders

101 North Tryon Street

Independence Center, 15th Floor

NC1-001-15-04

Charlotte, North Carolina 28255

Attention: Agency Services

Ladies and Gentlemen:

The undersigned, LINCARE HOLDINGS INC. (the “Borrower”), refers to the Amended
and Restated Credit Agreement dated as of April 25, 2002 (as amended, modified,
restated or supplemented from time to time, the “Credit Agreement”), among the
Borrower, the Guarantors, the Lenders and Bank of America, N. A., as Agent.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. The Borrower hereby
gives notice pursuant to Section 2.1 of the Credit Agreement that it requests a
Revolving Loan advance under the Credit Agreement, and in connection therewith
sets forth below the terms on which such Loan advance is requested to be made:

 

(A)       Date of Borrowing (which is a Business Day)      (B)       Principal
Amount of Borrowing      (C)       Interest rate basis      (D)       Interest
Period and the last day thereof     

In accordance with the requirements of Section 5.2, the Borrower hereby
reaffirms the representations and warranties set forth in the Credit Agreement
as provided in subsection (b) of such Section, and confirms that the matters
referenced in subsections (c), (d) and (e) of such Section are true and correct.

 

LINCARE HOLDINGS INC. By:     Name:     Title:    

--------------------------------------------------------------------------------

Exhibit 2.1(e)

FORM OF REVOLVING NOTE

 

$                        April     , 2002

FOR VALUE RECEIVED, LINCARE HOLDINGS INC., a Delaware corporation (the
“Borrower”), hereby promises to pay to the order of
                                        , its successors and assigns (the
“Lender”), at the office of Bank of America, N. A., as Agent (the “Agent”), at
101 North Tryon Street, Independence Center, NC1-001-15-04, Charlotte, North
Carolina 28255 (or at such other place or places as the holder hereof may
designate), at the times set forth in the Amended and Restated Credit Agreement
dated as of the date hereof among the Borrower, the Guarantors, the Lenders and
the Agent (as it may be as amended, modified, restated or supplemented from time
to time, the “Credit Agreement”; all capitalized terms not otherwise defined
herein shall have the meanings set forth in the Credit Agreement), but in no
event later than the Maturity Date, in Dollars and in immediately available
funds, the principal amount of                                  DOLLARS
($                 ) or, if less than such principal amount, the aggregate
unpaid principal amount of all Revolving Loans made by the Lender to the
Borrower pursuant to the Credit Agreement, and to pay interest from the date
hereof on the unpaid principal amount hereof, in like money, at said office, on
the dates and at the rates selected in accordance with Section 2.1(d) of the
Credit Agreement.

Upon the occurrence and during the continuance of a default in the payment of
any amount hereunder, the balance outstanding hereunder shall bear interest as
provided in Section 3.1 of the Credit Agreement. Further, in the event the
payment of all sums due hereunder is accelerated under the terms of the Credit
Agreement, this Note, and all other indebtedness of the Borrower to the Lender
shall become immediately due and payable, without presentment, demand, protest
or notice of any kind, all of which are hereby waived by the Borrower.

In the event this Note is not paid when due at any stated or accelerated
maturity, the Borrower agrees to pay, in addition to the principal and interest,
all costs of collection, including reasonable attorneys’ fees.

This Note and the Loans evidenced hereby may be transferred in whole or in part
only by registration of such transfer on the Register maintained by or on behalf
of the Borrower as provided in Section 11.3(c) of the Credit Agreement.

IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed by its
duly authorized officer as of the day and year first above written.

 

LINCARE HOLDINGS INC. By:     Name:     Title:    

--------------------------------------------------------------------------------

Exhibit 3.2

FORM OF NOTICE OF EXTENSION/CONVERSION

Bank of America, N. A.,

as Agent for the Lenders

101 North Tryon Street

Independence Center, 15th Floor

NC1-001-15-04

Charlotte, North Carolina 28255

Attention: Agency Services

Ladies and Gentlemen:

The undersigned, LINCARE HOLDINGS INC. (the “Borrower”), refers to the Amended
and Restated Credit Agreement dated as of April 25, 2002 (as amended, modified,
restated or supplemented from time to time, the “Credit Agreement”), among the
Borrower, the Guarantors, the Lenders and Bank of America, N. A., as Agent.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. The Borrower hereby
gives notice pursuant to Section 3.2 of the Credit Agreement that it requests an
extension or conversion of a Revolving Loan outstanding under the Credit
Agreement, and in connection therewith sets forth below the terms on which such
extension or conversion is requested to be made:

 

(A)

   Loan Type        

(B)

   Date of Extension or Conversion
(which is the last day of the applicable Interest Period)        

(C)

   Principal Amount of Extension or Conversion        

(D)

   Interest rate basis        

(E)

   Interest Period and the last day thereof        

In accordance with the requirements of Section 5.2, the Borrower hereby
reaffirms the representations and warranties set forth in the Credit Agreement
as provided in subsection (b) of such Section, and confirms that the matters
referenced in subsections (c), (d) and (e) of such Section are true and correct.

 

LINCARE HOLDINGS INC. By:     Name:     Title:    

--------------------------------------------------------------------------------

Exhibit 7.1(c)

FORM OF OFFICER’S COMPLIANCE CERTIFICATE

For the fiscal quarter ended                     , 20        .

I,                                     , [Title] of LINCARE HOLDINGS INC. (the
“Borrower”) hereby certify that, to the best of my knowledge and belief, with
respect to that certain Amended and Restated Credit Agreement dated as of
April 25, 2002 (as amended, modified, restated or supplemented from time to
time, the “Credit Agreement”; all of the defined terms in the Credit Agreement
are incorporated herein by reference) among the Borrower, the Guarantors, the
Lenders and Bank of America, N. A., as Agent:

 

  a. The company-prepared financial statements which accompany this certificate
are true and correct in all material respects and have been prepared in
accordance with GAAP applied on a consistent basis, subject to changes resulting
from normal year-end audit adjustments; and

 

  b. Since                      (the date of the last similar certification, or,
if none, the Closing Date) no Default or Event of Default has occurred under the
Credit Agreement.

Delivered herewith are detailed calculations demonstrating compliance by the
Credit Parties with the financial covenants contained in Section 7.11 of the
Credit Agreement as of the end of the fiscal period referred to above.

This                  day of                     , 20    .

 

LINCARE HOLDINGS INC. By:     Name:     Title:    

--------------------------------------------------------------------------------

Attachment to Officer’s Certificate

Computation of Financial Covenants

--------------------------------------------------------------------------------

Exhibit 7.12

FORM OF JOINDER AGREEMENT

THIS JOINDER AGREEMENT (the “Agreement”), dated as of
                            , 20__, is by and between
                                    , a                                     
(the “Subsidiary”), and BANK OF AMERICA, N. A., in its capacity as Agent under
that certain Amended and Restated Credit Agreement (as it may be amended,
modified, restated or supplemented from time to time, the “Credit Agreement”),
dated as of April 25, 2002, by and among Lincare Holdings Inc., a Delaware
corporation (the “Borrower”), the Guarantors, the Lenders and Bank of America,
N. A., as Agent. All of the defined terms in the Credit Agreement are
incorporated herein by reference.

The Credit Parties are required by Section 7.12 of the Credit Agreement to cause
the Subsidiary to become a “Guarantor”.

Accordingly, the Subsidiary hereby agrees as follows with the Agent, for the
benefit of the Lenders:

1. The Subsidiary hereby acknowledges, agrees and confirms that, by its
execution of this Agreement, the Subsidiary will be deemed to be a party to the
Credit Agreement and a “Guarantor” for all purposes of the Credit Agreement, and
shall have all of the obligations of a Guarantor thereunder as if it had
executed the Credit Agreement. The Subsidiary hereby ratifies, as of the date
hereof, and agrees to be bound by, all of the terms, provisions and conditions
applicable to the Guarantors contained in the Credit Agreement. Without limiting
the generality of the foregoing terms of this paragraph 1, the Subsidiary hereby
(i) jointly and severally together with the other Guarantors, guarantees to each
Lender and the Agent, as provided in Section 4 of the Credit Agreement, the
prompt payment and performance of the Credit Party Obligations in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration or
otherwise) strictly in accordance with the terms thereof.

2. The Subsidiary hereby acknowledges, agrees and confirms that, by its
execution of this Agreement, the Subsidiary will be deemed to be a party to the
Pledge Agreement, and shall have all the obligations of a “Pledgor” thereunder
as if it had executed the Pledge Agreement. The Subsidiary hereby ratifies, as
of the date hereof, and agrees to be bound by, all the terms, provisions and
conditions contained in the Pledge Agreement. Without limiting the generality of
the foregoing terms of this paragraph 3, the Subsidiary hereby pledges and
assigns to the Agent, for the benefit of the Lenders, and grants to the Agent,
for the benefit of the Lenders, a continuing security interest in any and all
right, title and interest of the Subsidiary in and to the Pledged Capital Stock
(as such term is defined in Section 2 of the Pledge Agreement) listed on
Schedule 1 attached hereto and the other Pledged Collateral (as such term is
defined in Section 2 of the Pledge Agreement).

3. The address of the Subsidiary for purposes of all notices and other
communications is                                 ,
                                        , Attention of
                                 (Facsimile No.                             ).

--------------------------------------------------------------------------------

4. The Subsidiary hereby waives acceptance by the Agent and the Lenders of the
guaranty by the Subsidiary under Section 4 of the Credit Agreement upon the
execution of this Agreement by the Subsidiary.

5. This Agreement may be executed in one or more counterparts, each of which
shall constitute an original but all of which when taken together shall
constitute one contract.

6. This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of New York.

IN WITNESS WHEREOF, the Subsidiary has caused this Joinder Agreement to be duly
executed by its authorized officers, and the Agent, for the benefit of the
Lenders, has caused the same to be accepted by its authorized officer, as of the
day and year first above written.

 

[SUBSIDIARY] By:     Name:     Title:     Acknowledged and accepted: BANK OF
AMERICA, N. A., as Agent By:     Name:     Title:    

--------------------------------------------------------------------------------

Schedule 1

TO FORM OF JOINDER AGREEMENT

[Pledged Capital Stock]

--------------------------------------------------------------------------------

Exhibit 11.3(b)

FORM OF ASSIGNMENT AND ACCEPTANCE

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, the
“Credit Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Agent as contemplated below (i) all of the Assignor’s rights and obligations in
its capacity as a Lender under the Credit Agreement and any other documents or
instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and
obligations of the Assignor under the respective facilities identified below
(including without limitation any letters of credit, guarantees, and swingline
loans included in such facilities) and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other
right of the Assignor (in its capacity as a Lender) against any Person, whether
known or unknown, arising under or in connection with the Credit Agreement, any
other documents or instruments delivered pursuant thereto or the loan
transactions governed thereby or in any way based on or related to any of the
foregoing, including, but not limited to, contract claims, tort claims,
malpractice claims, statutory claims and all other claims at law or in equity
related to the rights and obligations sold and assigned pursuant to clause
(i) above (the rights and obligations sold and assigned pursuant to clauses
(i) and (ii) above being referred to herein collectively as, the “Assigned
Interest”). Such sale and assignment is without recourse to the Assignor and,
except as expressly provided in this Assignment and Assumption, without
representation or warranty by the Assignor.

 

1.   Assignor:    __________________________________ 2.   Assignee:   
__________________________________      [and is an Affiliate/Approved Fund of
[identify Lender]1] 3.   Borrower(s):    __________________________________ 4.  
Agent: ______________________, as the administrative agent under the Credit
Agreement 5.   Credit Agreement: The $200,000,000 Amended and Restated Credit
Agreement dated as of April 25, 2002 (as amended, modified, restated or
supplemented from time to time, the “Credit Agreement”), among the Borrower, the
Guarantors, the Lenders and Bank of America, N. A., as Agent, and the other
agents parties thereto

 

1

Select as applicable.

--------------------------------------------------------------------------------

6. Assigned Interest:

 

Facility Assigned2

   Aggregate Amount of
Commitment/Loans for
all Lenders*    Amount of
Commitment/Loans
Assigned*    Percentage Assigned of
Commitment/Loans3      $      $        %     $      $        %     $      $     
  % 

 

[7.

Trade Date:                                              ]4

Effective Date:                              , 20     [TO BE INSERTED BY AGENT
AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR [NAME OF ASSIGNOR] By:  

 

  Title: ASSIGNEE [NAME OF ASSIGNEE] By:  

 

  Title:

 

[Consented to and]5 Accepted: [NAME OF ADMINISTRATIVE AGENT], as Agent By       
Title: [Consented to:]6 [NAME OF RELEVANT PARTY] By        Title:

 

2

Fill in the appropriate terminology for the types of facilities under the Credit
Agreement that are being assigned under this Assignment (e.g. “Revolving Credit
Commitment,” “Term Loan Commitment,” etc.)

* Amount to be adjusted by the counterparties to take into account any payments
or prepayments made between the Trade Date and the Effective Date.

3

Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.

4

To be completed if the Assignor and the Assignee intend that the minimum
assignment amount is to be determined as of the Trade Date.

5

To be added only if the consent of the Administrative Agent is required by the
terms of the Credit Agreement.

6

To be added only if the consent of the Borrower and/or other parties (e.g.
Swingline Lender, L/C Issuer) is required by the terms of the Credit Agreement.