Exhibit 10.2

 

 

AMENDED AND RESTATED

CREDIT AGREEMENT

 

DATED AS OF APRIL 23, 2004

 

AMONG

 

CURATIVE HEALTH SERVICES, INC.,

AS BORROWER REPRESENTATIVE,

 

THE BORROWERS SIGNATORY HERETO,

 

THE LENDERS REFERRED TO HEREIN,

 

GECC CAPITAL MARKETS GROUP, INC.,

AS LEAD ARRANGER

 

AND

 

GENERAL ELECTRIC CAPITAL CORPORATION,

AS AGENT

 

 

 

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

 

TABLE OF CONTENTS

 

 

ARTICLE I.  DEFINITIONS

 

 

 

 

 

Section 1.1.  Certain Defined Terms

 

 

Section 1.2.  Accounting Terms and Determinations

 

 

Section 1.3.  Other Definitional Provisions

 

 

 

 

ARTICLE II.  THE FACILITIES

 

 

 

 

 

Section 2.1.  The Facilities

 

 

Section 2.2.  Notes

 

 

Section 2.3. Method of Borrowing; Funding of Loans; Agent May Assume Funding;
Failure to Fund

 

 

Section 2.4.  Interest on Loans

 

 

Section 2.5.  Letters of Credit

 

 

Section 2.6.  Swingline Loans

 

 

Section 2.7.  Certain Fees

 

 

Section 2.8.  Mandatory Prepayments

 

 

Section 2.9.  Optional Prepayments

 

 

Section 2.10.  Application of Payments

 

 

Section 2.11.  Reduction of Commitments

 

 

Section 2.12.  Loan Account and Accounting

 

 

Section 2.13.  Computation of Interest and Fees

 

 

Section 2.14.  General Provisions Regarding Payments

 

 

Section 2.15.  Maximum Interest

 

 

Section 2.16.  Additional Borrowers

 

 

 

 

ARTICLE III.  CONDITIONS

 

 

 

 

 

Section 3.1.  Conditions to Closing

 

 

Section 3.2.  Conditions to Each Extension of Credit

68

 

 

 

ARTICLE IV.  REPRESENTATIONS AND WARRANTIES

 

 

 

 

 

Section 4.1.  Existence and Organizational Power; Compliance with Organizational
Documents

 

 

Section 4.2.  Governmental Compliance with Laws and Compliance with Agreements
with Third Parties

 

 

Section 4.3. Organizational and Governmental Approvals; No Contravention

 

 

Section 4.4.  Binding Effect; Liens of Collateral Documents

 

 

Section 4.5.  Financial Statements

 

 

Section 4.6.  Material Adverse Effect

 

 

Section 4.7.  Litigation

 

 

Section 4.8.  Due Diligence Questionnaire; Full Disclosure

 

 

Section 4.9.  No Adverse Fact

 

 

Section 4.10.  Ownership of Property, Liens

 

 

Section 4.11.  Environmental Laws

 

 

Section 4.12.  ERISA

 

 

Section 4.13.  Subsidiaries Capitalization

 

 

Section 4.14.  Government Regulations

 

 

Section 4.15.  Margin Regulations

 

 

i

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Section 4.16.  Taxes

 

 

Section 4.17.  Intellectual Property

 

 

Section 4.18.  Solvency

 

 

Section 4.19.  Insurance

 

 

Section 4.20.  Brokers

 

 

Section 4.21.  Compliance with HIPAA

 

 

Section 4.22.  Matters Concerning Prior Acquisitions

 

 

 

 

ARTICLE V.  REPORTING COVENANTS

 

 

 

 

 

Section 5.1.  Financial Statements and Other Reports

 

 

Section 5.2.  Collateral Reports

 

 

Section 5.3.  Financial Statements and Other Reports

 

 

 

 

ARTICLE VI.  AFFIRMATIVE COVENANTS

 

 

 

 

 

Section 6.1.  Payment of Obligations

 

 

Section 6.2.  Conduct of Business and Maintenance of Existence

 

 

Section 6.3.  Maintenance of Assets and Properties

 

 

Section 6.4.  Insurance; Damage to or Destruction of Collateral

 

 

Section 6.5.  Compliance with Laws

 

 

Section 6.6.  Inspection of Property, Books and Records

 

 

Section 6.7.  Supplemental Disclosure

 

 

Section 6.8.  Use of Proceeds

 

 

Section 6.9.  Further Assurances

 

 

Section 6.10.  Hedging Facilities.

 

 

Section 6.11.  Environmental Matters

 

 

Section 6.12.  Landlord and Warehouseman Waivers

 

 

Section 6.13.  Mortgages on Real Property; Title Insurance and Survey

 

 

Section 6.14.  Additional Subsidiaries

 

 

Section 6.15. Compliance Program

 

 

Section 6.16.  Cash Management Systems

 

 

Section 6.17.  Accreditation and Licensing.

 

 

Section 6.18. Minimum Liquidity.

 

 

Section 6.19.  Additional Covenants.

 

 

 

 

ARTICLE VII.  NEGATIVE COVENANTS

 

 

 

 

Section 7.1.  Indebtedness

 

 

Section 7.2.  Liens; Negative Pledges

 

 

Section 7.3.  Guaranteed Obligations

 

 

Section 7.4.  Capital Stock; Nature of Business

 

 

Section 7.5.  Restricted Payments

 

 

Section 7.6.  No Restrictions on Subsidiary Distributions to Borrowers

 

 

Section 7.7.  ERISA

 

 

Section 7.8.  Consolidations; Mergers; Sales of Assets; Creation of Subsidiaries

 

 

Section 7.9.  Purchase of Assets; Investments

 

 

Section 7.10.  Transactions with Affiliates

 

 

Section 7.11.  Amendments or Waivers

 

 

Section 7.12.  Fiscal Year

 

 

Section 7.13.  Capital Expenditures

 

 

Section 7.14.  Lease Limits

 

 

ii

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Section 7.15. Total Leverage Ratio

 

 

Section 7.16. Senior Secured Leverage Ratio

 

 

Section 7.17.  Fixed Charge Coverage Ratio

 

 

Section 7.18.  Pro Forma Adjustments.

 

 

Section 7.19.  Accounts Receivable DSO

 

 

Section 7.20.  Sale-Leasebacks

 

 

 

 

ARTICLE VIII.  EVENTS OF DEFAULT

 

 

 

 

 

Section 8.1.  Events of Default

 

 

Section 8.2.  Remedies

 

 

Section 8.3.  Waivers by Credit Parties

 

 

 

 

ARTICLE IX.  EXPENSES AND INDEMNITIES

 

 

 

 

 

Section 9.1.  Expenses

 

 

Section 9.2.  Indemnity

 

 

Section 9.3.  Taxes

 

 

Section 9.4.  Capital Adequacy; Increased Costs; Illegality; Funding Losses

 

 

 

 

ARTICLE X.  THE AGENT

 

 

 

 

 

Section 10.1.  Appointment and Authorization

 

 

Section 10.2.  Delegation of Duties.

 

 

Section 10.3.  Agent and Affiliates.

 

 

Section 10.4.  Action by Agent

 

 

Section 10.5.  Consultation with Experts

 

 

Section 10.6.  Liability of Agent

 

 

Section 10.7.  Indemnification

 

 

Section 10.8.  Credit Decision

 

 

Section 10.9.  Successor Agent

 

 

Section 10.10.  Reliance by Agent

 

 

Section 10.11.  Notice of Default

 

 

 

 

ARTICLE XI.  MISCELLANEOUS

 

 

 

 

 

Section 11.1.  Survival

 

 

Section 11.2.  No Waivers; Remedies Cumulative.

 

 

Section 11.3.  Notices

 

 

Section 11.4.  Severability

 

 

Section 11.5.  Amendments and Waivers

 

 

Section 11.6.  Successors and Assigns; Registration

 

 

Section 11.7.  Setoffs and Sharing of Payments

 

 

Section 11.8.  Collateral

 

 

Section 11.9.  Headings

 

 

Section 11.10.  Governing Law; Submission To Jurisdiction

 

 

Section 11.11.  Notice of Breach by Agent or Lender

 

 

Section 11.12.  Waiver Of Jury Trial

 

 

Section 11.13.  Counterparts; Entire Agreement

 

 

Section 11.14.  Confidentiality; Press Release

 

 

Section 11.15.  Reinstatement

 

 

Section 11.16.  Advice of Counsel

 

 

Section 11.17.  No Strict Construction

 

 

Section 11.18.  Conflict of Terms

 

 

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Section 11.19.  Effect of Amendment and Restatement of the Existing Credit
Agreement

 

 

Section 11.20.  New Lenders

 

 

 

 

ARTICLE XII.  CROSS-GUARANTY

 

 

 

 

 

Section 12.1.  Cross-Guaranty

 

 

Section 12.2.  Waivers by Borrowers

 

 

Section 12.3.  Benefit of Guaranty

 

 

Section 12.4.  Subordination of Subrogation, Etc.

 

 

Section 12.5.  Election of Remedies

 

 

Section 12.6.  Limitation

 

 

Section 12.7.  Contribution with Respect to Guaranty Obligations

 

 

Section 12.8.  Liability Cumulative

 

 

iv

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EXHIBIT A

-

Revolving Note

EXHIBIT B

-

[RESERVED]

EXHIBIT C

-

Swingline Note

EXHIBIT D-1

-

Notice of Borrowing

EXHIBIT D-2

-

Notice of Swingline Borrowing

EXHIBIT E

-

Borrower Security Agreement

EXHIBIT F

-

Borrower Pledge Agreement

EXHIBIT G

-

Subsidiary Guaranty Agreement

EXHIBIT H

-

Guarantor Security Agreement

EXHIBIT I

-

Opinion of Counsel to the Credit Parties

EXHIBIT J

-

Authorized Signatory Letter

EXHIBIT K

-

Closing Checklist

EXHIBIT L

-

Assignment Agreement

EXHIBIT M

-

HIPAA Business Associate Agreement

EXHIBIT N

-

Form of Seller Subordination Agreement

EXHIBIT O

-

Form of Borrowing Base Certificate

 

 

 

EXHIBIT 5.1(a)

 

Compliance Certificate (Quarterly)

EXHIBIT 5.1(b)

 

Compliance Certificate (Annual)

 

The following schedules to the Credit Agreement have been omitted. Curative
Health Services, Inc. will furnish any such schedules to the Commission as
supplemental information upon request:

 

DISCLOSURE SCHEDULE 1.1

-

Permitted Restructuring

DISCLOSURE SCHEDULE 4.5(a)

-

Financial Statements

DISCLOSURE SCHEDULE 4.5(b)

-

Borrowers’ Financial Budget

DISCLOSURE SCHEDULE 4.7

-

Litigation

DISCLOSURE SCHEDULE 4.13

-

Subsidiaries, Other Equity Investments

DISCLOSURE SCHEDULE 4.19

-

Insurance Policies

DISCLOSURE SCHEDULE 6.16(a)

-

Government Receivables Deposit Accounts and Concentration Account

DISCLOSURE SCHEDULE 6.16(c)

-

Blocked Accounts

DISCLOSURE SCHEDULE 7.1

-

Indebtedness

DISCLOSURE SCHEDULE 7.2

-

Restatement Effective Date Liens

DISCLOSURE SCHEDULE 7.4

-

Capital Structure

DISCLOSURE SCHEDULE 7.9

-

Existing Investments

DISCLOSURE SCHEDULE 7.10(b)

-

Existing Loans to Employees

 

v

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AMENDED AND RESTATED

CREDIT AGREEMENT

 

This AMENDED AND RESTATED CREDIT AGREEMENT, dated as of April 23, 2004 (the
“Agreement”), among CURATIVE HEALTH SERVICES, INC., a Minnesota corporation
formerly known as Curative Holding Co. (“Holdings”), EBIOCARE.COM, INC., a
Delaware corporation (“Ebiocare”), HEMOPHILIA ACCESS, INC., a Tennessee
corporation (“Hemophilia Access”), APEX THERAPEUTIC CARE, INC., a California
corporation (“Apex”), CHS SERVICES, INC., a Delaware corporation (“CHS”),
CURATIVE HEALTH SERVICES CO., a Minnesota corporation formerly known as Curative
Health Services, Inc. (“CHSC”), CURATIVE HEALTH SERVICES OF NEW YORK, INC., New
York corporation (“CHSNY”), OPTIMAL CARE PLUS, INC., a Delaware corporation
(“Optimal Care”),  INFINITY INFUSION, LLC, a Delaware limited liability company
(“Infinity”), INFINITY INFUSION II, LLC, a Delaware limited liability company
(“Infinity II”), INFINITY INFUSION CARE, LTD., a Texas limited partnership
(“Infinity Infusion”), MEDCARE, INC., a Delaware corporation (“Medcare”),
CURATIVE PHARMACY SERVICES, INC., a Delaware corporation (“CPS”), CRITICAL CARE
SYSTEMS, INC., a Delaware corporation (“CCS”), any Additional Borrowers that
hereafter may from time to time become a party hereto pursuant to Section 2.16
hereof (Holdings, Ebiocare, Hemophilia Access, Apex, CHS, CHSNY, CHSC, Optimal
Care, Infinity, Infinity II, Infinity Infusion, Medcare, CPS, CCS and such
Additional Borrowers are sometimes collectively referred to herein as the
“Borrowers” and individually as a “Borrower”), the Lenders listed on the
signature pages hereof, and GENERAL ELECTRIC CAPITAL CORPORATION, as Agent.

 

INTRODUCTORY STATEMENT

 

A.            The Borrowers are a party to that certain Credit Agreement dated
as of June 9, 2003 (as amended, supplemented or otherwise modified from time to
time prior to the date hereof, the “Existing Credit Agreement”), among the
Borrowers (other than CCS), the lenders party thereto, General Electric Capital
Corporation, individually as a lender and in its capacity as agent, pursuant to
which such lenders have agreed to extend, and have extended, credit and other
financial accommodations to the Borrowers (other than CCS).

 

B.            The Borrowers have requested that the Existing Credit Agreement be
amended and restated as set forth below to, among other things, (a) to refinance
certain existing indebtedness and obligations of the Borrowers owing to the
Agent and the Lenders under the Existing Credit Agreement, (b) to provide funds
for certain fees and transaction costs relating to the negotiation and
documentation of the Agreement, the Subject Acquisition (as defined below) and
the Senior Unsecured Debt (as defined below), (c) to provide working capital
financing for the Borrowers and (d) to provide funds for other general corporate
purposes of the Borrowers, including funding fees and expenses associated with
the transactions contemplated hereunder.

 

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

 

C.            Each of the Borrowers desire to secure all of its Obligations (as
hereinafter defined) under the Loan Documents (as hereinafter defined) by
granting to the Agent, for the benefit of the Agent and Lenders, a security
interest in and lien upon all of its existing and after-acquired personal and
Real Property including a pledge of the capital stock of all of its
subsidiaries.

 

D.            It is the intent of the parties hereto that this Agreement not
constitute a novation of the obligations and liabilities existing under the
Existing Credit Agreement and which remain outstanding or evidence repayment of
any such obligations and liabilities and that this Agreement amend and restate
in its entirety the Existing Credit Agreement and re-evidence the obligations of
the Borrowers outstanding thereunder.

 

NOW, THEREFORE, in consideration of the premises and the agreements hereinafter
set forth, the parties hereto hereby agree that on the Restatement Effective
Date (as defined below), the Existing Credit Agreement shall be amended and
restated in its entirety as follows:

 

ARTICLE I.

 

DEFINITIONS

 

Section 1.1.  Certain Defined Terms.  The following terms used herein shall have
the following meanings:

 

“Account Debtor” means any Person who may become obligated to a Credit Party
under, with respect to, or on account of an Account of such Credit Party
(including without limitation any guarantor of the payment or performance of an
Account).

 

“Accounts Receivable Advance Rate” means up to 85%, subject to adjustment
pursuant to Section 2.1(d).

 

“Accounts Receivable Days Sales Outstanding” means gross accounts receivable of
Borrowers and their Subsidiaries on a consolidated basis divided by total gross
revenue of Borrowers and their Subsidiaries on a consolidated basis for the last
three months divided by 90.

 

“Acquisition” means the purchase by any Credit Party of: (i) any company,
limited liability company, association, partnership or other organization that
is engaged in any business that is not materially different than the businesses
engaged in by the Credit Parties on the Original Closing Date; (ii) all or
substantially all of the assets of any such Person or (iii) a business line of
any Person which business line is related to the business line of the Borrowers.

 

“Acquisition Agreement” means a stock purchase agreement, asset purchase
agreement or similar agreement by and among one or more Credit Parties and a
Target Seller, among others, if applicable, relating to the acquisition by one
or more Credit Parties from a Target Seller.

 

2

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“Acquisition Documents” means an Acquisition Agreement and all material
agreements, documents and instruments executed in connection therewith.

 

“Additional Borrower” has the meaning ascribed to it in Section 2.16.

 

“Advance” means either a LIBOR Loan Advance or a Base Rate Advance, as
applicable.

 

“Affiliate” means, with respect to any Person, (a) each Person that, directly or
indirectly, owns or controls, whether beneficially or as a trustee, guardian or
other fiduciary, five percent (5%) or more of the Stock of such Person, (b) each
Person that controls, is controlled by or is under common control with such
Person, (c) each of such Person’s officers, directors, joint venturers and
partners and (d) in the case of the Borrowers, the immediate family members,
spouses and lineal descendants of individuals who are Affiliates of the
Borrowers.  For the purposes of this definition, “control” of a Person means the
possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of voting
securities, by contract or otherwise; provided, however, that the term
“Affiliate” when used with respect to any Credit Party shall specifically
exclude each Lending Party.

 

“Agent” means GE Capital in its capacity as Agent for the Lenders hereunder and
under the Loan Documents, and its successors in such capacity.

 

“Aggregate L/C Exposure” means, at any time, the sum, without duplication, of
(a) the aggregate amount that is (or may thereafter become) available for
drawing under all Letters of Credit outstanding at such time plus (b) the
aggregate unpaid principal amount of all Reimbursement Obligations outstanding
at such time.

 

“Agreement” means this Amended and Restated Credit Agreement, including all
schedules and exhibits hereto as the same may be amended, modified, supplemented
or restated from time to time.

 

“Allocable Amount” has the meaning ascribed to it in Section 12.7(b).

 

“Apex” has the meaning ascribed thereto in the preamble to this Agreement.

 

“Applicable Law” means, anything in Section 11.10 to the contrary
notwithstanding, (i) all applicable common law and principles of equity and (ii)
all applicable provisions of all (A) constitutions, statutes, rules, regulations
and orders of Governmental Authorities, (B) Governmental Approvals and (C)
orders, decisions, judgments and decrees of all courts and arbitrators.

 

“Applicable Margin” means: (a) from the Restatement Effective Date to and
including the fifth day following the receipt of financial statements for the
Fiscal Quarter ended June 30, 2004 delivered pursuant to Section 5.1(a) (the
“Initial Adjustment Date”), (i) 3.50% per annum for LIBOR Loan Advances and
2.25% per annum for Base Rate Advances, (ii) 2.25% per annum for Swingline
Loans, and (iii) 3.50% per annum for the Letter of Credit Fee Applicable

 

3

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Margin; and (b) commencing on the Initial Adjustment Date and on the first day
of each Fiscal Quarter thereafter that follows by at least five (5) days the
receipt of financial statements delivered pursuant to Section 5.1(a), the
Applicable Margin for each Class of Extension of Credit shall be that determined
from the chart below based on such financial statements:

 

If Total Leverage Ratio is:

 

Level of
Applicable Margins:

<3.50x

 

Level I

>3.50x but <4.25x

 

Level II

>4.25x

 

Level III

 

 

 

Applicable Margins

 

 

 

Level I

 

Level II

 

Level III

 

Applicable Margin for Base Rate Advances

 

1.75

%

2.00

%

2.25

%

Applicable Margin for LIBOR Loan Advances

 

3.00

%

3.25

%

3.50

%

Applicable Margin for Letter of Credit Fee

 

3.00

%

3.25

%

3.50

%

 

Notwithstanding the foregoing, if a Default or Event of Default shall have
occurred and be continuing, any quarterly adjustment in the Applicable Margins
as provided for above in this definition which would result in a decrease in any
Applicable Margin shall be deferred until the first day of the calendar month
following the date that such Default or Event of Default has been cured or
waived.

 

“Applicable Percentage” means (a) three percent (3%), in the case of a
prepayment or reduction on or prior to the first anniversary of the Restatement
Effective Date, (b) two percent (2%), in the case of a prepayment or reduction
after the first anniversary of the Restatement Effective Date but on or prior to
the second anniversary thereof, and (c) one percent (1%), in the case of a
prepayment or reduction after the second anniversary of the Restatement
Effective Date, but on or prior to the third anniversary thereof.

 

“Assessments” has the meaning ascribed to it in Section 4.21.

 

“Asset Disposition” means any disposition, whether by sale, lease, transfer,
loss, damage, destruction, casualty, condemnation or otherwise (including any
such transaction effected by way of merger or consolidation), of any Stock or
other property (whether real, personal or mixed) of any Credit Party, but
excluding (a) dispositions of Inventory in the ordinary course of business, (b)
any single casualty event that results in less than $100,000 of insurance
proceeds being payable to any Credit Party, (c) dispositions of Temporary Cash
Investments and cash payments otherwise permitted under this Agreement, and (d)
dispositions of assets from one Credit Party to another Credit Party.

 

“Assignment Agreement” has the meaning ascribed to it in Section 11.6(a).

 

4

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“Assignment of Representations” means that certain Assignment of
Representations, Warranties, Covenants and Indemnities, made by certain Credit
Parties in favor of the Agent in connection any Acquisition occurring on or
after the Original Closing Date.

 

“Authorized Signatory” means any Person or Persons designated as such by the
Borrowers to the Agent in a writing in the form of Exhibit J.

 

“Base Rate” means, for any day, a floating rate equal to the greater of (a) the
rate publicly quoted from time to time by The Wall Street Journal as the “Prime
Rate” (or, if The Wall Street Journal ceases quoting a prime rate of the type
described, the highest per annum rate of interest published by the Federal
Reserve Board in Federal Reserve statistical release H.15 (519) entitled
“Selected Interest Rates” as the Bank prime loan rate or its equivalent), and
(b) the Federal Funds Rate plus 50 basis points per annum.  Any change in the
Base Rate due to a change in the prime rate or the Federal Funds Rate shall be
effective as of the opening of business on the effective day of such change in
the prime rate or the Federal Funds Rate, respectively.

 

“Base Rate Advance” means a Revolving Credit Advance bearing interest by
reference to the Base Rate.

 

“Base Rate Borrowing” means a Borrowing that is constituted of Base Rate Loans.

 

“Base Rate Loan” means that portion of a Loan, the interest on which is, or is
to be, as the context may require, computed on the basis of the Base Rate.

 

“Benefit Arrangement” means, at any time, an employee benefit plan within the
meaning of Section 3(3) of ERISA that is not a Plan or a Multiemployer Plan and
which is maintained or otherwise contributed to by any member of the Controlled
Group.

 

“Blocked Accounts” has the meaning ascribed to it in Section 6.16(a).

 

“Borrower Representative” means Holdings.

 

“Borrowers” and “Borrower” have the respective meanings ascribed thereto in the
preamble to this Agreement.

 

“Borrower Pledge Agreement” means the Borrower Pledge Agreement dated as of the
date hereof between the Borrowers (other than CCS) and the Agent, substantially
in the form of Exhibit F.

 

“Borrower Security Agreement” means the Security Agreement dated as of the date
hereof between the Borrowers (other than CCS) and the Agent, substantially in
the form of Exhibit E.

 

“Borrowing” means the aggregation of Advances to be made to the Borrowers by the
Lenders pursuant to Article II on the same day, all of which Advances are of the
same Type

 

5

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

 

(subject to Article II) and, except in the case of Base Rate Advances, have the
same initial LIBOR Period.  Borrowings are also classified for purposes hereof
by reference to the pricing of Advances comprising such Borrowing (for example,
a “LIBOR Borrowing” is a Borrowing comprised of LIBOR Loan Advances).

 

“Borrowing Availability” means as of any date of determination as to Borrowers,
the lesser of (a) the Maximum Commitment Amount and (b) the Borrowing Base, in
each case, minus the sum of (without duplication) the aggregate Revolving Loans
and Swingline Loans then outstanding.

 

“Borrowing Base” means, on any date, a dollar amount equal to (a) the sum of: 
(i) the Accounts Receivable Advance Rate multiplied by the book value of
Eligible Accounts, plus (ii) the Inventory Advance Rate multiplied by the value
of Eligible Inventory valued at the lower of cost (determined on a first-in,
first-out basis) or market, minus (b) any Reserves.

 

“Borrowing Base Certificate” means a certificate, duly executed by the chief
financial officer, controller or treasurer of the Borrower Representative,
appropriately completed and substantially in the form of Exhibit O.

 

“Budget” has the meaning ascribed to such term in Section 5.1(c).

 

“Business Day” means any day that is not a Saturday, a Sunday or a day on which
banks are required or permitted to be closed in the State of Maryland and/or New
York and, in reference to LIBOR Loans, means any such day that is also a LIBOR
Business Day.

 

“Capital Expenditures” means, with respect to any Person, all expenditures
(including, without limitation, by the expenditure of cash or the incurrence of
Indebtedness but excluding any such expenditures incurred in connection with an
Acquisition, but including any such expenditures incurred by way of assumption
of indebtedness or other obligations of a Person, to the extent reflected as
plant, property and equipment) by such Person during any measuring period for
any real property, fixtures, plant or equipment or improvements or for
replacements, substitutions or additions thereto that have a useful life of more
than one (1) year and that are required to be capitalized under GAAP.

 

“Capital Lease” means, with respect to any Person, any lease of any property
(whether real, personal or mixed) by such Person as lessee which would, in
accordance with GAAP, be required to be accounted for as a capital lease on the
balance sheet of such Person.

 

“Capital Lease Obligation” means, with respect to any Capital Lease of any
Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.

 

“Cash Collateral Account” has the meaning ascribed to it in Section 2.5(k)(i).

 

“Cash Equivalents” means cash or cash equivalents acceptable to Agent.

 

“Cash Management Systems” has the meaning ascribed to it in Section 6.16.

 

6

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“CCS” has the meaning ascribed thereto in the preamble to this Agreement.

 

“CCS Purchase Agreement” means that certain Stock Purchase Agreement, dated as
of February 24, 2004, by and among Holdings, CCS and the shareholders party
thereto, as amended, restated, supplemented or otherwise modified from time to
time.

 

“CCS Security Agreement” means the Security Agreement dated as of the
Restatement Effective Date between CCS and Agent.

 

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 U.S.C. Sections 9601 et seq.), as amended from time to
time, and the regulations promulgated thereunder.

 

“CHAMPVA” means, collectively, the Civilian Health and Medical Program of the
Department of Veteran Affairs, a program of medical benefits covering retirees
and dependents of former members of the armed services administered by the
United States Department of Veteran Affairs, and all laws, rules, regulations,
manuals, orders, guidelines or requirements pertaining to such program
including, without limitation, (a) all federal statutes (whether set forth in 38
U.S.C. §1713 or elsewhere) affecting such program or, to the extent applicable
to CHAMPVA and (b) all rules, regulations (including 38 C.F.R. §17.54), manuals,
orders and administrative, reimbursement and other guidelines of all
Governmental Authorities promulgated in connection with such program (whether or
not having the force of law), in each case as the same may be amended,
supplemented or otherwise modified from time to time.

 

“CHAMPVA Account” means an Account payable pursuant to CHAMPVA.

 

“CHSNY” has the meaning ascribed thereto in the preamble to this Agreement.

 

“Change of Control” means any of the following: (a) any person or group of
persons (within the meaning of the Exchange Act) shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under the Exchange Act) of twenty percent (20%) or more of
the issued and outstanding shares of Stock of Holdings having the right to vote
for the election of directors of Holdings under ordinary circumstances; (b)
during any period of twelve (12) consecutive calendar months, individuals, who
at the beginning of such period, constituted the board of directors of Holdings
(together with any new directors whose election by the board of directors of
Holdings or whose nomination for election by the holder of stock or equity
interests of Holdings was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason other than death or disability to constitute a
majority of the directors then in office; or (c) Holdings ceases to own and
control all of the economic and voting rights associated with all of the
outstanding Stock of any of its Subsidiaries, except to the extent expressly
permitted under Section 7.8.

 

“Charges” means any and all federal, state, county, city, municipal, local,
foreign or other governmental taxes (including taxes owed to the PBGC at the
time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral,

 

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(b) the Obligations, (c) the employees, payroll, income or gross receipts of any
Credit Party, (d) any Credit Party’s ownership or use of any properties or other
assets, or (e) any other aspect of any Credit Party’s business including,
without limitation, charges for necessary business permits and governmental
authorizations.

 

“Class” defines an Extension of Credit by reference to the Commitment and/or
subfacility under which it is made.

 

“Closing Checklist” means the Closing Checklist in the form of Exhibit K
attached hereto.

 

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

 

“Collateral” means the property subject to a security interest or Lien in favor
of Agent, on behalf of itself and Lenders, pursuant to the Security Agreements
and the other Collateral Documents and any other property, real or personal,
tangible or intangible, now existing or hereafter acquired, that may at any time
be or become subject to a security interest or Lien in favor of Agent, on behalf
of itself and Lenders, to secure the Obligations.

 

“Collateral Documents” means the Security Agreements, the Pledge Agreements, the
Guaranty Agreements, the Mortgages, blocked account agreements, lockbox account
agreements and all similar agreements entered into guaranteeing payment of,
granting or perfecting a Lien upon property as security for, the Obligations.

 

“Collateral Reports” means the reports with respect to the Collateral referred
to in Section 5.2.

 

“Collection Account” means that certain account of Agent, or such other account
as may be specified in writing by Agent as the “Collection Account”, as follows:

 

Deutsche Bank/Banker’s Trust

New York, NY

ABA No.:  021-001-033

Account No.:  50-271-079

Account Name:  GE-HFS Cash Flow Collections

Re:  Curative Health Services, Inc.

 

“Commitment” means (a) as to any Lender, such Lender’s Revolving Credit
Commitment (including without duplication the Swingline Lender’s Swingline
Commitment) and (b) as to all Lenders, the aggregate of all of Lenders’
Revolving Credit Commitments (including without duplication the Swingline
Lender’s Swingline Commitment, as such Commitments may be reduced, amortized or
adjusted from time to time in accordance with this Agreement).

 

“Commitment Letter” means that certain Commitment Letter, dated February 23,
2004, by and between GE Capital and certain of the Credit Parties party thereto.

 

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“Commitment Termination Date” means the earliest of (a) April 23, 2009 (b) the
date of termination of Lenders’ obligations to make Advances and to incur L/C
Obligations or the date of acceleration of the maturity date of all or any
portion of the Obligations pursuant to Section 8.2(b), and (c) the date of
indefeasible payment in full by the Borrowers of the Loans and the cancellation
and return of (or issuance of a stand-by guarantee or letter of credit with
respect to) all Letters of Credit or the cash collateralization of all L/C
Obligations pursuant to Section 2.5(k), and the permanent reduction of all
Commitments to Zero Dollars ($0).

 

“Competitor” means a Person that directly provides products or services that are
the same or substantially similar to the products or services provided by, and
that constitute a material part of the business of, a Credit Party.

 

“Compliance Certificate” means any of the compliance certificates delivered
pursuant to Sections 5.1(a)(iii) and/or (b)(iii).

 

“Concentration Accounts” has the meaning ascribed to it in Section 6.16.

 

“Concentration Account Bank” has the meaning ascribed to it in Section 6.16.

 

“Continuation” has the meaning ascribed to it in Section 2.3(a).

 

“Control Letter” means a letter agreement between Agent and (a) the issuer of
uncertificated securities with respect to uncertificated securities in the name
of any Credit Party, (b) a securities intermediary with respect to securities,
whether certificated or uncertificated, securities entitlements and other
financial assets held in a securities account in the name of any Credit Party,
(c) a futures commission merchant or clearing house, as applicable, with respect
to commodity accounts and commodity contracts held by any Credit Party, in each
case whereby, among other things, the issuer, securities intermediary, futures
commission merchant or clearing house disclaims (or subordinates in a manner
satisfactory to Agent in its sole discretion) any security interest in the
applicable financial assets, acknowledges the Lien of Agent, on behalf of itself
and Lenders, on such financial assets, and agrees to follow the instructions or
entitlement orders of Agent without further consent by the affected Credit
Party.

 

“Controlled Group” means, with respect to any Credit Party, any trade or
business (whether or not incorporated) that, together with such Credit Party, is
treated as a single employer within the meaning of Sections 414(b), (c), (m) or
(o) of the IRC or Section 4001 of ERISA.

 

“Conversion” has the meaning set forth in Section 2.3(a).

 

“Credit Document Obligations” has the meaning ascribed to such term in clause
(a) of the definition of Obligations.

 

“Credit Parties” means the Borrowers and each Guarantor.

 

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“Current Assets” means, with respect to any Person, all current assets of such
Person as of any date of determination calculated in accordance with GAAP, but
excluding Cash Equivalents and debts due from Affiliates.

 

“Current Liabilities” means, with respect to any Person, all liabilities that
should, in accordance with GAAP, be classified as current liabilities, and in
any event shall include (a) all Indebtedness payable on demand or within one (1)
year from any date of determination without any option on the part of the
obligor to extend or renew beyond such year, but excluding the current portion
of long-term debt required to be paid within one (1) year, and (b) all accruals
for federal or other taxes based on or measured by income and payable within
such year.

 

“Default” means any condition or event which constitutes an Event of Default or
which with the giving of notice or lapse of time or both would, unless cured or
waived within any applicable grace or cure period, become an Event of Default.

 

“Default Rate” means, subject to Section 2.15, the rate otherwise applicable to
an Obligation plus 2.00% per annum, or if no such rate is provided, the Base
Rate, plus the Applicable Margin for Base Rate Advances, plus 2.00%.

 

“Department of Justice Obligations” means that certain indebtedness outstanding
to the Department of Justice in accordance with that certain Stipulation and
Order of Settlement and Dismissal effected upon the date it was entered by the
court on or about December 28, 2001, with an initial outstanding balance of
$16,500,000 and an outstanding balance as of the Restatement Effective Date of
$3,500,000.

 

“Disbursement Account” has the meaning ascribed to it in Section 6.16.

 

“Dollars” or “$” means lawful currency of the United States of America.

 

“EBITDA” means, with respect to any Person for any fiscal period, without
duplication, an amount equal to (a) consolidated net income (or loss) of such
Person for such period (excluding extraordinary gains and non-cash items), minus
(b) the sum of, without duplication, (i) income tax credits, (ii) interest
income, (iii) any aggregate net gain (but not any aggregate net loss) during
such period arising from the sale, exchange or other disposition of capital
assets by such Person (including any fixed assets, whether tangible or
intangible, all inventory sold in conjunction with the disposition of fixed
assets and all securities), plus, (c) to the extent deducted in determining such
consolidated net income (or loss) for such period, the sum of, without
duplication, (i) income tax expense, (ii) Interest Expense and Fees, (iii) loss
from extraordinary items for such period, (iv) the amount of non-cash charges
(including depreciation and amortization) for such period, (v) amortized debt
discount for such period, and (vi) the amount of any deduction to consolidated
net income as the result of any grant to any employees, officers or directors of
such Person of any Stock.  For purposes of this definition, the following items
shall be excluded in determining consolidated net income of a Person: (1) the
income (or deficit) of any other Person accrued prior to the date it became a
Subsidiary of, or was merged or consolidated into, such Person or any of such
Person’s Subsidiaries; (2) the income (or deficit) of any other Person (other
than a Subsidiary) in which such Person has an

 

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ownership interest, except to the extent any such income has actually been
received by such Person in the form of cash dividends or distributions; (3) the
undistributed earnings of any Subsidiary of such Person to the extent that the
declaration or payment of dividends or similar distributions by such Subsidiary
is not at the time permitted by the terms of any contractual obligation or
requirement of law applicable to such Subsidiary; (4) any restoration to income
of any contingency reserve, except to the extent that provision for such reserve
was made out of income accrued during such period; (5) any write-up of any
asset; (6) any net gain from the collection of the proceeds of life insurance
policies; (7) any net gain arising from the acquisition of any securities, or
the extinguishment, under GAAP, of any Indebtedness, of such Person; (8) in the
case of a successor to such Person by consolidation or merger or as a transferee
of its assets, any earnings of such successor prior to such consolidation,
merger or transfer of assets; and (9) any deferred credit representing the
excess of equity in any Subsidiary of such Person at the date of acquisition of
such Subsidiary over the cost to such Person of the investment in such
Subsidiary.

 

“Eligible Accounts” means, at any date of determination thereof, the aggregate
amount of all Accounts at such date due to any Borrower except to the extent
that (determined without duplication):

 

(a)           such Account does not arise from the sale of goods or the
performance of services by such Borrower in the ordinary course of its business;

 

(b)           (i) such Borrower’s right to receive payment is not absolute or is
contingent upon the fulfillment of any condition whatsoever or (ii) as to which
such Borrower is not able to bring suit or otherwise enforce its remedies
against the Account Debtor through judicial process or (iii) if the Account
represents a progress billing consisting of an invoice for goods sold or used or
services rendered pursuant to a contract under which the Account Debtor’s
obligation to pay that invoice is subject to such Borrower’s completion of
further performance under such contract or is subject to the equitable lien of a
surety bond issuer;

 

(c)           any defense, counterclaim, setoff or dispute exists as to such
Account, but only to the extent of such defense, counterclaim, setoff or
dispute;

 

(d)           such Account is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold to or
services rendered and accepted by the applicable Account Debtor;

 

(e)           an invoice, reasonably acceptable to Agent in form and substance,
has not been sent to the applicable Account Debtor in respect of such Account;

 

(f)            such Account (i) is not owned by such Borrower or (ii) is subject
to any right, claim, security interest or other interest of any other Person,
other than Liens in favor of Agent, on behalf of itself and Lenders;

 

(g)           such Account arises from a sale to any director, officer, other
employee or Affiliate of any Credit Party, or to any entity that has any common
officer or director with any Credit Party;

 

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(h)           except for Government Accounts, such Account is the obligation of
an Account Debtor that is the United States government or a political
subdivision thereof, or department, agency or instrumentality thereof unless
Agent, in its sole discretion, has agreed to the contrary in writing and such
Borrower, if necessary or desirable, has complied with respect to such
obligation with the Federal Assignment of Claims Act of 1940, or any applicable
state, county or municipal law restricting assignment thereof;

 

(i)            such Account is the obligation of an Account Debtor located in a
foreign country;

 

(j)            such Borrower or any Subsidiary thereof is liable for goods sold
or services rendered by the applicable Account Debtor to such Borrower or any
Subsidiary thereof but only to the extent of the potential offset;

 

(k)           such Account arises with respect to goods that are delivered on a
bill and hold, cash on delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may be
conditional;

 

(l)            such Account is in default; provided that, without limiting the
generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:

 

(i)            the Account is not paid within the earlier of: (a) one hundred
twenty (120) days following its due date or (b) one hundred fifty (150) days
following the original invoice date;

 

(ii)           the Account Debtor obligated upon such Account suspends business,
makes a general assignment for the benefit of creditors or fails to pay its
debts generally as they come due; or

 

(iii)          any Account Debtor obligated upon such Account is a debtor or a
debtor in possession under any bankruptcy law or any other federal, state or
foreign (including any provincial) receivership, insolvency relief or other law
or laws for the relief of debtors;

 

(m)          such Account is the obligation of an Account Debtor if fifty
percent (50%) or more of the Dollar amount of all Accounts owing by that Account
Debtor are ineligible under the other criteria set forth in this definition;

 

(n)           such Account, as to which Agent’s Lien attaches thereon on behalf
of itself and Lenders, is not a first priority perfected Lien;

 

(o)           any of the representations or warranties in the Loan Documents
with respect to such Account are untrue or incomplete with respect to such
Account;

 

(p)           such Account is evidenced by a judgment, Instrument or Chattel
Paper;

 

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(q)           such Account exceeds any credit limit established by Agent, in its
sole credit judgment;

 

(r)            except with respect to Government Accounts, such Account,
together with all other Accounts owing by such Account Debtor and its Affiliates
as of any date of determination, exceeds 10% of all Eligible Accounts;

 

(s)           such Account is payable in any currency other than Dollars; or

 

(t)            such Account is otherwise unacceptable to Agent in its reasonable
credit judgment.

 

Without limiting the foregoing, no Accounts of CCS shall constitute Eligible
Accounts hereunder unless and until CCS becomes a wholly-owned Subsidiary of
Holdings and each of the foregoing criteria in this definition have been
satisfied with respect to the such Account.

 

“Eligible Inventory” means, at any date of determination thereof, the aggregate
amount of all Inventory at such date owned by any Borrower other than any item
of Inventory (determined without duplication) that:

 

(a)           is not owned by such Borrower  free and clear of all Liens and
rights of any other Person (including the rights of a purchaser that has made
progress payments and the rights of a surety that has issued a bond to assure
such Borrower’s performance with respect to that Inventory), except the first
priority perfected Liens in favor of Agent, on behalf of itself and Lenders, and
Permitted Encumbrances in favor of bailees to the extent expressly permitted
hereunder (subject to Reserves established by Agent in accordance with Section
2.1(d) hereof);

 

(b)           (i) is not located on premises owned, leased or rented by such
Borrower and set forth in Disclosure Schedule 3 to the Security Agreements, or
(ii) is stored at a leased location, unless a reasonably satisfactory landlord
waiver has been duly executed and delivered by landlord to Agent, or (iii) is
stored with a bailee or warehouseman, unless a reasonably satisfactory,
acknowledged bailee letter has been received by Agent and Reserves reasonably
satisfactory to Agent have been established with respect thereto, or (iv) is
located at an owned location subject to a mortgage in favor of a Person other
than Agent unless a reasonably satisfactory mortgagee waiver has been duly
executed and delivered by mortgagee to Agent, or (v) is located at any site if
the aggregate book value of Inventory at any such location is less than
$100,000;

 

(c)           is placed on consignment or is in transit;

 

(d)           is covered by a negotiable document of title, unless such document
has been delivered to Agent with all necessary endorsements, free and clear of
all Liens except those in favor of Agent and Lenders;

 

(e)           is excess, obsolete, unsalable, shopworn, seconds, damaged or
unfit for sale;

 

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(f)            consists of display items or packing or shipping materials,
manufacturing supplies, work-in-process Inventory or replacement parts;

 

(g)           consists of goods which have been returned by the buyer;

 

(h)           is not of a type held for sale in the ordinary course of such
Borrower’s business;

 

(i)            is not subject to a first priority lien in favor of Agent on
behalf of itself and Lenders;

 

(j)            any of the representations or warranties in the Loan Documents
with respect to such Inventory are untrue or incomplete with respect to such
Inventory;

 

(k)           consists of any costs associated with “freight-in” charges;

 

(l)            consists of Hazardous Materials or goods that can be transported
or sold only with licenses that are not readily available;

 

(m)          is not covered by casualty insurance reasonably acceptable to
Agent; or

 

(n)           is otherwise unacceptable to Agent in its reasonable credit
judgment.

 

Without limiting the foregoing, no Inventory of CCS shall constitute Eligible
Inventory hereunder unless and until CCS becomes a wholly-owned Subsidiary of
Holdings and each of the foregoing criteria in this definition have been
satisfied with respect to the such Inventory.

 

“Environmental Laws” means all applicable federal, state, local and foreign
laws, statutes, ordinances, codes, rules, standards and regulations, now or
hereafter in effect, and any applicable judicial or administrative
interpretation thereof, including any applicable judicial or administrative
order, consent decree, order or judgment, imposing liability or standards of
conduct for or relating to the regulation and protection of human health,
safety, the environment and natural resources (including ambient air, surface
water, groundwater, wetlands, land surface or subsurface strata, wildlife,
aquatic species and vegetation).  Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. §§
9601 et seq.) (“CERCLA”); the Hazardous Materials Transportation Authorization
Act of 1994 (49 U.S.C. §§ 5101 et seq.); the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. §§ 136 et seq.); the Solid Waste Disposal Act (42
U.S.C. §§ 6901 et seq.); the Toxic Substance Control Act (15 U.S.C. §§ 2601 et
seq.); the Clean Air Act (42 U.S.C. §§ 7401 et seq.); the Federal Water
Pollution Control Act (33 U.S.C. §§ 1251 et seq.); the Occupational Safety and
Health Act (29 U.S.C. §§ 651 et seq.); and the Safe Drinking Water Act (42
U.S.C. §§ 300(f) et seq.), and any and all regulations promulgated thereunder,
and all analogous state, local and foreign counterparts or equivalents and any
transfer of ownership notification or approval statutes.

 

“Environmental Liabilities” means, with respect to any Person, all liabilities,
obligations, responsibilities, response, remedial and removal costs,
investigation and feasibility

 

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study costs, capital costs, operation and maintenance costs, losses, damages,
punitive damages, property damages, natural resource damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts and consultants), fines,
penalties, sanctions and interest incurred as a result of or related to any
claim, suit, action, investigation, proceeding or demand by any Person, whether
based in contract, tort, implied or express warranty, strict liability, criminal
or civil statute or common law, including any arising under or related to any
Environmental Laws or Environmental Permits or in connection with any Release or
threatened Release or the presence of a Hazardous Material whether on, at, in,
under, from or about or in the vicinity of any real or personal property.

 

“Environmental Permits” means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.

 

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

 

“ERISA Event” means, with respect to any Credit Party or any member of a
Controlled Group, (a) any event described in Section 4043(c) of ERISA with
respect to a Title IV Plan, (b) the withdrawal of any Credit Party or any member
of a Controlled Group from a Title IV Plan subject to Section 4063 of ERISA
during a plan year in which it was a substantial employer, as defined in
Section 4001(a)(2) of ERISA, (c) the complete or partial withdrawal of any
Credit Party or any member of a Controlled Group from any Multi-employer Plan,
(d) the termination of, the filing of a notice of intent to terminate a Title IV
Plan or the treatment of a plan amendment as a termination under Section 4041 of
ERISA, (e) the institution of proceedings to terminate a Title IV Plan or
Multi-employer Plan by the PBGC, (f) the failure by any Credit Party or any
member of a Controlled Group to make when due required contributions to a
Multi-employer Plan or Title IV Plan unless such failure is cured within thirty
(30) days, (g) any other event or condition that might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Title IV Plan or Multi-employer Plan
or for the imposition of liability under Section 4069 or 4212(c) of ERISA, (h)
the termination of a Multi-employer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multi-employer Plan under Section 4241 or 4245
of ERISA, (i) the loss of a Qualified Plan’s qualification or tax exempt status,
or (j) the termination of a Plan described in Section 4064 of ERISA.

 

“ESOP” means a Plan that is intended to satisfy the requirements of Section
4975(e)(7) of the IRC.

 

“Event of Default” has the meaning ascribed to it in Section 8.1.

 

“Excess Cash Flow Offer” shall have the meaning assigned to such term in the
Senior Unsecured High Yield Note Indenture as in effect on the Restatement
Effective Date.

 

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

 

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“Existing Credit Agreement” has the meaning ascribed to it in paragraph A of the
Introductory Statement to this Agreement.

 

“Extension of Credit” means, as the context requires, (a) an Advance, (b) the
making of an Advance, (c) the conversion of a Base Rate Loan to a LIBOR Loan or
the continuation of a LIBOR Loan as a LIBOR Loan for an additional LIBOR Period,
or (d) the issuance of any Letter of Credit or the incurrence of any
Reimbursement Obligation.

 

“Federal Funds Rate” means, for any day, a floating rate equal to the weighted
average of the rates on overnight federal funds transactions among members of
the Federal Reserve System, as published for such day (or if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Agent from three (3) federal funds brokers of recognized
standing selected by the Agent, which determination shall be final, binding and
conclusive (absent manifest error).

 

“Fees” means any and all fees payable to Agent or any Lender pursuant to this
Agreement or any of the other Loan Documents or the GE Capital Fee Letter.

 

“Fiscal Quarter” means any of the quarterly accounting periods of Borrowers,
ending on March 31, June 30, September 30 and December 31 of each year.

 

“Fiscal Year” means any of the annual accounting periods of the Borrowers ending
on December 31 of each year.

 

“Fixed Charge Coverage Ratio” means, with respect to any Person for any fiscal
period, the ratio obtained by dividing (a) EBITDA, as calculated pursuant to its
definition herein and subject to any adjustments as required under Section 7.18,
minus Capital Expenditures made during such period, minus cash payments of taxes
during such Period, by (b) Fixed Charges.

 

“Fixed Charges” means, with respect to any Person for any fiscal period, the sum
of (a) the aggregate of all Interest Expense paid or accrued during such period,
plus (b) scheduled payments of principal with respect to any Indebtedness during
such period.

 

“Funded Debt” means all of the following, with respect to the Borrowers and
their Subsidiaries calculated on a consolidated basis, without duplication, (a)
all Indebtedness for borrowed money, (b) the Department of Justice Obligations,
(c) the Subordinated Notes, (d) the Aggregate L/C Exposure, (e) all Senior
Unsecured Debt, and (f) all Indebtedness evidenced by notes, bonds, debentures
or similar instruments, or upon which interest payments are customarily made, in
each case, that by its terms matures more than one (1) year from, or is directly
or indirectly renewable or extendible at such Person’s option under a revolving
credit or similar agreement obligating the lender or lenders to extend credit
over a period of more than one (1) year from, the date of creation thereof, and
specifically including, without limitation, Capital Lease Obligations, current
maturities of long-term debt, revolving credit and short-term debt extendible
beyond one (1) year at the option of the debtor, and also including, in the case
of the

 

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Borrowers, the Obligations and, without duplication, Guaranteed Obligations in
respect of Funded Debt of other Persons.

 

“GAAP” has the meaning ascribed to it in Section 1.2.

 

“GE Capital” means General Electric Capital Corporation, a Delaware corporation,
and its successors and assigns.

 

“GE Capital Fee Letter” means that certain letter, dated as of February 23,
2004, between GE Capital and certain of the Credit Parties party thereto with
respect to certain fees to be paid from time to time by the Borrowers to GE
Capital.

 

“GECMG” means GECC Capital Markets Group, Inc., and its successors and permitted
assigns.

 

“Government Accounts” means, collectively, any and all Accounts which are (a)
Medicare Accounts, (b) Medicaid Accounts, (c) TRICARE Accounts, (d) CHAMPVA
Accounts, or (e) any other Account payable by a Governmental Authority
acceptable to the Agent in its sole discretion.

 

“Government Receivables Deposit Account” has the meaning ascribed to it in
Section 6.16.

 

“Government Receivables Deposit Account Agreement” has the meaning ascribed to
it in Section 6.16.

 

“Governmental Approval” means an authorization, consent, approval, license or
exemption of, registration or filing with, or report or notice to any
Governmental Authority.

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

 

“Guaranteed Obligations” means as to any Person, without duplication, any
obligation of such Person guaranteeing, providing comfort or otherwise
supporting any Indebtedness, lease, dividend, or other obligation (“primary
obligation”) of any other Person (the “primary obligor”) in any manner,
including any obligation or arrangement of such Person to (a) purchase or
repurchase any such primary obligation, (b) advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet condition of the primary obligor, (c)
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, (d) protect the beneficiary of such
arrangement from loss (other than product warranties given in the ordinary
course of business) or (e) indemnify the owner of such primary obligation
against loss in respect thereof; provided that the term Guaranteed Obligations
shall not include endorsements for collection or deposit in the ordinary course
of business.  The amount of any Guaranteed Obligations at any time shall be

 

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deemed to be an amount equal to the lesser at such time of (x) the stated or
determinable amount of the primary obligation in respect of which such
Guaranteed Obligations is incurred and (y) the maximum amount for which such
Person may be liable pursuant to the terms of the instrument embodying such
Guaranteed Obligations, or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect thereof.

 

“Guarantors” means Curative Health Services III Co. and each Person (including,
without limitation, any Subsidiary of any Borrower acquired or created after the
Restatement Effective Date) that executes a Guaranty Agreement or other similar
agreement in favor of Agent, for itself and the ratable benefit of Lenders, in
connection with the transactions contemplated by this Agreement and the other
Loan Documents.

 

“Guaranty Agreements” means, collectively, that certain Subsidiary Guaranty
dated as of August 13, 2003 by and among Curative Health Services Co., Curative
Health Services III Co. and Curative Health Services IV Co., and any other
guaranty agreements now or hereafter executed by any Person in favor of Agent
and Lenders to guarantee the Obligations.

 

“Guarantor Payment” has the meaning ascribed to it in Section 12.7(a).

 

“Harris Bank” has the meaning ascribed to it in Section 7.2(h).

 

“Harris Bank Letter of Credit” has the meaning ascribed to it in Section 7.2(h).

 

“Hazardous Material” means any substance, material or waste that is regulated
by, or forms the basis of liability now or hereafter under, any Environmental
Laws, including any material or substance that is (a) defined as a “solid
waste,” “hazardous waste,” “hazardous material,” “hazardous substance,”
“extremely hazardous waste,” “restricted hazardous waste,” “pollutant,”
“contaminant,” “hazardous constituent,” “special waste,” “toxic substance” or
other similar term or phrase under any Environmental Laws, or (b) petroleum or
any fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB’s),
or any radioactive substance.

 

“Healthcare Laws” means, collectively, any and all federal, state or local laws,
rules, regulations and administrative manuals, orders, guidelines and
requirements issued under or in connection with Medicare, Medicaid CHAMPVA,
TRICARE or any government payment program or any law governing the licensure of
or regulating healthcare providers, professionals, facilities or payors or
otherwise governing or regulating the provision of, or payment for, Medical
Services, or the sale of medical supplies.  Without limiting the generality of
the foregoing, Healthcare Laws include, without limitation, Section 1128B(b) of
the Social Security Act, as amended, 42 U.S.C. Section 1320a-7(b) (Criminal
Penalties Involving Medicare or State Health Care Programs), commonly referred
to as the “Federal Anti-Kickback Statute,” and the Social Security Act, as
amended, and Section 1877, 42 U.S.C Section 1395nn (Prohibition Against Certain
Referrals), commonly referred to as “Stark Statute”.

 

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

 

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“HIPAA Business Associate Agreement” means, collectively, one or more Business
Associate Agreements in substantially the form attached hereto as Exhibit M,
between Agent and one or more Credit Parties, as amended, restated, supplemented
or otherwise modified from time to time.

 

“HIPAA Compliance Date” has the meaning ascribed to it in Section 4.21.

 

“HIPAA Compliance Plan” has the meaning ascribed to it in Section 4.21.

 

“HIPAA Compliant” has the meaning ascribed to it in Section 4.21.

 

“Holdings” has the meaning ascribed thereto in the preamble to this Agreement.

 

“Holdings Pledge Agreement” has the meaning ascribed thereto in the definition
of Pledge Agreements.

 

“Holdings Security Agreement” has the meaning ascribed thereto in the definition
of Security Agreements.

 

“Home Care Purchase Agreement” means that certain Asset Purchase Agreement dated
as of October 23, 2002 by and among Holdings, CHSNY, Home Care Seller and the
shareholders party thereto, as amended, restated, supplemented or otherwise
modified.

 

“Home Care Seller” means Home Care of New York, Inc., a New York corporation.

 

“Indebtedness” of a Person means at any date, without duplication, (a) all
obligations of such Person for borrowed money (but excluding obligations to
trade creditors incurred in the ordinary course of business that are unsecured
and not overdue by more than 6 months unless being contested in good faith and
for which adequate reserves have been established in accordance with GAAP), (b)
all obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, or upon which interest payments are customarily made, (c)
all obligations of such Person to pay the deferred purchase price of property or
service incurred in the ordinary course of business if the purchase price is due
more than six (6) months from the date the obligation is incurred, (d) all
Capital Lease Obligations of such Person, (e) any obligation under any lease (a
“synthetic lease”) treated as an operating lease under GAAP and as a loan or
financing for United States income tax purposes or creditors rights purposes,
(f) all obligations of such Person to purchase securities (or other property)
which arise out of or in connection with the issuance or sale of the same or
substantially similar securities (or property), (g) all contingent or
non-contingent obligations of such Person to reimburse any bank or other Person
in respect of amounts paid under a letter of credit or similar instrument, (h)
all equity securities of such Person subject to repurchase or redemption
otherwise than at the sole option of such Person, (i) all “earnouts” and similar
payment obligations of such Person, (j) all indebtedness secured by a Lien on
any asset of such Person, whether or not such indebtedness is otherwise an
obligation of such Person, (k) all obligations of such Person under any foreign
exchange contract, currency swap agreement, interest rate swap, cap or collar
agreement or other similar agreement or arrangement designed to alter the risks
of that Person arising from

 

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fluctuations in currency values or interest rates, in each case whether
contingent or matured, including, without limitation the Subject Swap
Obligations, and (l) all Guaranteed Obligations of such Person.  Indebtedness
shall, in any event, include the Department of Justice Obligations.

 

“Indemnitees” has the meaning ascribed to it in Section 9.2.

 

“Information” means written data, reports, statements (including, but not
limited to, financial statements delivered pursuant to or referred to in
Sections 5.1 and 5.2), documents and other information, whether, in the case of
any such in writing, the same was prepared by any Credit Party or any other
Person on behalf of any Credit Party.

 

“Insurer” means a Person that insures a Patient against certain of the costs
incurred in the receipt by such Patient of Medical Services, or that has an
agreement with a Credit Party to compensate such Credit Party for providing
goods or services to a Patient.

 

“Intercompany Notes” has the meaning ascribed to it in Section 7.1(d).

 

“Intercreditor Agreement” has the meaning ascribed to it in the definition of
Obligations.

 

“Interest Expense” means, with respect to any Person for any period, the
aggregate interest expense (whether cash or non-cash) of such Person determined
in accordance with GAAP for the relevant period ended on such date, including
interest expense with respect to any Indebtedness of such Person and interest
expense for the relevant period that has been capitalized on the balance sheet
of such Person.

 

“Interest Payment Date” means (a) as to any Base Rate Loan, the first Business
Day of each calendar quarter to occur while such Loan is outstanding, and (b) as
to any LIBOR Loan, the last day of the applicable LIBOR Period, provided that in
the case of any LIBOR Period greater than three months in duration, interest
shall be payable at three-month intervals and on the last day of such LIBOR
Period; and provided further that, in addition to the foregoing, each of (x) the
date upon which all of the Commitments have been terminated and the Loans have
been paid in full and (y) the Commitment Termination Date, shall be deemed to be
an “Interest Payment Date” with respect to any interest (including interest
accruing at the Default Rate) that has then accrued under this Agreement and
remains unpaid.

 

“Interest Rate Protection Agreement” means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or similar agreement
or arrangement designed to hedge against fluctuations in interest rates under
which the Borrowers or any of their Subsidiaries is a party or a beneficiary on
the date hereof or becomes a party or a beneficiary hereafter.

 

“Inventory Advance Rate” means up to 60%, subject to adjustment pursuant to
Section 2.1(d).

 

“Investment” means, with respect to any Person, any investment by such Person in
any other Person, whether by means of acquiring or holding Stock, capital
contribution, loan,

 

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advance, extension of credit, purchase of Indebtedness, guarantee, deposit or
otherwise, but excluding any trade account receivable arising in the ordinary
course of business.

 

“IRC” means the Internal Revenue Code of 1986, as amended from time to time, and
all regulations promulgated thereunder.

 

“IRS” means the Internal Revenue Service.

 

“Joinder Agreement” has the meaning ascribed to it in Section 2.16.

 

“Lead Arranger” means GECMG in its capacity as Lead Arranger hereunder and under
the Loan Documents, and its successors in such capacity.

 

“L/C Exposure” means, with respect to any Lender at any time, its Percentage of
the Aggregate L/C Exposure at such time.

 

“L/C Issuer” means (a) GE Capital and (b) any other Lender designated as an “L/C
Issuer” for purposes hereof in a notice to the Agent signed by the Borrower
Representative and such Lender, acting in each case in the capacity of an L/C
Issuer under the letter of credit facility described in Section 2.5, and their
respective successors.

 

“L/C Limit” means $5,000,000.

 

“L/C Obligations” means all outstanding obligations incurred by L/C Issuer and
Revolving Lenders, whether direct or indirect, contingent or otherwise, due or
not due, in connection with the issuance of Letters of Credit by Agent or
another L/C Issuer or the purchase of a participation as set forth in Section
2.5 with respect to any Letter of Credit.  The amount of such L/C Obligations
shall equal the maximum amount that may be payable at such time or at any time
thereafter by Agent or Revolving Lenders thereupon or pursuant thereto.

 

“L/C Payment Date” has the meaning ascribed to it in Section 2.5(f).

 

“Lenders” means GE Capital, the other Lenders named on the signature pages of
this Agreement, and, if any such Lender shall decide to assign all or any
portion of the Obligations pursuant to Section 11.6, such term shall include any
assignee of such Lender permitted under this Agreement.

 

“Lending Party” means the Agent, Lead Arranger, the Lenders and any Letter of
Credit Issuer.  For the avoidance of doubt, the term Lending Party shall not
include the Subject Swap Counterparty.

 

“Letter of Credit Fee” has the meaning ascribed to it in Section 2.7(d).

 

“Letters of Credit” has the meaning ascribed to it in Section 2.5(a).

 

“LIBOR Borrowing” means a Borrowing that is constituted of LIBOR Loans.

 

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“LIBOR Business Day” means a Business Day on which banks in the City of London,
England are generally open for interbank or foreign exchange transactions.

 

“LIBOR Loan” means a Loan or any portion thereof bearing interest by reference
to the LIBOR Rate.

 

“LIBOR Loan Advance” means a Revolving Credit Advance bearing interest by
reference to the LIBOR Rate.

 

“LIBOR Period” means, with respect to any LIBOR Loan, each period commencing on
a LIBOR Business Day and ending one (1), two (2), three (3) or six (6) months
thereafter, in each case as selected by the Borrower Representative’s
irrevocable notice to Agent as set forth in Section 2.3; provided that the
foregoing provision relating to LIBOR Periods is subject to the following:

 

(a)           if any LIBOR Period would otherwise end on a day that is not a
LIBOR Business Day, such LIBOR Period shall be extended to the next succeeding
LIBOR Business Day unless the result of such extension would be to carry such
LIBOR Period into another calendar month in which event such LIBOR Period shall
end on the immediately preceding LIBOR Business Day;

 

(b)           no LIBOR Period shall extend beyond the Commitment Termination
Date;

 

(c)           any LIBOR Period that begins on the last LIBOR Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such LIBOR Period) shall end on the last
LIBOR Business Day of a calendar month;

 

(d)           the Borrower Representative shall select LIBOR Periods so as not
to require a payment or prepayment of any LIBOR Loan during a LIBOR Period for
such Loan; and

 

(e)           the Borrower Representative shall select LIBOR Periods so that
there shall be no more than five (5) separate LIBOR Loans in existence at any
one time.

 

“LIBOR Rate” means for each LIBOR Period, a rate of interest determined by Agent
equal to:

 

(a)           the offered rate for deposits in Dollars for the applicable LIBOR
Period that appears on Telerate Page 3750 (or any successor or substitute page)
as of 11:00 a.m. (London time) on the second full LIBOR Business Day next
preceding the first day of such LIBOR Period (unless such date is not a Business
Day, in which event the next succeeding Business Day will be used); divided by

 

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(b)           a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day that is two (2) LIBOR Business Days prior to
the beginning of such LIBOR Period (including basic, supplemental, marginal and
emergency reserves under any regulations of the Federal Reserve Board or other
Governmental Authority having jurisdiction with respect thereto, as now and from
time to time in effect) for Eurocurrency funding (currently referred to as
“Eurocurrency Liabilities” in Regulation D of the Federal Reserve Board that are
required to be maintained by a member bank of the Federal Reserve System.

 

If such interest rates shall cease to be available from Telerate News Service,
the LIBOR Rate shall be determined from such financial reporting service or
other information as shall be mutually acceptable to Agent and Borrower
Representative.

 

“Lien” means any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, lien (statutory or other), charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease, conditional sale or title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
perfecting a security interest under the Code or comparable law of any
jurisdiction).

 

“Litigation” has the meaning ascribed to it in Section 4.7.

 

“Loan Account” has the meaning ascribed to it in Section 2.12.

 

“Loan Documents” means this Agreement, the Notes, the GE Capital Fee Letter, the
Collateral Documents, the Intercreditor Agreement, the master standby agreement
relating to the issuance of standby Letters of Credit, the master documentary
agreement relating to the issuance of documentary Letters of Credit, the HIPAA
Business Associate Agreement, the Joinder to Credit Agreement, dated as of
August 19, 2003, executed by Holdings in favor of Lenders and Agent, the
Reaffirmation Agreement, the Post Closing Letter Agreement and all other
agreements, instruments, documents and certificates identified in the Closing
Checklist executed and delivered to, or in favor of, Agent or any Lenders and
including all other pledges, powers of attorney, consents, assignments,
contracts, notices, and all other written matter whether heretofore, now or
hereafter executed by or on behalf of any Credit Party, or any employee of any
Credit Party, and delivered to Agent or any Lender in connection with this
Agreement or the transactions contemplated thereby.  Any reference in this
Agreement or any other Loan Document to a Loan Document shall include all
appendices, exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto, and shall refer to this Agreement or
such Loan Document as the same may be in effect at any and all times such
reference becomes operative.

 

“Loans” means any one or more of the Revolving Loan or the Swingline Loan, as
the context may require.

 

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“Lock Boxes” has the meaning ascribed to it in Section 6.16.

 

“Margin Stock” has the meaning assigned thereto in Regulation U of the Federal
Reserve Board, as the same may be amended, supplemented or modified from time to
time.

 

“Material Adverse Effect” means, with respect to any event, act, condition or
occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences, whether or not related, a material
adverse change in, or a material adverse effect upon, any of (a) the financial
condition, operations, business, properties or prospects of the Credit Parties
taken as a whole, (b) the rights and remedies of the Agent or the Lenders under
the Loan Documents, or the ability of any Credit Party to perform its
obligations under the Loan Documents to which it is a party, as applicable, (c)
the legality, validity or enforceability of any Loan Document, or (d) the
existence, perfection or priority of any security interest granted in the Loan
Documents or the value of the Collateral (including its value to the Agent and
the Lenders as security for the Obligations).  If (x) a fact or circumstance
disclosed in the financial statements referred to in Section 4.5 or a Disclosure
Statement, or if an investigation, action, suit or proceeding disclosed in
Disclosure Schedule 4.7, that, at the time of such disclosure did not appear
reasonably likely to have a Material Adverse Effect, should in the future have,
or appear reasonably likely to have, a Material Adverse Effect, or (y) a
development or change shall occur with respect to any fact or circumstance
disclosed in any financial statement, Disclosure Schedule or previously
described investigation, action, suit or proceeding that should in the future
have or appear reasonably likely to have a Material Adverse Effect, then in each
case ((x) and (y)) such Material Adverse Effect shall be a change or event
subject to Section 4.6 notwithstanding such prior disclosure.

 

“Maximum Commitment Amount” means, as of any date of determination, an amount
equal to the Revolving Credit Commitments of all Lenders as of that date.

 

“Maximum Lawful Rate” has the meaning ascribed to it in Section 2.15(b).

 

“Medicaid” means, collectively, the healthcare assistance program established by
Title XIX of the Social Security Act (42 U.S.C. §§1396 et seq.) and any statutes
succeeding thereto, and all laws, rules, regulations, manuals, orders,
guidelines or requirements (whether or not having the force of law) pertaining
to such program, in each case as the same may be amended, supplemented or
otherwise modified from time to time.

 

“Medicaid Account” means an Account payable pursuant to a Medicaid Provider
Agreement.

 

“Medicaid Certification” means certification of a facility by CMS or a state
agency or entity under contract with CMS that such healthcare facility fully
complies with all the conditions of Medicaid.

 

“Medicaid Provider Agreement” means an agreement entered into between a state
agency or other entity administering Medicaid in such state and a health care
facility or physician

 

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under which the health care facility or physician agrees to provide services or
merchandise for Medicaid patients.

 

“Medical Services” means medical or health care services provided to a Patient,
including, but not limited to, medical or health care services provided to a
Patient and performed by a Credit Party which are covered by a policy of
insurance issued by an Insurer, and includes, without limitation, physician
services, pharmacy services, nurse and therapist services, dental services,
hospital services, skilled nursing facility services, comprehensive outpatient
rehabilitation services, home health care services, residential and out-patient
behavioral healthcare services, and medicine, pharmaceutical products or health
care equipment provided by a Credit Party to a Patient for a necessary or
specifically requested valid and proper medical or health purpose.

 

“Medicare” means, collectively, the health insurance program for the aged and
disabled established by Title XVIII of the Social Security Act (42 U.S.C. §§1395
et seq.) and any statutes succeeding thereto, and all laws, rules, regulations,
manuals, orders or guidelines (whether or not having the force of law)
pertaining to such program, in each case as the same may be amended,
supplemented or otherwise modified from time to time.

 

“Medicare Account” means an Account payable pursuant to a Medicare Provider
Agreement.

 

“Medicare Certification” means certification of a facility by CMS or a state
agency or entity under contract with CMS that such healthcare facility fully
complies with all conditions for such facility’s participation in Medicare.

 

“Medicare Provider Agreement” means an agreement entered into between a state
agency or other entity administering Medicare in such state and a health care
facility or physician under which the health care facility or physician agrees
to provide services or merchandise for Medicare patients.

 

“Monthly Swap Statement” means that certain monthly statement prepared by the
Subject Swap Counterparty and delivered to Holdings, which statement sets forth
all Subject Swap Obligations then owing by Holdings to the Subject Swap
Counterparty, and is otherwise in form and substance satisfactory to Agent.

 

“Mortgaged Property” has the meaning set forth to it in Section 6.13.

 

“Mortgages” means each of the mortgages, deeds of trust, leasehold mortgages,
leasehold deeds of trust, collateral assignments of leases or other Real
Property security documents delivered by any Credit Party to Agent on behalf of
itself and Lenders with respect to the Mortgaged Properties, all in form and
substance reasonably satisfactory to Agent.

 

“Multi-employer Plan” means a “multi-employer plan” as defined in
Section 4001(a)(3) of ERISA, and to which any Credit Party or any member of a
Controlled Group is making, is obligated to make or has made or been obligated
to make, contributions on behalf of participants who are or were employed by any
of them.

 

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“Net Cash Proceeds” means, with respect to any transaction, an amount equal to
the cash proceeds received by a Credit Party or any Subsidiary from or in
respect of such transaction (including any cash proceeds received as income or
other cash proceeds of any non-cash proceeds of such transaction), less (x) any
commissions and other reasonable and customary transaction costs, fees and
expenses properly attributable to such transaction and payable by the Credit
Party in connection therewith (in each case, paid to non-Affiliates) and (y) in
the case of an Asset Disposition, any amounts payable to holders of senior Liens
(to the extent such Liens are permitted by Section 7.2) and any taxes paid or
payable by such Person (as reasonably estimated by the chief financial officer
of the Borrower Representative giving effect to the overall tax position of such
Person) in respect of such Asset Disposition and (z) the amount of any
reasonable reserve established in accordance with GAAP against any liabilities
retained by such Person (other than taxes deducted pursuant to the foregoing
clause (y)) associated with the asset disposed of in such Asset Disposition.

 

“Net Proceeds Offer” shall have the meaning assigned to such term in Senior
Unsecured High Yield Note Indenture as in effect on the Restatement Effective
Date.

 

“Notes” means, collectively, the Revolving Notes and the Swingline Notes.

 

“Notice of Borrowing” has the meaning ascribed to it in Section 2.3(a).

 

“Obligations” means (a) all Loans, fees, indebtedness, liabilities, obligations,
covenants and duties of any Credit Party to any Lending Party of every kind,
nature and description, direct or indirect, absolute or contingent, due or not
due, in contract or tort, liquidated or unliquidated, arising under this
Agreement, or under the other Loan Documents, by operation of law or otherwise
in connection with the transactions contemplated hereby, now existing or
hereafter arising, and whether or not for the payment of money or the
performance or non-performance of any act, including, but not limited to, all
damages that any Credit Party may owe to the Agent and/or the Lenders by reason
of any breach by any Credit Party of any representation, warranty, covenant,
agreement or other provision of this Agreement or any of the other Loan
Documents and all obligations of the Borrowers under any interest rate
protection agreement entered with any Lender pursuant to Section 6.10 hereof
(all of the foregoing liabilities and obligations described in this clause (a)
are referred to herein collectively as the “Credit Document Obligations”), and
(b) solely for purposes of Section 2.10(b) hereof relating to the application of
proceeds from the Collateral and the use of the term Obligations in any of the
Security Agreements, Pledge Agreements or Mortgages, the term Obligations shall
include the Subject Swap Obligations to the extent and only to the extent that
an intercreditor agreement in form and substance satisfactory to GE Capital in
its sole and absolute discretion (such intercreditor agreement is referred to
herein as the “Intercreditor Agreement”) has been duly executed by the Subject
Swap Party and the Credit Parties and delivered to GE Capital following the
Restatement Effective Date and such Intercreditor Agreement is and remains at
all times after execution and delivery thereof effective.  The Credit Parties
hereby acknowledge and agree that neither GE Capital nor any of its Affiliates
is obligated at any time to enter into or to negotiate the terms of the
Intercreditor Agreement and the failure to enter into or negotiate such terms
shall not result in any liability of GE Capital, Agent, any Lender or any
Affiliate thereof.  Without limiting the generality of the foregoing, this term
includes all principal, interest (including all

 

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interest that accrues after the commencement of any case or proceeding by or
against any Credit Party in bankruptcy, whether or not allowed in such case or
proceeding), Fees, Charges, expenses, attorneys’ fees and any other sum payable
by any Credit Party to a Lending Party under this Agreement or any of the other
Loan Documents.

 

“Officer’s Certificate” means a certificate executed on behalf of a Person by
one or more of its chairman of the board (if an officer), chief executive
officer, president, chief financial officer or treasurer.

 

“Organizational Documents” means, for any corporation, the certificate or
articles of incorporation, the bylaws, or other similar organizational
documents, any certificate of designation or instrument relating to the rights
of preferred shareholders of such corporation, any shareholder rights agreement,
and all applicable resolutions of the board of directors (or any committee
thereof) of such corporation adopting, supplementing or modifying any of the
foregoing and, for any entity other than a corporation, the equivalent of the
foregoing, including, without limitation, the partnership agreement, and the
operating agreement (or comparable agreement) of any partnership or limited
liability company, respectively.

 

“Original Closing Date” means June 9, 2003.

 

“Outstanding Amount” means, with respect to any Lender at any time, the sum of
(a) the aggregate outstanding principal amount of its Advances, plus (b) its
Percentage of the aggregate outstanding principal amount of the Swingline Loans
(if any) plus (c) its L/C Exposure, all determined at such time after giving
effect to any prior assignments by or to such Lender pursuant to Section 11.6.

 

“Patient” means any Person receiving Medical Services from any Credit Party and
all Persons legally liable to pay such Credit Party for such Medical Services
other than Insurers or Governmental Authorities.

 

“Pay Proceeds Letter” means a letter of direction from Borrower Representative
addressed to Agent, on behalf of itself and Lenders, with respect to the
disbursement on the Restatement Effective Date of the proceeds of the initial
Revolving Credit Advances.

 

“Payment Account” means, with respect to each Lender, the account specified on
the signature pages hereof into which all payments by or on behalf of the
Borrowers to such Lender under the Loan Documents shall be made, or such other
account as such Lender shall from time to time specify by notice to the Borrower
Representative and Agent.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.

 

“Pension Plan” means a Plan described in Section 3(2) of ERISA.

 

“Percentage” means, with respect to any Lender at any time, the percentage which
the amount of its Commitment for a particular Class at such time represents of
the aggregate amount of all the Commitments for such Class at such time.  At any
time after the Commitments

 

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for a Class shall have terminated, the term “Percentage” shall refer to a
Lender’s Percentage for that Class immediately before such termination, adjusted
to reflect any subsequent assignments pursuant to Section 11.6.

 

“Permitted Acquisition” means an Acquisition occurring after the Restatement
Effective Date which either (a) Agent and Required Lenders have consented to in
writing prior to the date of the consummation thereof, or (b) satisfies each of
the following conditions: (i) from the Restatement Effective Date through and
including December 31, 2004, the aggregate purchase price for such Acquisition
consummated during such period does not exceed $10,000,000 (excluding the
Subject Acquisition) and the aggregate purchase price for all such Acquisitions
during such period does not exceed $15,000,000 (excluding the Subject
Acquisition); (ii) for each Fiscal Year commencing after the Fiscal Year ended
December 31, 2004, the aggregate purchase price for such Acquisition consummated
during such Fiscal Year does not exceed $25,000,000 and the aggregate purchase
price for all such Acquisitions during any such Fiscal Year does not exceed
$40,000,000; (iii) after giving effect to any such Acquisition, the sum of (A)
the amount Borrowing Availability at such time plus (B) unrestricted cash on
hand (which cash shall (x) either be in Borrowers sole possession or in a
deposit account which Agent has received a tri-party account agreement in form
satisfactory to it and (y) shall not be subject to any Lien other than Liens in
favor of Agent) at such time, shall equal or exceed $10,000,000, (iv) if a
Revolving Credit Advance is used to fund a portion of the purchase price for
such Acquisition, Borrowers shall have demonstrated that after giving effect to
such Acquisition and the making of any such Revolving Credit Advances to fund
the purchase price thereof (x) Borrowers are in actual and pro forma compliance
with the financial covenants in Sections 7.15, 7.16 and 7.17 and (y) Borrowers
and the other Credit Parties, taken as a whole, are Solvent; (v) Borrowers shall
have given Agent 15 days’ prior written notice of such Acquisition; (vi)
Borrowers have delivered to Agent prior to the consummation of such Acquisition
a certificate of the chief financial officer of the Borrowers demonstrating such
compliance and solvency, which certificate shall be in form and substance
reasonably satisfactory to Agent; (vii) Borrowers shall have delivered to Agent
prior to the consummation of any such Acquisition copies of all of the
substantially final Acquisition Documents, together with any other information,
agreements or documents that Agent may reasonably request in connection with
such Acquisition; (viii) no Default or Event of Default has occurred and is
continuing immediately prior to and after giving effect to such Acquisition,
(ix) promptly as soon as available and in any event not later than 30 days after
the consummation of such Acquisition, Borrowers shall have delivered to Agent
copies of all of the final executed Acquisition Documents and such Acquisition
Documents shall not differ in any material respect from the substantially final
copies of the Acquisition Documents delivered to Agent under clause (vii) of
this definition; (x) if in connection with any such Acquisition, any Borrower is
granted a Lien as secured party on any assets of the applicable Target, promptly
and in any event not later than thirty (30) days after the consummation of such
Acquisition, Borrowers shall have delivered to Agent a UCC 3 assignment in
appropriate form for filing naming Agent as secured party’s assignee; (xi) such
Acquisition shall not include any Stock or assets of any Person organized or
located outside of the United States; (xii) the Target must have positive EBITDA
for the trailing four quarters most recently ended; (xiii) such Acquisition must
be approved by board of directors of the Target (and by the shareholders to the
extent required under the Target’s organizational documents or applicable law);
and (xiv) the Target must not be engaged in any business that is

 

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materially different from the businesses engaged in by the Credit Parties on the
Restatement Effective Date, and in the case of an Acquisition of a business
line, such business line must be related to the business lines of the Credit
Parties.

 

“Permitted Contest” means, with respect to any Credit Party, a good faith
contest by such Credit Party, by appropriate proceedings, of the validity or
amount of any Charges, claims, obligations or liabilities of such Credit Party;
provided, that (a) such contest is maintained and prosecuted continuously and
with diligence and operates to suspend collection or enforcement of such
Charges, (b) no Lien shall be imposed to secure payment of such Charges, claims,
obligations or liabilities (other than payments to warehousemen and/or bailees)
that is superior to any of the Liens securing the Obligations, (c) none of the
Collateral becomes subject to forfeiture or loss as a result of such contest,
(d) such Credit Party shall promptly pay or discharge such contested Charges,
claims, obligations, liabilities and all additional charges, interest, penalties
and expenses, if any, and shall deliver to Agent evidence reasonably acceptable
to Agent of such compliance, payment or discharge, if such contest is terminated
or discontinued adversely to such Credit Party or the conditions set forth above
in clause (a), (b) and (c) of this definition are no longer met, and (e) Agent
has not advised Borrower Representative in writing that Agent reasonably
believes that nonpayment or nondischarge thereof could have, or result in, a
Material Adverse Effect.

 

“Permitted Disposition” means a disposition of the Borrowers’ wound care
management business unit, provided that each of the following conditions are
met: (a) no Default or Event of Default has occurred and is continuing
immediately prior to and after giving effect to such disposition; (b) such
disposition is consummated not later than December 31, 2004; (c) the aggregate
sales price for such disposition is at least $25,000,000, and the entire amount
of consideration for such disposition is paid in cash to Borrowers on the
closing date of such disposition; provided, however that (i) up to 25% of the
purchase price may be held in escrow upon terms satisfactory to Agent in its
sole discretion and (ii) a portion of the consideration may be in the form of a
promissory note issued by buyer to Borrowers in an amount and upon terms
satisfactory to Agent it its sole discretion; and (d) after giving effect to
such disposition, Borrowers are in pro forma compliance with the financial
covenants in Sections 7.15, 7.16 and 7.17 and Holdings has delivered to Agent
prior to the consummation of such disposition a certificate of the chief
financial officer of Holdings demonstrating such compliance, which certificate
shall be in form and substance reasonably satisfactory to Agent.

 

“Permitted Encumbrances” means the following encumbrances: (a) Liens for taxes
or assessments or other governmental Charges not yet due and payable or which
are the subject of a Permitted Contest; (b) pledges or deposits of money
securing statutory obligations under workmen’s compensation, unemployment
insurance, social security or public liability laws or similar legislation
(excluding Liens under ERISA); (c) pledges or deposits of money made in the
ordinary course of business and securing bids, tenders, contracts (other than
contracts for the payment of money), securing leases to which any Credit Party
is a party as lessee made in the ordinary course of business, or securing
indemnity, performance or other similar bonds incurred in the ordinary course of
business and to the extent required by applicable law for the performance of
bids, tenders or contracts (other than for the repayment of Debt and excluding
Liens under ERISA); (d) inchoate and unperfected workers’, mechanics’ or similar
liens arising

 

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in the ordinary course of business, so long as such Liens attach only to
Equipment, Fixtures and/or Real Property; (e) carriers’, warehousemen’s,
suppliers’ or other similar possessory liens arising in the ordinary course of
business and securing liabilities in an outstanding aggregate amount not in
excess of $25,000 at any time, so long as such Liens attach only to Inventory;
(f) deposits securing, or in lieu of, surety, appeal or customs bonds in
proceedings to which any Credit Party is a party; (g) any attachment or judgment
lien not constituting an Event of Default under Section 8.1(k); (h) zoning
restrictions, easements, licenses, or other restrictions on the use of any Real
Property or other minor irregularities in title (including leasehold title)
thereto, so long as the same do not materially impair the use, value, or
marketability of such Real Property; (i) presently existing or hereafter created
Liens in favor of Agent, on behalf of Lender and the other Secured Creditors;
and (j) Liens expressly permitted under clauses (b), (c), (e) and (f) of Section
7.2 of this Agreement.

 

“Permitted Restructuring” means the corporate restructuring of certain of the
Credit Parties described on Disclosure Schedule 1.1 (Permitted Restructuring);
provided, however, that Borrowers shall not be permitted to effect the Permitted
Restructuring or take any actions with respect thereto unless each of the
following conditions have been satisfied in a manner satisfactory to Agent and
Required Lenders in their sole and absolute discretion:

 

(a)           the corporate and capital structure of the Borrowers (or any
successor in interest) and all Subsidiaries and Affiliates thereof after giving
effect to such proposed restructuring shall be as described on Disclosure
Schedule 1.1 (Permitted Restructuring);

 

(b)           immediately after giving effect to such corporate restructuring,
(i) all assets (including Stock of Subsidiaries, except to the extent such
Subsidiaries are being merged out of existence as part of such restructuring)
presently owned by Borrowers will be owned by one or more successor and survivor
entities (including any transferee) of Borrowers or Guarantors, as required by
Agent (individually, a “Surviving Entity” and collectively, the “Surviving
Entities”), (ii) there shall be no reduction in the assets or increase in the
liabilities or change in net worth of the Surviving Entities, determined on a
consolidated basis, from the assets, liabilities and net worth of Holdings and
its consolidated Subsidiaries immediately prior to giving effect to such
restructuring, provided, however that for purposes of determining compliance
with this clause (ii) any disposition of assets constituting the Permitted
Disposition shall be disregarded, and (iii) Agent and Required Lenders shall
have received such pro forma balance sheets and other financial information and
certificates of executive officers of Borrowers and Surviving Entity as it may
reasonably request in order to verify that the conditions in the immediately
preceding clause (ii) have been met;

 

(c)           Agent shall have received one or more duly executed assignment and
assumption agreements from each Surviving Entity and such other documents,
instruments and agreements as Agent may require, in each case, in form and
substance satisfactory to Agent in order to ensure (x) each such Surviving
Entity shall be legally bound as a Borrower, Additional Borrower and/or
Guarantor as required by Agent, and (y) Agent on behalf of itself and the other
Lenders shall have a valid and perfected first priority security interest in the
Collateral and all of the assets of each such Surviving Entity (subject only to
Permitted Encumbrances), except for any assets that are disposed of in
connection with the Permitted Disposition;

 

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(d)           Agent shall have received such other documents, instruments,
agreements, certificates and legal opinions as Agent shall reasonably request in
connection with the proposed restructuring, each in form and substance
satisfactory to Agent, including, without limitation, certified copies of all
plans of merger and merger documents, certificates (including good standing
certificates), any asset transfer documentation, any other documents or
instruments effectuating or evidencing the transactions contemplated under the
Permitted Restructuring and proposed new or amended Organizational Documents for
each Surviving Entity created or acquired in connection with the proposed
restructuring;

 

(e)           Agent shall have received evidence satisfactory to Agent that
Agent (for the benefit of itself and Lenders) has a valid and perfected first
priority security interest in the Collateral and all of the assets of each
Surviving Entity, including (i) such documents, instruments and certificates
(including Stock certificates) duly executed and authorized by each Credit Party
and each Surviving Entity (including financing statements under the Code and
other applicable documents under the laws of any jurisdiction with respect to
the perfection of Liens) as Agent may request in order to perfect its security
interests in the Collateral and such assets, and (ii) copies of UCC, tax, lien
and judgment search reports in respect of each Surviving Entity, with results
satisfactory to Agent;

 

(f)            after giving effect to such proposed restructuring, (i) no
Default or Event of Default shall exist, (ii) Credit Parties shall be in actual
and pro forma compliance with the financial covenants in Sections 7.15, 7.16 and
7.17, (iii) Surviving Entities taken as a whole are Solvent, and (iv) Borrowers
have delivered to Agent prior to the consummation of such restructuring a
certificate of the chief financial officer of the Borrower Representative
demonstrating such compliance and solvency, which certificate shall be in form
and substance reasonably satisfactory to Agent

 

(g)           Agent shall have received (i) evidence from Borrowers that they
have obtained a favorable private letter ruling from the IRS that no Credit
Party or Subsidiary thereof shall suffer any material adverse tax consequences
as a result of such proposed restructuring or (ii) other evidence (including,
without limitation, opinions of Borrowers accountants and financial advisors)
that such proposed restructuring would not result in any material adverse tax
consequences to any Credit Party or Subsidiary thereof;

 

(h)           all of the mergers, asset transfers and other transactions
consummated as part of the Permitted Restructuring shall be carried out in full
compliance with any Applicable Law and each Credit Party and Surviving Entity
shall have obtained all necessary Governmental Approvals and consents from third
parties; and

 

(i)            no suit, action or proceeding (including any action seeking
injunctive relief) shall have been commenced or overtly threatened by any Person
against any Credit Party or Surviving Entity in connection with such proposed
restructuring or any of the transactions contemplated in connection therewith
including, without limitation, the transactions described on Disclosure Schedule
1.1 (Permitted Restructuring).

 

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“Person” means any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, limited liability
company, institution, public benefit corporation, other entity or government
(whether federal, state, county, city, municipal, local, foreign, or otherwise,
including any instrumentality, division, agency, body or department thereof).

 

“Plan” means, at any time, an “employee benefit plan” as defined in Section 3(3)
of ERISA, that any Credit Party or any member of a Controlled Group maintains,
contributes to or has an obligation to contribute to or has maintained,
contributed to or had an obligation to contribute to at any time within the past
seven (7) years on behalf of participants who are or were employed by any Credit
Party or any member of a Controlled Group.

 

“Pledge Agreements” means, collectively, (i) the Borrower Pledge Agreement, (ii)
the Amended and Restated Pledge Agreement dated as of the date hereof by
Holdings in favor of Agent (the “Holdings Pledge Agreement”) and (iii) any
pledge agreements entered into after the Restatement Effective Date by any
Credit Party (as required by this Agreement or any other Loan Document).

 

“Post Closing Letter Agreement” means that certain letter agreement dated as of
the date hereof between the Borrower Representative and Agent in form and
substance satisfactory to Agent.

 

“Primary Obligations” means (a) in the case of the Credit Document Obligations,
all principal of, premium, fees and interest on, all Loans and L/C Obligations
and all Fees, and (b) in the case of the Subject Swap Obligations, all amounts
due by Holdings to Subject Swap Counterparty under the Subject Swap other than
indemnities, fees (including, without limitation, attorneys’ fees) and similar
obligations and liabilities, provided, however that the term Primary Obligations
shall not as of any date of determination include any Subject Swap Obligations
to the extent that such Subject Swap Obligations, together with all other
outstanding Subject Swap Obligations, would exceed the Subject Swap Obligation
Cap as of such date of determination, provided, further that in no event shall
the term Primary Obligations include any Subject Swap Obligations unless the
Intercreditor Agreement in form and substance satisfactory to GE Capital in its
sole and absolute discretion has been duly executed by the Subject Swap Party
and the Credit Parties and delivered to GE Capital following the Restatement
Effective Date and such Intercreditor Agreement is and remains at all times
after execution and delivery thereof effective.

 

“Privacy and Security Rules” has the meaning ascribed to it in Section 4.21.

 

“Private Accounts” means, collectively, any and all Accounts that are not
Government Accounts.

 

“Pro Forma Data” has the meaning ascribed to it in Section 3.1(x).

 

“Pro Forma Financial Statements” has the meaning ascribed to it in Section
3.1(x).

 

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“Pro Rata Share” shall mean, when calculating a Secured Creditor’s portion of
any distribution or amount, that amount (expressed as a percentage) equal to a
fraction the numerator of which is the then unpaid amount of such Secured
Creditor’s Primary Obligations or Secondary Obligations, as the case may be, and
the denominator of which is the then outstanding amount of all Primary
Obligations or Secondary Obligations, as the case may be.

 

“Qualified Assignee” means (a) any Lender, any Affiliate of any Lender and, with
respect to any Lender that is an investment fund that invests in commercial
loans, any other investment fund that invests in commercial loans and that is
managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor, and (b) any commercial bank, savings and
loan association or savings bank or any other entity which is an “accredited
investor” (as defined in Regulation D under the Securities Act) that extends
credit or buys loans as one of its businesses, including insurance companies,
mutual funds, lease financing companies and commercial finance companies, and
that in each case, has a rating of BBB or higher from Standard & Poor’s Rating
Group and a rating of Baa2 or higher from Moody’s Investors Service, Inc. at the
date that it becomes a Lender and that, through its applicable lending office,
is capable of lending to the Borrowers without the imposition of any withholding
or similar taxes; provided that (i) no Person determined by Agent to be acting
in the capacity of a vulture fund or distressed debt purchaser shall be a
Qualified Assignee, (ii) no Person or Affiliate of such Person (other than a
Person that is already a Lender) holding Subordinated Debt or Stock issued by
any Credit Party shall be a Qualified Assignee, and (iii) no Person that is a
Competitor or a Subsidiary of a Competitor shall be a Qualified Assignee.

 

“Qualified Plan” means a Pension Plan that is intended to be tax-qualified under
Section 401(a) of the IRC.

 

“Quarterly Date” means the first Business Day of each of January, April, July
and October occurring after the Restatement Effective Date.

 

“Questionnaire” means that certain due diligence request letter, dated as of
March 3, 2003, drafted by Kilpatrick Stockton LLP and provided to Holdings, as
supplemented by that certain Legal Due Diligence Request drafted by Kilpatrick
Stockton LLP and provided to Holdings and its counsel on March 2, 2004, together
with all written responses of the Borrowers to, and all information provided to
Kilpatrick Stockton LLP in connection with, such due diligence requests.

 

“Reaffirmation Agreement” means the Reaffirmation Agreement dated as of the date
hereof by and among the Credit Parties and Agent.

 

“Real Property” with respect to any Person, means all of such Person’s right,
title and interest in and to any owned or leased real property and any buildings
and Fixtures located thereon.

 

“Reimbursement Obligations” means, at any time, all obligations of the Borrowers
to reimburse the L/C Issuers pursuant to Section 2.5 for amounts paid by the L/C
Issuers in respect of drawings under any Letters of Credit, including any
portion of any such obligation to which a Lender has become subrogated pursuant
to Section 2.5.

 

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“Reinvestment Period” has the meaning ascribed to it in Section 2.8(b).

 

“Related Person” has the meaning ascribed to it in Section 6.16.

 

“Related Transactions” means the initial borrowing under the Revolving Loan on
the Restatement Effective Date, the Subject Acquisition, the issuance of the
Senior Unsecured High Yield Notes and the incurrence of the Indebtedness
evidenced thereby, and the payment of all fees, costs and expenses associated
with all of the foregoing and the execution and delivery of all of the Related
Transactions Documents.

 

“Related Transaction Documents” means the Loan Documents, the Senior Unsecured
High Yield Note Documents, the Subject Acquisition Documents, any Acquisition
Documents, any Assignment of Representations and all other material agreements
or instruments executed in connection with the Related Transactions.

 

“Relationship Bank” has the meaning ascribed to it in Section 6.16.

 

“Release” means any release, threatened release, spill, emission, leaking,
pumping, pouring, emitting, emptying, escape, injection, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of Hazardous Material in
the indoor or outdoor environment, including the movement of Hazardous Material
through or in the air, soil, surface water, ground water or property.

 

“Reportable Event” means a reportable event as defined in Section 4043 of ERISA
other than a reportable event for which the requirement to provide notice to the
PBGC has been waived by regulation.

 

“Required Lenders” means Lenders having (a) more than 66 2/3% of the Commitments
of all Lenders, or (b) if the Commitments have been terminated, more than 66
2/3% of the aggregate outstanding principal amount of all Loans and
Reimbursement Obligations.

 

“Reserves” means (a) the Subject Swap Reserve and (b) any other reserves
established by Agent from time to time pursuant to Section 2.1(d) hereof against
Eligible Accounts, Eligible Inventory or Borrowing Availability of the
Borrowers.  Without limiting the generality of the foregoing, Reserves may be
established by Agent from time to time to ensure the payment of accrued Interest
Expenses or any Indebtedness.

 

“Residual Obligations” means, as of any date of determination, all Subject Swap
Obligations as of such date of determination other than Primary Obligations and
Secondary Obligations, provided, further that in no event shall the term
Residual Obligations include any Subject Swap Obligations unless the
Intercreditor Agreement in form and substance satisfactory to GE Capital in its
sole and absolute discretion has been duly executed by the Subject Swap Party
and the Credit Parties and delivered to GE Capital following the Restatement
Effective Date and such Intercreditor Agreement is and remains at all times
after execution and delivery thereof effective.

 

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“Restatement Effective Date” means April 23, 2004.

 

“Restricted Payment” means, with respect to any Credit Party (a) the declaration
or payment of any dividend or the incurrence of any liability to make any other
payment or distribution of cash or other property or assets in respect of Stock,
(b) any payment on account of the purchase, redemption, defeasance, sinking fund
or other retirement of such Credit Party’s Stock or any other payment or
distribution made in respect thereof, either directly or indirectly, (c) any
payment or prepayment of principal of, premium, if any, or interest, fees or
other charges on or with respect to, and any redemption, purchase, retirement,
defeasance, sinking fund or similar payment and any claim for rescission with
respect to, any Subordinated Debt, (d) any payment made to redeem, purchase,
repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire Stock of such Credit Party now or hereafter
outstanding, (e) any payment of a claim for the rescission of the purchase or
sale of, or for material damages arising from the purchase or sale of, any
shares of such Credit Party’s Stock or of a claim for reimbursement,
indemnification or contribution arising out of or related to any such claim for
damages or rescission, (f) any payment, loan, contribution, or other transfer of
funds or other property to any holder of stock or equity interests of such
Credit Party other than payment of compensation in the ordinary course of
business to any holders of stock or equity interests who are employees, officers
or directors of such Person, (g) any payment of management fees (or other fees
of a similar nature) by such Credit Party to any holder of Stock of such Credit
Party or its Affiliates, (h) any payment or prepayment of principal of, premium,
if any, or interest, fees or other charges on or with respect to, and any
redemption, purchase, retirement, defeasance, sinking fund or similar payment
and any claim for rescission with respect to, any Senior Unsecured Debt, (i) any
payment or prepayment on or with respect to any of the Subject Swap Obligations
(other than any payments made by Agent to the Subject Swap Counterparty
constituting Collateral and proceeds thereof pursuant to and in accordance with
Section 2.10(b) of this Agreement).

 

“Revolving Credit Advance” has the meaning ascribed to it in Section 2.1(a).

 

“Revolving Credit Commitment” means: (a) as to any Lender, the amount (if any)
set forth thereon opposite the name of such Lender on the signature pages hereof
under the heading “Revolving Credit Commitment”; (b) with respect to any
assignee of a Revolving Credit Commitment, the amount of the transferor Lender’s
Revolving Credit Commitment assigned to such assignee pursuant to Section 11.6;
and (c) as to all Lenders having a Revolving Credit Commitment, the aggregate
commitment of all Lenders to make Revolving Credit Advances, which aggregate
commitment shall be $40,000,000 on the Restatement Effective Date, as such
amount may be reduced from time to time pursuant to Section 2.8 or changed as a
result of an assignment pursuant to Section 11.6.  The term “Revolving Credit
Commitment” does not include the Swingline Commitment.

 

“Revolving Credit Commitments” means the sum of the Revolving Credit Commitments
of all Lenders in effect at such time.

 

“Revolving Lenders” means, as of any date of determination, Lenders having a
Revolving Credit Commitment.

 

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“Revolving Loan” means, at any time, the sum of (a) the aggregate amount of
Revolving Credit Advances outstanding to the Borrowers plus (b) the aggregate
L/C Obligations incurred on behalf of the Borrowers.  Unless the context
otherwise requires, references to the outstanding principal balance of the
Revolving Loan shall include the outstanding balance of L/C Obligations.

 

“Revolving Note” has the meaning ascribed to it in Section 2.2.

 

“Secondary Obligations” shall mean all Obligations other than Primary
Obligations; provided, however that the term Secondary Obligations shall not as
of any date of determination include any Subject Swap Obligations to the extent
that such Subject Swap Obligations, together with all other outstanding Subject
Swap Obligations, would exceed the Subject Swap Obligation Cap as of such date
of determination, provided, further that in no event shall the term Secondary
Obligations include any Subject Swap Obligations unless the Intercreditor
Agreement in form and substance satisfactory to GE Capital in its sole and
absolute discretion has been duly executed by the Subject Swap Party and the
Credit Parties and delivered to GE Capital following the Restatement Effective
Date and such Intercreditor Agreement is and remains at all times after
execution and delivery thereof effective.

 

“Secured Creditors” means, collectively, the Lenders, the Agent and the Subject
Swap Counterparty, together with their respective successors and assigns.

 

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

 

“Security Agreements” means collectively, (i) the Borrower Security Agreement,
(ii) the Amended and Restated Security Agreement dated as of the date hereof
between Holdings and Agent (the “Holdings Security Agreement”), (iii) the CCS
Security Agreement, and (iv) any other security agreements now or hereafter
executed by any Person in favor of Agent and Lenders to secure the Obligations.

 

“Seller Indemnity Payment” means any payment to any Credit Party or any
Subsidiary of any amount pursuant to any indemnity provision of any Acquisition
Agreement.

 

“Senior Funded Debt” means Indebtedness incurred under this Agreement and any
other Funded Debt (other than Senior Unsecured Debt) that does not constitute
Subordinated Debt.

 

“Senior Secured Leverage Ratio” means, at any time with respect to the Holdings
and its Subsidiaries, on a consolidated basis, the ratio obtained by dividing
(a) Senior Funded Debt by (b) EBITDA for the twelve (12) months ending as of the
last day of the most recent month for which financial statements have been
delivered pursuant to Section 5.1(a).

 

“Senior Unsecured Debt” means the Indebtedness under the Senior Unsecured High
Yield Notes.

 

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“Senior Unsecured High Yield Note Documents” means, collectively, the Senior
Unsecured High Yield Notes, the Senior Unsecured High Yield Note Indenture and
any and all agreements, instruments or other documents from time to time
evidencing or guaranteeing the obligations of any of the Credit Parties under or
in respect of the Senior Unsecured High Yield Notes, in each case, as amended,
restated, supplemented or modified from time to time.

 

“Senior Unsecured High Yield Note Indenture” means that certain Indenture dated
as of April 23, 2004 between Wells Fargo Bank, N.A., as trustee, and Holdings,
pursuant to which Holdings issued its Senior Unsecured High Yield Notes, as
amended, restated, supplemented or modified from time to time.

 

“Senior Unsecured High Yield Notes” means, collectively, the unsecured senior
notes of Holdings issued on or after the Restatement Effective Date pursuant to
a public issuance, or a Rule 144A or other private placement arranged by UBS
Securities LLC with a group of investors.

 

“Single Employer Plan” means a Plan maintained by the Borrowers or any member of
the Controlled Group for employees of the Borrowers or any member of the
Controlled Group.

 

“Solvent” means, with respect to any Person on a particular date, that on such
date (a) the assets of such Person, at a fair valuation (with such assets being
measured on a going concern basis if and only to the extent that such Person’s
business could reasonably be viewed at the time of any such determination as in
fact being conducted as a going concern in light of the business historically
conducted by such Person and such other facts and circumstances existing at such
time that are relevant under Applicable Law to such determination, and
otherwise, if such Person is not conducting its business as a going concern,
such assets shall be measured on a liquidation basis and in any event without
attributing any value to any asset of such Person constituting goodwill), exceed
its liabilities, including contingent liabilities, (b) the remaining capital of
such Person is not unreasonably small to conduct its business and (c) such
Person will not have incurred debts, and does not have the present intent to
incur debts, beyond its ability to pay such debts as they mature.  For purposes
of this definition, “debt” means any liability on a claim, and “claim” means any
(i) right to payment, whether or not such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured, or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.  In computing the amount of contingent liabilities of any Person
on any date, such liabilities shall be computed at the amount that, in the
reasonable credit judgment of the Agent in light of all facts and circumstances
existing at such time, represents the amount of such liabilities that reasonably
can be expected to become actual or matured liabilities.

 

“Stated Rate” has the meaning ascribed to it in Section 2.15(b).

 

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“Statement of Sources and Uses” means the Statement of Sources and Uses prepared
by Holdings dated as of the Restatement Effective Date setting forth the amounts
and uses of the proceeds of the Senior Unsecured Debt incurred by Holdings and
Loans made available to Borrowers on the Restatement Effective Date, which
statement shall be in form and substance satisfactory to the Agent.

 

“Stock” means all shares, options, warrants, general or limited partnership
interests, membership interests or other equivalents (regardless of how
designated) of or in a corporation, partnership, limited liability company or
equivalent entity whether voting or nonvoting, including common stock, preferred
stock or any other “equity security” (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Exchange Act).

 

“Stock Purchase Agreement” has the meaning ascribed to it in Section 3.1(m).

 

“Subject Acquisition” has the meaning ascribed to it in Section 3.1(m).

 

“Subject Acquisition Documents” has the meaning ascribed to it in Section
3.1(m).

 

“Subject Swap” means the Interest Rate Protection Agreement entered into between
Holdings and UBS AG on or about the Restatement Effective Date pursuant to the
Subject Swap Documents in the form attached as Exhibit A to the Intercreditor
Agreement.

 

“Subject Swap Counterparty” means UBS AG, together with its successors and
assigns.

 

“Subject Swap Documents” means that certain ISDA Master Agreement dated on or
about the Restatement Effective Date between Holdings and the Subject Swap
Counterparty and the related ISDA Schedule to the Master Agreement dated on or
about the Restatement Effective Date, together with and any confirmations
relating to the Subject Swap, entered into between Holdings and the Subject Swap
Counterparty, which documents and agreements, in each case must be in the form
attached as Exhibit A to the Intercreditor Agreement.

 

“Subject Swap Obligations” means, as of any date of determination, all
obligations and liabilities owing by Holdings to the Subject Swap Counterparty
on such date which arise under and pursuant to the terms of the Subject Swap
Documents.

 

“Subject Swap Obligations Cap” means, as of any date of determination, 
$10,000,000.

 

“Subject Swap Reserve” means, as of any date of determination, a reserve against
Eligible Accounts and Eligible Inventory of the Borrowers in an amount equal to
the Subject Swap Obligations Cap, provided, however, that such Reserve shall not
apply to the extent and only to the extent that as of any date of determination,
(i) Holdings has no obligations (whether contingent or otherwise) whatsoever
under the Subject Swap or any of the Subject Swap Obligations as of such date,
and (ii) all of the Subject Swap Obligations have been indefeasibly

 

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paid in full as of such date.  If at any time any of the conditions in clauses
(i) and (ii) of this definition are not met, then the Subject Swap Reserve shall
apply.

 

“Subordinated Debt” means any Indebtedness of any Credit Party subordinated to
the Obligations in a manner and form satisfactory to Agent and Lenders in their
sole discretion, as to right and time of payment and as to any other rights and
remedies thereunder.

 

“Subordinated Notes” means (a) that certain 4.4% Amended and Restated Promissory
Note due February 28, 2007 issued by Holdings in favor of Jon M. Tamiyasu, in
his capacity as Stockholder Representative, in an aggregate outstanding
principal amount as of the Original Closing Date of $3,600,000 pursuant to the
provisions of that certain Stock Purchase Agreement, dated January 27, 2002, by
and among Holdings and the stockholders of Apex Therapeutic Care, Inc., as
amended through the Original Closing Date and (b) that certain 3% Subordinated
Convertible Note due October 23, 2005 issued by Holdings in an aggregate
original principal amount of $3,000,000 pursuant to the provisions of the Home
Care Purchase Agreement.

 

“Subsidiary” means, with respect to any Person, (a) any corporation of which an
aggregate of more than fifty percent (50%) of the outstanding Stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, Stock of any other 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, directly or indirectly, owned
legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of fifty percent (50%) or more of such Stock whether by
proxy, agreement, operation of law or otherwise, and (b) any partnership or
limited liability company in which such Person or one or more Subsidiaries of
such Person shall have an interest (whether in the form of voting or
participation in profits or capital contribution) of more than fifty percent
(50%) or of which any such Person is a general partner or may exercise the
powers of a general partner.  Unless the context otherwise requires, each
reference to a Subsidiary shall be a reference to a Subsidiary of the Borrowers.

 

“Subsidiary Pledge Agreement” has the meaning ascribed to it in the definition
of Pledge Agreements.

 

“Swingline Advance” has the meaning ascribed to it in Section 2.1(b).

 

“Swingline Availability Period” means the period from and including the
Restatement Effective Date to but excluding the Swingline Maturity Date.

 

“Swingline Borrowing” means a borrowing of a Swingline Loan pursuant to Section
2.6(a).

 

“Swingline Commitment” means the obligation of the Swingline Lender to make
Swingline Loans to the Borrowers in an aggregate principal amount at any one
time outstanding not to exceed $5,000,000.

 

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“Swingline Lender” means GE Capital, in its capacity as the Swingline Lender
under the swingline facility described in Section 2.6, and its successors in
such capacity.

 

“Swingline Loan” means a loan made by the Swingline Lender pursuant to Section
2.6(a).

 

“Swingline Maturity Date” means the day that is thirty (30) days before the
Commitment Termination Date.

 

“Swingline Note” has the meaning ascribed to it in Section 2.2(b).

 

“Target” means a Person, group of assets or business line that is the subject of
an Acquisition.

 

“Target Seller” means the seller of a Target in an Acquisition.

 

“Temporary Cash Investment” means any Investment in (a) direct obligations of
the United States or any agency thereof, or obligations fully guaranteed by the
United States or any agency thereof, (b) commercial paper rated at least A-1 by
Standard & Poor’s Rating Group and P-1 by Moody’s Investors Service, Inc., (c)
time deposits with, including certificates of deposit issued by, any office
located in the United States of any bank or trust company which is organized
under the laws of the United States or any State thereof and has capital,
surplus and undivided profits aggregating at least $500,000,000 and which issues
(or the parent of which issues) certificates of deposit or commercial paper with
a rating described in clause (b) above, (d) repurchase agreements with respect
to securities described in clause (a) above entered into with an office of a
bank or trust company meeting the criteria specified in clause (c) above,
provided in each case that such Investment matures within one (1) year from the
date of acquisition thereof by any Credit Party or (e) any money market or
mutual fund that invests only in the foregoing and the manager of which and the
liquidity of which is reasonably satisfactory to the Agent.

 

“Termination Date” the date on which (a) the Loans have been indefeasibly repaid
in full in cash, (b) all other Obligations under this Agreement and the other
Loan Documents have been completely discharged, (c) all of the L/C Obligations
have been cash collateralized, cancelled or backed by standby letters of credit
in accordance with Section 2.5 hereof, and (d) the Borrowers shall not have any
further right to borrow any monies under this Agreement.

 

“Third Party Payor” means any governmental entity, insurance company, health
maintenance organization, professional provider organization or similar entity
that is obligated to make payments on any Account.

 

“Title IV Plan” means a Pension Plan (other than a Multi-employer Plan), that is
covered by Title IV of ERISA, and that any Credit Party or any member of a
Controlled Group maintains, contributes to or has an obligation to contribute to
on behalf of participants who are or were employed by any of them.

 

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“Total Leverage Ratio” means, at any time with respect to the Borrowers and
their Subsidiaries, on a consolidated basis, the ratio obtained by dividing (a)
Funded Debt by (b) EBITDA for the twelve (12) months ending as of the last day
of the most recent month for which financial statements have been delivered
pursuant to Section 5.1(a).

 

“Transactions Rule” has the meaning ascribed to it in Section 4.21.

 

“TRICARE” means, collectively, a program of medical benefits covering former and
active members of the uniformed services and certain of their dependents,
financed and administered by the United States Departments of Defense, Health
and Human Services and Transportation, which program was formerly known as the
Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), and all
laws, rules, regulations, manuals, orders and administrative, reimbursement and
other guidelines of all Governmental Authorities promulgated in connection with
such program (whether or not having the force of law), in each case as the same
may be amended, supplemented or otherwise modified from time to time.

 

“TRICARE Account” means an Account payable pursuant to TRICARE.

 

“Type” defines a Loan by reference to whether such Loan is a LIBOR Loan or
Borrowing or a Base Rate Loan or Borrowing.  Identification of a Borrowing or
group of Advances by Type indicates that such Borrowing or group of Advances is
comprised of Advances of the specified Type.

 

“Unfunded Pension Liability” means, at any time, the aggregate amount, if any,
of the sum of (a) the amount by which the present value of all accrued benefits
under each Title IV Plan exceeds the fair market value of all assets of such
Title IV Plan allocable to such benefits in accordance with Title IV of ERISA,
all determined as of the most recent valuation date for each such Title IV Plan
using the actuarial assumptions for funding purposes in effect under such Title
IV Plan, plus (b) for a period of five (5) years following a transaction which
might reasonably be expected to be covered by Section 4069 of ERISA, the
liabilities (whether or not accrued) that could be avoided by any Credit Party
or any member of a Controlled Group as a result of such transaction.

 

“Unused Line Fee” has the meaning ascribed to it in Section 2.7(b).

 

“Welfare Plan” means a Plan described in Section 3(i) of ERISA.

 

“Working Capital” shall mean, as of any date of determination, Borrowers’ and
their Subsidiaries’ Current Assets less their Current Liabilities.

 

Section 1.2.  Accounting Terms and Determinations.  Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with generally accepted
accounting principles as in effect from time to time in the United States
(“GAAP”), applied on a basis consistent (except for changes concurred in by the
Credit Parties’ independent public accountants) with the most recent audited
consolidated financial statements of the Credit Parties delivered to the
Lenders; provided

 

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that, if:  (a) the Borrower Representative notifies the Lenders that the
Borrowers wish to amend any provision of any Loan Document to eliminate the
effect of any change in GAAP on the operation of such provision, or (b) the
Agent notifies the Borrower Representative that the Required Lenders wish to
amend any provision of any Loan Document for such purpose, then compliance with
such provision shall be determined on the basis of GAAP in effect immediately
before the relevant change in GAAP became effective, until either such notice is
withdrawn or such provision is amended in a manner satisfactory to the Borrower
Representative and the Required Lenders.

 

Section 1.3.  Other Definitional Provisions.  The terms “Accounts”, “Chattel
Paper”, “Code”, “Contracts”, “Deposit Accounts”, “Documents”, “Fixtures”,
“Equipment”, “General Intangibles”, “Goods”, “Intellectual Property”,
“Instruments”, “Inventory”, “Investment Property”, “Letter-of-Credit Rights”,
“License” and “Software” have the meanings assigned to such terms in Section 1
of the Borrower Security Agreement.  References in this Agreement to “Articles”,
“Sections”, “Schedules” or “Exhibits” shall be to Articles, Sections, Schedules
or Exhibits of or to this Agreement unless otherwise specifically provided.  Any
of the terms defined in Section 1.1 may, unless the context otherwise requires,
be used in the singular or plural depending on the reference.  “Include”,
“includes” and “including” shall be deemed to be followed by “without
limitation” whether or not they are in fact followed by such words or words of
like import.  “Writing”, “written” and comparable terms refer to printing,
typing and other means of reproducing words on paper.  Except as otherwise
expressly provided herein, references to any agreement or contract are to such
agreement or contract as amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof.  References to any Person include
the successors and permitted assigns of such Person; provided that no Credit
Party may assign its rights or obligations under any Loan Document without the
prior written consent of the Agent and the Lenders.  References “from”,
“through” or “to” any date mean, unless otherwise specified, mean “from and
including”, “through and including”, and “to but excluding”, respectively. 
References to any statute and related regulation shall include any amendments,
modifications and supplements of the same and any successor statutes and
regulations.

 

ARTICLE II.

 

THE FACILITIES

 

Section 2.1.  The Facilities.

 

(a)           Revolving Credit Advances.              Upon the terms and subject
to the conditions set forth herein, from time to time during the period from the
Restatement Effective Date to the Commitment Termination Date, each Lender,
severally and not jointly, agrees to advance funds to the Borrowers (each a
“Revolving Credit Advance”); provided that immediately after each such Advance
is made (and after giving effect to any substantially concurrent application of
the proceeds thereof to repay outstanding Advances, Reimbursement Obligations or
Swingline Loans):

 

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(i)            such Lender’s Outstanding Amount shall not exceed its Revolving
Credit Commitment; and

 

(ii)           the aggregate Outstanding Amount of all the Lenders shall not
exceed the lesser of the Maximum Commitment Amount or the Borrowing Base then in
effect.

 

(b)           Swingline Facility.                The Swingline Lender agrees to
advance funds to the Borrowers (each as “Swingline Advance”), and the Revolving
Lenders agree to purchase participations therein from time to time, all upon the
terms and conditions specified in Section 2.6.

 

(c)           Letter of Credit Facility.      The Revolving Lenders agree to
incur, or purchase participations in, L/C Obligations incurred by the L/C Issuer
upon the terms and subject to the conditions specified in Section 2.5.

 

(d)           Reserves; Borrowing Base Adjustment.          The Agent shall have
the right to establish, modify or eliminate Reserves against Borrowing
Availability, the Borrowing Base or any component thereof from time to time in
its sole credit judgment.  In addition, Agent reserves the right, at any time
and from time to time after the Restatement Effective Date, to adjust any of the
criteria used to determine eligibility of any component of the Borrowing Base,
to establish new criteria and to adjust advance rates with respect to such
component, in its sole credit judgment, subject to the approval of the Required
Lenders in the case of adjustments, new criteria or changes in advance rates
that have the effect of making more credit available to the Borrowers.  Agent
shall endeavor to give prior notice to the Borrower Representative of the
imposition of such Reserves, the adjustment of any eligibility criteria or the
adjustment of any advance rates, provided that the failure to give such notice
shall not invalidate the imposition of such Reserve or any such adjustments, or
result in any liability of the Agent or Lenders to any Credit Party or any other
Person.

 

Section 2.2.  Notes.

 

(a)           Revolving Notes. The Revolving Loan of each Lender shall be
evidenced by a single revolving note, substantially in the form of Exhibit A
(each such note, a “Revolving Note”), dated the Restatement Effective Date (or,
if issued after the Restatement Effective Date, be dated the date of the
issuance thereof) in an aggregate principal amount equal to the amount of such
Lender’s Revolving Credit Commitment, duly executed and delivered and payable by
the Borrowers to such Lender.  Each Lender shall record the date and amount of
each Revolving Credit Advance made by it, and the date and amount of each
payment of principal made by the Borrowers with respect thereto, and prior to
any transfer of its Revolving Note shall endorse on Schedule A thereto (or any
continuation thereof) forming a part thereof appropriate notations to evidence
the foregoing information with respect to such Revolving Loan then outstanding;
provided that the failure of any Lender to make any such recordation or
endorsement shall not affect the obligations of the Borrowers hereunder or under
any Revolving Note.  Each Lender is hereby irrevocably authorized by the
Borrowers to so endorse its

 

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Revolving Note and to attach to and make a part of its Revolving Note a
continuation of any such schedule as and when required.

 

(b)           Swingline Notes.  The Swingline Loan shall be evidenced by a
swingline note substantially in the form of Exhibit C (such note, the “Swingline
Note”), dated the Restatement Effective Date (or, if issued after the
Restatement Effective Date, be dated the date of the issuance thereof) in a
principal amount equal to the Swingline Commitment or the portion of such
Swingline Loan assigned to any Lender in accordance with Section 11.6, duly
executed and delivered by the Borrowers and payable to the Swingline Lender or
other holder of such Swingline Loan.

 

Section 2.3.  Method of Borrowing; Funding of Loans; Agent May Assume Funding;
Failure to Fund.

 

(a)           Method of Borrowing.  Whenever the Borrowers desire to receive an
Advance, including the initial Advance, or to convert any portion of the
outstanding Base Rate Loans into one or more LIBOR Borrowings (a “Conversion”),
or to continue all or any portion of an outstanding LIBOR Loan for another or
additional LIBOR Period (a “Continuation”), Borrower Representative on behalf of
the applicable Borrower shall give the Agent notice in writing (by telecopy or
by telephone confirmed immediately in writing) in the form of a duly completed
Exhibit D-1 (a “Notice of Borrowing”) duly executed by an Authorized Signatory,
in the case of an Advance or Continuation of, or a Conversion into, a LIBOR
Borrowing, three (3) Business Days before the requested date of such Advance,
Conversion or Continuation, and in the case of an Advance of a Base Rate
Borrowing, not later than 11:00 a.m. (New York City time) on the Business Day
before the requested date of such Advance (which shall be a Business Day).  Such
Notice of Borrowing shall specify (i) the requested date of the Advance,
Conversion or Continuation, which shall be a Business Day, (ii) in the case of a
Conversion or Continuation, which existing Borrowings include the Loans or
portions thereof to be affected by such Notice, (iii) the amount of the Advances
to be incurred, and/or the Borrowings to be created by such Conversion or
Continuation, (iv) the Class of the Loans comprising each requested Borrowing,
(v) in the case of a LIBOR Advance, Conversion or Continuation, the duration of
the LIBOR Period of the requested Borrowing and (vi) such other information as
the Agent shall request.  If a request for a Conversion or Continuation is not
timely made prior to the expiration of a LIBOR Period, or is not made in
accordance with this Section, the portions of the Loans proposed to be affected
thereby shall be converted into, or continued as, Base Rate Loans.  Any Notice
of Borrowing received after 2:00 p.m. (New York City time) shall be deemed
received on the following Business Day.  Each Notice of Borrowing shall be
irrevocable upon receipt by the Agent.

 

(b)           Funding of Loans.  Promptly after receiving a Notice of Borrowing,
the Agent shall notify each Lender of the contents of such Notice of Borrowing,
of such Lender’s Percentage of the Advances or Borrowings requested by such
Notice of Borrowing and, in the case of a LIBOR Borrowing, the applicable LIBOR
Period.  In the case of an Advance, each Lender shall make available to the
Agent at the Agent’s Office its Lender’s Percentage of such requested Advance,
in lawful money of the United States of America in immediately available funds,
prior to 1:00 p.m. (New York City time) on the specified date.  The Agent shall,
unless it

 

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shall have determined that one of the conditions set forth in Article III has
not been satisfied, by 3:00 p.m. (or in the case of a LIBOR Borrowing, 12 p.m.)
(New York City time) on such day, credit the amounts received by it in like
funds to the Borrowers Account, to repay Swingline Loans, to repay Reimbursement
Obligations, to pay expenses incurred by the Agent for the Borrowers’ account or
in such other manner as the Agent shall reasonably determine.

 

(c)           Agent May Assume Funding.  Unless the Agent shall have received
notice from a Lender prior to the date of any particular Advance that such
Lender will not make available to the Agent such Lender’s Percentage of such
Advance, the Agent may assume that such Lender has made such amount available to
it on the date of such Advance in accordance with subsection (b) of this Section
2.3, and may (but shall not be obligated to), in reliance upon such assumption,
make available a corresponding amount for the account of the Borrowers on such
date.  If and to the extent that such Lender shall not have so made such amount
available to the Agent, such Lender and the Borrowers severally agree to repay
to the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the day such amount is made available to the
Borrowers until the day such amount is repaid to the Agent, at (i) in the case
of the Borrowers, a rate per annum equal to the greater of (x) the Federal Funds
Rate and (y) the interest rate applicable thereto pursuant to Section 2.4, and
(ii) in the case of such Lender, a rate per annum equal to (x) for each day from
the day such amount is made available to the Borrowers through the third
succeeding Business Day, the Federal Funds Rate for such day as determined by
the Agent and (y) for each day thereafter until the day such amount is repaid to
the Agent, the Base Rate for such day.  If such Lender shall repay such
corresponding amount to the Agent, the amount so repaid shall constitute such
Lender’s Loan included in such Borrowing for purposes of this Agreement.

 

(d)           Lender’s Failure to Fund.  The failure of any Lender to make an
Advance on the date of any Borrowing shall not relieve any other Lender of its
obligation hereunder, if any, to make its Advance on that date.  Neither the
Agent nor any Lender shall be responsible for the failure of any other Person to
make any Advance hereunder on the date required therefor.

 

(e)           Reliance on Notices; Appointment of Borrower Representative. 
Agent shall be entitled to rely upon, and shall be fully protected in relying
upon, any Notice of Borrowing or similar notice believed by Agent to be
genuine.  Agent may assume that each Person executing and delivering any notice
in accordance herewith was duly authorized, unless the responsible individual
acting thereon for Agent has actual knowledge to the contrary.  Each Borrower
hereby designates Holdings as its representative and agent on its behalf for the
purposes of issuing Notices of Borrowing, giving instructions with respect to
the disbursement of the proceeds of the Loans, selecting interest rate options,
requesting Letters of Credit, giving and receiving all other notices and
consents hereunder or under any of the other Loan Documents and taking all other
actions (including in respect of compliance with covenants) on behalf of any
Borrower or Borrowers under the Loan Documents.  Borrower Representative hereby
accepts such appointment.  Agent and each Lender may regard any notice or other
communication pursuant to any Loan Document from Borrower Representative as a
notice or communication from all Borrowers, and may give any notice or
communication required or permitted to be given to any Borrower or Borrowers
hereunder to Borrower Representative on behalf of such Borrower or Borrowers. 
Each Borrower agrees that each notice, election, representation and warranty,

 

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covenant, agreement and undertaking made on its behalf by Borrower
Representative shall be deemed for all purposes to have been made by such
Borrower and shall be binding upon and enforceable against such Borrower to the
same extent as if the same had been made directly by such Borrower.

 

Section 2.4.  Interest on Loans.

 

(a)           Interest.  Each Loan shall bear interest on the outstanding
principal amount thereof from the date of the applicable Advance until repaid in
full, whether before or after default, judgment or the institution of
proceedings under any bankruptcy, insolvency or other similar law, as provided
in this Section 2.4.  Unless the Default Rate has been imposed, each Loan shall
bear interest on the outstanding principal amount thereof until due at a rate
per annum equal to, (i) to the extent and so long as it is a Base Rate Loan, the
Base Rate as in effect from time to time plus the Applicable Margin, and (ii) to
the extent and so long as it is a LIBOR Loan, the LIBOR Rate plus the Applicable
Margin.

 

(b)           Interest Options.  Subject to the provisions hereof, all or
portions of the Loans, at the option of the Borrower Representative, may be made
or Continued as, or Converted into, Base Rate Loans or one or more LIBOR Loan,
or any combination thereof; provided that LIBOR Loans may not be Converted, but
may be Continued, and such Continuation may occur on (and only on) the last day
of an applicable LIBOR Period; provided, further, that Loans of any Class may
only be part of a Borrowing consisting of Loans of the same Class; and provided,
further, that no Advances shall be made as part of, and no Loans shall be
Continued as, LIBOR Loans, and all existing LIBOR Loans shall be Converted into
Base Rate Loans on the last day of the applicable LIBOR Period, so long as a
Default shall have occurred and be continuing and the Agent shall have
determined in its sole discretion to suspend the Borrowers’ LIBOR Borrowing
option.  Each LIBOR Borrowing shall be in a minimum amount of $500,000 and in
greater whole multiples of $500,000.  There shall at no time be in effect more
than five (5) LIBOR Borrowings.

 

(c)           Post-Default Interest.  During the period that any Default or
Event of Default shall have occurred and be continuing, at the election of the
Agent (or at the written request of Required Lenders), all Loans and other
outstanding Obligations shall bear interest at the Default Rate.  Agent shall
endeavor to give Borrower Representative notice of the imposition of such
Default Rate within a reasonable time thereafter; provided that the failure to
give such notice shall not invalidate the imposition of such Default Rate or
result in any liability of the Agent or Lenders to any Credit Party or any other
Person.

 

(d)           Payments.  Interest due pursuant to this Agreement shall be
payable (i) in the case of any Loans, on the Interest Payment Date, and (ii) in
the case of any other Obligation, when any portion of such Obligation shall be
due (whether at maturity, by reason of prepayment or acceleration or otherwise),
but only to the extent then accrued on the amount then so due.  Interest at the
Default Rate shall be payable on demand.

 

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(e)           Determination. Each determination by the Agent of the interest
rate hereunder shall be conclusive and binding for all purposes, absent clear
and convincing evidence to the contrary.

 

Section 2.5.  Letters of Credit.

 

(a)           Letters of Credit.  Upon the terms and subject to the conditions
set forth herein, from time to time during the period commencing on the
Restatement Effective Date and ending on the date that is thirty (30) days prior
to the Commitment Termination Date, the Revolving Credit Commitment may, in
addition to Advances under the Revolving Loan, be utilized, upon the request of
Borrower Representative on behalf of the applicable Borrower, for (i) the
issuance of standby letters of credit for the account of such Borrower by GE
Capital or any other L/C Issuer approved by the Agent, (ii) the issuance of
commercial letters of credit for the account of such Borrower by any L/C Issuer
other than GE Capital approved by Agent or (iii) the issuance of standby letters
of credit or commercial letters of credit for the account of such Borrower under
risk participation agreements entered into by GE Capital, as L/C Issuer, with
other banks or financial institutions (the letters of credit described in
clauses (i), (ii) and (iii) will be referred to hereinafter collectively as
“Letters of Credit”).  Immediately upon the issuance by a L/C Issuer of a Letter
of Credit, and without further action on the part of Agent or any of the
Lenders, each Lender with a Revolving Credit Commitment shall be deemed to have
purchased from such L/C Issuer a participation in such Letter of Credit (or in
its obligation under a risk participation agreement with respect thereto) equal
to such Lender’s Percentage of the aggregate amount available to be drawn under
such Letter of Credit.  Immediately after each such Letter of Credit is issued
and participations therein are sold to the Lenders as provided in this
subsection:

 

(i)            the Aggregate L/C Exposure shall not exceed the L/C Limit;

 

(ii)           in the case of each Lender, its Outstanding Amount shall not
exceed its Revolving Credit Commitment; and

 

(iii)          the aggregate Outstanding Amount of all the Lenders shall not
exceed the lesser of the Maximum Commitment Amount or the Borrowing Availability
then in effect.

 

If required to obtain such issuance by an L/C Issuer that is not Agent, an
affiliate or a subsidiary thereof or a Lender, Agent agrees to enter into risk
participation agreements with respect to the obligations of the applicable
Borrower under the Letter of Credit pursuant to which Agent acquires the credit
risk with respect to such Borrower’s payment and performance of its obligations
arising under and with respect to such Letter of Credit to the L/C Issuer.  Upon
any such issuance or entering in to a risk participation agreement, without
further action by any party hereto, (x) each Revolving Lender shall be deemed to
have purchased from Agent and/or such L/C Issuer, and (y) such L/C Issuer or
Agent shall be deemed to have sold to each Revolving Lender, a participation in
the then existing or thereafter arising Reimbursement Obligations with respect
to such Letter of Credit, on the terms specified in this Agreement, in each case
equal to such Lender’s Percentage thereof.

 

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(b)           Permitted Terms.  Each Letter of Credit must (i) support a
transaction entered into in the ordinary course of business of the applicable
Borrower and (ii) be in a form, for an amount and contain such terms and
conditions as are reasonably satisfactory to each of the L/C Issuer and the
Agent in its sole discretion.  No Letter of Credit shall have an expiration date
later than the close of business on the earlier of:  (A) the date that is one
(1) year after such Letter of Credit is issued (or, in the case of any renewal
or extension thereof, one (1) year after the expiration of such renewal or
extension) and (B) the date that is thirty (30) Business Days prior to the
Commitment Termination Date.  Notwithstanding the foregoing, a Letter of Credit
may provide for automatic extensions of its expiration date for one (1) or more
successive one year periods; provided that the L/C Issuer that issued such
Letter of Credit has the right to terminate such Letter of Credit on each such
annual expiration date and no renewal term may extend the term of the Letter of
Credit to a date that is later than thirty (30) Business Days prior to the
Commitment Termination Date.

 

(c)           Request for Issuance of Letter of Credit.  The Borrower
Representative shall give Agent at least three (3) Business Days’ prior written
notice requesting the issuance of any Letter of Credit.  The notice shall be
accompanied by the form of the Letter of Credit (which shall be acceptable to
the Agent and the L/C Issuer) and a completed application for standby letter of
credit, master standby agreement, application for agreement for documentary
letter of credit or master documentary agreement (as applicable), in each case,
in form and substance satisfactory to Agent.

 

(d)           Notice of Proposed Extensions of Expiration Dates.  The L/C Issuer
or the Borrower Representative shall give the Agent at least three (3) Business
Days’ notice before such L/C Issuer extends (or allows an automatic extension
of) the expiration date of any Letter of Credit issued by it (whether such
extension results from a request therefor by the Borrower Representative or, in
the case of an evergreen Letter of Credit, from the absence of a request by the
Borrower Representative for the termination thereof).  Such notice shall (i)
identify such Letter of Credit, (ii) specify the date on which such extension is
to be made (or the last day on which such L/C Issuer can give notice to prevent
such extension from occurring) and (iii) specify the date to which such
expiration date is to be so extended.  Upon receipt of such notice, the Agent
shall promptly notify each Lender of the contents thereof.  No L/C Issuer shall
extend (or allow the extension of) the expiration date of any Letter of Credit
if (x) the extended expiration date would be after (A) the date that is one (1)
year after the date on which such Letter of Credit is to be extended or (B) the
date that is the thirty (30) Business Days before the Commitment Termination
Date or (y) such L/C Issuer shall have been notified by the Agent or the
Required Lenders expressly to the effect that any condition specified in Section
3.2 is not satisfied at the time such Letter of Credit is to be extended;
provided that, in the case of such notice from the Agent or Required Lenders,
such L/C Issuer receives such notice prior to the date notice of non-renewal is
required to be given by such L/C Issuer and such L/C Issuer has had a reasonable
period of time to act on such notice.

 

(e)           Notice of Issuances.  Promptly upon issuing any Letter of Credit,
the relevant L/C Issuer will notify the Agent of the date of such Letter of
Credit, the amount thereof, the beneficiary or beneficiaries thereof and the
expiration date.  Upon receipt of such notice, the Agent shall promptly notify
each Revolving Lender of the contents thereof and the amount of

 

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such Revolving Lender’s participation in the relevant Letter of Credit. 
Promptly upon issuing any Letter of Credit, the relevant L/C Issuer will send a
copy of such Letter of Credit to the Agent.

 

(f)            Drawings.  Upon receiving a demand for payment under any Letter
of Credit from the beneficiary thereof, the relevant L/C Issuer shall determine,
in accordance with the terms of such Letter of Credit, whether such demand for
payment should be honored.  If such L/C Issuer determines that any such demand
for payment should be honored, such L/C Issuer shall (i) promptly notify the
Borrower Representative and the Agent as to the amount to be paid by such L/C
Issuer as a result of such demand and the date on which such amount is to be
paid (an “L/C Payment Date”) and (ii) on such L/C Payment Date make available to
such beneficiary in accordance with the terms of such Letter of Credit the
amount of the drawing under such Letter of Credit.

 

(g)           Reimbursement and Other Payments by the Borrowers.  If any amount
is drawn under any Letter of Credit:

 

(i)            the Borrowers irrevocably and unconditionally agrees to reimburse
the relevant L/C Issuer for all amounts paid by such L/C Issuer immediately upon
such drawing, together with interest on the amount drawn at the rate applicable
to Base Rate Loans for each day from and including the date such amount is drawn
to but excluding the date such reimbursement payment is due and payable.  Such
reimbursement payment shall be due and payable on the relevant L/C Payment Date
and Borrowers hereby authorize and direct Agent, at Agent’s option, to debit any
Borrower’s account (by increasing the outstanding principal balance of the
Revolving Loan) in the amount of any payment made by an L/C Issuer with respect
to any Letter of Credit; and

 

(ii)           in addition, the Borrowers agree to pay to the relevant L/C
Issuer interest on any and all amounts not paid by the Borrowers when due
hereunder with respect to a Letter of Credit, for each day from and including
the date when such amount becomes due, but excluding the date such amount is
paid in full, payable on demand, at a rate per annum equal to the Default Rate.

 

Each payment to be made by the Borrowers pursuant to this Section 2.5(g) shall
be made to the relevant L/C Issuer in federal or other funds immediately
available to it at its address specified in or pursuant to Section 11.3.

 

(h)           Payments by Lenders with Respect to Letters of Credit.  In the
event Agent elects not to debit Borrowers’ account for any Reimbursement
Obligations and the Borrowers fail to reimburse the relevant L/C Issuer as and
when required by Section 2.5(g) above for all or any portion of any amount drawn
under a Letter of Credit issued by it:

 

(i)            such L/C Issuer may notify the Agent of such unpaid Reimbursement
Obligation and request that the Revolving Lenders reimburse such L/C Issuer for
their respective Percentages thereof.  Upon receiving any such

 

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notice from an L/C Issuer, the Agent shall promptly notify each Revolving Lender
of such unpaid Reimbursement Obligation and such Lender’s Percentage thereof. 
Upon receiving such notice from the Agent, each Lender shall make available to
such L/C Issuer, at its address specified in or pursuant to Section 11.3, an
amount equal to such Revolving Lender’s Percentage of such unpaid Reimbursement
Obligation as set forth in such notice, in federal or other funds immediately
available to such L/C Issuer, by 3:00 p.m. (New York City time) (A) on the day
such Revolving Lender receives such notice if it is received at or before 12:00
Noon (New York City time) on such day or (B) on the first Business Day following
such Lender’s receipt of such notice if it is received after 12:00 Noon (New
York City time) on the date of receipt, in each case together with interest on
such amount for each day from and including the relevant L/C Payment Date to but
excluding the day such payment is due from such Revolving Lender at the Federal
Funds Rate for such day.  Upon payment in full thereof, such Revolving Lender
shall be subrogated to the rights of such L/C Issuer against the Borrowers to
the extent of such Revolving Lender’s Percentage of such unpaid Reimbursement
Obligation (including interest accrued thereon).  Nothing in this Section 2.5(h)
shall affect any rights any Revolving Lender may have against any L/C Issuer for
any action or omission for which such L/C Issuer is not indemnified under
Section 2.5(j); and

 

(ii)           if any Revolving Lender fails to pay any amount required to be
paid by it pursuant to this Section 2.5(h) on the date on which such payment is
due, interest shall accrue on such Revolving Lender’s obligation to make such
payment, for each day from and including the date such payment became due to but
excluding the date such Lender makes such payment, at a rate per annum equal to
(x) for each day from the day such payment is due through the third succeeding
Business Day, inclusive, the Federal Funds Rate for such day as determined by
the relevant L/C Issuer and (y) for each day thereafter, the Base Rate for such
day.  Any payment made by any Revolving Lender after 3:00 p.m. (New York City
time) on any Business Day shall be deemed for purposes of the preceding sentence
to have been made on the next succeeding Business Day.

 

If the Borrowers shall reimburse any L/C Issuer for any drawing with respect to
which any Revolving Lender shall have made funds available to such L/C Issuer in
accordance with this Section 2.5(h), such L/C Issuer shall promptly upon receipt
of such reimbursement distribute to such Revolving Lender its Percentage
thereof, including interest, to the extent received by such L/C Issuer.

 

(i)            Obligation Absolute.  The obligation of the Borrowers to
reimburse Agent and any applicable Revolving Lenders for payments made with
respect to any L/C Obligation shall be absolute, unconditional and irrevocable,
without necessity of presentment, demand, protest or other formalities, and the
obligation of each applicable Revolving Lender to make payments to Agent with
respect to Letters of Credit shall be unconditional and irrevocable.  Such
obligations of the Borrowers and Revolving Lenders shall be paid strictly in
accordance with the terms hereof under all circumstances including the
following:

 

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(i)            any lack of validity or enforceability of any Letter of Credit or
this Agreement or the other Loan Documents or any other agreement relating to
the Letter of Credit;

 

(ii)           the existence of any claim, setoff, defense or other right that
any Credit Party or any of their respective Affiliates or any Lender may at any
time have against a beneficiary or any transferee of any Letter of Credit (or
any Persons or entities for whom any such transferee may be acting), Agent, any
Lender, or any other Person, whether in connection with this Agreement, the
Letter of Credit, the transactions contemplated herein or therein or any
unrelated transaction (including any underlying transaction between the Credit
Party or any of their respective Affiliates and the beneficiary of the Letter of
Credit);

 

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

 

(iv)          payment by Agent (except as otherwise expressly provided in
paragraph (k)(ii)(C) below) or any L/C Issuer under any Letter of Credit or L/C
Obligation against presentation of a demand, draft or certificate or other
document that does not comply with the terms of such Letter of Credit or L/C
Obligation;

 

(v)           any other circumstance or event whatsoever that is similar to any
of the foregoing;

 

(vi)          the fact that a Default or an Event of Default has occurred and is
continuing;

 

(vii)         any amendment or waiver of or any consent or departure from all or
any of the provisions of any Letter of Credit or any Loan Document; or

 

(viii) any other act or omission to act or delay of any kind of any L/C Issuer,
Agent, any Lender or any other Person or any other event or circumstance
whatsoever that might, but for the provisions of this subsection, constitute a
legal or equitable discharge of any Borrowers’ obligations hereunder.

 

(j)            Indemnification; Nature of Lenders’ Duties.

 

(i)            In addition to amounts payable as elsewhere provided in this
Agreement, each Borrower hereby agrees to pay and to protect, indemnify and save
harmless Agent and each Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys’ fees and allocated costs of internal counsel) that Agent or any
Lender may incur or be subject to as a consequence, direct or indirect, of (A)
the issuance of any Letter of Credit or the incurrence of any L/C Obligation in

 

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respect thereof, or (B) the failure of Agent or any Lender seeking
indemnification or of any L/C Issuer to honor a demand for payment under any
Letter of Credit or of the Agent to make any payment under any L/C Obligation 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, in each case
other than to the extent solely as a result of the gross negligence or willful
misconduct of Agent or such Lender (as finally determined by a court of
competent jurisdiction).

 

(ii)           As between Agent and any Lender, on the one hand, and any
Borrower, on the other hand, such Borrower assumes all risks of the acts and
omissions of, or misuse of any Letter of Credit by, beneficiaries of any Letter
of Credit.  In furtherance and not in limitation of the foregoing, to the
fullest extent permitted by law, neither Agent nor any Lender shall be
responsible for (A) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document issued 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) 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) the failure of the beneficiary
of any Letter of Credit to comply fully with conditions required to demand
payment under such Letter of Credit; provided that in the case of any payment by
Agent under any Letter of Credit or L/C Obligation, Agent shall be liable only
to the extent such payment was made solely as a result of its gross negligence
or willful misconduct (as finally determined by a court of competent
jurisdiction) in determining that the demand for payment under such Letter of
Credit or L/C Obligation complies on its face with any applicable requirements
for a demand for payment under such Letter of Credit or any guaranty thereof,
(D) errors, omissions, interruptions or delays in transmission or delivery of
any messages by mail, cable, telegraph, telex or otherwise, whether or not they
may be in cipher, (E) errors in interpretation of technical terms, (F) any loss
or delay in the transmission or otherwise of any document required to make a
payment under any Letter of Credit or L/C Obligation, (G) the credit of the
proceeds of any drawing under any Letter of Credit or L/C Obligation and (H) any
consequences arising from causes beyond the control of Agent or any Lender. None
of the above shall affect, impair or prevent the vesting of any of Agent’s or
any Lender’s rights or powers hereunder or under this Agreement.

 

(iii)          Nothing contained herein shall be deemed to limit or expand any
waivers, covenants or indemnities made by any Borrower in favor of any L/C
Issuer in any letter of credit application, reimbursement agreement or similar
document, instrument or agreement between any Borrower and such L/C Issuer,
including the application for standby Letter of Credit, master standby
agreement, application for documentary Letter of Credit or master agreement for
documentary Letter of Credit.

 

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(k)           Cash Collateral.

 

(i)            If the Borrowers are required to provide cash collateral for any
L/C Obligations pursuant to this Agreement prior to the Commitment Termination
Date, the Borrowers will pay to Agent for the ratable benefit of itself and the
Revolving Lenders cash in an amount equal to one hundred five percent (105%) of
the maximum amount then available to be drawn under each applicable Letter of
Credit.  Such cash shall be held by Agent in a cash collateral account (the
“Cash Collateral Account”) maintained at a bank or financial institution
acceptable to Agent in its sole discretion.  The Cash Collateral Account shall
be in the name of the Borrowers and shall be pledged to, and subject to the
control of, Agent, for the benefit of Agent and the Revolving Lenders, in a
manner satisfactory to Agent.  Each Borrower hereby pledges and grants to Agent,
on behalf of itself and the Revolving Lenders, a security interest in all such
funds and Cash Equivalents held in the Cash Collateral Account from time to time
and all proceeds thereof, as security for the payment of all amounts due in
respect of the L/C Obligations and other Obligations, whether or not then due. 
This Agreement, including the provisions of this Section 2.5(k), Obligations
shall constitute a security agreement under applicable law.

 

(ii)           If any L/C Obligations, whether or not then due and payable,
shall for any reason be outstanding on the Commitment Termination Date, the
Borrowers shall either (A) provide cash collateral therefor in the manner
described above, (B) cause all such Letters of Credit and L/C Obligations, if
any, to be canceled and returned, or (C) deliver a stand-by letter (or letters)
of credit in guaranty of such L/C Obligations, which stand-by letter (or
letters) of credit shall be of like tenor and duration (plus thirty (30)
additional days) as, and in an amount equal to one hundred five percent (105%)
of the aggregate maximum amount then available to be drawn under, the Letters of
Credit to which such outstanding L/C Obligations relate and shall be issued by a
Person, and shall be subject to such terms and conditions, as are satisfactory
to Agent in its sole discretion.

 

(iii)          From time to time after funds are deposited in the Cash
Collateral Account by the Borrowers, whether before or after the Commitment
Termination Date, Agent may apply such funds or Cash Equivalents then held in
the Cash Collateral Account to the payment of any amounts, and in such order as
Agent may elect, as shall be or shall become due and payable by the Borrowers to
Agent and the Revolving Lenders with respect to such L/C Obligations and, upon
the satisfaction in full of all L/C Obligations, to any other Obligations of the
Borrowers then due and payable.

 

(iv)          Neither the Borrowers nor any Person claiming on behalf of or
through any Borrower shall have any right to withdraw any of the funds or Cash
Equivalents held in the Cash Collateral Account, except that upon the
termination of all L/C Obligations and the payment of all amounts payable by the

 

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Borrowers to Agent and Lenders in respect thereof, any funds remaining in the
Cash Collateral Account shall be applied to other Obligations then due and owing
and upon payment in full of such Obligations, any remaining amount shall be paid
to the Borrower or as otherwise required by law.  Interest earned on deposits in
the Cash Collateral Account shall be for the account of Agent.

 

(v)           Borrowers agree to execute such Control Letters and such other
documents and instruments as the Agent shall require with respect to the
security interests created under this Section.

 

Section 2.6.  Swingline Loans.

 

(a)           Swingline Commitment.       Upon the terms and subject to the
conditions set forth herein, from time to time during the Swingline Availability
Period, the Swingline Lender agrees to advance funds to the Borrowers pursuant
to this Section; provided that, immediately after each such Advance is made (and
after giving effect to any substantially concurrent application of the proceeds
thereof to repay outstanding Advances or Reimbursement Obligations and to any
Lender interest therein):

 

(i)            the aggregate outstanding principal amount of the Swingline Loans
shall not exceed the Swingline Commitment;

 

(ii)           in the case of each Lender, its Outstanding Amount shall not
exceed its Revolving Credit Commitment; and

 

(iii)          the aggregate Outstanding Amount of all the Lenders shall not
exceed the lesser of (A) the Borrowing Availability then in effect and (B) the
aggregate Revolving Credit Commitment then in effect.

 

Each Swingline Advance shall be in a minimum amount of $100,000 or integral
multiples of $10,000 in excess thereof.  Subject to the foregoing limits, the
Borrowers may borrow, repay and reborrow Swingline Advances at any time during
the Swingline Availability Period.

 

(b)           Notice of Swingline Borrowing.         The Borrower Representative
shall give the Swingline Lender notice (a “Notice of Swingline Borrowing”),
substantially in the form of Exhibit D-2 hereto, not later than 11:00 a.m. (New
York City time) on the date of each requested Swingline Advance, specifying:

 

(i)            the date of such Advance, which shall be a Business Day; and

 

(ii)           the amount of such Advance.

 

(c)           Funding of Swingline Loans.  As promptly as practicable following
receipt of a Notice of Swingline Borrowing, the Swingline Lender shall, unless
the Swingline Lender determines that any applicable condition specified in
Article III has not been satisfied,

 

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make available the amount of such Swingline Advance in federal or other funds
immediately available as provided in Section 2.3(b).

 

(d)           Interest.  The Swingline Loans shall bear interest on the
outstanding principal amount thereof, for each day from and including the day
such Swingline Advance is made to but excluding the date repaid, at a rate per
annum equal to the rate applicable to Base Rate Advances for such day.  Such
interest shall be payable on the Interest Payment Date.

 

(e)           Optional Prepayment of Swingline Loans.  The Borrowers may prepay
the Swingline Loans in whole at any time, or from time to time in part, by
giving notice of such prepayment to the Swingline Lender not later than 12:00
Noon (New York City time) on the date of prepayment and paying the principal
amount to be prepaid, together with interest accrued thereon to the date of
prepayment, to the Swingline Lender in the manner provided in Section 2.14 not
later than 3:00 p.m. (New York City time) on the date of prepayment.

 

(f)            Mandatory Prepayment of Swingline Loan.  The Borrowers shall
prepay the Swingline Loans, together with interest accrued thereon to the date
of prepayment, upon the acceleration of the Obligations pursuant to Article
VIII.  On the date of each Revolving Credit Advance, the Agent shall apply the
proceeds thereof to prepay all Swingline Loans then outstanding, together with
interest accrued thereon to the date of prepayment.

 

(g)           Maturity of Swingline Loan.  The Swingline Loans outstanding on
the Swingline Maturity Date shall be due and payable on such date, together with
interest accrued thereon to such date.

 

(h)           Refunding Unpaid Swingline Loans.  If (x) the Swingline Loans are
not paid in full on the Swingline Maturity Date or (y) the Swingline Loans
become immediately due and payable pursuant to Article VIII, the Swingline
Lender (or the Agent on its behalf) may, by notice to the Lenders (including the
Swingline Lender, in its capacity as a Lender), require each Lender to pay to
the Swingline Lender an amount equal to such Lender’s Percentage of the
aggregate unpaid principal amount of the Swingline Loans then outstanding.  Such
notice shall specify the date on which such payments are to be made, which shall
be the first Business Day after such notice is given.  Not later than 12:00 Noon
(New York City time) on the date so specified, each Lender shall pay the amount
so notified to it to the Swingline Lender at its address specified in or
pursuant to Section 11.3, in federal or other funds immediately available in New
York, New York.  The amount so paid by each Lender shall constitute a Base Rate
Advance to the Borrowers and each Lender hereby irrevocably agrees (absent gross
negligence of the Swingline Lender as determined by a court of competent
jurisdiction) to the making of such Base Rate Advance notwithstanding (i) the
amount of such Advance may not comply with the minimum amount for borrowings of
Revolving Loans otherwise required hereunder, (ii) whether any conditions
specified in Section 3.1 or 3.2 as applicable, are then satisfied, (iii) whether
a Default or an Event of Default then exists, (iv) the failure of any such
request or deemed request for Revolving Loans to be made by the time otherwise
required in Section 2.1, (v) the date of such mandatory Advance or (vi) any
reduction in the Revolving Credit Commitments or termination of the Revolving
Credit Commitments immediately prior to such mandatory Advance contemporaneously
therewith; provided that, if the Lenders are prevented

 

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from making such Base Rate Revolving Credit Advances to the Borrowers by the
provisions of the United States Bankruptcy Code or otherwise, the amount so paid
by each Lender shall constitute a purchase by it of a participation in the
unpaid principal amount of the Swingline Loan and interest accruing thereon
after the date of such payment; provided that (x) 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 (y) 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, to the
extent not paid to the Swingline Lender by the Borrowers in accordance with the
terms of subsection (d) 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.  Each Lender’s obligation to make such payment or to
purchase such participation under this subsection shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (1) any set-off, counterclaim, recoupment, defense or other right
which such Lender or any other Person may have against the Swingline Lender or
the Borrowers, (2) the occurrence or continuance of a Default or an Event of
Default or the termination of the Commitments, (3) any adverse change in the
condition (financial or otherwise) of the Borrowers or any other Person, (4) any
breach of this Agreement by any party hereto or (5) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.

 

(i)            Termination of Swingline Commitment.  The Borrowers may, upon at
least three (3) Business Days’ notice to the Swingline Lender and the Agent,
terminate the Swingline Commitment at any time, if no Swingline Loans are
outstanding at such time.  Unless previously terminated, the Swingline
Commitment shall terminate at the close of business on the Swingline Maturity
Date.

 

Section 2.7.  Certain Fees.

 

(a)           Agent Fees.  The Borrowers shall pay to GE Capital, individually,
the Fees as and when required pursuant to the GE Capital Fee Letter at the times
specified for payment therein.

 

(b)           Unused Line Fee.  As additional compensation for the Revolving
Lenders, the Borrowers shall pay to Agent, for the ratable benefit of such
Revolving Lenders, in arrears, on the first Business Day of each month prior to
the Commitment Termination Date and on the Commitment Termination Date, a fee
(the “Unused Line Fee”) for the Borrowers’ non-use of available funds in an
amount equal to the product of (i) the Unused Line Fee Applicable Margin per
annum set forth in the chart below multiplied by (ii) the difference between (x)
the Maximum Commitment Amount (as it may be reduced from time to time) minus (y)
the average for the period of the daily closing balances of the aggregate
Revolving Loans and the Swingline Loans outstanding during the period for which
such Unused Line Fee is due.

 

Facility Usage

 

Unused Line Fee
Applicable Margin

 

Less than or equal to 1/2

 

0.75

%

 

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Facility Usage

 

Unused Line Fee
Applicable Margin

 

Greater than 1/2

 

0.50

%

 

“Facility Usage” means, during any period for which the Unused Line Fee is due,
a fraction, the numerator of which is (x) the average for the period of the
daily closing balances of the aggregate Revolving Loans and the Swingline Loans
outstanding during the period for which such Fee is due, and the denominator of
which is (y) the Maximum Commitment Amount (as it may be reduced from time to
time).

 

(c)           Prepayment Fee.  If the Borrowers shall pay after acceleration or
prepay all or any portion of the Revolving Loans and reduce or terminate the
Revolving Credit Commitments, whether voluntarily or involuntarily and whether
before or after acceleration of the Obligations, or if any of the Commitments
are otherwise terminated, the Borrowers shall pay to Agent, for the ratable
benefit of Lenders as liquidated damages and compensation for the costs of being
prepared to make funds available hereunder an amount equal to (i) the Applicable
Percentage multiplied by (ii) in the case of any partial reduction of the
Revolving Credit Commitment, the amount of the reduction of the Revolving Credit
Commitment and, in the case of any termination of the Revolving Credit
Commitment, by the amount of the entire Revolving Credit Commitment immediately
prior to giving effect to such termination.  The Credit Parties agree that the
Applicable Percentages are a reasonable calculation of Lenders’ lost profits in
view of the difficulties and impracticality of determining actual damages
resulting from an early termination of the Commitments.  Notwithstanding the
foregoing, no prepayment fee shall be payable by the Borrowers upon a mandatory
prepayment made pursuant to Sections 2.8 and 2.15; provided that the Borrowers
do not permanently reduce or terminate the Revolving Credit Commitment upon any
such prepayment and, in the case of prepayments and corresponding Commitment
reductions made pursuant to Section 2.8(b) or Section 2.8(c), the transaction
giving rise to the applicable prepayment and reduction is not prohibited under
Article VII.

 

(d)           Letter of Credit Fee.  (i) The Borrowers agree to pay to the Agent
for the ratable benefit of Revolving Lenders, with respect to the L/C
Obligations incurred hereunder, (A) for the benefit of the Agent and the L/C
Issuer, all customary costs and expenses incurred by the Agent and the L/C
Issuer on account of such L/C Obligations, (B) for the ratable benefit of the
Revolving Lenders, for each day during any month in which any L/C Obligation
shall remain outstanding, a fee (the “Letter of Credit Fee”) in an amount equal
to (x) the Applicable Margin (calculated on the basis of a 360 day year for
actual days elapsed) multiplied by (y) the maximum amount available for drawing
(whether or not such day is a Business Day and whether or not the conditions for
drawing thereunder have been satisfied) under all Letters of Credit at the close
of business on such day, and (C) for the sole benefit of the L/C Issuer, a
fronting fee (the “Fronting Fee”) in an amount equal to .125% of the face amount
of each Letter of Credit.  The Letter of Credit Fee shall be paid to Agent for
the ratable benefit of the Revolving Lenders monthly in arrears, on the first
day of each month and on the Commitment Termination Date.  The Fronting Fee
shall be paid to the Administrative Agent, for the benefit of the L/C Issuer on
the date of issuance of the applicable Letter of Credit.  In addition, the
Borrowers shall pay to

 

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any L/C Issuer, on demand, such fees (including all per annum fees), customary
charges and expenses of such L/C Issuer in respect of the issuance, negotiation,
acceptance, amendment, transfer and payment of any Letter of Credit or otherwise
payable pursuant to the application and related documentation under which any
Letter of Credit is issued.  During any period during which the Default Rate
shall have been imposed pursuant Section 2.4(c), or, in the absence of such
imposition, during any period during which the Required Lenders could have
imposed the Default Rate pursuant to such Section and instead elect to impose
the provisions of this paragraph, the Letter of Credit Fee otherwise in effect
pursuant to the preceding paragraph shall be increased by two percent (2%) per
annum.

 

Section 2.8.  Mandatory Repayments and Prepayments.

 

(a)           Prepayment of Excess Outstanding Amount; Maturity of Obligations.

 

(i)            If at any time the aggregate unpaid principal balance of the
Revolving Loans exceeds the Borrowing Availability, then, the Borrowers shall
immediately prepay Revolving Loans without premium or penalty (except to the
extent required by Section 2.7(c) in connection with a prepayment and
termination of this Agreement) in an aggregate principal amount sufficient to
eliminate such excess (or if no such Loans and Swingline Loans are outstanding,
deposit cash in a collateral account in accordance with Section 2.5(k)).

 

(ii)           The Revolving Credit Commitment of each Lender shall terminate at
the opening of business on the Commitment Termination Date, and there shall
become due and the Borrowers shall pay on the Commitment Termination Date, the
entire outstanding principal amount of each Revolving Loan and of each L/C
Obligation, together with accrued and unpaid interest thereon to but excluding
the Commitment Termination Date.

 

(b)           Asset Dispositions.  Immediately upon any Credit Party’s receipt
of Net Cash Proceeds of any Asset Disposition or any sale of Stock of any
Subsidiary of any Credit Party, the Borrowers shall prepay an aggregate
principal amount of Loans (and to the extent that any Net Cash Proceeds in
excess of the outstanding principal amount of Loans, cash collateralize L/C
Obligations in accordance with Section 2.5(k)) equal to one hundred percent
(100%) of all such Net Cash Proceeds.

 

Notwithstanding the foregoing, so long as no Default or Event of Default shall
have occurred and be continuing, Borrowers shall be permitted to use an amount
up to (i) the entire proceeds of any Permitted Disposition to consummate a
Permitted Acquisition(s) within 90 days after the date of consummation of such
Permitted Disposition (such 90-day period referred to herein as the
“Reinvestment Period”); provided that at all times during the Reinvestment
Period and prior to the use the proceeds of the Permitted Disposition to
consummate Permitted Acquisitions, Borrowers shall cause such proceeds to be
deposited in a depository account at a financial institution satisfactory to
Agent, which account shall be subject to a tri-party control agreement, in form
and substance satisfactory to Agent, (ii) $3,500,000 individually or in the
aggregate in proceeds of any Permitted Disposition to satisfy in full the

 

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Department of Justice Obligations; (iii) the entire amount of the proceeds of
any dispositions of obsolete or worn-out property to the extent permitted under
clause (b)(iii) of Section 7.8 to purchase assets that are used or useful in the
business of Borrowers the Credit Parties within 180 days after receipt of such
proceeds by any Credit Party, and (iv) the entire amount of the proceeds of any
sales or settlement of disputed or delinquent Accounts to the extent permitted
under clause (b)(v) of Section 7.8.  If Borrowers fail to use any portion of (x)
the proceeds of the Permitted Disposition to consummate Permitted Acquisitions
or to satisfy the Department of Justice Obligations within the Reinvestment
Period, or (y) fail to timely reinvest the proceeds of any asset disposition
permitted under clause (b)(iii) of Section 7.8 in accordance with clause (iii)
above of this Section 2.8(b), Borrowers shall immediately apply such proceeds
against principal in accordance with Section 2.10.  Any prepayment under this
Section 2.8(b) shall be applied in accordance with Section 2.10 without any
permanent reduction of the Revolving Credit Commitments.

 

(c)           Stock Issuances and Debt Security Issuances.  If any Credit Party
issues Stock or debt securities, immediately upon receipt of the Net Cash
Proceeds thereof (other than (i) proceeds of the issuance of Stock by any
Borrower received on or before the Restatement Effective Date, (ii) proceeds
from the issuance of Stock to officers, directors and employees of any Borrower,
(iii) proceeds of the issuance of Stock to any Borrower or any Subsidiary of any
Borrower and (iv) Stock of Holdings issued in connection with Permitted
Acquisitions and (v) any Indebtedness permitted pursuant to Section 7.1)
provided, in the case of the immediately preceding clauses (i) through (iv),
inclusive, that (x) no cash is received by any Credit Party in connection with
the issuance of such Stock (other than payment of nominal par value for the
shares issued) and (y) no Change of Control would result therefrom), Borrowers
shall prepay an aggregate principal amount of Loans (and to the extent of any
Net Cash Proceeds in excess of the outstanding principal amount of Loans, cash
collateralize L/C Obligations in accordance with Section 2.5(k)) in an amount
equal to one hundred percent (100%) of all such Net Cash Proceeds; provided,
further that notwithstanding the foregoing, the Credit Parties shall be
permitted to apply the proceeds from any sale or issuance of common stock of
Holdings after the Restatement Effective Date to the repayment of up to but not
exceeding 35% of the aggregate outstanding principal amount of the Senior
Unsecured High Yield Notes outstanding as of the Restatement Effective Date less
the amount of any principal repayments thereof made after the Restatement
Effective Date so long as each of the following conditions are met at the time
of such proposed repayment: (1) immediately upon receipt thereof, the proceeds
of such Stock are applied as follows: first, to repay the principal amount of
any Loans (other than the Revolving Loans) that may be outstanding, second, the
remaining balance of such proceeds, if any, to repay the principal amount of
such Senior Unsecured High Yield Notes, subject to the 35% limit set forth above
in this Section 2.8(c), and third, the remaining balance of such proceeds, if
any, to the mandatory prepayment of outstanding Revolving Credit Advances in
accordance with this Section 2.8; (2) Agent shall have received a certificate
from the Chief Financial Officer of Holdings, in form reasonably satisfactory to
Agent, demonstrating compliance on a pro forma basis with the financial
covenants in Sections 7.15, 7.16 and 7.17 after giving effect to such repayment;
(3) no Default or Event of Default exists or would result therefrom; and (4) the
Indebtedness evidenced by such Senior Unsecured High Yield Notes that is to be
repaid with such proceeds is expressly permitted to be incurred under Section
7.1(k).   Any prepayment

 

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under this Section 2.8(c) shall be applied in accordance with Section 2.10
without any permanent reduction of the Revolving Credit Commitments.

 

(d)           [Reserved].

 

(e)           Seller Indemnity Payments.  Promptly upon receipt by any Credit
Party or any Subsidiary of any Seller Indemnity Payment, an amount equal to 100%
of the Net Cash Proceeds of such payment; provided that: (i) if such Seller
Indemnity Payment is being made to such Credit Party to reimburse the Credit
Parties for the cost of any claim or expense paid by such Credit Party to a
Person not an Affiliate of any Credit Party or any judgment, settlement or award
in connection therewith (or are to be used to pay the same within thirty days
following the receipt of such Net Cash Proceeds; provided that to the extent any
such amounts are not so applied, they shall be applied to prepay the Loans or
L/C Obligations on or before such thirtieth day), then the Net Cash Proceeds of
all such Seller Indemnity Payments may be retained by the applicable Credit
Party rather than being paid to the Agent under this Section 2.8(e); and (ii)
any other Seller Indemnity Payments not covered by the immediately proceeding
clause (i) in an aggregate amount up to $250,000 may be retained by the
applicable Credit Party rather than being paid to the Agent under this Section
2.8(e).

 

Section 2.9.  Optional Prepayments.  Borrowers may prepay the Loans in whole or
in part (in minimum principal amounts of $100,000 or in any larger integral
multiple of $10,000, or the total remaining amount outstanding) upon at least
three (3) Business Days’ (or, in the case of Base Rate Revolving Loans, one (1)
Business Day’s) prior irrevocable written notice to the Lenders, subject to the
payment of any prepayment fee provided in Section 2.7(c) and the payment of any
prepayment charges incurred pursuant to Section 9.4(d).  The aggregate principal
amount of Loans designated for prepayment in any notice of optional prepayment
given pursuant to this Section shall become due and payable on the date fixed
for prepayment as specified in such notice.

 

Section 2.10.  Application of Payments.

 

(a)           Mandatory prepayment pursuant to Section 2.8 and optional
prepayments pursuant to Section 2.9 shall be applied to Revolving Loans.  Each
payment or prepayment of less than all of the outstanding aggregate principal
amount of the Loans shall be applied pro rata to the Loans of all Lenders
according to the respective outstanding principal amounts of Loans held by each
such Lender.  Any such prepayment shall be applied first to any Base Rate Loans
before application to LIBOR Loans, in each case in a manner which minimizes any
resulting LIBOR breakage fee.

 

(b)           During the occurrence and continuance of any Event of Default, the
Agent shall apply all or any part of proceeds constituting Collateral and any
and all proceeds thereof turned over to, held by or realized through the
exercise by the Agent of its remedies hereunder or under the other Loan
Documents, in payment of the Obligations in following order:

 

(i)            first, to the payment of all amounts owing to the Agent or any
Lender of the following type: (x) any and all sums advanced by the Agent or any
Lender

 

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in order to preserve the Collateral or preserve its security interest in the
Collateral, (y) the expenses of retaking, holding, preparing for sale or lease,
selling or otherwise disposing of or realizing on the Collateral, or of any
exercise by the Agent or any Lender of its rights hereunder or under any other
Loan Document, together with reasonable attorneys’ fees and court costs, and (z)
all amounts paid by Agent or any Lender as to which Agent or such Lender has an
express right to reimbursement or indemnification from any Credit Party (or, in
the case of Agent, from any Lender) under this Agreement or any other Loan
Document;

 

(ii)           second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), to the payment of all other amounts owing
to Agent pursuant to any of the Loan Documents in its capacity as such;

 

(iii)          third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii), to the payment of an amount
equal to the outstanding Primary Obligations to the Secured Creditors, with each
Secured Creditor receiving an amount equal to its outstanding Primary
Obligations or, if the proceeds are insufficient to pay in full all such Primary
Obligations, its Pro Rata Share of such amount;

 

(iv)          fourth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) through (iii), inclusive, to the payment
of an amount equal to the outstanding Secondary Obligations to the Secured
Creditors, with each Secured Creditor receiving an amount equal to its
outstanding Secondary Obligations or, if the proceeds are insufficient to pay in
full all such Secondary Obligations, its Pro Rata Share of such amount;

 

(v)           fifth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) through (iv), inclusive, and following the
Termination Date, to the payment of an amount equal to the outstanding Residual
Obligations owing to the Subject Swap Counterparty;

 

(v)           sixth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) through (v), inclusive, and following the
Termination Date, to the payment of the relevant Credit Party or to whomever may
be lawfully entitled to receive such surplus.

 

Section 2.11.  Reduction of Revolving Credit Commitments.  (a) The Revolving
Credit Commitment shall be permanently reduced (i) by the amount of each payment
made pursuant to Sections 2.11(b) applied to Revolving Loans to the extent
directed by the Borrower Representative, and (ii) to zero Dollars ($0) on the
Commitment Termination Date.

 

(b)           The Borrowers shall have the right to terminate in whole the
Revolving Credit Commitments and this Agreement or, from time to time,
irrevocably to reduce in part the amount of the Revolving Credit Commitments
upon at least fifteen (15) days’ prior written notice from Borrower
Representative to the Agent.  Such notice shall be irrevocable on the part of
the Borrowers and shall specify the effective date of such termination or
reduction, whether a

 

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termination or reduction is being made, and, in the case of any reduction, the
amount thereof (which shall be in an amount of $100,000 or an integral multiple
$10,000 in excess thereof).  Upon any such reduction, the Borrowers shall
simultaneously prepay any outstanding Revolving Loans (without premium except
for the prepayment fee as required by Section 2.7(c) and except for the payment
of any charges incurred pursuant to Section 9.4(d)) to the extent necessary so
that the aggregate outstanding principal amount of the Revolving Loans does not
exceed the amount of the Revolving Credit Commitment after giving effect to any
partial reduction thereof.  The aforesaid prior notice requirement shall not
apply to the Agent’s exercise of remedies under Section 8.2.  The amount of the
Revolving Credit Commitment may not be reinstated if it is reduced or if this
Agreement is terminated by the Borrowers.

 

(c)           In the event the Borrowers exercise their rights under Section
2.11(b) to reduce the Revolving Credit Commitment, the Borrowers agree that any
such prepayment or reduction shall be accompanied by (i) in the case of a
prepayment in full and termination of this Agreement, the payment by the
Borrowers to the Agent for the ratable account of the Lenders of all accrued and
unpaid interest and all fees and other remaining Obligations hereunder, (ii) if
such prepayment or reduction shall occur on or prior to the third anniversary of
the Restatement Effective Date, the prepayment fee provided for in Section
2.7(c) and (iii) the payment of any prepayment charges incurred pursuant to
Section 9.4(d).

 

Section 2.12.  Loan Account and Accounting.  The Agent shall maintain a loan
account (the “Loan Account”) on its books to record all Loans, all payments made
by the Borrowers, and all other debits and credits as provided in this Agreement
with respect to the Loans or any other Obligations.  All entries in the Loan
Account shall be made in accordance with the Agent’s customary accounting
practices as in effect from time to time.  The balance in the Loan Account, as
recorded on the Agent’s most recent printout or other written statement, shall,
absent clear and convincing evidence to the contrary, be presumptive evidence of
the amounts due and owing to each Lender and the Agent by the Borrowers;
provided that any failure to so record or any error in so recording shall not
limit or otherwise affect the Borrowers’ duty to pay the Obligations.  The Agent
shall render to the Borrower Representative a monthly accounting of transactions
with respect to the Loans setting forth the balance of the Loan Account.  Unless
the Borrower Representative notifies the Agent in writing of any objection to
any such accounting (specifically describing the basis for such objection),
within thirty (30) days after the date thereof, each and every such accounting
shall (absent clear and convincing error) be deemed final, binding and
conclusive upon the Credit Parties in all respects as to all matters reflected
therein.  Only those items expressly objected to in such notice shall be deemed
to be disputed by the Borrowers.

 

Section 2.13.  Computation of Interest and Fees.  Unused Line Fees pursuant to
Section 2.7(b), Letter of Credit Fees pursuant to Section 2.7(d) and all
interest hereunder and under the Notes shall be calculated for any period on the
basis of a 360-day year for the actual number of days elapsed during such
period, including the first day but excluding the last day of such period.

 

Section 2.14.  General Provisions Regarding Payments.  All payments (including
prepayments) to be made by the Credit Parties under any Loan Document, including

 

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payments of principal of and interest on the Notes, fees, expenses and
indemnities, shall be made without set-off or counterclaim and in immediately
available funds to each Lender’s Payment Account before 1:00 p.m. (New York City
time) on the date when due.  If any payment hereunder becomes due and payable on
a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon, shall be payable at the then applicable rate during such extension. 
For purposes of computing interest and Fees and determining Borrowing
Availability as of any date, all payments shall be deemed received on the first
Business Day following the Business Day on which immediately available funds
therefor are received in the Collection Account prior to 1:00 p.m. (New York
City time).  Payments received after 1:00 p.m. (New York City time) on any
Business Day or on a day that is not a Business Day shall be deemed to have been
received on the following Business Day.

 

Section 2.15.  Maximum Interest.  (a)  In no event shall the interest charged
with respect to the Loans, the Notes or any other Obligations of any Credit
Party under the Loan Documents exceed the maximum amount permitted under the
laws of the jurisdiction whose law is specified as the governing law of this
document pursuant to Section 11.10 or of any other applicable jurisdiction.  For
the purposes of making any such determination hereunder, the Loans hereunder
shall be deemed a single loan in the amount of the Commitments.

 

(b)           Notwithstanding anything to the contrary herein or elsewhere, if
at any time the rate of interest payable for the account of any Lender hereunder
or any other Loan Document (the “Stated Rate”) would exceed the highest rate of
interest permitted under any applicable law to be charged by such Lender (the
“Maximum Lawful Rate”), then for so long as the Maximum Lawful Rate would be so
exceeded, the rate of interest payable for the account of such Lender shall be
equal to the Maximum Lawful Rate; provided that if at any time thereafter the
Stated Rate is less than the Maximum Lawful Rate, the Borrowers shall, to the
extent permitted by law, continue to pay interest for the account of such Lender
at the Maximum Lawful Rate until such time as the total interest received by
such Lender is equal to the total interest which such Lender would have received
had the Stated Rate been (but for the operation of this provision) the interest
rate payable.  Thereafter, the interest rate payable for the account of such
Lender shall be the Stated Rate unless and until the Stated Rate again would
exceed the Maximum Lawful Rate, in which event this provision shall again apply.

 

(c)           In no event shall the total interest received by any Lender exceed
the amount which such Lender could lawfully have received had the interest been
calculated for the full term hereof at the Maximum Lawful Rate with respect to
such Lender.

 

(d)           In computing interest payable with reference to the Maximum Lawful
Rate applicable to any Lender, such interest shall be calculated at a daily rate
equal to the Maximum Lawful Rate divided by the number of days in the year in
which such calculation is made.

 

(e)           If any Lender has received interest hereunder in excess of the
Maximum Lawful Rate with respect to such Lender, such excess amount shall be
applied to the reduction of the outstanding principal balance of its Loans or to
other amounts (other than interest) payable

 

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hereunder, and if no such principal or other amounts are then outstanding, such
excess or part thereof remaining shall be paid to the Borrowers.

 

Section 2.16.  Additional Borrowers.  The Borrower Representative may request in
writing from time to time that any Subsidiary of Holdings be allowed to become a
Borrower under this Agreement (each, an “Additional Borrower”); provided that
such Subsidiary shall not become an Additional Borrower unless and until each
and every of the following conditions precedent with respect to such Subsidiary
have been satisfied or provided for in a manner reasonably satisfactory to Agent
or waived in writing by Agent and the Lenders: (a) such Subsidiary shall have
been formed or acquired by Holdings or any other Borrower; (b) the Agent shall
have consented in writing to such Subsidiary becoming an Additional Borrower;
(c) no Default or Event of Default shall exist at the time of or after giving
effect to such Subsidiary’s becoming an Additional Borrower; and (d) the Agent
shall have received the following documents with respect to such Subsidiary
(each duly executed and delivered by the appropriate Persons specified below):
(i) from such Subsidiary, the other Borrowers and the Guarantors, a joinder
agreement in form and substance reasonably satisfactory to Agent (each, a
“Joinder Agreement”), (ii) from such Subsidiary and the other Borrowers, a
replacement Revolving Note in favor of each Revolving Lender in the form of
Exhibit A and a replacement Swing Line Note in favor of the Swing Line Lender
substantially in the form of Exhibit C, and (iii) from such and any other
applicable Credit Parties, the various Loan Documents with respect to such
Subsidiary required to be delivered under Section 6.14.

 

ARTICLE III.

 

CONDITIONS

 

Section 3.1.  Conditions to Effectiveness of Amendment and Restatement and to
the initial Extensions of Credit on the Restatement Effective Date.  The
occurrence of the Original Closing Date, and the agreement of each Lender to
make the initial extensions of credit requested to be made by it on the Original
Closing Date under the Existing Credit Agreement, were subject to the
satisfaction, prior to or concurrently with the making of such extensions of
credit on the Original Closing Date, of the conditions precedent set forth in
Section 3.1 of the Existing Credit Agreement.  The effectiveness of this
Agreement and the obligation of each Lender to make any Extension of Credit on
the Restatement Effective Date or for the Agent or any Lender to take, fulfill
or perform any other action hereunder, shall be subject to satisfaction of all
of the following conditions in a manner satisfactory to Agent:

 

(a)           This Agreement or counterparts hereof, the Notes and the other
Loan Documents shall have been duly executed by the Borrowers and the other
Credit Parties party thereto, and delivered to the Agent and Lenders; and Agent
shall have received such documents, instruments, agreements and legal opinions
as Agent shall reasonably request in connection with the transactions
contemplated by this Agreement and the other Related Transactions Documents,
including an opinion of counsel to the Credit Parties substantially in the form
of Exhibit I and the other documents, instruments agreements and opinions listed
in the Closing Checklist attached hereto as Exhibit K, each in form and
substance reasonably satisfactory to the Agent.

 

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The Agent shall have received and approved revised Schedules to this Agreement
and, if appropriate, the other Credit Documents, dated as of the Restatement
Effective Date;

 

(b)           On the Restatement Effective Date, each Credit Party shall have
duly authorized, executed and delivered to the Agent the Reaffirmation
Agreement;

 

(c)           Agent shall have received (i) evidence satisfactory to it in its
sole discretion that the Credit Parties have obtained all required consents
(including landlords’ and other consents) and approvals, including regulatory
and other third party approvals necessary or, in the discretion of the Agent,
advisable in connection with the Subject Acquisition, of all Persons including
all requisite Governmental Authorities, to the execution, delivery and
performance of this Agreement and the other Loan Documents, the issuance of the
Senior Unsecured Debt, the consummation of the Related Transactions and the
continuing operations of the Credit Parties (including CCS), and the same shall
be in full force and effect, and all applicable waiting periods shall have
expired without any action being taken or threatened by any competent authority
that would restrain, prevent or otherwise impose adverse conditions on the
Related Transactions or (ii) an Officer’s Certificate in form and substance
satisfactory to Agent affirming that no such consents or approvals are required;

 

(d)           Agent shall have received the Fees required to be paid by the
Borrowers on the Restatement Effective Date in the respective amounts specified
in Section 2.7 or in the GE Capital Fee Letter and shall have reimbursed the
Agent for all fees, costs and expenses of closing presented as of the
Restatement Effective Date;

 

(e)           The corporate structure, capital structure, other debt
instruments, material contracts of CCS, and governing documents of the Credit
Parties (including CCS) and their Subsidiaries shall be acceptable to Agent and
Lenders in their respective sole discretion;

 

(f)            Agent shall have received evidence satisfactory to it in its sole
discretion that Agent (on behalf of the Lenders) holds a perfected, first
priority lien in all of the Collateral, subject to no other liens except for
Permitted Encumbrances;

 

(g)           As of the Restatement Effective Date, there shall have been (i)
since September 30, 2003 (in the case of Holdings and its Subsidiaries other
than CCS), and since December 31, 2002 (in the case of CCS) (it being understood
that the preceding reference to “December 31, 2002” in this Section 3.1(g) shall
be deemed to refer to “December 31, 2003” after Agent (A) has received and
reviewed to its satisfaction the audited financial statements of CCS for the
Fiscal Year ended December 31, 2003 and (B) confirmed to Holdings in writing its
satisfaction with such audited financial statements), no material adverse change
in the business, financial or other condition of the Credit Parties (including
CCS) taken as a whole, the Collateral which would be subject to the security
interest granted to the Agent, or in the projections of the Credit Parties
(including CCS), (ii) no litigation commenced that has a reasonable likelihood
of being determined adversely to any Credit Party (including CCS) and that, if
so determined, could reasonably be expected to have a Material Adverse Effect,
and (iii) since their last audited financial statements, no material increase in
the liabilities, liquidated or contingent, of the Credit Parties (including CCS)
taken as a whole, or a material decrease in the assets of the Credit

 

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Parties (including CCS) taken as a whole, except for any increase in liabilities
due to the incurrence of the Senior Unsecured Debt;

 

(h)           Agent shall have received copies of all Acquisition-related
diligence materials for Acquisitions completed by any Credit Party within the
past two Fiscal Years, which shall, among other things, include information in
sufficient detail to allow Agent to perform pre-acquisition and post-acquisition
analysis of the financial performance of each acquired entity;

 

(i)            After giving effect to any Extensions of Credit to be made on the
Restatement Effective Date, the incurrence of the Senior Unsecured Debt and the
consummation of the Related Transactions, Borrowers shall be in compliance with
all financial covenants set forth in this Agreement and Agent shall have
received such certificates and information as it may request in order to verify
such pro forma compliance with the financial covenants;

 

(j)            After giving effect to any Extensions of Credit to be made on the
Restatement Effective Date, the incurrence of the Senior Unsecured Debt and the
consummation of the Related Transactions, Borrowers shall have Borrowing
Availability (calculated on a pro forma basis with trade payables being paid
currently, expenses and liabilities being paid in the ordinary course of
business and without acceleration of sales and without deterioration of working
capital) of at least $10,000,000 in the aggregate;

 

(k)           Agent shall have received the following, in each case, in form and
substance satisfactory to Agent: (i) the CCS Security Agreement, duly executed
and delivered by CCS; (ii) the Holdings Pledge Agreement, duly executed and
delivered by Holdings; and (iii) the Holdings Security Agreement, duly executed
and delivered by Holdings;

 

(l)            After giving effect to the Related Transactions, there shall not
exist (i) any Default or Event of Default under the Loan Documents or (ii) any
default or event of default under any other Indebtedness or agreement of any
Credit Party (including CCS), which could reasonably be expected to have a
Material Adverse Effect;

 

(m)          The board of directors of CCS shall have approved the Subject
Acquisition, and shareholders holding at least 90% of each class of outstanding
stock of CCS shall have tendered such shares to Holdings.  Holdings shall have
consummated the acquisition (the “Subject Acquisition”) of not less than 90% of
the stock and other ownership interests of CCS, free and clear of any Liens
other than the Liens in favor of Agent and Lenders securing the Obligations. 
The aggregate purchase price consideration paid by the Credit Parties for CCS
(including any assumed indebtedness) shall not exceed $150,000,000, subject to
adjustment as provided in the stock purchase agreement (“Stock Purchase
Agreement”) relating to the Subject Acquisition.  The Stock Purchase Agreement
(including all schedules and exhibits thereto) (collectively, the “Subject
Acquisition Documents”) shall not have been amended or modified in any material
respect, except for any such amendments or modifications that have been approved
in writing by the Agent.  Agent shall be satisfied that the disclosure schedules
to the Stock Purchase Agreement are complete and that any supplements to such
disclosure schedules do not raise any material legal or business concerns;

 

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(n)           Holdings shall have received not less than $185,000,000 in gross
proceeds from the incurrence of Senior Unsecured Debt, which proceeds shall be
used by Holdings on the Restatement Effective Date to pay the entire purchase
price for the Subject Acquisition, pay fees and expenses related to the Related
Transactions, and repay the Term Loan (as such term is defined in the Existing
Credit Agreement), all as described in detail in the Statement of Sources and
Uses;

 

(o)           The Senior Unsecured Note Documents shall be in form and substance
satisfactory to Agent and Lenders;

 

(p)           All Loan Documents shall be in form and substance satisfactory to
the Agent and the Lenders;

 

(q)           The Credit Parties (including CCS) shall be in pro forma
compliance with all financial covenants set forth in Sections 7.15, 7.16, 7.17
and 7.19 as of the Restatement Effective Date after giving effect to the Loans
to be made on the Restatement Effective Date, the incurrence of the Senior
Unsecured Debt and the consummation of the Related Transactions, and Agent shall
have received evidence in form and substance satisfactory to it in its sole
discretion of such pro form compliance;

 

(r)            Holdings and its consolidated Subsidiaries (including CCS) shall
have pro forma trailing twelve month EBITDA of at least $42,000,000, with any
adjustments to such pro forma EBITDA to be satisfactory to Agent in its sole
discretion;

 

(s)           The Senior Secured Leverage Ratio shall not exceed 1.30 to 1.00,
determined on a pro forma basis after giving effect to the Loans to be made on
the Restatement Effective Date, the incurrence of the Senior Unsecured Debt and
the consummation of the Related Transactions;

 

(t)            The Total Leverage Ratio shall not exceed 4.90 to 1.00,
determined on a pro forma basis after giving effect to the Loans to be made on
the Restatement Effective Date, the incurrence of the Senior Unsecured Debt and
the consummation of the Related Transactions;

 

(u)           The Agent shall not have become aware after the date hereof of any
information or other matter affecting any Credit Party or the transactions
contemplated hereby that is inconsistent in a material and adverse manner with
any such information or other matter disclosed to the Agent prior to February
23, 2004;

 

(v)           The Agent shall have received a duly executed Borrowing Base
Certificate, dated as of the Restatement Effective Date, in form and substance
satisfactory to Agent;

 

(w)          Agent shall have received and reviewed (i) the audited consolidated
balance sheets and related statements of income, stockholders’ equity and cash
flows of each of Holdings and its consolidated Subsidiaries and CCS prepared in
accordance with GAAP for the Fiscal Year ended December 31, 2003, (ii) pro forma
consolidated balance sheets and related statements of income and cash flows for
Holdings (the “Pro Forma Financial Statements”), as

 

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well as pro forma levels of EBITDA and other operating data (the “Pro Forma
Data”), for the Fiscal Year ended December 31, 2003, after giving effect to the
Related Transactions and (iii) any changes to the forecasts of the financial
performance of Holdings and its Subsidiaries through 2009.  The Pro Forma
Financial Statements and the Pro Forma Data shall be consistent in all material
respects with the forecasts previously provided to Agent.  Agent shall be
satisfied with the items specified in clauses (i) and (ii) (it being understood
that Agent is satisfied with the amounts set forth in the draft consolidated
balance sheets and related statements of income, stockholders’ equity and cash
flows of Holdings for the Fiscal Year ended December 31, 2003 delivered to Agent
prior to February 23, 2004).  Any changes specified in clause (iii) shall not be
materially worse than the forecasts previously provided to Agent.

 

Section 3.2  Conditions to Each Extension of Credit.  The obligation of any
Lender to make any Extension of Credit (including on the Restatement Effective
Date), is subject to the satisfaction of the following additional conditions:

 

(a)           receipt by the Agent of a Notice of Borrowing in accordance with
Section 2.3(a)(i);

 

(b)           immediately before and after giving effect to such Extension of
Credit, no Default or Event of Default shall have occurred and be continuing;

 

(c)           the representations and warranties of the Credit Parties contained
in the Loan Documents shall be true and correct in all material respects on and
as of the date of and after giving effect to such Extension of Credit, except
for such changes therein as are expressly permitted by the terms of this
Agreement or consented to in writing by the Required Lenders and except to the
extent that such representations and warranties are expressly stated to be made
as of an earlier date, in which case they shall be true as of such earlier date;
and

 

(d)           immediately before and after giving effect to such Extension of
Credit, the sum of (i) the amount of Borrowing Availability at such time, plus
(ii) unrestricted cash on hand (which cash shall (A) either be in Borrowers sole
possession or in a deposit account which Agent has received a tri-party account
agreement in form satisfactory to it and (B) shall not be subject to any Lien
other than Liens in favor of Agent) at such time, shall equal or exceed an
amount equal to ten percent (10%) of the aggregate Commitments then in effect at
such time.

 

Each Extension of Credit hereunder shall be deemed to constitute, as of the date
thereof, (i) a representation and warranty by each Borrower on the date of such
Extension of Credit as to the facts specified in clauses (b) and (c) of this
Section and (ii) a reaffirmation by Borrowers of the cross-guaranty provisions
set forth in Section 12 and of the granting and continuance of Agent’s Liens, on
behalf of itself and Lenders, pursuant to the Collateral Documents.

 

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ARTICLE IV.

 

REPRESENTATIONS AND WARRANTIES

 

To induce each Lending Party to enter into the Loan Documents and to make
Extensions of Credit, each Borrower, jointly and severally, makes the following
representations and warranties to each Lending Party, each and all of which
shall survive the execution and delivery of this Agreement:

 

Section 4.1.  Existence and Organizational Power; Compliance with Organizational
Documents.  Each Credit Party (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (b) is
duly qualified to conduct its business and is in good standing in each other
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified could not result in a Material Adverse Effect, (c) has the requisite
power and authority and the legal right to own, pledge, mortgage or otherwise
encumber and operate its properties, (d) has all organizational powers necessary
for the conduct of its business as now conducted or hereafter proposed to be
conducted, and (e) is in full compliance with all provisions of its
Organizational Documents.

 

Section 4.2.  Governmental Approvals, Compliance with Laws and Compliance with
Agreements with Third Parties.  Each Credit Party possesses in full force and
effect all Governmental Approvals (including, as applicable, accreditations,
licenses and certifications as a provider of health care services including
those necessary for it to be eligible to receive payment and compensation and to
participate under Medicare, Medicaid, TRICARE or CHAMPVA or any Blue Cross/Blue
Shield or equivalent program) necessary for the conduct of its business and is
in compliance with all provisions of all Healthcare Laws and all other
Applicable Laws, except where the failure to possess such Governmental Approval
or of such Governmental Approval to be in full force and effect or the failure
to comply with Healthcare Laws or Applicable Laws could not reasonably be
expected to have a Material Adverse Effect.  No Credit Party is in breach of or
default under or with respect to any contract, agreement, lease or other
instrument to which it is a party or by which any of its property is bound or
affected, which breach or default could reasonably be expected to have a
Material Adverse Effect.

 

Section 4.3. Organizational and Governmental Approvals; No Contravention.  The
execution, delivery and performance by each Credit Party of the Loan Documents
and Related Transaction Documents to which it is a party, and the consummation
of the transactions contemplated to occur thereunder, (a) are within its
organizational powers, have been duly authorized by all necessary organizational
action, (b) require no Governmental Approval (other than the filing of UCC-1
financing statements, and such other filings as have been made and are in full
force and effect), (c) do not contravene, or constitute a default under (i) any
provision of Applicable Law the violation of which could reasonably be expected
to have a Material Adverse Effect, (ii) the Organizational Documents of such
Credit Party or (iii) any agreement, judgment, injunction, order, decree or
other instrument binding upon any Credit Party and (d) do not result in the
creation or imposition of any Lien (other than the Liens created by the
Collateral Documents) on any asset of any such Credit Party.

 

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Section 4.4.  Binding Effect; Liens of Collateral Documents.  (a)  Each Loan
Document and each Related Transaction Document to which any Credit Party, is a
party constitutes a valid and binding agreement of such Credit Party in each
case enforceable in accordance with its terms, subject to (i) the effect of any
applicable bankruptcy, fraudulent transfer, moratorium, insolvency,
reorganization or other similar laws affecting the rights of creditors generally
and (ii) the effect of general principles of equity whether applied by a court
of equity or law.

 

(b)           The Collateral Documents create valid security interests in the
Collateral purported to be covered thereby, which security interests are
perfected security interests, prior to all other Liens other than Permitted
Prior Liens.

 

Section 4.5.  Financial Statements.

 

(a)           The financial information set forth in the financial statements
listed on, and attached to, Disclosure Schedule 4.5(a) present fairly, in all
material respects, in accordance with GAAP, the consolidated and consolidating
financial position of the Credit Parties as at their respective dates and the
consolidated and consolidating income, shareholders’ equity and cash flows of
the Credit Parties for the respective periods to which such statements relate
(except in the case of unaudited interim financial statements for the absence of
footnotes and normally recurring year-end adjustments).  Any information other
than financial information presented in such statements is true, correct and
complete in all material respects.  Except as disclosed or reflected in such
financial statements or in Disclosure Schedule 4.5(a), no Credit Party has any
liabilities, contingent or otherwise, nor any unrealized or anticipated losses,
that, singly or in the aggregate, have had or might have a Material Adverse
Effect.

 

(b)           The Budget delivered on the date hereof and attached hereto as
Disclosure Schedule 4.5(b) was prepared by the Borrowers in light of the past
operations of its businesses, but including future payments of known contingent
liabilities, and reflect projections for the five year period beginning on April
1, 2004 on a month-by-month basis for the first year and on a year-by-year basis
thereafter.  The Budget is based upon estimates and assumptions stated therein,
all of which the Borrowers believe to be reasonable and fair in light of current
conditions and current facts known to the Borrowers and, as of the Restatement
Effective Date, reflect the Borrowers’ good faith and reasonable estimates of
the future financial performance of the Borrowers and its Subsidiaries and of
the other information projected therein for the period set forth therein.

 

Section 4.6.  Material Adverse Effect.  Between December 31, 2003 and the
Restatement Effective Date: (a) no Credit Party has incurred any obligations,
contingent or noncontingent liabilities, liabilities for Charges, long-term
leases or unusual forward or long-term commitments that, alone or in the
aggregate, could reasonably be expected to have a Material Adverse Effect; (b)
no contract, lease or other agreement or instrument has been entered into by any
Credit Party or has become binding upon any Credit Party’s assets and no law or
regulation applicable to any Credit Party has been adopted that has had or could
reasonably be expected to have a Material Adverse Effect; (c) no Credit Party is
in default and, to the best of each Credit Party’s knowledge, no third party is
in default under any material contract, lease or

 

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other agreement or instrument; and (d) no event has occurred, that alone or
together with other events, could reasonably be expected to have a Material
Adverse Effect.

 

Section 4.7.  Litigation.  Except as disclosed on Disclosure Schedule 4.7, there
is no action, suit, investigation or proceeding (collectively, “Litigation”)
pending or, to the knowledge of any Credit Party, threatened against or
affecting any Credit Party or its property before any court or arbitrator or any
Governmental Authority, that has a reasonable likelihood of being determined
adversely to any Credit Party and that, if so determined, could reasonably be
expected to have a Material Adverse Effect.  There is no Litigation pending or,
to the best knowledge of any Credit Party, threatened against or affecting, any
party to this Agreement or any of the Related Transaction Documents before any
court or arbitrator or any Governmental Authority which questions or challenges
the validity of this Agreement or any of the other Related Transaction Documents
or any transaction contemplated herein or therein.

 

Section 4.8.  Due Diligence Questionnaire; Full Disclosure.  The Questionnaire
is complete and correct in all respects.  None of the Information (financial or
otherwise) contained in the Questionnaire or otherwise furnished by or on behalf
of any Credit Party to the Agent or any other Lending Party hereunder or in
connection with the Loan Documents or the Related Transaction Documents or any
of the transactions contemplated here by or thereby contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained herein or therein not misleading in the light of the
circumstances under which such statements were made.

 

Section 4.9.  No Adverse Fact.  No fact or circumstance is known to any Credit
Party that, either alone or in conjunction with all other such facts and
circumstances, has had or reasonably could be expected in the future to have a
Material Adverse Effect, that has not been set forth or referred to in the
financial statements referred to in Section 4.5 or in a writing specifically
captioned “Disclosure Statement” and delivered to the Agent prior to the
Agreement Date.

 

Section 4.10.  Ownership of Property, Liens.  Each Credit Party is the lawful
owner of, has good and marketable title to and is in lawful possession of, or
has valid leasehold interests in, all properties and other assets (real or
personal, tangible, intangible or mixed) purported to be owned, leased,
subleased or used as the case may be, by such Credit Party on the most recent
balance sheet referred to in Section 4.5 or, if more recent, delivered pursuant
to Section 5.1, and none of such Credit Party’s properties or assets is subject
to any Liens, except Liens permitted pursuant to Section 7.2.

 

Section 4.11.  Environmental Laws. Each Credit Party and its respective
operations are (a) in material compliance with the requirements of all
Environmental Laws and (b) not the subject of any investigation by any
Governmental Authority evaluating whether any remedial action is needed to
respond to a Release of any Hazardous Material into the environment or the work
place or the use of any such substance in any of its products or manufacturing
operations, which noncompliance or remedial action could reasonably be expected
to have a Material Adverse Effect.

 

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Section 4.12.  ERISA.  Each member of the Controlled Group has fulfilled its
obligations under the minimum funding standards of ERISA and the IRC with
respect to each Plan and is in compliance in all material respects with the
presently applicable provisions of ERISA and the IRC with respect to each Plan. 
No member of the Controlled Group has (a) sought a waiver of the minimum funding
standard under Section 412 of the IRC in respect of any Plan, (b) failed to make
any contribution or payment to any Plan or Multiemployer Plan or in respect of
any Benefit Arrangement, or made any amendment to any Plan or Benefit
Arrangement, which has resulted or could reasonably be expected to result in the
imposition of a Lien or the posting of a bond or other security under ERISA or
the IRC or (c) incurred any liability under Title IV of ERISA other than a
liability to the PBGC for premiums under Section 4007 of ERISA.

 

Section 4.13.  Subsidiaries; Capitalization.   Borrowers have no Subsidiaries on
the Restatement Effective Date other than as set forth on Disclosure
Schedule 4.13.  Disclosure Schedule 4.13 sets forth the correct legal name and
jurisdiction of organization of each of the Borrowers and their Subsidiaries. 
The authorized Stock of each of the Credit Parties are as set forth on
Disclosure Schedule 4.13.  All issued and outstanding Stock of each of the
Credit Parties are duly authorized and validly issued, fully paid,
nonassessable, free and clear of all Liens other than those in favor of Agent
for the benefit of the Lending Parties, and such Stock was issued in compliance
with all Applicable Laws.  The identity of the holders of the Stock of each of
the Credit Parties and the percentage of their fully diluted ownership of the
Stock of each of the Credit Parties is set forth on Disclosure Schedule 4.13. 
No Stock of any Credit Party, other than that described above, is issued and
outstanding.  Except as provided in Disclosure Schedule 4.13, there are no
preemptive or other outstanding rights, options, warrants, conversion rights or
similar agreements or understandings for the purchase or acquisition from any
Credit Party of any Stock of any such entity.  All outstanding Indebtedness and
Guaranteed Obligations of each Credit Party as of the Restatement Effective Date
(except for the Obligations) is described in Disclosure Schedule 4.13.

 

Section 4.14.  Government Regulations.  No Credit Party is an “investment
company” or an “affiliated person” of, or “promoter” or “principal underwriter”
for, an “investment company”, as such terms are defined in the Investment
Company Act of 1940.  No Credit Party is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, or any other federal
or state statute that restricts or limits its ability to incur Indebtedness or
to perform its obligations hereunder.

 

Section 4.15.  Margin Regulations.  No Credit Party is engaged, nor will it
engage, principally or as one of its activities, in the business of extending
credit for the purpose of “purchasing” or “carrying” any “margin stock” as such
terms are defined in Regulation U of the Federal Reserve Board as now and from
time to time hereafter in effect (such securities being referred to herein as
“Margin Stock”).  No Credit Party owns any Margin Stock and none of the proceeds
from the Loans have been or will be used, directly or indirectly, for the
purpose of purchasing or carrying any Margin Stock, for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or carry
any Margin Stock or for any other purpose which might cause any of the loans
under this Agreement to be considered a “purpose credit” within the meaning of
Regulations T, U or X of the Board of Governors of the

 

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Federal Reserve Board.  No Credit Party will take or permit to be taken any
action that might cause any Loan Document to violate any regulation of the
Federal Reserve Board.

 

Section 4.16.  Taxes.  All tax returns, reports and statements, including
information returns, required by any Governmental Authority to be filed by any
Credit Party have been filed with the appropriate Governmental Authority and all
Charges have been paid prior to the date on which any fine, penalty, interest or
late charge may be added thereto for nonpayment thereof (or any such fine,
penalty, interest, late charge or loss has been paid), excluding Charges or
other amounts which are the subject of a Permitted Contest or charges related to
certain state and/or local taxes (other than income, gross receipts, sales,
franchise or use taxes) in an aggregate amount not to exceed $50,000 at any
time.  Proper and accurate amounts have been withheld by each Credit Party from
its respective employees for all periods in compliance with Applicable Laws and
such withholdings have been timely paid to the respective Governmental
Authorities.

 

Section 4.17.  Intellectual Property.  Each Credit Party owns or has rights to
use all Intellectual Property material to the conduct of its business as now or
heretofore conducted by it or proposed to be conducted by it, without actual or
claimed infringement upon the rights of third parties.

 

Section 4.18.  Solvency.  Both before and after giving effect to (a) the
Extensions of Credit to be made or extended on the Restatement Effective Date or
such other date as Extensions of Credit requested hereunder are made or
extended, the issuance of the guaranties of the Obligations and the pledge of
assets as security therefor by all of the Credit Parties, (b) the disbursement
of the proceeds of such Extensions of Credit pursuant to the instructions of the
Credit Parties, (c) the consummation of the transactions contemplated in the
Related Transactions Documents, and (d) the payment and accrual of all
transaction costs in connection with the foregoing, the Borrowers and the other
Credit Parties, taken as a whole, are Solvent.

 

Section 4.19.  Insurance.  Disclosure Schedule 4.19 lists all insurance policies
of any nature maintained, as of the Restatement Effective Date, for current
occurrences by each Credit Party, as well as a summary of the terms of each such
policy.

 

Section 4.20.  Brokers.  No broker or finder acting on behalf of any Credit
Party brought about the obtaining, making or closing of the Loans, and no Credit
Party has any obligation to any Person in respect of any finder’s or brokerage
fees in connection therewith.

 

Section 4.21.  Compliance with HIPAA.  To the extent that and for so long as (i)
any Credit Party is a “covered entity” as defined in 45 C.F.R. § 160.103, (ii)
any Credit Party and/or its business and operations are subject to or covered by
the HIPAA Administrative Requirements codified at 45 C.F.R. Parts 160 & 162 (the
“Transactions Rule”) and/or the HIPAA Security and Privacy Requirements codified
at 45 C.F.R. Parts 160 & 164 (the “Privacy and Security Rules”), or (iii) any
Credit Party sponsors any “group health plans” as defined in 45 C.F.R. §
160.103, such Credit Party has:  (x) completed, or will complete on or before
any applicable compliance date, surveys, audits, inventories, reviews, analyses
and/or assessments, including risk assessments, (collectively “Assessments”) of
all areas of its business and

 

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operations subject to HIPAA and/or that could reasonably be expected to be
adversely affected by the failure of such Credit Party to be HIPAA Compliant (as
defined below) to the extent that such Credit Party reasonably believes that
these Assessments are appropriate or required for such Credit Party to be HIPAA
Compliant; (y) developed, or will develop on or before any applicable compliance
date, a detailed plan and time line for becoming HIPAA Compliant (a “HIPAA
Compliance Plan”); and (z) implemented, or will implement on or before any
applicable compliance date, those provisions of its HIPAA Compliance Plan
necessary to ensure that such Credit Party is HIPAA Compliant; provided,
however, that subsections (x), (y) and (z) of this Section 4.21 as they relate
to the Transactions Rule shall not apply to Medcare for the period beginning on
the date of this Agreement and continuing until the later to occur (and
including such date) of (1) October 15, 2003 and (2) such other date as may be
adopt by the U.S. Department of Health and Human Services (“HHS”) as the
compliance deadline for the Transactions Rule (including any extensions of such
deadline adopted by HHS).  For purposes of this Agreement, “HIPAA Compliant”
shall mean that such Credit Party (1) is, or on or before any applicable
compliance date, including any extensions of such date adopted by HHS, will be,
in full compliance with any and all of the applicable requirements of HIPAA,
including all requirements of the Transactions Rule and the Privacy and Security
Rules and (2) is not subject to, and could not reasonably be expected to become
subject to, any civil or criminal penalty or any investigation, claim or process
that could reasonably be expected to have a Material Adverse Effect.

 

Section 4.22.  Matters Concerning Prior Acquisitions.  Each of the Borrowers
hereby represents and warrants that if the “Second Closing” (as such term is
defined in the Home Care Purchase Agreement) has not occurred by the “Second
Closing Deadline” (as such term is defined in the Home Care Purchase Agreement)
and the Home Care Seller terminates the Home Care Purchase Agreement in
accordance with Section 6.1(d) thereof, after giving effect to any such
termination, Holdings and CHSNY, as buyers under the Home Care Purchase
Agreement (a) will be entitled to retain all rights, titles and interests in and
to the ownership of the assets of and operation of the pharmacy services
business purchased under the Home Care Purchase Agreement, and (b) will be
entitled to retain all rights, titles and interests in and to all profits,
proceeds and distributions of any kind generated in connection with the home
health business purchased under the Home Care Purchase Agreement to the extent
that such profits, proceeds and distributions were generated from services
performed by Holdings, CHSNY or any Affiliate thereof after the Effective Date
(as such term is defined in the Home Care Purchase Agreement) and prior to the
effective date of such termination.

 

ARTICLE V.

 

REPORTING COVENANTS

 

So long as any Lending Party has any Commitment hereunder or any Extension of
Credit or other Obligation (other than contingent indemnity obligations not then
due) remains outstanding, each Credit Party shall comply with each of the
provisions in this Article V:

 

Section 5.1.  Financial Statements and Reports.  The Credit Party shall deliver
the following to each Lending Party at its address specified pursuant to Section
4.5:

 

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(a)                                  Quarterly Financials.  As soon as
available, but in any event within 45 days after the end of each Fiscal Quarter:

 

(i)                                     consolidated and consolidating balance
sheets of the Credit Parties as of the close of such Fiscal Quarter and the
related consolidated and consolidating statements of income and cash flow for
such Fiscal Quarter and for that portion of the Fiscal Year ending as of the
close of such Fiscal Quarter, in each case setting forth in comparative form the
figures for the corresponding period in the prior year;

 

(ii)                                  a management discussion and analysis that
includes a comparison of performance for such Fiscal Quarter to the
corresponding period in the prior year; and

 

(iii)                               a Compliance Certificate by Borrower
Representative in the form of Exhibit 5.1(a).

 

(b)           Annual Financials.  As soon as available, but in any event within
90 days after the end of each Fiscal Year:

 

(i)                                     audited consolidated and consolidating
balance sheets and related audited consolidated and consolidating statements of
income, retained earnings and cash flows for the Credit Parties, setting forth
in comparative form in each case the figures for the previous Fiscal Year, and
reported on without a “going concern” or other qualification or exception by an
independent certified public accounting firm of national standing acceptable to
Agent;

 

(ii)                                  a management discussion and analysis that
includes a comparison to Budget for such Fiscal Year and a comparison of
performance for such Fiscal Year to the prior year;

 

(iii)                               a Compliance Certificate by Borrower
Representative in the Form of Exhibit 5.1(b); and

 

(iv)                              the annual letters collected by such
accountants in connection with their audit examination detailing contingent
liabilities and material litigation matters.

 

(c)           Annual Budgets.  As soon as available following the end of each
Fiscal Year, but in any event not later than 30 days after the end of such
Fiscal Year, an annual operating plan for the Credit Parties (the “Budget”), on
a consolidated and consolidating basis, approved by the Board of Directors of
each Borrower, for the following Fiscal Year, which (i) includes a statement of
all of the material assumptions on which such plan is based, (ii) includes
monthly balance sheets, income statements and statements of cash flows for the
following year and (iii) integrates sales, gross profits, operating expenses,
operating profit, cash flow projections

 

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and Borrowing Availability projections, all prepared on the same basis and in
similar detail as that on which operating results are reported (and in the case
of cash flow projections, representing management’s good faith estimates of
future financial performance based on historical performance), and including
plans for personnel, Capital Expenditures and facilities.

 

(d)           Management Letters.  Within five Business Days after receipt
thereof by any Credit Party, copies of all management letters, exception reports
or similar letters or reports received by such Person from its independent
certified public accountants.

 

(e)           Defaults and other Material Events. As soon as practicable, and in
any event within five (5) Business Days after any executive or financial officer
of any Credit Party obtains knowledge of the existence of any event that could
reasonably be expected to have a Material Adverse Effect or of any Default,
telephonic or telecopied notice specifying the nature of such event or Default,
including the anticipated effect thereof, which notice, if given telephonically,
shall be promptly confirmed in writing on the next Business Day.

 

(f)            Litigation.              As soon as practicable, and in any event
within fifteen (15) days after any executive or financial officer of any Credit
Party obtains knowledge that any Litigation commenced or threatened against any
Credit Party, individually or in the aggregate, (i) seeks damages in excess of
$500,000, (ii) seeks injunctive relief against any Credit Party involving
property of any Credit Party valued in excess of $500,000 or a transaction in
which such Credit Party is a party where the payments to be made or received or
the subject matter of such transaction exceeds individually or in the aggregate
an amount equal to $500,000 or otherwise could reasonably be expected to have a
Material Adverse Effect, (iii) is asserted or instituted against any Plan, its
fiduciaries or its assets or against any Credit Party or any member of a
Controlled Group in connection with any Plan, (iv) alleges criminal misconduct
by any Credit Party, (v) alleges material violations of any Healthcare Laws,
(vi) alleges the violation of any law regarding, or seeks remedies in connection
with, any Environmental Liabilities, which could reasonably be expected to have
a Material Adverse Effect, or (vii) if adversely determined against any Credit
Party, could reasonably be expected to have a Material Adverse Effect.

 

(g)           Other Securities Reports.  Promptly upon their becoming available,
copies of (i) all financial statements, reports, notices and proxy statements
sent by any Credit Party to its security holders, (ii) all regular and periodic
reports and all registration statements and prospectuses, if any, filed by any
Credit Party with any securities exchange or with the Securities and Exchange
Commission or any governmental or private regulatory authority and (iii) all
press releases and other statements made available by any Credit Party to the
public concerning material changes or developments in the business of any such
Credit Party.

 

(h)           Supplemental Disclosures. Supplemental disclosures, if any,
required by Section 6.7.

 

(i)            Damage to Collateral.  Disclosure of any loss, damage, or
destruction to the Collateral in the amount of $100,000 or more individually or
in the aggregate, whether or not covered by insurance.

 

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(j)            Defaults under Material Agreements.   Immediately upon receipt,
copies of any notice to any Credit Party of claimed default by any third party
to any Credit Party with respect to or by any Credit Party of any material lease
or agreement to which any Credit Party is a party that involves payments in
excess of $500,000 individually or in the aggregate per annum or involves
property of any Credit Party having a value in excess of $500,000 individually
or in the aggregate.

 

(k)           Litigation Update.  To Agent, at the time of delivery of each of
the quarterly financial statements delivered pursuant to Section 5.1(a) (and in
any event promptly upon request by Agent), a written update as to the status of
the E2M litigation described on Disclosure Schedule 4.7, including a description
of the procedural status, any settlement discussions and any motions, orders,
pleadings or judgments filed or entered.

 

(l)            Monthly Swap Statement; Etc.  To Agent, at the time of delivery
of each Borrowing Base Certificate, a Monthly Swap Statement, which shall be in
form and substance reasonably satisfactory to Agent.  Holdings hereby agrees to
immediately upon receipt thereof notify Agent (telephonically and in writing by
facsimile transmission) of any communication (whether oral or written) and to
provide Agent with a copy of any notice or communication that it receives from
the Subject Swap Counterparty in connection with the Subject Swap or any of the
Subject Swap Documents that (i) the Subject Swap Exposure (as such term is
defined in the Subject Swap) exceeds $8.5 million, (ii) Holdings is required to
make a payment of any Buydown Amount (as such term is defined in the Subject
Swap) as defined in the Subject Swap, or (iii) that any event of default or any
termination event has occurred under the Subject Swap Documents.  In addition to
the notice required to be delivered by Holdings to Agent pursuant to the
immediately preceding sentence, Holdings shall deliver to Agent for its receipt
at least one Business Day in advance of any required payment of any Buydown
Amount (as such term is defined in the Subject Swap) by Holdings, a certificate
of the chief financial officer of Holdings, in form and substance reasonably
satisfactory to Agent, demonstrating on a pro forma basis after giving effect to
any such payment compliance with the minimum liquidity covenant in Section 6.18
and actual and pro forma compliance with the financial covenants in Sections
7.15, 7.16 and 7.17.

 

(m)          Other Documents.  Promptly upon request, such other financial and
other information respecting any Credit Party’s business or financial condition
as Agent or any Lender shall from time to time reasonably request.

 

Section 5.2.  Collateral Reports.   Each Credit Party shall deliver to Agent or
to Agent and Lenders, as required, the various Collateral Reports (including
Borrowing Base Certificates in the form of Exhibit O) at the times and in the
manner set forth below.

 

(a)           To the Agent, on a monthly basis on the date that is 15 Business
Days (or, in the case of any fiscal month ending prior to the first anniversary
of the Restatement Effective Date, 30 days) after the end of each fiscal month
or at such more frequent intervals as Agent may request from time to time
(together with a copy of all or any part of the following reports requested by
Agent or any Lender in writing after the Restatement Effective Date), each of
the

 

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following reports, each of which shall be prepared by the Borrowers as of the
last day of the immediately preceding fiscal month:

 

(i)            a Borrowing Base Certificate accompanied by such supporting
detail and documentation as shall be requested by the Agent in its sole
discretion;

 

(ii)           a summary of Inventory by location and type with a supporting
perpetual Inventory report, accompanied by such supporting detail and
documentation as shall be requested by the Agent in its sole discretion; and

 

(iii)          a monthly trial balance showing Accounts outstanding aged from
invoice date as follows: one (1) to thirty (30) days; thirty-one (31) to sixty
(60) days; sixty-one (61) to ninety (90) days; ninety-one (91) to one hundred
twenty (120) days; one hundred twenty-one (121) to one hundred fifty (150) days;
and one hundred fifty-one (151) days or more, accompanied by such supporting
detail and documentation as shall be requested by the Agent in its sole
discretion;

 

(b)           To the Agent, on a monthly basis on the date that is 15 Business
Days (or, in the case of any fiscal month ending prior to the first anniversary
of the Restatement Effective Date, 30 days) after the end of each month or at
such more frequent intervals as Agent may request from time to time (together
with a copy of all or any part of such delivery requested by any Lender in
writing after the Restatement Effective Date), Collateral reports including all
additions and reductions (cash and non-cash) with respect to Accounts in each
case accompanied by such supporting detail and documentation as shall be
requested by the Agent in its sole discretion each of which shall be prepared as
of the last day of the immediately preceding month;

 

(c)           To the Agent, at the time of delivery of each of the quarterly
financial statements delivered pursuant to Section 5.1(a):

 

(i)            a reconciliation of the Accounts trial balance to the most recent
Borrowing Base Certificate, general ledger and quarterly financial statements
delivered pursuant to Section 5.1(a), in each case accompanied by such
supporting detail and documentation as shall be requested by the Agent in its
sole discretion; and

 

(ii)           a reconciliation of the perpetual inventory by location to the
most recent Borrowing Base Certificate, general ledger and quarterly financial
statements delivered pursuant to Section 5.1(a), accompanied by such supporting
detail and documentation as shall be requested by the Agent in its sole
discretion.

 

(d)           To the Agent, at any time that adjustments resulting from physical
verifications or cycle counts that any Credit Party may in its discretion have
made, or caused any other Person to have made on its behalf, or all or any
portion of its Inventory, exceed in the aggregate, $100,000 for the most
recently completed twelve (12) month period, a summary in form and substance
satisfactory to the Agent describing such adjustments (and, if a Default or
Event of Default has occurred and is continuing, the Borrowers shall, upon the
request of Agent or the Required Lenders, conduct, and deliver the results of,
such physical verifications as Agent or the Required Lenders may require);

 

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(e)           To Agent, at the time of delivery of each of the quarterly
financial statements delivered pursuant to Section 5.1(a), a reconciliation of
the outstanding Loans as set forth in the quarterly Loan Account statement
provided by Agent to the general ledger and quarterly financial statements
delivered pursuant to Section 5.1(a), in each case accompanied by such
supporting detail and documentation as shall be requested by Agent in its
reasonable credit judgment;

 

(f)            To Agent, at the time of delivery of each of the quarterly
financial statements delivered pursuant to Section 5.1(a), (i) a listing of
government contracts of the Borrowers subject to the Federal Assignment of
Claims Act of 1940; and (ii) a list of any applications for the registration of
any patent, trademark or copyright filed by any Credit Party with the United
States Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in the prior Fiscal Quarter;

 

(g)           To the Agent, the results of each physical verification, if any,
that the Borrowers or any of their Subsidiaries may in their discretion have
made, or caused any other Person to have made on its behalf, of all or any
portion of their Inventory (and, if an Event of Default) has occurred and is
continuing, the Borrowers shall, upon the request of Agent, conduct, and deliver
the results of, such physical verifications as Agent may require);

 

(h)           To the Agent, such appraisals of the Borrowers’ assets as Agent
may request at any time after the occurrence and during the continuance of a
Default or Event of Default, such appraisals to be conducted by an appraiser,
and in form and substance reasonably satisfactory to Agent;

 

(i)            To Agent, within 5 Business Days after receipt thereof, copies of
(i) any and all default notices received under or with respect to any Senior
Unsecured Debt, any Subordinated Debt, any leased location or public warehouse
where any Collateral is located, and (ii) such other notices or documents with
respect to any owned or leased Real Property of any Credit Party as Agent may
reasonably request;

 

(j)            To Agent, within 5 Business Days after receipt thereof, copies of
any written offer to purchase, repay or redeem all or any portion of any Senior
Unsecured Debt or Subordinated Debt made by any Credit Party to one or more of
the holders thereof or any representative of such holders;

 

(k)           To Agent, within 5 Business Days after receipt thereof, copies of
any material amendments to any Real Property leases of any Credit Party; and

 

(l)            Such other reports, statements and reconciliations with respect
to the Collateral or Obligations of any or all Credit Parties as Agent shall
from time to time request in its reasonable discretion.

 

Section 5.3.  Accuracy of Financial Statements and Information

 

(a)           Future Financial Statements.  All financial statements delivered
pursuant to Section 5.1(a) or (b), shall (i) in the case of the financial
information set forth therein, present

 

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fairly, in all material respects, in accordance with GAAP the consolidated and
consolidating financial position of the Credit Parties, as at their respective
dates and the consolidated and consolidating income, shareholders’ equity, and
consolidated cash flows of the Credit Parties for the respective periods to
which such statements relate (subject, in the case of the financial statements
delivered pursuant to Section 5.1(a), to the absence of footnotes and normally
recurring year-end adjustments) and (ii) in the case of any other information
presented, be true, correct and complete in all material respects, and the
furnishing of the same to the Lending Parties shall constitute a representation
and warranty by the Credit Parties made on the date the same are furnished to
the Lending Parties to that effect.

 

(b)           Future Information.  All Information furnished to any Lending
Party by or on behalf of any Credit Party on and after the Agreement Date in
connection with or pursuant to this Agreement or any other Loan Document or in
connection with or pursuant to any amendment or modification of, or waiver
under, this Agreement or any other Loan Document, shall, at the time the same is
so furnished, but in the case of Information dated as of a prior date, as of
such date, (i) in the case of any such information prepared in the ordinary
course of business, be complete and correct in all material respects in the
light of the purpose prepared, and, in the case of any such Information required
by the terms of this Agreement or the preparation of which was requested by any
Lending Party, be complete and correct in all material respects to the extent
necessary to give true and accurate knowledge of the subject matter thereof, and
(ii) not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements contained therein, in light of
the circumstances in which they are made, not misleading, and the furnishing of
the same to any Lending Party shall constitute a representation and warranty by
the Credit Parties made on the date the same are so furnished to the effect
specified in clauses (i) and (ii).

 

ARTICLE VI.

 

AFFIRMATIVE COVENANTS

 

So long as any Lending Party has any Commitment hereunder or any Extension of
Credit or other Obligation (other than contingent indemnity obligations not then
due) remains outstanding, each Borrower shall, and shall cause each Credit Party
to, comply with each of the covenants in this Article VI unless compliance with
such covenants has previously been waived in writing by Agent and/or Lenders, as
applicable, in their sole and absolute discretion, in accordance with Section
11.5:

 

Section 6.1.  Payment of Obligations.  Each Credit Party (a) shall pay and
discharge, at or before maturity, all of its respective obligations and
liabilities, including Charges, the non-payment or discharge of which could
reasonably be expected to have a Material Adverse Effect except where the same
is the subject of a Permitted Contest, (b) shall maintain, in accordance with
GAAP, appropriate reserves for the accrual of any of the same and (c) shall not
breach in any respect, or permit to exist any default under, the terms of any
lease, commitment, contract, instrument or obligation to which it is a party, or
by which its properties or assets are bound, the breach of or default under
which could reasonably be expected to have a Material Adverse Effect, subject to
Permitted Contests.

 

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Section 6.2.  Conduct of Business and Maintenance of Existence.  Each Credit
Party will continue to conduct its business substantially as now conducted by
the Credit Parties or as otherwise permitted hereunder, and will preserve, renew
and keep in full force and effect its corporate, company or partnership, as
applicable, existence, rights, privileges and franchises necessary or desirable
in the normal conduct of business except to the extent that such failure (a)
results from any merger or consolidation of any Credit Party to the extent such
merger or consolidation is expressly permitted under Section 7.8 of this
Agreement or (b) is a part of the Permitted Restructuring and is expressly
described on Disclosure Schedule 1.1 (Permitted Restructuring) hereof, provided
that each condition to Disclosure Schedule 1.1 (Permitted Restructuring) is
satisfied in connection therewith, and further provided that Holdings shall at
all times be and remain a holding company and shall not conduct any business
(other than business activities directly related to the provision of
administrative services to the Borrowers, including, but not limited to,
accounting, legal, human resources, information systems, business development
and certain marketing services) and shall not at any time own or hold any
material assets (other than the Stock of its Subsidiaries).

 

Section 6.3.  Maintenance of Assets and Properties.   Each Credit Party will
keep all material assets and properties useful and necessary in its business in
good working order and condition, ordinary wear and tear excepted, and will
cause to be made all appropriate repairs, renewals and replacements thereof.

 

Section 6.4.  Insurance; Damage to or Destruction of Collateral.    (a)  The
Credit Parties shall, at their sole cost and expense, maintain the policies of
insurance described on Disclosure Schedule 4.19 as in effect on the date hereof
or otherwise in form with such deductibles as is customary for similarly
situated businesses, and amounts and with insurers reasonably acceptable to
Agent.  Such policies of insurance (or the loss payable and additional insured
endorsements delivered to Agent) shall contain provisions pursuant to which the
insurer agrees to provide thirty (30) days prior written notice to Agent in the
event of any non-renewal, cancellation or amendment of any such insurance
policy.  If any Credit Party at any time or times hereafter shall fail to obtain
or maintain any of the policies of insurance required above, or to pay all
premiums relating thereto, Agent may at any time or times thereafter obtain and
maintain such policies of insurance and pay such premiums and take any other
action with respect thereto that Agent deems advisable; provided that Agent
shall have no obligation to obtain insurance for any Credit Party or pay any
premiums therefor, but to the extent it does obtain such insurance or pay such
premiums, Agent shall not be deemed to have waived any Default arising from any
Credit Party’s failure to maintain such insurance or pay any premiums therefor. 
All sums so disbursed by Agent hereunder, including reasonable attorneys’ fees,
court costs and other charges related thereto, shall be payable by Borrowers on
demand by the Agent and shall constitute additional Obligations hereunder
secured by the Collateral.

 

(b)           Agent reserves the right at any time upon any change in any Credit
Party’s risk profile (including any change in the product mix maintained by any
Credit Party or any laws affecting the potential liability of such Credit Party)
to require additional forms and limits of insurance to, in Agent’s opinion,
adequately protect both Agent’s and Lender’s interests in all or any portion of
the Collateral and to ensure that each Credit Party

 

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is protected by insurance in amounts and with coverage customary for its
industry.  If requested by Agent, each Credit Party shall deliver to Agent from
time to time a report of a reputable insurance broker, satisfactory to Agent,
with respect to its insurance policies.

 

(c)           Each Credit Party shall deliver to Agent, in form and substance
satisfactory to Agent, endorsements to (i) all “All Risk” and business
interruption insurance naming Agent, on behalf of itself and Lenders, as loss
payee, and (ii) all general liability and other liability policies naming Agent,
on behalf of itself and Lenders, as additional insured.  Each Credit Party
irrevocably makes, constitutes and appoints Agent (and all officers, employees
or agents designated by Agent), so long as any Event of Default has occurred and
is continuing or the anticipated insurance proceeds exceed $250,000, as such
Credit Party’s true and lawful agent and attorney-in-fact for the purpose of
making, settling and adjusting claims under such “All Risk” policies of
insurance, endorsing the name of such Credit Party on any check or other item of
payment for the proceeds of such “All Risk” policies of insurance and for making
all determinations and decisions with respect to such “All Risk” policies of
insurance; provided that  Agent shall have no duty to exercise any rights or
powers granted to it pursuant to the foregoing power-of-attorney.  After
deducting from such proceeds the expenses, if any, incurred by Agent in the
collection or handling thereof, Agent may, at its option, (i) apply such
proceeds to the reduction of the Obligations in accordance with Section 2.8(b)
or (ii) permit or require the applicable Credit Party to use such money, or any
part thereof, to replace, repair, restore or rebuild the Collateral within 180
days of such casualty with materials and workmanship of substantially the same
quality as existed before the loss, damage or destruction; provided that if such
Credit Party shall not have completed or entered into binding agreements to
complete such replacement, restoration, repair or rebuilding within 180 days of
such casualty, Agent may apply such insurance proceeds to the Obligations in
accordance with Section 2.8(b).  Notwithstanding the foregoing, if the casualty
giving rise to such insurance proceeds could not reasonably be expected to have
a Material Adverse Effect and such insurance proceeds do not exceed $250,000 in
the aggregate, Agent shall permit the applicable Credit Party to replace,
restore, repair or rebuild the property; provided that if such Credit Party
shall not have completed or entered into binding agreements to complete such
replacement, restoration, repair or rebuilding within 180 days of such casualty,
Agent may apply such insurance proceeds to the Obligations in accordance with
Section 2.8(b).  All insurance proceeds that are to be made available to any
Credit Party to replace, repair, restore or rebuild the Collateral shall be
applied by Agent to reduce the outstanding principal balance of the Revolving
Loan (which application shall not result in a permanent reduction of the
Revolving Credit Commitment) and upon such application, Agent shall establish a
Reserve against the Borrowing Availability in an amount equal to the amount of
such proceeds so applied.  Thereafter, such funds shall be made available to
that Credit Party to provide funds to replace, repair, restore or rebuild the
Collateral as follows: (x) the Borrower Representative shall request a Revolving
Credit Advance be made to such Credit Party in the amount requested to be
released; (y) so long as the conditions set forth in Section 3.4, as applicable,
have been met, Revolving Lenders shall make such Revolving Credit Advance and
(z) in the case of insurance proceeds applied against the Revolving Loan, the
Reserve established with respect to such insurance proceeds shall be reduced by
the amount of such Revolving Credit Advance.  To the extent not used to replace,
repair, restore or rebuild the Collateral, such insurance proceeds shall be
applied in accordance with Section 2.8(b).

 

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Section 6.5.  Compliance with Laws.  Each Credit Party will (a) comply with all
laws, rules, regulations and orders, and all applicable restrictions imposed by
all Governmental Authorities, applicable to it and its assets and properties if
noncompliance with any such law, rule, regulation, order or restriction could
reasonably be expected to have a Material Adverse Effect, (b) conform with and
duly observe  all laws, rules and regulations and all other valid requirements
of any regulatory authority with respect to the conduct of its business,
including without limitation Titles XVIII and XIX of the Social Security Act,
Medicare Regulations, Medicaid Regulations, and all laws, rules and regulations
of Governmental Authorities, pertaining to the business of the Credit Parties
except where any such failure to comply or observe could not reasonably be
expected to have a Material Adverse Effect, and (c) obtain and maintain all
licenses, permits, certifications and approvals of all applicable Governmental
Authorities as are required for the conduct of its business as currently
conducted and herein contemplated, including without limitation professional
licenses, CLIA certifications, Medicaid Certifications and Medicare
Certifications, if failure to do so could have a Material Adverse Effect. 
Specifically, but without limiting the foregoing, and except where any such
failure to comply could not reasonably be expected to have a Material Adverse
Effect (i) each Credit Party’s billing policies, arrangements, protocols and
instructions will comply with reimbursement requirements under Medicare,
Medicaid and other medical reimbursement programs and will be administered by
properly trained personnel; and (ii) each Credit Party’s medical director
compensation arrangements and other arrangements with referring physicians will
comply with applicable state and federal self-referral and anti-kick-back laws,
including without limitation 42 U.S.C. Section 1320a-7b(b)(1) – (b)(2) 42 U.S.C.
and 42 U.S.C. Section 2395nn.

 

Section 6.6.  Inspection of Property, Books and Records.  Each Credit Party will
keep proper books of record and account in which full, true and correct entries
shall be made of all dealings and transactions in relation to its business and
activities and will permit the Agent, who may be accompanied by the
representatives of any Lender upon such Lender’s written request, to visit and
inspect any of its properties, to examine and make abstracts or copies from any
of its books and records subject to applicable confidentiality laws relating to
patient medical care records (to the extent not waived by the patient), to
conduct a collateral audit and analysis of its inventories and accounts
receivable and to discuss its affairs, finances and accounts with its officers,
employees and independent public accountants, all at such reasonable times
during regular business hours and as often as may reasonably be desired;
provided that, so long as no Default or Event of Default shall have occurred and
be continuing, the Agent shall have provided the appropriate Credit Party with
reasonable prior notice and shall conduct such visit in a manner that does not
unreasonably interfere with the conduct of such Credit Party’s business; and
provided further that Agent agrees that except (a) during the occurrence and
continuance of a Default or Event of Default, (b) in connection with any
Acquisition (other than a Permitted Acquisition) and (c) for audits of
Additional Subsidiaries pursuant to Section 6.14, no Credit Party shall be
responsible for any audit fess with respect to more than two (2) audits during
any Fiscal Year.  Representatives of each Lender will be permitted to accompany
representatives of Agent during each visit, inspection and discussion referred
to in the immediately preceding sentence.  Agent and Lenders agree that to the
extent that (x) any documents or records requested for inspection pursuant to
this Section 6.6 are, at the time of such request, subject to a legitimate
attorney-client privilege in favor of a Credit Party as a result of threatened
or potential litigation

 

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or adverse action involving such Credit Party and another Person (other than a
Lender or Agent) and (y) such disclosure would destroy such attorney-client
privilege, such Agent or Lender, as applicable, shall afford Borrower
Representative an opportunity to consult with such Agent or Lender, as
applicable, prior to disclosure of such documents or records.  Without in any
way limiting the foregoing, Borrowers will participate and will cause the chief
executive officer and the chief financial officer of the Borrowers and such
other officers of the Credit Parties as the Agent shall designate to participate
in a meeting with Agent and Lenders to discuss the financial results and
condition of the Credit Parties at least once during each year, which meeting
shall be held at such time during regular business hours and such place as may
be reasonably requested by Agent.

 

Section 6.7.  Supplemental Disclosure.  From time to time as may be reasonably
requested by Agent (which request will not be made more frequently than once
each year absent the occurrence and continuance of a Default or an Event of
Default), the Credit Parties shall supplement each Disclosure Schedule hereto,
or any representation herein or in any Loan Document, with respect to any matter
hereafter arising that, if existing or occurring as of the date of this
Agreement, would have been required to be set forth or described in such
Disclosure Schedule or as an exception to such representation or that is
necessary to correct any information in such Disclosure Schedule or
representation which has been rendered inaccurate thereby (and, in the case of
any supplements to any Disclosure Schedule, such Disclosure Schedule shall be
appropriately marked to show the changes made therein); provided that (a) no
such supplement to any such Disclosure Schedule or representation shall amend,
supplement or otherwise modify any Disclosure Schedule or representation, or be
deemed a waiver of any Default resulting from the matters disclosed therein,
except as consented to by Agent and Required Lenders in writing, and (b) no
supplement shall be required or permitted as to representations and warranties
that relate solely to the Restatement Effective Date or are expressly stated to
be made as of an earlier date.

 

Section 6.8.  Use of Proceeds.  The proceeds of Revolving Loans made on the
Restatement Effective Date shall be used by the Borrowers solely to (a) repay on
the Restatement Effective Date the principal amount of all of the outstanding
“Term Loans” under and as defined in the Existing Credit Agreement owing to GE
Capital and any other lenders under the Existing Credit Agreement on the
Restatement Effective Date, (b) to pay on the Restatement Effective Date all
accrued and unpaid interest and fees owing to GE Capital and the other lenders
under the Existing Credit Agreement, whether or not then due and payable, and
(c) pay certain fees and expenses relating to the Related Transactions, in each
case as specified in the Statement of Sources and Uses delivered by Holdings to
Agent on or prior to the Restatement Effective Date.  The proceeds of Revolving
Loans and Swingline Loans made on and after the Restatement Effective Date shall
be used by the Borrowers solely for the purpose of funding working capital and
other general corporate purposes of the Borrowers and any of their Subsidiaries
that are Credit Parties and financing all or a portion of the purchase price of
Permitted Acquisitions (other than the Subject Acquisition).  Letters of Credit
shall be used solely for general corporate purposes of the Borrowers and any of
their Subsidiaries that are Credit Parties.  No Extension of Credit and none of
the proceeds of any Extension of Credit will be used (i) in violation of any
Applicable Law or (ii) to repay all or any portion of the principal amount of
any Senior Unsecured Debt or Subordinated Debt.  GE Capital hereby acknowledges

 

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and agrees that any prepayment fee that would otherwise apply pursuant to the
Existing Credit Agreement in connection with the repayment of the outstanding
“Term Loans” under and as defined in the Existing Credit Agreement on the
Restatement Effective Date is hereby waived.

 

Section 6.9.  Further Assurances.  Each Credit Party shall, at its own cost and
expense, cause to be promptly and duly taken, executed, acknowledged and
delivered all such further acts, documents and assurances (a) as may from time
to time be necessary or as the Agent may from time to time reasonably request to
carry out the intent and purposes of the Loan Documents and the transactions
contemplated thereby, including all such actions to establish, preserve, protect
and perfect the estate, right, title and interest of the Agent to the Collateral
(including Collateral acquired after the date hereof), including first priority
Liens thereon, subject only to Liens permitted by Section 7.2, and (b) as the
Agent may from time to time reasonably request, to establish, preserve, protect
and perfect first priority Liens in favor of the Agent on any and all assets of
the Credit Parties and the proceeds thereof, now owned or hereafter acquired,
that do not constitute Collateral on the date hereof.  The Borrower
Representative shall promptly give notice to the Agent of the acquisition after
the Restatement Effective Date by any Credit Party of any Real Property
(including leaseholds in respect of Real Property) or any trademark, copyright
or patent.

 

Section 6.10.  Hedging Facilities.  Upon request of the Agent, within 60 days
after request by Agent, the Borrowers, at their sole cost and expense, shall
enter into, and cause to be maintained in effect one or more Interest Rate
Protection Agreements having terms, conditions and tenures, and being otherwise
in form and substance reasonably satisfactory to Agent, to the extent necessary
so that, until the Senior Unsecured Debt maturity date thereof, interest on
Indebtedness in a principal amount equal to at least 50% of the total
outstanding principal amount of the Senior Unsecured Debt is effectively fixed
or capped at rates which are reasonably acceptable to the Agent.  It being
understood that the entering into by Holdings of the Subject Swap on or about
the Restatement Effective Date shall count against the 50% hedge requirement
referred to in the immediately preceding sentence.

 

Section 6.11.  Environmental Matters.   Each Credit Party shall and shall cause
each Person within its control to (a) conduct its operations and keep and
maintain its Real Property in compliance with all Environmental Laws and
Environmental Permits other than noncompliance that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
(b) implement any and all investigative, remedial, removal and response actions
that are appropriate or necessary to maintain the value and marketability of the
Real Property or to otherwise comply with Environmental Laws and Environmental
Permits pertaining to the presence, generation, treatment, storage, use,
disposal, transportation or Release of any Hazardous Material on, at, in, under,
above, to, from or about any of the Real Property of any Credit Party, and (c)
promptly forward to Agent a copy of any order, notice, request for information
or any communication or report received by such Credit Party in connection with
any such violation or Release or any other matter relating to any Environmental
Laws or Environmental Permits that could reasonably be expected to result in
Environmental Liabilities in excess of $250,000, in each case whether or not any
Governmental Authority has taken or threatened any action in connection with any
violation, Release or other matter.  If Agent at any time has a reasonable basis
to believe that there may be a violation of any Environmental Laws

 

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or Environmental Permits by any Credit Party or any Environmental Liability
arising thereunder, or a Release of Hazardous Materials on, at, in, under,
above, to, from or about any of the Real Property of any Credit Party, that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, then each Credit Party shall, upon Agent’s written
request (i) cause the performance of such environmental audits including
subsurface sampling of soil and groundwater, and preparation of such
environmental reports, at the Borrowers’ expense, as Agent may from time to time
reasonably request, which shall be conducted by reputable environmental
consulting firms reasonably acceptable to Agent and shall be in form and
substance reasonably acceptable to Agent, and (ii) permit Agent or its
representatives to have access to all Real Property for the purpose of
conducting such environmental audits and testing as Agent deems appropriate,
including subsurface sampling of soil and groundwater; provided that the
Borrowers shall reimburse Agent for the costs of such audits and tests and the
same will constitute a part of the Obligations secured hereunder.

 

Section 6.12.  Landlord and Warehouseman Waivers.  The Credit Parties shall
deliver to the Agent waivers of contractual and statutory landlord’s,
mortgagee’s or warehouseman’s Liens in form and substance reasonably
satisfactory to the Agent under each lease, mortgage, warehouse agreement or
similar agreement to which any Credit Party is a party; provided that the Credit
Parties shall not be required to deliver to Agent a landlord waiver for any
leased location if each of the following conditions are met with respect to such
leased locations: (a) no books or records related to any of the Credit Parties’
Accounts or other Collateral are located at such location; (b) such leased
location is not the chief executive office of any Credit Party; and (c) the
aggregate value of all Inventory located at such leased location (valued at the
greater of cost or market value) does not exceed $100,000.  If at any time, such
leased location fails to satisfy any of the foregoing conditions in clauses (a),
(b) or (c) then, Holdings shall, or shall cause the applicable Credit Party
lessee as the case may be, to use its best efforts to obtain a landlord waiver
in form and substance reasonably satisfactory to Agent.  So long as Borrowers
have used their best efforts to obtain such required landlord waiver agreements,
the failure of any Borrower to timely deliver any such landlord waiver agreement
pursuant to the immediately preceding sentence shall not constitute a Default or
Event of Default, but shall entitle Agent to impose a Reserve against Eligible
Accounts and Eligible Inventory for purposes of determining Borrowing
Availability in an amount equal to three times the monthly rent under any such
lease, and the Inventory located at such leased location shall be excluded from
Eligible Inventory.  Without limiting the foregoing, Agent shall establish a
Reserve against Eligible Accounts and Eligible Inventory in an amount equal to
at least 3 months’ rent for any leased location where a landlord waiver in form
and substance reasonably satisfactory to Agent has not been obtained,
irrespective of whether or not such landlord waiver is required to be obtained
by any of the Credit Parties pursuant to this Section 6.12.

 

Section 6.13.  Mortgages on Real Property; Title Insurance and Survey.  Within
thirty (30) days after the acquisition of any Real Property having a fair market
value in excess of $250,000 by any Credit Party, such Credit Party will furnish
the Agent with a Mortgage covering each parcel of Real Property acquired by such
Credit Party (the “Mortgaged Property”), together with an ALTA extended coverage
lender’s policy of title insurance in a policy amount equal to one hundred
percent (100%) of the greater of (x) the purchase price of such acquired
property (including any liabilities assumed in connection with the acquisition)
or

 

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(y) the fair market value of such property, insuring such Mortgage as a valid,
enforceable first Lien on the Credit Party’s interest in the Mortgaged Property
covered thereby, subject only to Permitted Encumbrances and to such other
exceptions as are reasonably satisfactory to the Agent, together with an ALTA
survey with respect to each parcel of the Mortgaged Property acquired, in form
and substance reasonably satisfactory to the Agent, and legible copies of all
documents affecting title, which shall show all recording information.  The
policy, including each of the exceptions to coverage contained therein, shall be
subject to the approval of the Agent, and shall be issued by a title company
acceptable to the Agent.  Attached to the policy shall be any and all
endorsements reasonably required by the Agent, including (a) a comprehensive
endorsement (ALTA 100 or equivalent) covering restrictions and other matters,
(b) a broad form zoning endorsement, which specifically ensures that applicable
parking requirements, if any, have been satisfied, (c) an endorsement ensuring
that the lien of each Mortgage is valid against any applicable usury laws or
other laws prohibiting the charging of interest on interest in the state(s)
where such Mortgaged Property is located, (d) an endorsement ensuring that the
Mortgaged Property has access to a dedicated public street, (e) a revolving
credit endorsement, (f) a contiguity endorsement, (g) a survey and “same as”
endorsement and (h) an endorsement deleting the so-called “doing business”
exclusion.

 

Section 6.14.  Additional Subsidiaries.   Within 30 days (or such shorter period
of time as may be required in this Agreement in connection with the Subject
Acquisition) after the creation or acquisition of any Subsidiary by any Credit
Party, such Credit Party (other than Credit Parties that become Additional
Borrowers pursuant to Section 2.16) shall cause to be executed and delivered,
(i) by such new Subsidiary, a Subsidiary Guaranty Agreement substantially in the
form of Exhibit G to this Agreement and pursuant to which such Subsidiary shall
guarantee the payment and performance of all of the Obligations, (ii) by such
new Subsidiary, a Guarantor Security Agreement substantially in the form of
Exhibit H to this Agreement pursuant to which the Agent (for the benefit of
itself and the Lenders) shall be granted a first priority (subject to Permitted
Encumbrances) and perfected security interest in all Collateral (as defined in
the Security Agreement) of such Subsidiary that is either (x) property in which
a security interest can be granted and perfected under the Code or (y)
Intellectual Property registered with the United States Patent and Trademark
Office or the United States Copyright Office, (iii) by such new Subsidiary if it
owns any real property, a Mortgage in form and substance reasonably satisfactory
to Agent) pursuant to which the Agent (for the benefit of itself and the
Lenders) shall be granted a first priority (subject to Permitted Encumbrances)
and perfected Lien in such Mortgaged Properties together with the other
documents relating to such Mortgaged Properties described in Section 6.13, (iv)
by such Subsidiary if it owns any Intellectual Property that is registered with
the United States Patent and Trademark Office or the United States Copyright
Office, an Intellectual Property Security Agreement in substantially the form of
the Intellectual Property Security Agreement delivered by the other Credit
Parties on the Original Closing Date (or otherwise in form and substance
reasonably satisfactory to Agent) and pursuant to which the Agent (for the
benefit of itself and the Lenders) shall be granted a first priority (subject to
Permitted Encumbrances) and perfected security in all of such Intellectual
Property, (v) by the Credit Party that is such Subsidiary’s direct parent
company or companies, a Pledge Agreement substantially in the form of the Pledge
Agreement delivered by the other Credit Parties on the Original Closing Date (or
otherwise in form and substance reasonably satisfactory to the Agent) and
pursuant to which all of the Stock of such new Subsidiary owned

 

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by each such parent company shall be pledged to the Collateral Agent (for the
benefit of itself and the Lenders) on a first priority and perfected basis to
secure the Obligations, and (vi) by the applicable Credit Parties, such other
related documents (including closing certificates, legal opinions and other
documents of the types described in Exhibit I) as the Agent may reasonably
request, all in form and substance reasonably satisfactory to the Agent;
provided, however, that clause (i) above shall not apply to any newly-formed
Subsidiary that becomes an Additional Borrower in accordance with Section 2.16.

 

Section 6.15.        Compliance Program.  Each Credit Party will maintain, and
be operated in accordance with, a compliance program substantially in accordance
with the compliance program described in Schedule 6.15.

 

Section 6.16.        Cash Management Systems.  The Credit Parties will establish
and maintain the cash management systems described below (the “Cash Management
Systems”):

 

(a)           Commencing on or prior to the Restatement Effective Date, (i) the
Borrowers will, or cause each of their Subsidiaries to, request in writing and
otherwise take reasonable steps to ensure that all Account Debtors in respect of
Government Accounts forward payment directly to an account of a Credit Party
designated as a Government Receivables Deposit Account on Disclosure Schedule
6.16(a) (each a “Government Receivables Deposit Account”), (ii) the Credit
Parties (including CCS) will, or will cause each of their Subsidiaries to,
establish lock boxes (“Lock Boxes”) or at Agent’s discretion, blocked accounts
at one or more of the banks set forth in Disclosure Schedule 6.16(c) (“Blocked
Accounts”), and shall request in writing and otherwise take such reasonable
steps to ensure that all Account Debtors with respect to Private Accounts
forward payment directly to such Lock Boxes and (iii) the Credit Parties will
deposit and cause their Subsidiaries to deposit or cause to be deposited
promptly, and in any event no later than the first Business Day after the date
of receipt thereof, all cash, checks, drafts or other similar items of payment
relating to or constituting payments made in respect of any and all Collateral
(whether or not otherwise delivered to a Lock Box) into the Blocked Accounts. 
Until so deposited, all such payments shall be held in trust by each Credit
Party and any of its Subsidiaries for the Agent and shall not be commingled with
any other funds or property of any Credit Party.  On or before the Restatement
Effective Date, Borrower Representative shall have established a concentration
account in its name (the “Concentration Account”) at the bank that shall be
designated as the Concentration Account bank for Borrowers in Disclosure
Schedule 6.16(a) (the “Concentration Account Bank”) which bank shall be
reasonably satisfactory to Agent.

 

(b)           Any Borrower may maintain, in its name, an account (each a
“Disbursement Account” and collectively, the “Disbursement Accounts”) at a bank
reasonably acceptable to Agent into which Agent shall, from time to time,
deposit proceeds of Revolving Credit Advances and Swingline Advances made to the
Borrowers pursuant to Section 2.1 for use by the Borrowers solely in accordance
with the provisions of Section 6.8.

 

(c)           On or before the Restatement Effective Date (or such later date as
Agent shall consent to in writing), each Credit Party (including CCS) shall
deliver to Agent (i) for each Government Receivables Deposit Account, a
tri-party deposit account agreement between Agent,

 

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the bank at which each Government Receivables Deposit Account is maintained and
each Credit Party, in form and substance satisfactory to Agent (each a
“Government Receivables Deposit Account Agreement”), which Government
Receivables Deposit Account Agreement shall become operative on or prior to the
Restatement Effective Date, and (ii) for the accounts of Credit Parties
designated as a Blocked Account on Disclosure Schedule 6.16(c) and for the
Concentration Account and any Disbursement Accounts, a tri-party blocked account
agreement or lockbox account agreement between Agent, the bank at which such
Blocked Accounts or Disbursement Account is maintained and Credit Parties, in
form and substance satisfactory to Agent (each a “Blocked Account Agreement”),
which Blocked Account Agreement shall become operative on or prior to the
Restatement Effective Date.  Each such Blocked Account Agreement shall provide,
among other things, that from and after the Restatement Effective Date (A) with
respect to banks at which any Blocked Accounts or Disbursement Account is
maintained, such bank agrees to forward immediately all amounts in each Blocked
Account to the Concentration Account and to commence the process of daily sweeps
from each of the Concentration Accounts and Disbursement Accounts into the
Collection Account.

 

(d)           By 10:00 a.m. (New York time) on each Business Day, each Credit
Party will cause the entire available balance in each Government Receivables
Deposit Account to be transferred to the Blocked Accounts.  The balance from
time to time standing to the credit of the Blocked Accounts shall be distributed
as directed by the Credit Parties in accordance with the provisions of the
Blocked Account Agreement.  Borrowers shall not, and shall not cause or permit
any Subsidiary thereof to, accumulate or maintain cash in disbursement accounts
or payroll accounts as of any date of determination in excess of checks
outstanding against such accounts as of that date and amounts necessary to meet
minimum balance requirements.

 

(e)           So long as no Default or Event of Default has occurred and is
continuing, Borrowers may amend Disclosure Schedule 6.16(a) and (c) to add or
replace a bank, Government Receivables Deposit Account, the Concentration
Account, any Blocked Account or any Disbursement Account; provided, that (i)
Agent shall have consented in writing in advance to the opening of such account
with the relevant bank and (ii) prior to the time of the opening of such
account, Borrowers or their Subsidiaries, as applicable, and such bank shall
have executed and delivered to Agent a tri-party blocked account agreement, in
form and substance satisfactory to Agent in its sole discretion.  Borrowers
shall close any of its accounts (and establish replacement accounts in
accordance with the foregoing sentence) promptly and in any event within 30 days
following notice from Agent to Borrower Representative that the creditworthiness
of any bank holding an account is no longer acceptable in Agent’s reasonable
credit judgment, or as promptly as practicable and in any event within 60 days
following notice from Agent to Borrower Representative that the operating
performance, funds transfer or availability procedures or performance with
respect to accounts or lockboxes of the bank holding such accounts or Agent’s
liability under any tri-party blocked account agreement with such bank is no
longer acceptable in Agent’s reasonable credit judgment.

 

(f)            The Government Receivables Deposit Accounts, the Concentration
Account, the Blocked Accounts and the Disbursement Accounts shall be cash
collateral accounts, with all cash, checks and other similar items of payment in
such accounts securing payment of the Loans and all other Obligations, and in
which Borrowers and each Subsidiary

 

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thereof shall have granted a Lien to Agent, on behalf of itself and Lenders,
pursuant to the Security Agreement.

 

(g)           All amounts deposited in the Collection Account shall be deemed
received by Agent in accordance with Section 2.14 and shall be applied (and
allocated) by Agent in accordance with Section 2.10.  In no event shall any
amount be so applied unless and until such amount shall have been credited in
immediately available funds to the Collection Account.

 

(h)           Borrowers shall and shall cause its Affiliates, officers,
employees, agents, directors or other Persons acting for or in concert with
Borrowers (each a “Related Person”) to (i) hold in trust for Agent, for the
benefit of itself and Lenders, all checks, cash and other items of payment
received by Borrowers or any such Related Person, and (ii) within 1 Business Day
after receipt by Borrowers or any such Related Person of any checks, cash or
other items of payment, deposit the same into a Blocked Account or the
Concentration Account.  Borrowers and each Related Person thereof acknowledges
and agrees that all cash, checks or other items of payment constituting proceeds
of Collateral are part of the Collateral.  All proceeds of the sale or other
disposition of any Collateral, shall be deposited directly into a Blocked
Account or the Concentration Account (or if proceeds of Government Accounts into
a Government Receivables Deposit Account).

 

Section 6.17.  Accreditation and Licensing.  Each Borrower shall keep itself and
its Subsidiaries fully licensed with all licenses required to operate such
Person’s business under Applicable Law and maintain its qualification for
participation in, and payment under, Medicare, Medicaid, TRICARE, CHAMPVA and
any other federal, state or local governmental program or private program
providing for payment or reimbursement for services rendered by such Person,
except to the extent that the loss or relinquishment of such qualification would
not or could not reasonably be expected to have a Material Adverse Effect;
provided, however, that nothing in this Agreement shall require that any Credit
Party participate in the TRICARE or CHAMPVA programs if it elects not to accept
patients covered by such programs.  The Borrowers will promptly furnish the
Agent with copies of all reports and correspondence relating to any loss or
revocation (or threatened loss or revocation) of any qualification described in
this Section.

 

Section 6.18  Minimum Liquidity.   Borrowers shall at all times on and after the
Restatement Effective Date maintain a minimum amount of Borrowing Availability
and unrestricted cash on hand such that at no time shall the sum of (a) the
amount Borrowing Availability at such time plus (B) unrestricted cash on hand
(which cash shall (x) either be in Borrowers sole possession or in a deposit
account which Agent has received a tri-party account agreement in form
satisfactory to it and (y) shall not be subject to any Lien other than Liens in
favor of Agent) at such time, be less than an amount equal to 10% of the
aggregate Commitments then in effect at such time.

 

Section 6.19  Additional Covenants.   If on the Restatement Effective Date
Holdings has not acquired 100% of the outstanding voting Stock of CCS, Holdings
shall within 2 Business Days after the Restatement Effective Date consummate a
short form statutory merger (the “Statutory Merger”) of CCS pursuant to Delaware
law such that CCS shall become a

 

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wholly owned Subsidiary of Holdings not later than 2 Business Days after the
Restatement Effective Date.  Upon the consummation of the Statutory Merger, CCS
shall become and remain at all times thereafter a wholly-owned Subsidiary of
Holdings.  The aggregate purchase price consideration paid by the Credit Parties
for CCS (including any assumed indebtedness) shall not exceed $150,000,000,
subject to adjustment as provided in the CCS Purchase Agreement as in effect on
the Restatement Effective Date.

 

ARTICLE VII.

 

NEGATIVE COVENANTS

 

So long as any Lender has any Commitment hereunder or any Extension of Credit or
other Obligation (other than contingent indemnity obligations not then due)
remains outstanding, each Borrower shall, and shall cause each Credit Party to,
comply with each of the covenants in this Article VII unless compliance with
such covenants has previously been waived in writing by Agent or Lenders, as
applicable, in their sole and absolute discretion, in accordance with Section
11.5:

 

Section 7.1.  Indebtedness.  No Credit Party will, and no Credit Party will
permit any Subsidiary to, directly or indirectly, create, incur, assume,
guarantee or otherwise become or remain directly or indirectly liable with
respect to any Indebtedness, except for:

 

(a)           Indebtedness outstanding on the Restatement Effective Date to the
extent set forth in Disclosure Schedule 7.1, and any refinancings, refundings,
renewals or extensions thereof; provided, however, that after giving effect to
any such refinancings, refundings, renewals or extensions (i) the principal
amount of such Indebtedness shall not be increased, (ii) such Indebtedness shall
remain unsecured, (iii) the scheduled maturity date thereof shall not be
shortened and (iv) in the case of any such Indebtedness that constitutes
subordinated Indebtedness, no refinancing, refunding, renewal or extension
thereof shall be permitted without the prior written consent of the Agent and
Required Lenders;

 

(b)           Indebtedness under the Loan Documents;

 

(c)           Indebtedness incurred or assumed for the purpose of financing all
or any part of the cost of acquiring any asset (including through Capital
Leases) in an aggregate principal amount outstanding not greater than $500,000
at any time; provided that such Indebtedness is incurred within twenty (20) days
following such purchase and does not exceed one hundred percent (100%) of the
purchase price of the subject assets;

 

(d)           Indebtedness of a Credit Party to another Credit Party, provided
that: (i) upon request of Agent, each Credit Party shall have executed and
delivered to each other Credit Party, on the Restatement Effective Date, a
demand note (collectively, the “Intercompany Notes”) to evidence any such

 

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intercompany Indebtedness owing at any time by such Credit Party to such other
Credit Parties which Intercompany Notes shall be in form and substance
reasonably satisfactory to Agent and shall be pledged and delivered to Agent
pursuant to the applicable Pledge Agreement or Security Agreement as additional
collateral security for the Obligations; (ii) each Credit Party shall record all
intercompany transactions on its books and records in a manner reasonably
satisfactory to Agent; (iii) the obligations of each Credit Party under any such
Intercompany Notes shall be subordinated to the Obligations of such Credit Party
hereunder in a manner reasonably satisfactory to Agent; and (iv) no Default
would occur and be continuing after giving effect to any such proposed
intercompany loan;

 

(e)           Indebtedness consisting of Guaranteed Obligations to the extent
that such Guaranteed Obligations are permitted pursuant to Section 7.3 or to the
extent that the underlying Indebtedness being guaranteed is expressly permitted
pursuant to this Section 7.1;

 

(f)            Indebtedness under (i) any Interest Rate Protection Agreement
entered into pursuant to Section 6.10 and (ii) the Subject Swap provided that
the Intercreditor Agreement in form and substance satisfactory to GE Capital in
its sole and absolute discretion has been duly executed by the Subject Swap
Party and the Credit Parties and delivered to GE Capital following the
Restatement Effective Date and such Intercreditor Agreement is and remains at
all times after execution and delivery thereof effective;

 

(g)           reimbursement and indemnity obligations of any Borrower in respect
of any performance bonds or similar instrument to the extent that such bond or
instrument is required under applicable law to be obtained by such Borrower as a
condition such Borrower conducting business in a particular jurisdiction within
the United States of America provided that the aggregate amount of any such
reimbursement and indemnity obligations shall not at any time to exceed the
amount maximum required under applicable state law to be posted by such Borrower
in order conduct business in such jurisdiction;

 

(h)           Indebtedness of the Borrowers incurred in connection with any
Permitted Acquisition, provided that (i) such Indebtedness (including, without
limitation, any “earnouts” or similar payment obligations) is subordinated to
the Obligations pursuant to (x) a Subordination Agreement substantially in the
form of Exhibit N duly executed by the holders of such Indebtedness or (y) a
subordination agreement in form and substance satisfactory to Agent and the
Lenders in the exercise of their good faith discretion, (ii) such Indebtedness
(including, without limitation, any “earnouts” or similar payment obligations)
is in such amounts satisfactory to Agent and the Lenders in the exercise of
their good faith discretion, and (iii) the instrument evidencing such
Indebtedness (including, without limitation, any “earnouts” or similar payment
obligations) does not contain any covenants or events of default that are more
restrictive than

 

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the covenants and events of default of the type contained in the Subordinated
Notes as in effect on the Original Closing Date or otherwise materially adverse
to Agent and Lenders;

 

(i)            Indebtedness of Holdings under the Senior Unsecured High Yield
Notes issued on the Closing Date, provided that: (i) the maximum aggregate
principal amount of such Indebtedness at any time outstanding shall not exceed
$185,000,000 less any principal repayments thereof; (ii) such Indebtedness shall
be and at all times remain unsecured; and (iii) the Senior Unsecured High Yield
Notes shall not mature prior to the date that is one year after the Commitment
Termination Date and shall not be subject to mandatory defeasance or mandatory
retirement, or be subject to any mandatory right of redemption, repurchase or
put right prior to the date that is one year after the Commitment Termination
Date, except that (x) a portion of the principal amount of the Senior Unsecured
Notes may be prepaid from the proceeds of sales of Stock of Holdings to the
extent and only to the extent such prepayment is expressly permitted under
Section 2.8(c), (y) the existence (but not the performance) of Section 4.09 of
the Senior Unsecured High Yield Note Indenture as in effect on the Restatement
Effective Date shall not violate this Section 7.1(i), but the giving of any
Change in Control Offer Notice and the occurrence of any Change of Control (in
each case as such terms are defined in the Senior Unsecured High Yield Note
Indenture) shall constitute an immediate Event of Default hereunder pursuant to
Section 8.1(1) of this Agreement, (z) a portion of the principal amount of the
Senior Unsecured Notes, together with accrued interest thereon, may be repaid in
connection with any Excess Cash Flow Offer or Net Proceeds Offer made in
accordance with the terms of the Senior Unsecured High Yield Note Indenture as
in effect on the Restatement Effective Date to the extent expressly permitted
under Section 7.5(h); and

 

(j)            other Indebtedness of the Credit Parties in an aggregate
principal amount (whether fixed or contingent, drawn or undrawn) not to exceed
at any time $500,000.

 

Section 7.2.  Liens; Negative Pledges.  No Credit Party shall create, incur,
assume or permit to exist any Lien on or with respect to its Accounts or any of
its other properties or assets (whether now owned or hereafter acquired),
including but not limited to the Collateral, except for (a) Permitted
Encumbrances, (b) Liens in existence on the date hereof and summarized on
Disclosure Schedule 7.2 securing the Indebtedness described on Disclosure
Schedule 7.1 and permitted refinancings, extensions and renewals thereof,
including extensions or renewals of any such Liens; provided that the principal
amount of the Indebtedness so secured is not increased and the Lien does not
attach to any other property or assets of any Credit Party, (c) Liens created
after the date hereof by conditional sale or other title retention agreements
(including Capital Leases) or in connection with Indebtedness permitted by
Section 7.1(c); provided that such Liens attach only to the assets subject to
such purchase money debt, (d) any Lien on any asset securing Indebtedness
permitted under Section 7.1(h) incurred or assumed for the purpose of financing
all or any part of the cost of acquiring such asset, provided that such

 

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Lien attaches to such asset concurrently with or within 90 days after the
acquisition thereof, (e) encumbrances in the nature of non-exclusive licenses of
granted by Credit Parties to customers in the ordinary course of business,
provided that such licenses do not impair in any respect the presently existing
or hereafter created Liens in favor of Agent on any of the Collateral; (f)
banker’s liens on Deposit Accounts of Credit Parties to the extent and only to
the extent that (i) such Deposit Accounts are not required pursuant to the
express terms of this Agreement or any of the other Loan Documents to be subject
to a Control Agreement in favor of Agent, or (ii) Agent shall have entered into
a Control Agreement which subordinates, waives or otherwise imposes limits upon
such Liens on terms satisfactory to Agent in its sole discretion, (g) other
Liens securing Indebtedness not exceeding $500,000 in the aggregate at any time
outstanding, so long as such Liens do not attach to any Accounts or Inventory,
and (h) the Lien existing on the Restatement Effective Date in the nature of a
pledge of cash collateral in an aggregate amount not exceeding $50,000 in favor
of Harris Trust and Savings Bank (“Harris Bank”) to secure the reimbursement
obligations of CCS under that certain outstanding letter of credit dated as of
September 9, 2002 issued by Harris Trust and Savings Bank in favor of Riggs &
Company (the “Harris Bank Letter of Credit”), provided that not later than May
24, 2004, Agent shall have received evidence reasonably satisfactory to it that
(x) the Harris Bank Letter of Credit has been cancelled and was not drawn by the
holder thereof, and (y) such Lien has been fully terminated and released and the
balance of such pledged cash collateral (after deducting any amounts then due
and owing to Harris Bank by the applicable Borrower in respect of the Harris
Bank Letter of Credit) has been returned by Harris Bank to the applicable
Borrower.  In addition, no Credit Party shall become a party to any agreement,
note, indenture or instrument, or take any other action, that would prohibit the
creation of a Lien on any of its properties or other assets in favor of Agent,
on behalf of itself and Lenders, in each case entered into in the ordinary
course of business, except operating leases, Capital Leases or Licenses which
prohibit Liens upon the assets or properties that are subject to such operating
lease, Capital Lease or License.

 

Section 7.3.  Guaranteed Obligations.  No Credit Party shall create, incur,
assume or permit to exist any Guaranteed Obligations except (a) by endorsement
of instruments or items of payment for deposit to the general account of any
Credit Party, (b) for Guaranteed Obligations incurred for the benefit of any
other Credit Party if the primary obligation is expressly permitted by this
Agreement and (c) Guaranteed Obligations in existence on the date hereof and
described on Disclosure Schedule 7.1.

 

Section 7.4.  Capital Stock; Nature of Business.  No Credit Party shall (a)
except in the connection with and as part of the Permitted Restructuring, make
any change in its capital structure as described in Disclosure Schedule 7.4,
including the issuance or sale of any shares of Stock, warrants or other
securities convertible into Stock or any revision of the terms of its
outstanding Stock; provided that so long as no Change of Control occurs as a
result of such action (i) Holdings may issue or sell shares of its common Stock
for cash so long as the proceeds thereof are applied in prepayment of the
Obligations as required by Section 2.8(c), (ii) Holdings may issue shares of its
Stock in connection with the exercise of options by employees, officers and
directors under any employee stock option plan existing on the Original Closing
Date or in connection with the exercise of any options not granted pursuant to a
stock option plan but in connection with any Acquisition or granted to new
hires; provided that (x) such options and plans shall not provide in the
aggregate for the issuance of options to acquire more than 40% of

 

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the common Stock of Holdings, on a fully-diluted basis, and (y) Holdings will
not in connection with either the exercise of any such options or the
reservation of shares of Stock for issuance in connection with the exercise of
any such options repurchase any of its Stock unless such repurchase is expressly
permitted under Section 7.5 of this Agreement, (iii) Holdings may issue shares
of its Stock upon the exercise of any warrants, and (iv) Holdings may issue
shares of its Stock in connection with a Permitted Acquisition, where such Stock
constitutes a portion of the purchase consideration for such Permitted
Acquisition, or (b) amend its Organizational Documents in a manner that would
adversely affect Agent or Lenders or such Credit Party’s duty or ability to
repay the Obligations.  No Credit Party shall engage in any business materially
different than the businesses currently engaged in by it on the Original Closing
Date; provided, however, that the Credit Parties shall not be deemed in
violation of this covenant as a result of any change in Credit Parties business
due solely to the consummation of the Permitted Disposition.

 

Section 7.5.  Restricted Payments.  No Credit Party shall make any Restricted
Payment, except (a) intercompany loans between Credit Parties to the extent
permitted by Section 7.1, (b) dividends and distributions by Subsidiaries of any
Credit Party paid to such Credit Party, (c) employee loans permitted under
Section 7.10(b), (d) payments of principal and interest of Intercompany Notes
issued in accordance with Section 7.1, (e) Holdings or any Subsidiary thereof
may redeem or repurchase for cash, at fair value, the equity interests of
Holdings or a Subsidiary (or options to purchase equity interests) from any
director, officer or employee of Holdings or a Subsidiary upon the death,
disability, retirement or other termination of such director, officer or
employee; provided that all such repurchases under this clause (e) shall not
exceed $750,000 in any Fiscal Year, (f) Holdings may engage in cashless
exercises of stock options with its officers, employees and directors provided
that no cash or property is paid to or given by any Credit Party to such
officer, employee, director or any other Person in connection with such exercise
and no Credit Party incurs any Indebtedness in connection with such transaction,
(g) scheduled payments of interest with respect to Subordinated Debt, (h)
scheduled payments of interest with respect to the Senior Unsecured Debt, (i)
prepayments of a portion of principal of Senior Unsecured Debt from the proceeds
of sales Stock of Holdings to the extent and only to the extent such prepayment
is expressly permitted under Section 2.8(c), and prepayments of principal of
Senior Unsecured Debt and accrued interest thereon pursuant to any Excess Cash
Flow Offer or any Net Proceeds Offer and (j) payments of any Buydown Amount (as
such term is defined in the Subject Swap Documents) from time to time owing by
Holdings to the Subject Swap Counterparty under the Subject Swap Documents to
the extent and only to the extent that the Intercreditor Agreement in form and
substance satisfactory to GE Capital in its sole and absolute discretion has
been duly executed by the Subject Swap Party and the Credit Parties and
delivered to GE Capital following the Restatement Effective Date and such
Intercreditor Agreement is and remains at all times after execution and delivery
thereof effective; provided that, in each case with respect to clauses (d), (e),
(f), (g), (i) and (j) above (and both before and after giving effect to any such
Restricted Payment) (i) no Default or Event of Default has occurred and is
continuing at the time of such proposed Restricted Payment, (ii) the chief
financial officer of Holdings shall have delivered to Agent a certificate, in
form and substance reasonably satisfactory to Agent, demonstrating on a pro
forma basis after giving effect to any such Restricted Payment compliance with
the minimum liquidity covenant in Section 6.18 and actual and pro forma
compliance with the financial covenants in Sections 7.15, 7.16 and 7.17,

 

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and (iii) the Restricted Payments shall be made at such times as will permit the
delivery of financial statements necessary to determine current compliance with
the financial covenants set forth herein prior to each such Restricted Payment.

 

Section 7.6.  No Restrictions on Subsidiary Distributions to Borrowers.   Except
as provided in this Agreement, the Borrowers will not and will not permit any of
their Subsidiaries directly or indirectly to create or otherwise cause or suffer
to exist or become effective any consensual encumbrance or restriction of any
kind on the ability of any such Subsidiary to (a) pay dividends or make any
other distribution on any of such Subsidiary’s Stock owned by any Borrower or
any other Subsidiary, (b) pay any Indebtedness owed to the Borrowers or any
other Subsidiary, (c) make loans or advances to any Borrower or any other
Subsidiary or (d) transfer any of its property or assets to any Borrower or any
other Subsidiary.

 

Section 7.7.  ERISA.  No Credit Party shall, or shall cause or permit any member
of a Controlled Group to, cause or permit to occur an event that could result in
the imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event
could reasonably be expected to have a Material Adverse Effect.

 

Section 7.8.  Consolidations; Mergers; Sales of Assets; Creation of
Subsidiaries.  No Credit Party will (a) consolidate or merge with or into any
other Person other than the merger of a wholly owned Subsidiary of a Borrower
with and into a Borrower (provided that such Borrower is the surviving
corporation) or another wholly owned Subsidiary of a Borrower, (b) sell, lease
or otherwise transfer, or grant any Person an option to acquire, directly or
indirectly, any of its properties or assets or consummate any Asset Disposition,
other than (i) sales of Inventory and data collection and management services
for fair value in the ordinary course of businesses, (ii) dispositions of
Temporary Cash Investments, (iii) dispositions of obsolete or worn-out property
in the ordinary course of business provided that the aggregate fair market value
of all such assets disposed of pursuant to this clause (b)(iii) after the date
hereof does not exceed $250,000 in any Fiscal Year, (iv) dispositions for cash
and fair value of Equipment, Fixtures, and other assets that the Borrowers
determine in good faith are no longer used or useful in the business of the
Credit Parties; provided that (x) immediately after any such disposition the
aggregate fair market value of all such assets disposed of pursuant to this
clause (b)(iv) after the Original Closing Date does not exceed $1,000,000 and
the aggregate fair market value of all such assets disposed of during the Fiscal
Year in which such disposition is made does not exceed $500,000, and (y) the net
proceeds of all such Asset Dispositions under this clause (b)(iv) are applied to
prepay the Loan pursuant to Section 2.8(b), (v) sale or settlement of disputed
or delinquent Accounts at a discount in the ordinary course of Borrowers’
business and consistent with past practice as of the Original Closing Date;
provided that the aggregate face amount of all such Accounts does not exceed
$100,000 in any Fiscal Year, (vi) the sale or issuance of any Subsidiary’s
capital stock to a Borrower or the merger of one of more Subsidiaries of a
Borrower into another Credit Party, (vii) dispositions of property from any
Subsidiary of a Borrower to a Credit Party, including, without limitation,
Restricted Payments permitted under Section 7.5 or transfers of stock of
Subsidiaries in connection with any merger or consolidation permitted under
Section 7.8(a), (viii) the Permitted Disposition and transfers of assets from
Guarantor to a Borrower or from any Borrower to another Borrower in connection

 

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with and as part of the Permitted Restructuring; and (ix) dispositions for cash
and fair value of hyperbaric oxygen chambers, provided that the aggregate fair
market value of all such assets disposed of pursuant to this clause (b)(xii)
after the Original Closing Date does not exceed $750,000, or (c) shall form a
Subsidiary unless all applicable requirements of Sections 6.13 and 6.14 are met
with respect to such Subsidiary.

 

Section 7.9.  Purchase of Assets; Investments.  No Credit Party will acquire all
or substantially all of the assets of, engage in any joint venture or
Partnership with any Person, or make, acquire or own any Investment other than
(a) Cash Equivalents or Temporary Cash Investments; (b) Investments in another
Credit Party; (c) Investments existing on the Restatement Effective Date and
described on Disclosure Schedule 7.9, (d) Permitted Acquisitions; and (e) other
Investments not exceeding $500,000 in the aggregate at any time outstanding. 
Without limiting the generality of the foregoing, no Credit Party will (i)
except in connection with Permitted Acquisitions and subject to compliance with
Section 6.14, acquire or create any Subsidiary without the consent of the
Required Lenders or (ii) engage in any joint venture or partnership with any
other Person.

 

Section 7.10.  Transactions with Affiliates   (a) No Credit Party will, directly
or indirectly, enter into or permit to exist any transaction (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of any Credit Party on terms that are less favorable
to such Credit Party than those which might be obtained at the time from a
Person who is not an Affiliate of such Credit Party, except (i) Restricted
Payments to the extent expressly permitted under Sections 7.5(a) and (c), and
(ii) mergers and consolidations to the extent expressly permitted under Section
7.8(a).

 

(b)           No Credit Party shall enter into any lending or borrowing
transaction with any employees of any Credit Party, except with respect to loans
existing on the Restatement Effective Date and disclosed on Disclosure Schedule
7.10(b), and except loans to its respective employees (other than officers
except to the extent permitted by law) in the ordinary course of business
consistent with past practices for travel and entertainment expenses, relocation
costs and similar purposes up to a maximum of $250,000 in the aggregate at any
one time outstanding.

 

Section 7.11.  Amendments or Waivers.  Without the prior written consent of the
Agent and the Required Lenders, no Credit Party will agree to (a) any amendment
to or waiver of or in respect of any Loan Documents, or (b) any other material
amendment to or waiver of any material contract constituting a part of the
Collateral which could reasonably be expected to have a Material Adverse Effect
on the Credit Parties, (c) any amendment or waiver of any document governing any
Subordinated Debt or any Senior Unsecured Debt, or (d) any amendment, waiver or
other modification of any of the Subject Swap Documents from the form of such
documents attached as Exhibit A to the Intercreditor Agreement.

 

Section 7.12.  Fiscal Year.  The Borrowers and their Subsidiaries shall not
change their Fiscal Year from a Fiscal Year ending December 31.

 

Section 7.13.  Capital Expenditures.  The Credit Parties will not make or commit
to make any Capital Expenditures in excess of (a) $5,500,000 in the aggregate
during the

 

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Fiscal Year 2004, (b) $7,000,000 in the aggregate during the Fiscal Year 2005,
(c) $8,500,000 in the aggregate during the Fiscal Year 2006 and (d) $9,500,000
in the aggregate during any Fiscal Year on and after Fiscal Year 2007.

 

Section 7.14.  Lease Limits.   No Credit Party will become or remain liable in
any way, whether by assignment, as a guarantor or other surety or otherwise, for
the obligations of any lessee under any operating lease, synthetic lease or
similar off-balance sheet financing, if the aggregate amount of all rents (or
substantially equivalent payments) paid by the Credit Parties under all such
leases would exceed $4,000,000 in any Fiscal Year.

 

Section 7.15. Total Leverage Ratio.  The Borrowers shall not permit the Total
Leverage Ratio as of the last day of any Fiscal Quarter to be greater than the
amount specified in the table below for the corresponding period specified below
for each Fiscal Quarter.

 

Quarterly Period

 

Maximum Total Leverage Ratio

Fiscal Quarter Ended June 30, 2004

 

4.75:1.00

Fiscal Quarter Ended September 30, 2004

 

4.75:1.00

Fiscal Quarter Ended December 31, 2004

 

4.75:1.00

Fiscal Quarter Ended March 31, 2005

 

4.50:1.00

Fiscal Quarter Ended June 30, 2005

 

4.50:1.00

Fiscal Quarter Ended September 30, 2005

 

4.25:1.00

Fiscal Quarter Ended December 31, 2005

 

4.25:1.00

Fiscal Quarter Ended March 31, 2006

 

3.75:1.00

Fiscal Quarter Ended June 30, 2006

 

3.75:1.00

Fiscal Quarter Ended September 30, 2006

 

3.25:1.00

Fiscal Quarter Ended December 31, 2006

 

3.25:1.00

Fiscal Quarter Ended March 31, 2007

 

3.00:1.00

Fiscal Quarter Ended June 30, 2007

 

3.00:1.00

Fiscal Quarter Ended September 30, 2007

 

2.75:1.00

Fiscal Quarter Ended December 31, 2007

 

2.75:1.00

Fiscal Quarter Ended March 31, 2008

 

2.50:1.00

Fiscal Quarter Ended June 30, 2008

 

2.50:1.00

Fiscal Quarter Ended September 30, 2008 and each Fiscal Quarter thereafter

 

2.25:1.00

 

Section 7.16. Senior Secured Leverage Ratio.  The Borrowers shall not permit the
Senior Secured Leverage Ratio as of the last day of any Fiscal Quarter to be
greater than the amount specified in the table below for the corresponding
period specified below for each Fiscal Quarter.

 

Quarterly Period

 

Maximum Senior Secured
Leverage Ratio

Fiscal Quarter Ended June 30, 2004

 

1.50:1.00

Fiscal Quarter Ended September 30, 2004

 

1.50:1.00

 

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Fiscal Quarter Ended December 31, 2004

 

1.50:1.00

Fiscal Quarter Ended March 31, 2005

 

1.50:1.00

Fiscal Quarter Ended June 30, 2005

 

1.50:1.00

Fiscal Quarter Ended September 30, 2005

 

1.25:1.00

Fiscal Quarter Ended December 31, 2005

 

1.25:1.00

Fiscal Quarter Ended March 31, 2006

 

1.25:1.00

Fiscal Quarter Ended June 30, 2006

 

1.25:1.00

Fiscal Quarter Ended September 30, 2006

 

1.25:1.00

Fiscal Quarter Ended December 31, 2006

 

1.25:1.00

Fiscal Quarter Ended March 31, 2007 and each Fiscal Quarter thereafter

 

1.00:1.00

 

Section 7.17.  Fixed Charge Coverage Ratio.  The Borrowers shall not permit the
Fixed Charge Coverage Ratio, determined on a consolidated basis for the
Borrowers and their consolidated Subsidiaries, for the twelve (12) months ending
as of the last day of any Fiscal Quarter, to be less than the amount specified
in the table below for the corresponding period specified below for each Fiscal
Quarter.

 

Quarterly Period

 

Minimum Fixed Charge
Coverage Ratio

Fiscal Quarter Ended June 30, 2004

 

1.50:1.00

Fiscal Quarter Ended September 30, 2004

 

1.50:1.00

Fiscal Quarter Ended December 31, 2004

 

1.50:1.00

Fiscal Quarter Ended March 31, 2005

 

1.50:1.00

Fiscal Quarter Ended June 30, 2005

 

1.50:1.00

Fiscal Quarter Ended September 30, 2005

 

1.50:1.00

Fiscal Quarter Ended December 31, 2005

 

1.50:1.00

Fiscal Quarter Ended March 31, 2006

 

2.00:1.00

Fiscal Quarter Ended June 30, 2006

 

2.00:1.00

Fiscal Quarter Ended September 30, 2006

 

2.25:1.00

Fiscal Quarter Ended December 31, 2006

 

2.25:1.00

Fiscal Quarter Ended March 31, 2007

 

2.75:1.00

Fiscal Quarter Ended June 30, 2007

 

2.75:1.00

Fiscal Quarter Ended September 30, 2007

 

2.75:1.00

Fiscal Quarter Ended December 31, 2007

 

2.75:1.00

Fiscal Quarter Ended March 31, 2008 and each Fiscal Quarter thereafter

 

3.25:1.00

 

Section 7.18.  Pro Forma Adjustments.  In calculating compliance with the
covenants specified in Sections 7.15, 7.16 and 7.17, the following adjustments
shall be made to reflect the effect of acquisitions and dispositions occurring
after the Restatement Effective Date and during the relevant test period:

 

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(a)           For the purposes of Sections 7.15, 7.16 and 7.17, the EBITDA
attributable to such acquisition, based on the actual EBITDA of such acquired
entity for such period, shall be included as if such entity had been acquired on
the first day of such period to the extent that the relevant financial
information with respect to it for the portion of such period prior to such
acquisition can be determined with reasonable accuracy and shall be adjusted to
eliminate, as of the first day of such period, any Indebtedness repaid or
refinanced in such acquisition and to include any Indebtedness incurred in
connection with such acquisition (including any portion thereof used to fund the
aforementioned refinancing);

 

(b)           For the purposes of Section 7.17, Fixed Charges shall include, as
of the first day of such period and for the entire period, any Fixed Charges
associated with any acquired entity, including, any interest attributable to any
Indebtedness incurred in connection with such acquisition, but excluding any
interest or other Fixed Charges attributable to any Indebtedness refinanced in
such acquisition (including any portion thereof used to fund the aforementioned
refinancing);

 

(c)           For the purposes of Section 7.17, for any test period which occurs
prior to the date when four (4) Fiscal Quarters have ended since the Restatement
Effective Date, and that requires adjustments pursuant to clauses (i) and (ii)
above, the Fixed Charge Coverage Ratio shall be calculated by annualizing the
results for the Borrowers and their Subsidiaries before making the adjustments
referred to in such clauses and then making the adjustment described in such
clauses based on the actual results of the newly acquired entities for the
twelve (12) months ended as of the end of the relevant test period; and

 

(d)           For the purposes of Section 7.15 and 7.16, Indebtedness and Senior
Funded Debt of the Borrowers and their Subsidiaries shall be adjusted (A) upward
to reflect any Indebtedness or Senior Funded Debt incurred or assumed in
connection with such acquisition or disposition and (B) adjusted downward to
reflect any Indebtedness or Senior Funded Debt repaid, retired or disposed of in
connection with such acquisition, disposition or Service Agreement termination
to the extent that the Borrowers and/or their Subsidiaries have been released
from all liability therefor.

 

(e)           For the purposes of Sections 7.15, 7.16 and 7.17 of the EBITDA
attributable to any entity all or substantially all of whose stock, equity
interest or assets were disposed of shall be excluded as if such entity had been
disposed of on the first day of such period and shall be adjusted to eliminate,
as of the first day of such period, any Indebtedness repaid, retired or disposed
of in connection with such disposition or termination to the extent that the
Borrowers and/or the remaining Subsidiaries have been released from all
liability therefor.

 

(f)            For the purposes of Section 7.17, Fixed Charges shall exclude, as
of the first day of such period and for the entire period, and Fixed Charges
associated with any entity disposed of, including, any interest or other Fixed
Charges attributable to any Indebtedness repaid, retired or disposed of in such
disposition or termination, to the extent that the Borrowers or the remaining
Subsidiaries have been released from all liability therefor.

 

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Section 7.19.  Accounts Receivable Days Sales Outstanding.  Accounts Receivable
Days Sales Outstanding shall not at any time exceed 105 days during any three
month period commencing with the Fiscal Quarter ended March 31, 2004.

 

Section 7.20.  Sale-Leasebacks.  No Credit Party shall engage in any
sale-leaseback, synthetic lease or similar transaction involving any of its
assets.

 

ARTICLE VIII.

 

EVENTS OF DEFAULT

 

Section 8.1.  Events of Default.  The occurrence of any one or more of the
following events for any reason whatsoever (whether voluntary or involuntary, by
operation of law or otherwise) shall constitute an event of default hereunder
(each, an “Event of Default”):

 

(a)           any Borrower (i) fails to make any payment of principal of, or
interest on, or Fees owing in respect of, the Loans or any of the other
Obligations when due and payable; provided that in the case of any failure to
pay interest or fees, such failure shall have continued for a period of three
(3) days or (ii) fails to pay or reimburse Agent or Lenders for any expense
reimbursable hereunder or under any other Loan Document within ten (10) days
following Agent’s or any Lender’s demand for such reimbursement or payment of
expenses;

 

(b)           any Credit Party shall fail to observe or perform any covenant
applicable to it contained in Section 5.1, Section 5.2, Section 6.1, Section 6.2
(so far as it requires each Credit Party to maintain its existence), Section
6.5, Section 6.8, Section 6.9, Section 6.10, Section 6.16, Section 6.17, Section
6.18 or Article VII hereof;

 

(c)           any Credit Party shall fail to observe or perform any covenant or
agreement contained in the Loan Documents (other than those covered by clause
(a) or (b) above) and such failure shall have continued for a period of thirty
(30) days after notice thereof has been given to the Borrower Representative by
the Agent;

 

(d)           any representation, warranty, certification or statement made by
any Credit Party in any Related Transactions Documents or in any certificate,
disclosure schedule, financial statement or other document delivered by or on
behalf of any Credit Party pursuant to the Related Transactions Documents shall
prove to have been incorrect in any respect (or in any material respect if such
representation, warranty, certification or statement is not by its terms already
qualified as to materiality) when made (or deemed made);

 

(e)           any Credit Party shall fail to make any payment when due in
respect of any Indebtedness (other than the Obligations) the aggregate
outstanding principal amount of which Indebtedness, either individually or in
the

 

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aggregate with all other Indebtedness with respect to which the Credit Parties
have failed to make a payment, equals or exceeds $1,000,000;

 

(f)            any event or condition shall occur which (i) results in the
acceleration of the maturity of Indebtedness of any Credit Party of the holder
or holders thereof in an outstanding principal amount in excess of $1,000,000,
individually or in the aggregate with all other Indebtedness of the Credit
Parties (other than the Obligations), or (ii) enables (or, with the giving of
notice or lapse of time or both, would enable) the holder or holders of
Indebtedness of any Credit Party in an outstanding principal amount in excess of
$1,000,000, individually or in the aggregate with all other Indebtedness of the
Credit Parties (other than the Obligations), or any Person acting on such
holder’s behalf to accelerate the maturity of any such Indebtedness, or (iii)
results in a violation of, or a default under, any provision of the
Organizational Documents of any Credit Party;

 

(g)           any Credit Party shall (i) commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its properties or assets, (ii) consent to any such relief or to the appointment
of or taking possession by any such official in an involuntary case or other
proceeding commenced against it, (iii) cease to be solvent (as represented in
Section 4.18) or make a general assignment for the benefit of creditors or (iv)
fail generally, not be able or admit in writing its inability to pay its debts
as they become due, or take any action in furtherance of, or indicating its
consent to, or approval of or acquiescence in any of the foregoing;

 

(h)           an involuntary case or other proceeding shall be commenced against
any Credit Party seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of sixty (60) days, or an order for relief
shall be entered against any Credit Party under any bankruptcy laws as now or
hereafter in effect, or any Credit Party shall take any action in furtherance
of, or indicating its consent to, or approval of or acquiescence in any of the
foregoing;

 

(i)            (i) institution of any steps by any Borrower or any member of the
Controlled Group or any other Person to terminate a Pension Plan if, as a result
of such termination, such Borrower or any member of the Controlled Group could
reasonably be expected to be required to make a contribution to such Pension
Plan, or could incur a liability or obligation to such Pension Plan, in excess
of $1,000,000, (ii) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under Section 302 of ERISA, (iii) there
shall

 

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occur any withdrawal or partial withdrawal from a Multiemployer Plan and the
withdrawal liability (without unaccrued interest) to Multiemployer Plans as a
result of such withdrawal (including any outstanding withdrawal liability that
any Borrower and the members of the Controlled Group have incurred on the date
of such withdrawal) exceeds $1,000,000, (iv) with respect to any Plan, any
Borrower or any member of the Controlled Group shall incur an accumulated
funding deficiency or request a funding waiver from the IRS, or (v) there shall
occur an ERISA Event or a non-exempt prohibited transaction within the meaning
of Section 406 of ERISA or IRC Section 4975; provided, that the events listed in
clauses (iv) and (v) hereof shall constitute Events of Default only if the
liability, deficiency or waiver request, whether or not assessed, could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect;

 

(j)            (i)            Any member of a Controlled Group shall engage in
any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975
of the IRC) involving any Plan, (ii) any “accumulated funding deficiency” (as
defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Plan or any Lien in favor of the PBGC or a Plan (other than a
Permitted Encumbrance) shall arise on the assets of any Borrower or any
Controlled Group, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, with
Reportable Event or commencement of proceedings or appointment of a trustee is,
in the reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) any
Borrower, any of its Subsidiaries or any member of any Controlled Group shall,
or in the reasonable opinion of the Required Lenders is likely to, incur any
liability in connection with a withdrawal from, or the insolvency or
reorganization of, any Multi-employer Plan or (vi) any other similar event or
condition shall occur or exist with respect to a Plan; and in each case in
clauses (i) through (vi) above, such event or condition, together with all other
such events or conditions, if any, could reasonably be expected to have a
Material Adverse Effect;

 

(k)           a judgment or order for the payment of money which, individually
or when aggregated with other such judgments or orders, equals or exceeds
$1,000,000, shall be rendered against any Credit Party and such judgment or
order shall continue unsatisfied and unstayed for a period of ten (10) days or
any judgment shall be rendered against any Credit Party that exceeds by more
than $1,000,000 any insurance coverage applicable thereto as to which the
insurance company has acknowledged coverage and such judgment or order shall
continue unsatisfied and unstayed for a period of ten (10) days;

 

(l)            (i) a Change of Control shall occur; or (ii) any “Change in
Control” under and as defined in the Senior Unsecured High Yield Note Indenture

 

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or other event (including, without limitation, the giving by Holdings of any
“Change of Control Offer” notice (as defined in Senior Unsecured High Yield Note
Indenture) to any holder of Senior Unsecured High Yield Notes, but excluding any
Excess Cash Flow Offer or Net Proceeds Offer, in each case to the extent
expressly permitted in Section 7.5(h)) shall occur under any of the Senior
Unsecured High Yield Note Documents which requires Holdings or any other Credit
Party to make an offer to one or more of the holders of such Indebtedness to
repurchase, redeem or retire all or any portion of such Indebtedness, or
otherwise entitles the  holder or holders of all or any portion of such
Indebtedness, or any Person acting on such holder’s behalf to accelerate the
maturity of such Indebtedness, or results in the acceleration of the maturity of
all or any portion of such Indebtedness;

 

(m)          the auditor’s report or reports on the audited statements delivered
pursuant to Section 5.1(b) shall include any material qualification (including
with respect to the scope of audit) or exception or any adverse statement as to
the ability of any Credit Party to continue as a going concern;

 

(n)           any material provision of any Related Transaction Documents shall
for any reason cease to be valid, binding and enforceable against any Credit
Party for any reason, or any Credit Party shall so assert in writing or the Lien
created by any of the Collateral Documents shall at any time fail to constitute
a valid and perfected first priority Lien subject to no prior or equal Lien
except Permitted Encumbrances on any portion of the Collateral purported to be
secured thereby which is deemed material by the Agent, or any Credit Party shall
so assert in writing;

 

(o)           any Credit Party shall be prohibited, enjoined or otherwise
materially restrained from conducting the business theretofore conducted by it
by virtue of any determination, ruling, decision, decree or order of any
Governmental Authority and such determination, ruling, decision, decree or order
remains unstayed and in effect for any period of ten (10) days beyond any period
for which any business interruption insurance policy of the Credit Parties shall
provide full coverage to such Credit Party with respect to any losses and lost
profits; or

 

(p)           any of the Related Transactions Documents (other than the Loan
Documents) shall for any reason fail to constitute the valid and binding
agreement of any party thereto, or any such party shall so assert in writing, or
refuse or fail to perform in any respect its obligations thereunder and, in each
case such failure or refusal could reasonably be expected to result in any
Credit Party incurring  a liability, individually or in the aggregate, in excess
of $1,000,000 in connection therewith or could reasonably be expected to result
in a Material Adverse Effect;

 

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(q)           any Credit Party fails to (i) obtain or maintain any operating
licenses or Environmental Permits required by environmental authorities, (ii)
begin, continue or complete any remediation activities as required by any
environmental authorities, (iii) store or dispose of any hazardous materials in
accordance with applicable environmental laws and regulations, or (iv) comply
with any environmental laws, in each case, if any such failure in clauses (i)
through (iv) above, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect;

 

(r)            any material damage to, or loss, theft or destruction of, any
Collateral, whether or not insured, or any strike, lockout, labor dispute,
embargo, condemnation, act of God or public enemy, or other casualty which
causes, for more than fifteen (15) consecutive days, the cessation or
substantial curtailment of revenue producing activities at any facility of any
Credit Party, if any such event or circumstance, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect;

 

(s)           the loss, suspension or revocation of, or failure to renew, any
license or permit now held or hereafter acquired by any Credit Party, in each
case, if such loss, suspension, revocation or failure to renew, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect;

 

(t)            any Credit Party shall be suspended or excluded from any Medicaid
Provider Agreement, Medicaid Certification, Medicare Provider Agreement,
Medicare Certification or any medical reimbursement program, and such exclusion
or suspension arises from fraud or other claims or allegations that could
reasonably be expected to have a Material Adverse Effect; or

 

(u)           any event of default shall occur under any of the Senior Unsecured
High Yield Note Documents, or any other event or condition shall occur which
enables (or, with the giving of notice or lapse of time or both, would enable)
the holder or holders of all or any portion of the Senior Unsecured High Yield
Notes, or any Person acting on such holder’s behalf to accelerate the maturity
of all or any portion of the Indebtedness evidenced by the Senior Unsecured High
Yield Notes, or results in the acceleration of the maturity of all or any
portion of such Indebtedness.

 

Section 8.2.  Remedies.

 

(a)           If any Default or Event of Default has occurred and is continuing,
Agent may, and at the written request of the Required Lenders shall, without
notice or demand, suspend the Revolving Credit Commitment with respect to
additional Advances or the incurrence of additional L/C Obligations, whereupon
any additional Advances and additional L/C Obligations shall be made or incurred
in Agent’s sole discretion (or in the sole discretion of the Required Lenders,
if such suspension occurred at their direction) so long as such Default or Event
of Default

 

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 is continuing.  If any Default or Event of Default has occurred and is
continuing, Agent may (and at the written request of Required Lenders shall),
without notice except as otherwise expressly provided herein, increase the rate
of interest applicable to the Loans in accordance with Section 2.4(c) and other
outstanding Obligations.

 

(b)           If any Event of Default has occurred and is continuing, Agent may,
and at the written request of the Required Lenders shall, without notice or
demand (i) terminate the Revolving Credit Commitment with respect to further
Advances or the incurrence of further L/C Obligations (ii) declare all or any
portion of the Obligations, including all or any portion of any Loan, to be
forthwith due and payable, and require that the L/C Obligations be either cash
collateralized as provided in Section 2.5(k) or fully supported by a back-up
letter of credit (other than a Letter of Credit issued under this Agreement)
issued for the benefit of Agent, in form and substance satisfactory to Agent,
from an issuer satisfactory to Agent, all without presentment, demand, protest
or further notice of any kind, all of which are expressly waived by the
Borrowers and each other Credit Party, or (iii) exercise any rights and remedies
provided to Agent under the Loan Documents, the other Related Transactions
Documents or at law or equity, including all remedies provided under the Code;
provided that upon the occurrence of an Event of Default specified in Sections
8.1(g) or 8.1(h), the Revolving Credit Commitment shall be immediately
terminated and all of the Obligations, including the outstanding Loans, shall
become immediately due and payable without declaration, notice or demand by any
Person.

 

Section 8.3.  Waivers by Credit Parties.   Except as otherwise provided for in
this Agreement or by applicable law, each Credit Party waives (including for
purposes of Section 12) (a) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of acceleration,
protest, default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by Agent
on which any Credit Party may in any way be liable, and hereby ratifies and
confirms whatever Agent may do in this regard, (b) all rights to notice and a
hearing prior to Agent’s taking possession or control of, or to Agent’s replevy,
attachment or levy upon the Collateral or any bond or security that might be
required by any court prior to allowing Agent to exercise any of its remedies,
and (c) the benefit of all valuation, appraisal, marshaling and exemption laws.

 

ARTICLE IX.

 

EXPENSES AND INDEMNITIES

 

Section 9.1.  Expenses.  Whether or not the transactions contemplated hereby are
consummated, the Credit Parties, jointly and severally, agree (a) to pay on
demand all fees, costs and expenses (including reasonable attorneys’ fees and
expenses and the allocated cost of internal legal staff) incurred by Agent, Lead
Arranger and any appraisers, auditors and consultants retained by the Agent or
Lead Arranger in connection with (i) the examination, review, due diligence
investigation, documentation, negotiation, closing and syndication of the
transactions contemplated herein and in the Related Transactions Documents and
in connection

 

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with the continued administration of the Loan Documents including any
amendments, modifications, consents and waivers, (ii) creating, perfecting and
maintaining Liens pursuant to the Loan Documents, including filing and recording
fees and expenses, the costs of any bonds required to be posted in respect of
future filing and recording fees and expenses, and title investigations and
(iii) any matters contemplated by or arising out of the Loan Documents,
including Agent’s customary field audit charges and the reasonable fees,
expenses and disbursements of the Agent, Lead Arranger or any accountants or
other experts retained by the Agent or Lead Arranger (including any affiliate of
Agent or Lead Arranger as shall be engaged for such purpose) in connection with
accounting and collateral audits or reviews of the Credit Parties and their
affairs, (b) to promptly pay reasonable documentation charges assessed by Agent
for amendments, waivers, consents and any of the documentation prepared by
Agent’s internal legal staff, and (c) to promptly pay all fees, costs and
expenses (including attorneys’ fees and expenses and the allocated cost of
internal legal staff) incurred by Agent and Lenders in connection with any
action to enforce any Loan Document or to collect any payments due from
Borrowers or any other Credit Party.  All fees, costs and expenses for which any
Credit Party is responsible under this Section 9.1 shall be deemed part of the
Obligations when incurred, and shall be payable on demand in accordance with
Section 2.14.

 

Section 9.2.  Indemnity.  Whether or not the transactions contemplated hereby
are consummated, the Credit Parties, jointly and severally, agree to indemnify,
pay and hold harmless each Lending Party and any subsequent holder of any of the
Notes or any other Obligation, and each of such Person’s officers, directors,
employees, attorneys, agents and Affiliates (collectively, the “Indemnitees”)
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including the fees and disbursements of
counsel for such Indemnitee and the allocated cost of internal legal staff) in
connection with any claim, investigative, administrative or judicial proceeding,
whether or not such Indemnitee shall be designated a party thereto and including
any such proceeding initiated by or on behalf of any Credit Party, and the
expenses of investigation by experts, engineers, environmental consultants and
similar technical personnel and any commission, fee or compensation claimed by
any broker (other than any broker retained by any Lending Party) asserting any
right to payment for the transactions contemplated hereby, which may be imposed
on, incurred by or asserted against such Indemnitee as a result of or in
connection with the transactions contemplated hereby or by the Loan Documents or
the other Related Transactions Documents (including, without limitation, (i)(A)
as a direct or indirect result of the presence on or under, or Release from, any
Real Property now or previously owned, leased or operated by any Credit Party of
any Hazardous Materials or any Hazardous Materials contamination, (B) arising
out of or relating to the offsite disposal of any Hazardous Materials generated
or present on any such Real Property or (C) arising out of or resulting from the
environmental condition of any such Real Property or the applicability of any
governmental requirements relating to Hazardous Materials, whether or not
occasioned wholly or in part by any condition, accident or event caused by any
act or omission of any Credit Party, and (ii) proposed and actual Extensions of
Credit under this Agreement) and the use or intended use of any Extension of
Credit or the proceeds thereof, except that the Credit Parties shall have no
obligation hereunder to an Indemnitee with respect to any liability resulting
solely from the gross negligence or willful misconduct of such Indemnitee as
finally determined by a court of competent jurisdiction.  To the extent that the
undertaking set forth in the

 

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 immediately preceding sentence may be unenforceable, each Credit Party shall
contribute the maximum portion which it is permitted to pay and satisfy under
Applicable Law to the payment and satisfaction of all such indemnified
liabilities incurred by the Indemnitees or any of them.  Without limiting the
generality of any provision of this Section, to the fullest extent permitted by
law, each Credit Party hereby waives all rights for contribution or any other
rights of recovery with respect to liabilities, losses, damages, costs and
expenses arising under or relating to Environmental Laws that it might have by
statute or otherwise against any Indemnitee, except to the extent that such
items are finally determined by a court of competent jurisdiction to have
resulted solely from the gross negligence or willful misconduct of such
Indemnitee.  An Indemnitee under this Section 9.2 shall endeavor to notify the
Borrower Representative of any event requiring indemnification within ten (10)
Business Days following such Indemnitee’s receipt of notice of commencement of
any action or proceeding, or such Indemnitee’s obtaining knowledge of the
occurrence of any event, giving rise to a claim for indemnification hereunder,
provided that the failure to give such notice shall not invalidate or otherwise
impair the rights of the Indemnitee to indemnification under this Section 9.2 or
result in any liability of such Indemnitee, the Agent or any Lender to any
Credit Party or any other Person.

 

Section 9.3.  Taxes.  The Credit Parties jointly and severally agree to pay each
Lending Party, promptly following demand therefor, all Charges (excluding income
or other similar taxes imposed on any Lender or any holder of a Note by the
jurisdictions under the laws of which such Person seeking payment is organized
or conducts business or any political subdivision thereof), including any
interest or penalties thereon, at any time payable or ruled to be payable in
respect of the existence, execution or delivery of this Agreement, the Related
Transactions Documents or the making of any Extension of Credit, and to
indemnify and hold each Lending Party, and each and every holder of the Notes or
any other Obligation harmless against liability in connection with any such
Charges.

 

Section 9.4.  Capital Adequacy; Increased Costs; Illegality; Funding Losses.

 

(a)           If any Lender shall have determined that the introduction of or
any change in after the date hereof of any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy, reserve requirements or similar requirements or compliance by any
Lender with any request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the force of law)
from any central bank or other Governmental Authority increases or would have
the effect of increasing the amount of capital, reserves or other funds required
to be maintained by such Lender and thereby reducing the rate of return on such
Lender’s capital as a consequence of its obligations hereunder, then the
Borrowers shall from time to time upon demand by such Lender (with a copy of
such demand to the Agent) promptly pay to the Agent, for the account of such
Lender, additional amounts sufficient to compensate such Lender for such
reduction.  A certificate as to the amount of such reduction that, at a minimum,
shows the basis of the computation thereof submitted by such Lender to the
Borrower Representative and to the Agent shall be conclusive and binding on the
Borrowers for all purposes, absent manifest error.

 

(b)           If, as a result of either (i) the introduction of or any change in
any law or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline

 

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or request from any central bank or other Governmental Authority (whether or not
having the force of law), there shall be any increase in the cost to any Lender
of agreeing to make or making, funding or maintaining any Loan, then the
Borrowers shall from time to time, upon demand by such Lender (with a copy of
such demand to the Agent), promptly pay to the Agent for the account of such
Lender additional amounts sufficient to compensate such Lender for such
increased cost.  A certificate as to the amount of such increased cost,
submitted to the Borrower Representative and to the Agent by such Lender, shall
be conclusive and binding on the Borrowers for all purposes, absent manifest
error.

 

(c)           Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any Loan based on LIBOR,
then, unless that Lender is able to make or to continue to fund or to maintain
such LIBOR Loan at another branch or office of that Lender without, in that
Lender’s opinion, adversely affecting it or its Loans or the income obtained
therefrom, on notice thereof and demand therefor by such Lender to the Borrower
Representative through the Agent, (i) the obligation of such Lender to agree to
make or to make or to continue to fund or maintain LIBOR Loans shall terminate
and (ii) all outstanding LIBOR Loans shall be deemed automatically converted
into Base Rate Loans.

 

(d)           To induce Lenders to permit LIBOR Loans on the terms provided
herein, if (i) any LIBOR Loan is repaid in whole or in part prior to the last
day of any applicable LIBOR Period (whether that repayment is made pursuant to
any provision of this Agreement or any other Loan Document or is the result of
acceleration, by operation of law or otherwise), (ii) any Borrower shall default
in payment when due of the principal amount of or interest on any LIBOR Loan,
(iii) any Borrower shall default in making any borrowing of, Conversion into or
Continuation of any LIBOR Loan after the Borrower Representative has given
notice requesting the same in accordance herewith, or (iv) any Borrower shall
fail to make any prepayment of a LIBOR Loan after the Borrower Representative
has given a notice thereof in accordance herewith, then the Borrowers shall
indemnify and hold harmless each Lender from and against all losses, costs and
expenses resulting from or arising from any of the foregoing.  Such
indemnification shall include any loss (but excluding loss of margin) or expense
arising from the reemployment of funds obtained by it or from fees payable to
terminate deposits from which such funds were obtained.  For the purpose of
calculating amounts payable to a Lender under this subsection, each Lender shall
be deemed to have actually funded its relevant LIBOR Loan through the purchase
of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount
of such LIBOR Loan and having a maturity comparable to the relevant LIBOR
Period; provided, that each Lender may fund each of its LIBOR Loans in any
manner it sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection.  As promptly as
practicable under the circumstances, each Lender shall provide the Borrower
Representative with its written calculation of all amounts payable pursuant to
this Section 9.4(d), and such calculation shall be conclusive and binding on the
Borrowers for all purposes, absent manifest error.  The Borrowers shall pay to
Lenders all amounts required to be paid by it hereunder promptly upon demand
therefor.

 

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ARTICLE X.

 

THE AGENT

 

Section 10.1.  Appointment and Authorization.  L/C Issuer and each Lender hereby
irrevocably designates and appoints GE Capital as the Agent of L/C Issuer and
Lenders under this Agreement, and L/C Issuer and each such Lender irrevocably
authorizes GE Capital as the Agent for L/C Issuer and Lenders, to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental
thereto.  Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with L/C Issuer or any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement, the other Loan
Documents or otherwise exist against the Agent.  In performing its functions and
duties under this Agreement, Agent shall act solely as agent of Lenders and the
L/C Issuer and does not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for any Borrower or
any other Credit Party.

 

Section 10.2.  Delegation of Duties.  The Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties.  The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.  Without limiting the foregoing, the Agent may appoint one of
its affiliates as its agent to perform the functions of the Agent hereunder
relating to the advancing of funds to the Borrowers and distribution of funds to
L/C Issuer and the Lenders and to perform such other related functions of the
Agent hereunder as are reasonably incidental to such functions.

 

Section 10.3.  Agent and Affiliates.  Agent shall have the same rights and
powers under the Loan Documents as any other Lender and may exercise or refrain
from exercising the same as though it were not an Agent, and the terms “Lender”
and “Lenders” shall include the Agent in its individual capacity.  The Agent and
its Affiliates may lend money to and generally engage in any kind of business
with any Credit Party or Affiliate thereof as if it were not an Agent hereunder.

 

Section 10.4.  Action by Agent.  The duties of Agent shall be mechanical and
administrative in nature.  Agent shall not have by reason of this Agreement a
fiduciary relationship to any Lending Party or any other Person.  The
obligations of the Agent hereunder are only those expressly set forth herein and
under the other Loan Documents.  Without limiting the generality of the
foregoing, the Agent shall not be required to take any action with respect to
any Default, except as expressly provided in Article VIII.

 

Section 10.5.  Consultation with Experts.  The Agent may consult with legal
counsel (who may be counsel for any Borrower), accountants and other experts
selected by it and

 

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shall not be liable for (a) any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts, or (b) any negligence or misconduct of any of its legal counsel,
accountants or other experts, provided that Agent has exercised due care in the
selection of such Persons.

 

Section 10.6.  Liability of Agent.  Neither the Agent nor any of its directors,
officers, agents, representatives, employees or Affiliates shall be liable for
any action taken or not taken by it in connection with the Loan Documents (a)
with the consent or at the request or direction of the Required Lenders, or (b)
in the absence of its own gross negligence or willful misconduct.  Neither the
Agent nor any of its directors, officers, agents, representatives, employees or
Affiliates shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made under or in
connection with any Loan Document or any Extension of Credit hereunder, (ii) the
performance or observance of any of the covenants or agreements of any Credit
Party, (iii) the satisfaction of any condition specified in Article III, except
to confirm receipt of items required to be delivered to the Agent, (iv) the
validity, effectiveness, sufficiency or genuineness of any Loan Document or any
other instrument or writing furnished in connection therewith, or (v) the value,
validity, effectiveness, genuineness, enforceability or sufficiency of any of
the Loan Documents or for any failure of any Borrower or any other Credit Party
to perform its obligations under this Agreement or any other Loan Document.  The
Agent shall not incur any liability by acting in reliance upon any notice,
consent, certificate, statement, other writing (which may be a bank wire, telex,
facsimile transmission or similar writing) or conversation believed by it to be
genuine or to be signed by the proper party or parties.

 

Section 10.7.  Indemnification.  The L/C Issuer and each Lender shall, ratably
in accordance with its Revolving Credit Commitment (whether or not such
Commitments have been terminated), indemnify the Agent (to the extent not
reimbursed by the Credit Parties) against any cost, expense (including counsel
fees and disbursements), claim, demand, action, loss or liability (except such
as result from the Agent’s gross negligence or willful misconduct) that the
Agent may suffer or incur in connection with the Loan Documents or any action
taken or omitted by the Agent under this Agreement or any other Loan Document. 
The agreements in this Section 10.7 shall survive the termination of this
Agreement and payment of the Notes and all other amounts payable hereunder.

 

Section 10.8.  Credit Decision.  L/C Issuer and each Lender acknowledges that
neither the Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representation or warranty to it
and that no act by the Agent hereinafter taken, including any review of the
affairs of any Borrower or any other Credit Party, shall be deemed to constitute
any representation or warranty by the Agent to L/C Issuer or any Lender.  L/C
Issuer and each Lender acknowledges that it has, independently and without
reliance upon the Agent, L/C Issuer or any other Lender, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and to make the Extensions of
Credit hereunder.  L/C Issuer and each Lender also acknowledges that it will,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in connection with its taking or not
taking any action under the Loan

 

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Documents.  Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Agent hereunder, the Agent shall not have
any duty or responsibility to provide L/C Issuer or any Lender with any credit
or other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of any Borrower or any
other Credit Party which may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.

 

Section 10.9.  Successor Agent.  The Agent may resign at any time by giving
thirty (30) days’ prior written notice thereof to the Lenders and the Borrower
Representative.  Upon any such resignation, the Required Lenders shall have the
right to appoint a successor Agent which, absent the occurrence and continuance
of a Default or Event of Default, must be acceptable to the Borrower
Representative (such acceptance not to be unreasonably withheld or delayed).  If
no successor Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within thirty (30) days after the retiring
Agent gives notice of resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be an institution organized or
licensed under the laws of the United States of America or of any State thereof
and which, absent the occurrence and continuance of a Default or Event of
Default, must be acceptable to the Borrower Representative (such acceptance not
to be unreasonably withheld or delayed).  Upon the acceptance of its appointment
as Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder.  After any retiring Agent’s resignation hereunder as
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent.

 

Section 10.10.  Reliance by Agent.  The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it in good faith 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, without limitation, counsel to any Borrower), independent
accountants and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless (a) a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Agent and (b) the Agent shall have received the written agreement
of such assignee to be bound hereby as fully and to the same extent as if such
assignee were an original Lender party hereto, in each case in form satisfactory
to the Agent.  The Agent shall be fully justified in failing or refusing to take
any action under this Agreement unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate or it shall first be
indemnified to its satisfaction by the L/C Issuer and 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 any of the Loan
Documents in accordance with a request of the Required Lenders or all of the
Lenders, as may be required under this Agreement, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Notes.

 

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Section 10.11.  Notice of Default.  The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or the Borrower
Representative referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a “notice of default”.  In the event
that the Agent receives such a notice, the Agent shall give prompt notice
thereof to the L/C Issuer and the Lenders.  The Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Required Lenders; provided, that unless and until the Agent shall have
received such directions, 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 in the best interests of the L/C
Issuer and Lenders except to the extent that this Agreement expressly requires
that such action be taken, or not taken, only with the consent or upon the
authorization of the Required Lenders, or all of the Lenders, as the case may
be.

 

ARTICLE XI.

 

MISCELLANEOUS

 

Section 11.1.  Survival.  All agreements, representations and warranties made
herein shall survive the execution and delivery of this Agreement and the other
Loan Documents.  The provisions of Article IX and the indemnities contained in
this Agreement and the other Loan Documents shall survive the termination of
this Agreement.

 

Section 11.2.  No Waivers; Remedies Cumulative.  No failure or delay by the
Agent, the L/C Issuer or any Lender in exercising any right, power or privilege
under any Loan Document shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege.  The rights and remedies
herein and therein provided shall be cumulative and not exclusive of any rights
or remedies provided by law, by other agreement or otherwise.

 

Section 11.3.  Notices.  All notices, requests and other communications to any
party hereunder shall be in writing (including prepaid overnight courier,
facsimile transmission or similar writing) and shall be given to such party at
its address or facsimile number set forth in this Section or on the signature
pages hereof (or, in the case of any such Lender who becomes a Lender after the
date hereof, in a notice delivered to the Borrower Representative and the Agent
by the assignee Lender forthwith upon such assignment) or at such other address
or facsimile number as such party may hereafter specify in writing for the
purpose by notice to the Agent and the Borrower Representative.  Each such
notice, request or other communication shall be effective (a) if given by
facsimile, when transmitted to the facsimile number specified in this Section
and confirmation of receipt is received by the sender, (b) if given by mail,
upon the earlier of actual receipt and five (5) Business Days after deposit in
the United States Mail, registered or certified mail, return receipt requested,
properly addressed and with proper postage prepaid, (c) one (1) Business Day
after deposit with a reputable overnight courier property addressed and with all
charges prepaid or (d) when received, if by any other means.

 

Notices shall be addressed as follows:

 

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If to any Borrower or

 

 

Borrower Representative:

 

c/o  Curative Health Services, Inc.

 

 

150 Motor Parkway

 

 

Hauppauge, New York 11788

 

 

Attention:  Chief Financial Officer

 

 

Facsimile No: (631) 232-9323

 

 

Telephone No.: (631) 232-7015

 

 

 

With a copy to:

 

Curative Health Services, Inc.

 

 

150 Motor Parkway

 

 

Hauppauge, New York 11788

 

 

Attention: General Counsel

 

 

Facsimile No.: (631) 233-8106

 

 

Telephone No.: (631) 232-7016

 

 

 

If to Agent, L/C Issuer or GE Capital:

 

General Electric Capital Corporation

 

 

2 Bethesda Metro Center

 

 

Suite 600

 

 

Bethesda, MD 20814

 

 

Attention:

Curative Health Services, Inc.
Account Manager

 

 

Facsimile No: (301) 347-3175

 

 

Telephone No.: (301) 664-9816

 

 

 

With a copy to:

 

General Electric Capital Corporation

 

 

2 Bethesda Metro Center

 

 

Suite 600

 

 

Bethesda, MD 20814

 

 

Attention:  Legal Department

 

 

Facsimile No: (301) 664-9849

 

 

Telephone No.: (301) 664-9866

 

If to L/C Issuer or a Lender:  To the address set forth on the signature page
hereto or in the applicable Assignment Agreement.

 

Section 11.4.  Severability.  In case any provision of or obligation under this
Agreement or any other Loan Document shall be invalid, illegal or unenforceable
in any applicable jurisdiction, the validity, legality and enforceability of the
remaining provisions or obligations, or of such provision or obligation in any
other jurisdiction, shall not in any way be affected or impaired thereby.

 

Section 11.5.        Amendments and Waivers.  Any provision of this Agreement or
any other Loan Document may be amended or waived only if such amendment or
waiver is in writing and is signed by the Borrowers and the Agent (if authorized
by the Required Lenders) or the Required Lenders (and, if the rights or duties
of the Agent, the Swingline Lender or the L/C Issuer are affected thereby, by
the Agent, Swingline Lender or L/C Issuer as applicable);

 

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provided, that no such amendment or waiver shall, unless signed by all the
Lenders (i) increase or decrease any Commitment of any Lender (except for a
ratable decrease in the Commitments of all Lenders) or subject any Lender to any
additional obligation, (ii) reduce the principal of or rate of interest on any
Obligation or the amount of any Fees payable hereunder, (iii) postpone the date
fixed for any (A) payment of (1) principal of any Loan or Reimbursement
Obligation pursuant to Section 2.8, (2) of interest on any Loan or Reimbursement
Obligation or (3) any fees hereunder, or (B) termination of any Commitment, (iv)
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Loans and Reimbursement Obligations which shall be required for
the Lenders or any of them to take any action under this Section or any other
provision of this Agreement, (e) release all or substantially all of the
Collateral, (f) release all or substantially all of the Guarantors or (g) amend
this Section 11.5 or the definition of “Required Lenders”.

 

Section 11.6.  Successors and Assigns; Registration.  (a)  The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns (including any transferee of
any Note or other Obligation), except that no Borrower may assign or otherwise
transfer any of its rights under this Agreement without the prior written
consent of all Lenders.  Notwithstanding the foregoing, in the absence of an
Event of Default, each Lender covenants for the benefit of the Borrowers that it
will not assign Loans, Obligations or the Commitments (or any combination
thereof) except with the prior written consent of the Borrower Representative
and the Agent (which consent shall not be unreasonably withheld or delayed),
provided, that each Lender retains the unrestricted right to transfer, sell or
assign any or all of its interest and obligations in the Loans and the
Commitments without respect to this sentence in the following cases: (i) to any
Lender or any Affiliate of any Lender; (ii) to any Person to the extent required
to comply with any order, directive or request from any Governmental Authority;
(iii) to any Person in connection with the sale by any Lender of all or any
substantial portion of such Lender’s corporate finance or healthcare capital
portfolio; or (iv) to a Qualified Assignee.  Any assignment made pursuant to
this Section 11.6 shall be made pursuant to an Assignment Agreement
substantially in the form of Exhibit J (each such agreement referred to herein
as an “Assignment Agreement”).

 

(b)           Any assignment shall be for an equal percentage of such assignor
Lender’s Loans and its Commitment, and any such assignee Lender shall, upon its
registration in the Note Register referred to below, become a “Lender” for all
purposes hereunder.  The Agent shall receive a fee of $3,500 in connection with
any such assignment (including, without limitation, an assignment to an existing
Lender).  Upon any such assignment, the assignor Lender shall be released from
its Commitments to the extent assigned to and assumed by the assignee Lender.

 

(c)           Upon any assignment of any Note(s), the assigning Lender shall
surrender its Note(s) to the Borrower Representative for exchange or
registration of transfer, and the Borrowers will promptly execute and deliver in
exchange therefor a new Note or Note(s) of the same tenor and registered in the
name of the assignor Lender (if less than all of such Lender’s Notes are
assigned) and the name of the assignee Lender.

 

(d)           Each Lender may sell participations in all or any part of the
Loans, its Notes, its Commitments or its L/C Exposure.  Any participation by a
Lender shall be made with

 

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the understanding that all amounts payable by the Borrowers hereunder shall be
determined as if that Lender had not sold such participation, and that the
holder of any such participation shall not be entitled to require such Lender to
take or omit to take any action hereunder.  None of the Borrowers or any other
Credit Parties shall have any obligation or duty to any participant.  Neither
the Agent, L/C Issuer nor any Lender (other than the Lender selling a
participation) shall have any duty to any participant and may continue to deal
solely with the Lender selling a participation as if no such sale had occurred. 
No Lender shall, as between the Borrowers and that Lender, or Agent and/or L/C
Issuer and that Lender, be relieved of any of its obligations hereunder as a
result of any participation in all or any part of the Loans, its Note, its
Commitments or other Obligations.

 

(e)           The Agent shall maintain a register (the “Note Register”) of the
Lenders and all assignee Lenders that are the holders of all the Notes and other
Obligations issued pursuant to this Agreement.  Upon five (5) Business Days’
prior written notice to the Agent, the Agent will allow any Lender to inspect
and copy such list at the Agent’s principal place of business during normal
business hours.  Prior to the due presentment for registration of transfer of
any Note or other Obligation, the Agent may deem and treat the Person in whose
name a Note or Other Obligation is registered as the absolute owner of such Note
or Obligation for the purpose of receiving payment of principal of and premium
and interest on such Note or Obligation and for all other purposes whatsoever,
and the Agent shall not be affected by notice to the contrary.

 

(f)            Each Lender (including any assignee Lender at the time of such
assignment) represents that it (i) is acquiring its Note(s) or Obligations
solely for investment purposes and not with a view toward, or for sale in
connection with, any distribution thereof, (ii) has received and reviewed such
information as it deems necessary to evaluate the merits and risks of its
investment in such Note(s) or Obligations, (iii) is an “accredited investor”
within the meaning of Rule 501(a) under the Securities Act and (iv) has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of its investment in the Note(s) or Obligations,
including a complete loss of its investment.

 

(g)           Each Lender understands that the Notes or Obligations are being
offered only in a transaction not involving any public offering within the
meaning of the Securities Act, and that, if in the future such Lender decides to
resell, pledge or otherwise transfer the Notes or Obligations, the Notes or
Obligations may be resold, pledged or transferred only (i) to a person who such
Lender reasonably believes is a qualified institutional buyer that purchases for
its own account or for the account of a qualified institutional buyer to whom
notice is given that such resale, pledge or transfer is being made in reliance
on Rule 144A under the Securities Act or (ii)  pursuant to an exemption from
registration under the Securities Act.

 

(h)           Each Lender understands that the Notes will, unless otherwise
agreed by the Borrowers and the holder thereof, bear a legend to the following
effect:

 

THIS SECURITY IS NOT BEING REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”).  THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
AGREES FOR THE

 

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BENEFIT OF THE ISSUER THAT THIS SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1) TO A BORROWER, (2) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER THAT IS AWARE THAT THE RESALE, PLEDGE OR OTHER
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A OR (3) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT.

 

(i)            If any Note becomes mutilated and is surrendered by the Lender
with respect thereto to the Borrower Representative, or if any Lender claims
that any of its Notes have been lost, destroyed or wrongfully taken, the
applicable Borrower shall execute and deliver to such Lender a replacement
Note(s), upon the affidavit of such Lender attesting to such loss, destruction
or wrongful taking with respect to such Note(s) and such lost, destroyed,
mutilated, surrendered or wrongfully taken Note(s) shall be deemed to be
canceled for all purposes hereof.  Such affidavit shall be accepted as
satisfactory evidence of the loss, wrongful taking or destruction thereof and no
indemnity shall be required as a condition of the execution and delivery of a
replacement Note.  Any costs and expenses of the Borrowers in replacing any Note
shall be for the account of such Lender.

 

Section 11.7.  Setoff and Sharing of Payments.            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 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 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 held by such Lender, irrespective of whether such Lender shall have
made any demand under this Agreement or any Note or such Obligations and
although such Obligations my be unmatured.  Each Lender agrees promptly to
notify the Borrower Representative and Agent after any such set-off and
application made by such Lender; provided, 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 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) that such Lender may
have.  If any Lender (a “Benefited Lender”) shall at any time receive any
payment of all or part of the Loans or other Obligations or other amounts owing
to it hereunder, or interest thereon, or receive any Collateral in respect
thereof (whether voluntarily or involuntarily, by set-off, or otherwise), in a
greater proportion than any such payment to or Collateral received by any other
Lender, if any, in respect of such other Lender’s Loans, Obligations or other
amounts owing to it hereunder, or interest thereon, such Benefited Lender shall
purchase for cash from the other Lender(s) a participating interest in such
portion of each such other Lender’s Loans and other Obligations owing to it, or
shall provide such other Lender(s) with the benefits of any such Collateral, or
the proceeds thereof, as shall be necessary to cause such Benefited Lender to
share the excess payment or benefits of such Collateral or proceeds ratably with
each of the Lenders; provided, that if all or any such purchase shall be
rescinded, and the purchase price and benefits are thereafter recovered from
such Benefited

 

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Lender, such purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery, but without interest.  Each Credit
Party agrees that any Lender so purchasing a participation from any other Lender
pursuant to this Section 11.7 may, to the fullest extent permitted by law, and
notwithstanding the provisions of Section 11.6(d), exercise all of its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such purchasing Lender were the direct creditor of such Credit Party
in the amount of such participation.

 

Section 11.8.  Collateral.  Each of the Lenders represents to the Agent and each
of the other Lenders that it in good faith is not relying upon any Margin Stock
as collateral in the extension or maintenance of the credit provided for in this
Agreement.

 

Section 11.9.  Headings.  Headings and captions used in the Loan Documents
(including all exhibits and schedules thereto) are included herein and therein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.

 

Section 11.10.  Governing Law; Submission To Jurisdiction.  THIS AGREEMENT AND
EACH NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PROVISIONS THEREOF.  EACH OF THE BORROWERS AND THE OTHER CREDIT PARTIES PARTY
HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE
COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  EACH
OF THE BORROWERS AND THE OTHER CREDIT PARTIES PARTY HERETO IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH
A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.  EACH OF THE PARTIES HERETO IRREVOCABLY
CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION
11.3.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS
AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

Section 11.11.  Notice of Breach by Agent or Lender.  The Credit Parties party
hereto agree to give the Agent and the Lenders notice of any action or inaction
by the Agent or any Lender or any agent or attorney of the Agent or any Lender
in connection with this Agreement or any other Loan Document or the Obligations
of the Credit Parties under this Agreement or any other Loan Document that may
be actionable against the Agent or any Lender or any agent or attorney of the
Agent or any Lender or a defense to payment of any Obligations of the Credit
Parties under this Agreement or any other Loan Document for any reason,
including commission of a tort or violation of any contractual duty or duty
implied by law.  The Credit

 

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Parties party hereto agree, to the fullest extent that they may lawfully do so,
that unless such notice is given promptly (and in any event within ten (10) days
after any Credit Party has knowledge, or with the exercise of reasonable
diligence could have had knowledge, of any such action or inaction), no Credit
Party shall assert, and each Credit Party shall be deemed to have waived, any
claim or defense arising therefrom to the extent that the Agent or any Lender
could have mitigated such claim or defense after receipt of such notice.

 

Section 11.12.  Waiver Of Jury Trial.  EACH OF THE CREDIT PARTIES PARTY HERETO,
AGENT, L/C ISSUER AND LENDERS HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY AND TO THE FULLEST EXTENT
PERMITTED BY LAW WAIVES ANY RIGHTS THAT IT MAY HAVE TO CLAIM OR RECEIVE
CONSEQUENTIAL OR SPECIAL DAMAGES IN CONNECTION WITH ANY LEGAL PROCEEDING ARISING
OUT OF OR RELATING TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREBY.

 

Section 11.13.  Counterparts; Entire Agreement.  This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument. 
This Agreement shall become effective upon the execution of a counterpart hereof
by each of the parties hereto.  This Agreement and the other Loan Documents
(including any fee letters between Agent and one or more of the Credit Parties)
constitute the entire agreement and understanding among the parties hereto and
supersede any and all prior agreements and understandings, oral or written,
relating to the subject matter hereof; provided, however, that the provisions of
the Commitment Letter set forth in the “Syndication” section of the Commitment
Letter, together with any indemnification provisions made by Holdings in favor
of GE Capital, GECC Capital Markets Group, Inc. and their respective affiliates,
directors, officers, employees, agents, attorneys and representatives in
connection with such syndication shall survive execution and delivery of this
Agreement; provided further that the immediately preceding proviso is not
intended to limit, nor shall it be construed as limiting, the indemnification
provisions provided for in Section 9.2 and elsewhere in the Loan Documents in
favor of Lender Parties.

 

Section 11.14.  Confidentiality; Press Release.  (a)  Any information concerning
any Credit Party or its Subsidiaries or business operations or assets delivered
prior to the Restatement Effective Date and from and after the Restatement
Effective Date to the Agent or the Lenders by any Borrower or any other Credit
Party which is identified as confidential and which is not in the public domain
shall be held by the Agent or such Lender as confidential; provided, that the
Agent and each Lender may make disclosure of such information (i) to its
independent accountants and legal counsel (which Persons shall be likewise bound
by the provisions of this Section 11.14), (ii) pursuant to statutory and
regulatory requirements, (iii) pursuant to any mandatory court order or subpoena
or in connection with any legal process, (iv) pursuant to any written agreement
hereafter made between the Agent, any Lender and any Borrower or any other
Credit Party to which such information relates, which agreement permits such
disclosure, (v) as necessary in connection with the exercise of any remedy by
Agent or any Lender under the Loan Documents, (vi) consisting of general
portfolio information that does not

 

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directly or indirectly identify any Credit Party, (vii) which has heretofore
been publicly disclosed or is otherwise available to such Agent or Lender on a
non-confidential basis from a source that is not, to its knowledge, subject to a
confidentiality agreement with any Credit Party, (viii) in connection with any
litigation against any Credit Party or otherwise arising out of or relating to
the transactions contemplated under the Loan Documents to which Agent or any
Lender or its Affiliates is a party, or (ix) subject to a written agreement
containing provisions substantially the same as those set forth in this Section
11.14, to any assignee of or participant in, or prospective assignee of or
participant in, any of the Obligations; provided, however, that in the event any
assignee of a Lender has an Affiliate which is a Competitor, such assignee may
not disclose to such Affiliate any information concerning any Credit Party or
its Subsidiaries or business operations or assets which is identified as
confidential and which is not in the public domain.

 

(b)           No Credit Party or Affiliate thereof will in the future issue any
press releases or other public disclosure using the name of GE Capital or its
Affiliates or any other Lender or its Affiliates or referring to this Agreement
or the other Loan Documents without at least two (2) Business Days’ prior notice
to GE Capital and without the prior written consent of GE Capital unless (and
only to the extent that) such Credit Party or Affiliate is required to do so
under law and then, in any event, such Credit Party or Affiliate will consult
with GE Capital before issuing such press release or other public disclosure. 
Each Credit Party consents to the publication by Agent or any Lender of a
tombstone or similar advertising material relating to the financing transactions
contemplated by this Agreement; provided that Borrower Representative has been
afforded an opportunity prior to such publication to review and approve the same
(which such approval by Borrower Representative shall not be unreasonably
withheld).  Agent reserves the right to provide to industry trade organizations
information necessary and customary for inclusion in league table measurements.

 

Section 11.15.  Reinstatement.  This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
any Credit Party for liquidation or reorganization, should any Credit Party
become insolvent or make an assignment for the benefit of any creditor or
creditors or should a receiver or trustee be appointed for all or any
significant part of any Credit Party’s assets or properties, and shall continue
to be effective or to be reinstated, as the case may be, if at any time payment
and performance of the Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Obligations, whether as a “voidable preference,”
“fraudulent conveyance,” or otherwise, all as though such payment or performance
had not been made.  In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.

 

Section 11.16.  Advice of Counsel.  Each of the parties represents to each other
party hereto that it has discussed this Agreement and the other Loan Documents
and, specifically, the provisions of Sections 9.2, 11.10 and 11.12, with its
counsel.

 

Section 11.17.  No Strict Construction.  The parties hereto have participated
jointly in the negotiation and drafting of this Agreement and the other Loan
Documents.  In the event any ambiguity or question of intent or interpretation
arises, this Agreement and the other

 

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Loan Documents shall be construed as if drafted jointly by the parties hereto
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Agreement.

 

Section 11.18.  Conflict of Terms.  Except as otherwise provided in this
Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement conflicts with any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.

 

Section 11.19.  Effect of Amendment and Restatement of the Existing Credit
Agreement..

 

(a)           On the Restatement Effective Date upon the satisfaction of the
conditions precedent in Section 3.1, the Existing Credit Agreement shall be
amended and restated in its entirety.  The Borrowers will use the proceeds of
the initial Advances made on the Restatement Effective Date together with a
portion of the Senior Unsecured Debt to repay the principal amount of all of the
outstanding “Term Loans” (under and as defined in the Existing Credit
Agreement), and to pay all accrued and unpaid interest and fees owing to GE
Capital and the other lenders under the Existing Credit Agreement, whether or
not then due and payable, in accordance with Section 6.8 of the Credit Agreement
all as described in the Statement of Sources and Uses.  Any “Revolving Credit
Advances” (under and as defined in the Existing Credit Agreement) outstanding on
the Restatement Effective Date and not repaid with the proceeds of the initial
Advances made hereunder on the Restatement Effective Date shall be deemed to be
Revolving Credit Advances under this Agreement.

 

(b)           The parties hereto acknowledge and agree that (i) this Agreement
and the other Loan Documents, whether executed and delivered in connection
herewith or otherwise, do not constitute a novation or termination of the
“Obligations” (as defined in the Existing Credit Agreement) under the Existing
Credit Agreement as in effect prior to the Restatement Effective Date and which
remain outstanding and are in all respects continuing (as amended and restated
hereby), except to the extent that any such obligations have been repaid by
Borrowers on the Restatement Effective Date pursuant to the terms of this
Agreement; (ii) the Liens and security interests as granted under the Collateral
Documents securing payment of such “Obligations” are in all respects continuing
and in full force and effect after giving effect to this Agreement and the
transactions contemplated hereby; (iii) references in the Loan Documents and
Collateral Documents to the “Credit Agreement” shall be deemed to be references
to this Agreement, and to the extent necessary to effect the foregoing, each
such Loan Document and Collateral Document is hereby deemed amended accordingly,
(iv) all of the terms and provisions of the Existing Credit Agreement shall
continue to apply for the period prior to the Restatement Effective Date,
including any determinations of payment dates, interest rates, Events of Default
or any amount that may be payable to the Agent or the Lenders (or their
assignees or replacements hereunder), (v) the obligations under the Existing
Credit Agreement shall continue to be paid or prepaid on or prior to the
Restatement Effective Date, and shall from and after the Restatement Effective
Date continue to be owing and be subject to the terms of this Agreement, except
to the extent that any such obligations have been repaid by Borrowers on the
Restatement

 

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Effective Date pursuant to the terms of this Agreement, (vi) all references in
the Loan Documents and Collateral Documents to the “Lenders” or a “Lender” or to
the “Agent” shall be deemed to refer to such terms as defined in this Agreement,
and to the extent necessary to effect the foregoing, each such Loan Document and
Collateral Document is hereby deemed amended accordingly, and (vii) all
references in the Loan Documents and Collateral Documents to the “Credit
Agreement” shall be deemed to refer to this Agreement, and to the extent
necessary to effect the foregoing, each such Loan Document and Collateral
Document is hereby deemed amended accordingly.

 

(c)           The Borrowers, the Agent and the Lenders acknowledge and agree
that all principal, interest, fees, costs, reimbursable expenses and
indemnification obligations accruing or arising under or in connection with the
Existing Credit Agreement which remain unpaid and outstanding as of the
Restatement Effective Date shall be and remain outstanding and payable as an
obligation under this Agreement and the other Loan Documents.

 

Section 11.20.  New Lenders.  The parties hereto agree that as of the
Restatement Effective Date, (i) the Lenders signatory hereto shall become
“Lenders” under this Agreement and the other Loan Documents and (ii) each Lender
shall have the Commitments as set forth on signature page attached hereto
opposite the name of such Lender on the signature pages hereof.  Borrowers
hereby direct Agent to apply the proceeds of the Loans made on the Restatement
Effective Date to the repayment of certain outstanding loans and obligations of
the Borrowers owing to the “Agent” and “Lenders” under and as defined in the
Existing Credit Agreement on the Restatement Effective Date and to the payment
certain fees and expenses relating to the Related Transactions in accordance
with Section 11.19(a) and the Pay Proceeds Letter.

 

ARTICLE XII

 

CROSS-GUARANTY

 

Section 12.1.  Cross-Guaranty.  Each Borrower hereby agrees that such Borrower
is jointly and severally liable for, and hereby absolutely and unconditionally
guarantees to Agent and Lenders and their respective successors and assigns, the
full and prompt payment (whether at stated maturity, by acceleration or
otherwise) and performance of, all Obligations owed or hereafter owing to Agent
and Lenders by each other Borrower.  Each Borrower agrees that its guaranty
obligation hereunder is a continuing guaranty of payment and performance and not
of collection, that its obligations under this Section 12 shall not be
discharged until payment and performance, in full, of the Obligations has
occurred, and that its obligations under this Section 12 shall be absolute and
unconditional, irrespective of, and unaffected by,

 

(a)           the genuineness, validity, regularity, enforceability or any
future amendment of, or change in, this Agreement, any other Loan Document or
any other agreement, document or instrument to which any other Borrower is or
may become a party;

 

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(b)           the absence of any action to enforce this Agreement (including
this Section 12) or any other Loan Document or the waiver or consent by Agent
and Lenders with respect to any of the provisions thereof;

 

(c)           the existence, value or condition of, or failure to perfect its
Lien against, any security for the Obligations or any action, or the absence of
any action, by Agent and Lenders in respect thereof (including the release of
any such security);

 

(d)           the insolvency of any other Credit Party; or

 

(e)           any other action or circumstances that might otherwise constitute
a legal or equitable discharge or defense of a surety or guarantor other than
the payment and performance, in full, of the Obligations.

 

Each Borrower shall be regarded, and shall be in the same position, as principal
debtor with respect to the Obligations guaranteed hereunder.

 

Section 12.2. Waivers by Borrowers.  Each Borrower expressly waives all rights
it may have now or in the future under any statute, or at common law, or at law
or in equity, or otherwise, to compel Agent or Lenders to marshall assets or to
proceed in respect of the Obligations guaranteed hereunder against any other
Credit Party, any other party or against any security for the payment and
performance of the Obligations before proceeding against, or as a condition to
proceeding against, such Borrower.  It is agreed among each Borrower, Agent and
Lenders that the foregoing waivers are of the essence of the transaction
contemplated by this Agreement and the other Loan Documents and that, but for
the provisions of this Section 12 and such waivers, Agent and Lenders would
decline to enter into this Agreement.

 

Section 12.3.  Benefit of Guaranty.  Each Borrower agrees that the provisions of
this Section 12 are for the benefit of Agent and Lenders and their respective
successors, transferees, endorsees and assigns, and nothing herein contained
shall impair, as between any other Borrower and Agent or Lenders, the
obligations of such other Borrower under the Loan Documents.

 

Section 12.4.  Subordination of Subrogation, Etc.  Notwithstanding anything to
the contrary in this Agreement or in any other Loan Document, and except as set
forth in Section 12.7, each Borrower hereby expressly and irrevocably
subordinates to payment of the Obligations any and all rights at law or in
equity to subrogation, reimbursement, exoneration, contribution, indemnification
or set off and any and all defenses available to a surety, guarantor or
accommodation co-obligor until the Obligations are indefeasibly paid in full in
cash.  Each Borrower acknowledges and agrees that this subordination is intended
to benefit Agent and Lenders and shall not limit or otherwise affect such
Borrower’s liability hereunder or the enforceability of this Section 12, and
that Agent, Lenders and their respective successors and assigns are intended
third party beneficiaries of the waivers and agreements set forth in this
Section 12.4.

 

Section 12.5.  Election of Remedies.  If Agent or any Lender may, under
applicable law, proceed to realize its benefits under any of the Loan Documents
giving Agent or

 

123

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

 

such Lender a Lien upon any Collateral, whether owned by any Borrower or by any
other Person, either by judicial foreclosure or by non-judicial sale or
enforcement, Agent or any Lender may, at its sole option, determine which of its
remedies or rights it may pursue without affecting any of its rights and
remedies under this Section 12.  If, in the exercise of any of its rights and
remedies, Agent or any Lender shall forfeit any of its rights or remedies,
including its right to enter a deficiency judgment against any Borrower or any
other Person, whether because of any applicable laws pertaining to “election of
remedies” or the like, each Borrower hereby consents to such action by Agent or
such Lender and waives any claim based upon such action, even if such action by
Agent or such Lender shall result in a full or partial loss of any rights of
subrogation that each Borrower might otherwise have had but for such action by
Agent or such Lender.  Any election of remedies that results in the denial or
impairment of the right of Agent or any Lender to seek a deficiency judgment
against any Borrower shall not impair any other Borrower’s obligation to pay the
full amount of the Obligations.  In the event Agent or any Lender shall bid at
any foreclosure or trustee’s sale or at any private sale permitted by law or the
Loan Documents, Agent or such Lender may bid all or less than the amount of the
Obligations and the amount of such bid need not be paid by Agent or such Lender
but shall be credited against the Obligations.  The amount of the successful bid
at any such sale, whether Agent, Lender or any other party is the successful
bidder, shall be conclusively deemed to be the fair market value of the
Collateral and the difference between such bid amount and the remaining balance
of the Obligations shall be conclusively deemed to be the amount of the 
Obligations guaranteed under this Section 12, notwithstanding that any present
or future law or court decision or ruling may have the effect of reducing the
amount of any deficiency claim to which Agent or any Lender might otherwise be
entitled but for such bidding at any such sale.

 

Section 12.6.  Limitation.  Notwithstanding any provision herein contained to
the contrary, each Borrower’s liability under this Section 12 (which liability
is in any event in addition to amounts for which such Borrower is primarily
liable under Section 1) shall be limited to an amount not to exceed as of any
date of determination the greater of:

 

(a)           the net amount of all Loans advanced to any other Borrower under
this Agreement and then re-loaned or otherwise transferred to, or for the
benefit of, such Borrower; and

 

(b)           the amount that could be claimed by Agent and Lenders from such
Borrower under this Section 12 without rendering such claim voidable or
avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law after taking into account, among other
things, such Borrower’s right of contribution and indemnification from each
other Borrower under Section 12.7.

 

Section 12.7.  Contribution with Respect to Guaranty Obligations.

 

(a)           To the extent that any Borrower shall make a payment under this
Section 12 of all or any of the Obligations (other than Loans made to that
Borrower for which it is primarily liable) (a “Guarantor Payment”) that, taking
into account all other Guarantor Payments then previously or concurrently made
by any other Borrower, exceeds the amount that such

 

124

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

 

Borrower would otherwise have paid if each Borrower had paid the aggregate
Obligations satisfied by such Guarantor Payment in the same proportion that such
Borrower’s “Allocable Amount” (as defined below) (as determined immediately
prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each
of the Borrowers as determined immediately prior to the making of such Guarantor
Payment, then, following indefeasible payment in full in cash of the Obligations
and termination of the Commitments, such Borrower shall be entitled to receive
contribution and indemnification payments from, and be reimbursed by, each other
Borrower for the amount of such excess, pro rata based upon their respective
Allocable Amounts in effect immediately prior to such Guarantor Payment.

 

(b)           As of any date of determination, the “Allocable Amount” of any
Borrower shall be equal to the maximum amount of the claim that could then be
recovered from such Borrower under this Section 12 without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.

 

(c)           This Section 12.7 is intended only to define the relative rights
of Borrowers and nothing set forth in this Section 12.7 is intended to or shall
impair the obligations of Borrowers, jointly and severally, to pay any amounts
as and when the same shall become due and payable in accordance with the terms
of this Agreement, including Section 12.1.  Nothing contained in this Section
12.7 shall limit the liability of any Borrower to pay the Loans made directly or
indirectly to that Borrower and accrued interest, Fees and expenses with respect
thereto for which such Borrower shall be primarily liable.

 

(d)           The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Borrower to which such
contribution and indemnification is owing.

 

(e)           The rights of the indemnifying Borrowers against other Credit
Parties under this Section 12.7 shall be exercisable upon the full and
indefeasible payment of the Obligations and the termination of the Commitments.

 

Section 12.8.  Liability Cumulative.  The liability of Borrowers under this
Section 12 is in addition to and shall be cumulative with all liabilities of
each Borrower to Agent and Lenders under this Agreement and the other Loan
Documents to which such Borrower is a party or in respect of any Obligations or
obligation of the other Borrower, without any limitation as to amount, unless
the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.

 

[Remainder of page intentionally left blank]

 

125

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

 

IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated
Credit Agreement to be duly executed by their respective authorized
representatives on the date first above written.

 

 

BORROWERS:

 

 

 

CURATIVE HEALTH SERVICES, INC.,
a Minnesota corporation formerly known as
Curative Holding Co.

 

 

 

 

 

By:

    /s/ Thomas W. Axmacher

 

Name:

 

 

Title:

 

 

 

 

 

 

EBIOCARE.COM, INC.

 

 

 

 

 

By:

    /s/ Thomas W. Axmacher

 

Name:

 

 

Title:

 

 

 

 

 

 

HEMOPHILIA ACCESS, INC.

 

 

 

 

 

By:

/s/ William Tella

 

Name:

 

 

Title:

 

 

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

 

 

APEX THERAPEUTIC CARE, INC.

 

 

 

 

 

By:

    /s/ Thomas W. Axmacher

 

Name:

 

 

Title:

 

 

 

 

 

 

CHS SERVICES, INC.

 

 

 

 

 

By:

    /s/ Thomas W. Axmacher

 

Name:

 

 

Title:

 

 

 

 

 

 

CURATIVE HEALTH SERVICES OF NEW YORK, INC.

 

 

 

 

 

By:

    /s/ Thomas W. Axmacher

 

Name:

 

 

Title:

 

 

 

 

 

 

OPTIMAL CARE PLUS, INC.

 

 

 

 

 

By:

    /s/ Thomas W. Axmacher

 

Name:

 

 

Title:

 

 

 

 

INFINITY INFUSION, LLC

 

 

 

By: Curative Health Services Co., its Sole
Member

 

 

 

 

 

By:

    /s/ Thomas W. Axmacher

 

Name:

 

 

Title:

 

 

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

 

 

INFINITY INFUSION II, LLC

 

 

 

By: Curative Health Services Co., its Sole Member

 

 

 

 

 

By:

    /s/ Thomas W. Axmacher

 

Name:

 

 

Title:

 

 

 

 

INFINITY INFUSION CARE, LTD.

 

 

 

By: Infinity Infusion  II, LLC, its Sole General
Partner

 

 

 

By: Curative Health Services Co., the Sole
Member of Infinity Infusion II, LLC

 

 

 

 

 

By:

    /s/ Thomas W. Axmacher

 

Name:

 

 

Title:

 

 

 

 

 

 

MEDCARE, INC.

 

 

 

 

 

By:

    /s/ Thomas W. Axmacher

 

Name:

 

 

Title:

 

 

 

 

 

 

CURATIVE PHARMACY SERVICES, INC.

 

 

 

 

 

By:

    /s/ Thomas W. Axmacher

 

Name:

 

 

Title:

 

 

 

 

 

 

CRITICAL CARE SYSTEMS, INC.

 

 

 

 

 

By:

    /s/ Thomas W. Axmacher

 

Name:

 

 

Title:

 

 

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

 

 

CURATIVE HEALTH SERVICES CO.,
a Minnesota corporation formerly known as
Curative Health Services, Inc.

 

 

 

 

 

By:

    /s/ Thomas W. Axmacher

 

Name:

 

 

Title:

 

 

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

 

AGENT AND LENDERS:

 

 

GENERAL ELECTRIC CAPITAL CORPORATION, as Lender and as Agent

 

 

Revolving Credit

By:/s/ Authorized Signatory

Commitment:  $40,000,000

Name:

 

Its Duly Authorized Signatory

 

 

 

 

 

 

Payment Account:

Deutsche Bank/Banker’s Trust
New York, NY
ABA No.:  021-001-033
Account No.:  50-271-079
Account Name:  GE-HFS Cash Flow Collections
Re:  Curative Health Services, Inc.

 

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

EXHIBIT A

to

CREDIT AGREEMENT

 

AMENDED AND RESTATED REVOLVING NOTE

 

                             , 20   

 

New York, New York

 

 

$                             

 

FOR VALUE RECEIVED, the undersigned, CURATIVE HEALTH SERVICES, INC., a Minnesota
corporation formerly known as Curative Holding Co. (“Holdings”), EBIOCARE.COM,
INC., a Delaware corporation, HEMOPHILIA ACCESS, INC., a Tennessee corporation,
APEX THERAPEUTIC CARE, INC., a California corporation, CHS SERVICES, INC., a
Delaware corporation, CURATIVE HEALTH SERVICES OF NEW YORK, INC., a New York
corporation, OPTIMAL CARE PLUS, INC., a Delaware corporation, INFINITY INFUSION,
LLC, a Delaware limited liability company, INFINITY INFUSION II, LLC, a Delaware
limited liability company, INFINITY INFUSION CARE, LTD., a Texas limited
partnership, MEDCARE, INC., a Delaware corporation, CURATIVE PHARMACY SERVICES,
INC., a Delaware corporation, CURATIVE HEALTH SERVICES CO., a Minnesota
corporation formerly known as Curative Health Services, Inc., CRITICAL CARE
SYSTEMS, INC., a Delaware corporation, (collectively, the “Borrowers”), HEREBY
JOINTLY AND SEVERALLY PROMISE TO PAY to the order of GENERAL ELECTRIC CAPITAL
CORPORATION (“Lender”), at the offices of GENERAL ELECTRIC CAPITAL CORPORATION,
a Delaware corporation, as Agent for Lenders (“Agent”), at its address at 2
Bethesda Metro Center, Suite 600, Bethesda, MD 20814, or at such other place as
Agent may designate from time to time in writing, in lawful money of the United
States of America and in immediately available funds, the amount of
                          ($                          ) or, if less, the
aggregate unpaid amount of all Revolving Credit Advances made to the undersigned
under the Credit Agreement (as hereinafter defined).  Borrowers further promise
to pay interest on the outstanding unpaid principal amount hereof from the date
hereof until payment in full at the rate or rates from time to time applicable
to the Revolving Credit Advances as determined in accordance with the Credit
Agreement.  All capitalized terms used but not otherwise defined herein have the
meanings given to them in Section 1.1 of the Credit Agreement.

 

This Amended and Restated Revolving Note is one of the Revolving Notes issued
pursuant to that certain Amended and Restated Credit Agreement dated as of April
23, 2004 by and among Borrowers, the other Persons named therein as Credit
Parties, Agent, Lender and the other Persons signatory thereto from time to time
as Lenders (including all annexes, exhibits and schedules thereto, and as from
time to time amended, restated, supplemented or otherwise modified, the “Credit
Agreement”), and is entitled to the benefit and security of the Credit
Agreement, the Security Agreements and all of the other Loan Documents referred
to therein.

 

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

 

Reference is hereby made to the Credit Agreement for a statement of all of the
terms and conditions under which the Loans evidenced hereby are made and are to
be repaid.

 

The principal amount of the indebtedness evidenced hereby shall be payable in
the amounts and on the dates specified in the Credit Agreement, the terms of
which are hereby incorporated herein by reference.  Interest thereon shall be
paid until such principal amount is paid in full at such interest rates and at
such times, and pursuant to such calculations, as are specified in the Credit
Agreement.  If any payment on this Amended and Restated Revolving Note becomes
due and payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day and, with respect to payments of
principal, interest thereon shall be payable at the then applicable rate during
such extension.

 

Upon and after the occurrence of any Event of Default, the entire principal
amount of this Amended and Restated Revolving Note, together with all accrued
interest thereon, may, as provided in the Credit Agreement, and without demand,
notice or legal process of any kind, be declared, and immediately shall become,
due and payable.

 

Time is of the essence of this Amended and Restated Revolving Note.  Except as
expressly required in the Credit Agreement, demand, presentment, protest and
notice of nonpayment and protest are hereby waived by Borrowers.  Borrowers
further agree, subject only to any limitation imposed by applicable law, to pay
all expenses, including attorneys’ fees and legal expenses, incurred by Agent
and Lenders in endeavoring to collect any amounts payable hereunder which are
not paid when due, whether by acceleration or otherwise.

 

This Amended and Restated Revolving Note constitutes the amendment and
restatement of that certain Revolving Note dated June 9, 2003, issued by
Borrowers (other than Holdings) in favor of Lender in the stated principal
amount of $15,000,000 (the “Prior Note”), and this Amended and Restated
Revolving Note, among other things, evidences the joint and several obligations
of all of the Borrowers (including Holdings) to repay the Loans, accrued
interest thereon and other amounts to the Lender in accordance with the terms
hereof.  The execution and delivery of this Amended and Restated Revolving Note
shall not in any circumstances be deemed to have terminated, extinguished,
released, constituted a novation of, or discharged the indebtedness of any of
the Borrowers under the Prior Note, which indebtedness shall continue under and
be governed by this Amended and Restated Revolving Note.

 

THIS AMENDED AND RESTATED REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.  Whenever possible
each provision of this Amended and Restated Revolving Note shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provisions of this Amended and Restated Revolving Note shall be prohibited by or
invalid under applicable law, such provisions shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Amended and Restated Revolving
Note.  Whenever in this Amended and Restated Revolving Note reference is made to
Agent, Lender or Borrowers, such reference shall be deemed to include, as
applicable, a reference to their respective permitted successors and assigns and
in the case of Lender, any financial institution to which it has sold or

 

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

 

assigned all or any part of its interest in the Amended and Restated Revolving
Loan or in its commitment to make the Revolving Credit Advances as permitted by
the Amended and Restated Credit Agreement.  The provisions of this Amended and
Restated Revolving Note shall be binding upon and inure to the benefit of such
successors and assigns, except that no Borrower may assign their rights or
obligations.  Borrowers’ successors and assigns shall include, without
limitation, a receiver, trustee or debtor in possession of or for any of the
Borrowers.

 

[Remainder of page left intentionally blank; signature page follows]

 

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

 

 

CURATIVE HEALTH SERVICES, INC.,

 

a Minnesota corporation formerly known as Curative Holding Co.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

EBIOCARE.COM, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

HEMOPHILIA ACCESS, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

APEX THERAPEUTIC CARE, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

CHS SERVICES, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

[Signature Page to Revolving Note]

 

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

 

 

CURATIVE HEALTH SERVICES OF NEW YORK, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

OPTIMAL CARE PLUS, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

INFINITY INFUSION, LLC

 

 

 

By: Curative Health Services Co., its Sole Member

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

INFINITY INFUSION II, LLC

 

 

 

By: Curative Health Services Co., its Sole Member

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

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

 

 

INFINITY INFUSION CARE, LTD.

 

 

 

By: Infinity Infusion II, LLC, its Sole General Partner

 

 

 

By: Curative Health Services Co., the Sole Member of Infinity Infusion II, LLC

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

MEDCARE, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

CURATIVE PHARMACY SERVICES, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

CRITICAL CARE SYSTEMS, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

CURATIVE HEALTH SERVICES CO.,

 

 

 

a Minnesota corporation formerly known as Curative Health Services, Inc.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

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

 

EXHIBIT C

to

CREDIT AGREEMENT

 

 

SWINGLINE NOTE

 

                             , 20   

 

New York, New York

 

 

$                             

 

FOR VALUE RECEIVED, the undersigned, CURATIVE HEALTH SERVICES, INC., a Minnesota
corporation formerly known as Curative Holding Co. (“Holdings”), EBIOCARE.COM,
INC., a Delaware corporation, HEMOPHILIA ACCESS, INC., a Tennessee corporation,
APEX THERAPEUTIC CARE, INC., a California corporation, CHS SERVICES, INC., a
Delaware corporation, CURATIVE HEALTH SERVICES OF NEW YORK, INC., a New York
corporation, OPTIMAL CARE PLUS, INC., a Delaware corporation, INFINITY INFUSION,
LLC, a Delaware limited liability company, INFINITY INFUSION II, LLC, a Delaware
limited liability company, INFINITY INFUSION CARE, LTD., a Texas limited
partnership, MEDCARE, INC., a Delaware corporation, CURATIVE PHARMACY SERVICES,
INC., a Delaware corporation, CURATIVE HEALTH SERVICES CO., a Minnesota
corporation formerly known as Curative Health Services, Inc., CRITICAL CARE
SYSTEMS, INC., a Delaware corporation, (collectively, the “Borrowers”), HEREBY
JOINTLY AND SEVERALLY PROMISE TO PAY to the order of GENERAL ELECTRIC CAPITAL
CORPORATION, a Delaware corporation (“Swingline Lender”) at its address at 2
Bethesda Metro Center, Suite 600, Bethesda, MD 20814, or at such other place as
Swingline Lender may designate from time to time in writing, in lawful money of
the United States of America and in immediately available funds, the amount of
                   Dollars ($                   ) or, if less, the aggregate
unpaid amount of all Swingline Advances made to the undersigned under the Credit
Agreement (as hereinafter defined).  Borrowers further promise to pay interest
on the outstanding unpaid principal amount hereof from the date hereof until
payment in full at the rate or rates from time to time applicable to the
Swingline Advances as determined in accordance with the Credit Agreement.  All
capitalized terms used but not otherwise defined herein have the meanings given
to them in Section 1.1 of the Credit Agreement.

 

This Amended and Restated Swingline Note is issued pursuant to that certain
Amended and Restated Credit Agreement dated as of April 23, 2004 by and among
Borrowers, the other Persons named therein as Credit Parties, Agent, Swingline
Lender and the other Persons signatory thereto from time to time as Lenders
(including all annexes, exhibits and schedules thereto, and as from time to time
amended, restated, supplemented or otherwise modified, the “Credit Agreement”),
and is entitled to the benefit and security of the Credit Agreement, the
Security Agreements, and all of the other Loan Documents referred to therein. 
Reference is hereby made to the Credit Agreement for a statement of all of the
terms and conditions under which the Loans evidenced hereby are made and are to
be repaid.

 

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

 

The principal amount of the indebtedness evidenced hereby shall be payable in
the amounts and on the dates specified in the Credit Agreement, the terms of
which are hereby incorporated herein by reference.  Interest thereon shall be
paid until such principal amount is paid in full at such interest rates and at
such times, and pursuant to such calculations, as are specified in the Credit
Agreement.

 

If any payment on this Amended and Restated Swingline Note becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day and, with respect to payments of
principal, interest thereon shall be payable at the then applicable rate during
such extension.

 

Upon and after the occurrence of any Event of Default, the entire principal
amount of this Amended and Restated Swingline Note, together with all accrued
interest thereon, may, as provided in the Credit Agreement, and without demand,
notice or legal process of any kind, be declared, and immediately shall become,
due and payable.

 

Time is of the essence of this Amended and Restated Swingline Note.  Except as
expressly required in the Credit Agreement, demand, presentment, protest and
notice of nonpayment and protest are hereby waived by Borrowers.  Borrowers
further agree, subject only to any limitation imposed by applicable law, to pay
all expenses, including attorneys’ fees and legal expenses, incurred by
Swingline Lender and Agent in endeavoring to collect any amounts payable
hereunder which are not paid when due, whether by acceleration or otherwise.

 

This Amended and Restated Swingline Note constitutes the amendment and
restatement of that certain Swingline Note dated June 9, 2003, issued by
Borrowers (other than Holdings) in favor of Lender in the stated principal
amount of $5,000,000 (the “Prior Note”), and this Amended and Restated Swingline
Note, among other things, evidences the joint and several obligations of all of
the Borrowers (including Holdings) to repay the Swingline Advances, accrued
interest thereon and other amounts to the Lender in accordance with the terms
hereof.  The execution and delivery of this Amended and Restated Swingline Note
shall not in any circumstances be deemed to have terminated, extinguished,
released, constituted a novation of, or discharged the indebtedness of any of
the Borrowers under the Prior Note, which indebtedness shall continue under and
be governed by this Amended and Restated Swingline Note.

 

THIS AMENDED AND RESTATED SWINGLINE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.  Whenever possible
each provision of this Amended and Restated Swingline Note shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provisions of this Amended and Restated Swingline Note shall be prohibited by or
invalid under applicable law, such provisions shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Amended and Restated Swingline
Note.  Whenever in this Amended and Restated Swingline Note reference is made to
Agent, Swingline Lender or Borrowers, such reference shall be deemed to include,
as applicable, a reference to their respective permitted successors and assigns
and in the case of Swingline Lender, any financial

 

2

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

 

institution to which it has sold or assigned all or any part of its interest in
the Swingline Loan or in its commitment to make the Swingline Advances as
permitted by the Credit Agreement.  The provisions of this Swingline Note shall
be binding upon and inure to the benefit of such successors and assigns, except
that no Borrower may assign its rights or obligations.  Borrowers’ successors
and assigns shall include, without limitation, a receiver, trustee or debtor in
possession of or for any Borrower.

 

[Remainder of page intentionally blank; next pages are signature pages]

 

3

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

 

 

CURATIVE HEALTH SERVICES, INC.,

 

a Minnesota corporation formerly known as Curative Holding Co.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

EBIOCARE.COM, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

HEMOPHILIA ACCESS, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

APEX THERAPEUTIC CARE, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

CHS SERVICES, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

[Signature Page to Swingline Note]

 

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

 

 

CURATIVE HEALTH SERVICES OF NEW YORK, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

OPTIMAL CARE PLUS, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

INFINITY INFUSION, LLC

 

 

 

By: Curative Health Services Co., its Sole Member

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

INFINITY INFUSION II, LLC

 

 

 

By: Curative Health Services Co., its Sole Member

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

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

 

 

INFINITY INFUSION CARE, LTD.

 

 

 

By: Infinity Infusion II, LLC, its Sole General Partner

 

 

 

By: Curative Health Services Co., the Sole Member of Infinity Infusion II, LLC

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

MEDCARE, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

CURATIVE PHARMACY SERVICES, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

CRITICAL CARE SYSTEMS, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

CURATIVE HEALTH SERVICES CO.,

 

a Minnesota corporation formerly known as Curative Health Services, Inc.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

4

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EXHIBIT D-1

to

CREDIT AGREEMENT

 

NOTICE OF BORROWING

 

Reference is made to that certain Amended and Restated Credit Agreement, dated
as of April        , 2004, by and among the undersigned (“Borrower
Representative”), the other Persons signatory thereto from time to time as
Borrowers, General Electric Capital Corporation, a Delaware corporation, as
agent (“Agent”), the other Persons signatory thereto from time to time as
Lenders (including all annexes, exhibits and schedules thereto, and as from time
to time amended, restated, supplemented or otherwise modified, the “Credit
Agreement”).  All capitalized terms used but not otherwise defined herein have
the meanings given to them in Section 1.1 of the Credit Agreement.

Borrower Representative hereby gives irrevocable notice, pursuant to Section
2.3(a) of the Credit Agreement, of its request for an Advance to be made on
               (the “Borrowing Date”) in the aggregate principal amount of
$                 , to be made as [a Base Rate Loan] [a LIBOR Loan having LIBOR
Period of [          ] month(s)].

 

In order to induce the Lenders to make the Advance(s) requested hereby,
Borrowers hereby represent and warrant as of the date of this Notice of
Borrowing that:

 

(i) all of the conditions precedent contained in Section 3.2 of the Credit
Agreement have been satisfied on and as of the date hereof, and will continue to
be satisfied on and as of the date of the Advance(s) requested hereby, before
and after giving effect thereto and to the application of the proceeds
therefrom;

 

(ii) all of the representations and warranties contained in Article IV of the
Credit Agreement are true on and as of the date of this Notice of Borrowing and
will be true in all material respects on and as of the applicable Borrowing Date
with the same effect as if such representations and warranties had been made on
and as of the date of this Notice of Borrowing or on and as of the applicable
Borrowing Date, as the case may be, except to the extent that such
representations and warranties are expressly stated to by made as of an earlier
date, in which case they shall be true as of such earlier date;

 

(iii) no Default or Event of Default has occurred and is continuing on the date
of this Notice of Borrowing or will have occurred and be continuing on the
applicable Borrowing Date, or will result from the Advance(s) requested in this
Notice of Borrowing; and

 

(iv) immediately before and after giving effect to the Advance requested hereby,
Borrowers have Borrowing Availability in an amount equal to not less than ten
percent (10%) of the aggregate Commitments in effect as of the date of such
requested Advance.

 

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

 

IN WITNESS WHEREOF, Borrower Representative has caused this Notice of Borrowing
to be executed and delivered by its duly authorized representative as of the
date set forth below.

 

Dated:

 

 

CURATIVE HEALTH SERVICES, INC.,
a Minnesota corporation formerly known as Curative Health Services Co.,
individually and as Borrower Representative

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

2

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

 

EXHIBIT D-2

to

CREDIT AGREEMENT

 

NOTICE OF SWINGLINE BORROWING

 

Reference is made to that certain Amended and Restated Credit Agreement, dated
as of April        , 2004, by and among the undersigned (“Borrower
Representative”), the other Persons signatory thereto from time to time as
Borrowers, General Electric Capital Corporation, a Delaware corporation, as
agent (“Agent”), the other Persons signatory thereto from time to time as
Lenders (including all annexes, exhibits and schedules thereto, and as from time
to time amended, restated, supplemented or otherwise modified, the “Credit
Agreement”).  All capitalized terms used but not otherwise defined herein have
the meanings given to them in Section 1.1 of the Credit Agreement.

 

Borrower Representative hereby gives irrevocable notice, pursuant to Section
2.6(b) of the Credit Agreement, of its request for a Swingline Advance to be
made on                        (the “Borrowing Date”) in the aggregate principal
amount of $                       , to be made as a Base Rate Loan.

 

In order to induce the Lenders to make the Swingline Advance(s) requested
hereby, Borrowers hereby represent and warrant as of the date of this Notice of
Borrowing that:

 

(i) all of the conditions precedent contained in Section 3.2 of the Credit
Agreement have been satisfied on and as of the date hereof, and will continue to
be satisfied on and as of the date of the Swingline Advance(s) requested hereby,
before and after giving effect thereto and to the application of the proceeds
therefrom;

 

(ii) all of the representations and warranties contained in Article IV of the
Credit Agreement are true on and as of the date of this Notice of Borrowing and
will be true in all material respects on and as of the applicable Borrowing Date
with the same effect as if such representations and warranties had been made on
and as of the date of this Notice of Borrowing or on and as of the applicable
Borrowing Date, as the case may be, except to the extent that such
representations and warranties are expressly stated to be made as of an earlier
date, in which case they shall be true as of such earlier date;

 

(iii) no Default or Event of Default has occurred and is continuing on the date
of this Notice of Borrowing or will have occurred and be continuing on the
applicable Borrowing Date, or will result from the Advance(s) requested in this
Notice of Swingline Borrowing; and

 

(iv) immediately before and after giving effect to the Swingline Advance
requested hereby, Borrowers have Borrowing Availability in an amount equal to
not less than ten percent (10%) of the aggregate Commitments in effect as of the
date of such requested Swingline Advance.

 

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

 

IN WITNESS WHEREOF, Borrower Representative has caused this Notice of Borrowing
to be executed and delivered by its duly authorized representative as of the
date set forth below.

 

Dated:

 

 

CURATIVE HEALTH SERVICES, INC.,
A Minnesota corporation formerly known as Curative Holding Co., individually and
as Borrower Representative

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

2

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

 

EXHIBIT E

to

CREDIT AGREEMENT

 

BORROWER SECURITY AGREEMENT

 

BORROWER SECURITY AGREEMENT (together with all amendments, supplements and
modifications, if any, from time to time hereto, this “Security Agreement”),
dated as of                      , 20     , by and among CURATIVE HEALTH
SERVICES, INC. a Minnesota corporation, EBIOCARE.COM, INC., a Delaware
corporation, HEMOPHILIA ACCESS, INC., a Tennessee corporation, APEX THERAPEUTIC
CARE, INC., a California corporation, CHS SERVICES, INC., a Delaware
corporation, CURATIVE HEALTH SERVICES OF NEW YORK, INC., a New York corporation,
OPTIMAL CARE PLUS, INC., a Delaware corporation, INFINITY INFUSION, LLC, a
Delaware limited liability company, INFINITY INFUSION II, LLC, a Delaware
limited liability company, INFINITY INFUSION CARE, LTD., a Texas limited
partnership, MEDCARE, INC., a Delaware corporation, CURATIVE PHARMACY SERVICES,
INC., a Delaware corporation (collectively, the “Grantors”), and GENERAL
ELECTRIC CAPITAL CORPORATION, a Delaware corporation, individually and in its
capacity as Agent for Lenders (“Agent”).

 

W I T N E S S T H:

 

WHEREAS, pursuant to that certain Credit Agreement, dated as of the date hereof,
by and among Grantors, the other Credit Parties signatory thereto, Agent and
Lenders (including all annexes, exhibits and schedules thereto, as from time to
time amended, restated, supplemented or otherwise modified, the “Credit
Agreement”), Lenders have, subject to certain terms and conditions, agreed to
make the Loans and to incur L/C Obligations on behalf of Grantors;

 

WHEREAS, in order to induce Agent and Lenders to enter into the Credit Agreement
and other Loan Documents and to induce Lenders to make the Loans and to incur
L/C Obligations as provided for in the Credit Agreement, Grantors have agreed to
grant a continuing Lien on the Collateral (as hereinafter defined) to secure the
Obligations;

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

I.                                         DEFINED TERMS.

 

CAPITALIZED TERMS USED IN THIS SECURITY AGREEMENT SHALL HAVE THE MEANINGS
ASCRIBED TO THEM IN THIS SECTION 1 UNLESS THE CONTEXT INDICATES OTHERWISE.  ALL
CAPITALIZED TERMS USED BUT NOT OTHERWISE DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO THEM IN SECTION 1.1 OF THE CREDIT AGREEMENT.  ANY OTHER TERMS CONTAINED IN
THIS SECURITY AGREEMENT NOT

 

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DEFINED IN THIS SECURITY AGREEMENT OR THE CREDIT AGREEMENT HAVE THE MEANINGS
PROVIDED FOR BY THE CODE TO THE EXTENT THE SAME ARE USED OR DEFINED THEREIN.

 

(A)                                  “ACCOUNTS” MEANS ALL “ACCOUNTS,” AS SUCH
TERM IS DEFINED IN THE CODE, NOW OWNED OR HEREAFTER ACQUIRED BY ANY GRANTOR,
INCLUDING (A) ALL ACCOUNTS RECEIVABLE, OTHER RECEIVABLES, BOOK DEBTS AND OTHER
FORMS OF OBLIGATIONS (OTHER THAN FORMS OF OBLIGATIONS EVIDENCED BY CHATTEL
PAPER, OR INSTRUMENTS), (INCLUDING ANY SUCH OBLIGATIONS THAT MAY BE
CHARACTERIZED AS AN ACCOUNT OR CONTRACT RIGHT UNDER THE CODE), (B) ALL OF EACH
GRANTOR’S RIGHTS IN, TO AND UNDER ALL PURCHASE ORDERS OR RECEIPTS FOR GOODS OR
SERVICES, (C) ALL OF EACH GRANTOR’S RIGHTS TO ANY GOODS REPRESENTED BY ANY OF
THE FOREGOING (INCLUDING UNPAID SELLERS’ RIGHTS OF RESCISSION, REPLEVIN,
RECLAMATION AND STOPPAGE IN TRANSIT AND RIGHTS TO RETURNED, RECLAIMED OR
REPOSSESSED GOODS), (D) ALL RIGHTS TO PAYMENT DUE TO ANY GRANTOR FOR PROPERTY
SOLD, LEASED, LICENSED, ASSIGNED OR OTHERWISE DISPOSED OF, FOR A POLICY OF
INSURANCE ISSUED OR TO BE ISSUED, FOR A SECONDARY OBLIGATION INCURRED OR TO BE
INCURRED, FOR ENERGY PROVIDED OR TO BE PROVIDED, FOR THE USE OR HIRE OF A VESSEL
UNDER A CHARTER OR OTHER CONTRACT, ARISING OUT OF THE USE OF A CREDIT CARD OR
CHARGE CARD, OR FOR SERVICES RENDERED OR TO BE RENDERED BY SUCH GRANTOR OR IN
CONNECTION WITH ANY OTHER TRANSACTION (WHETHER OR NOT YET EARNED BY PERFORMANCE
ON THE PART OF SUCH GRANTOR), (E) ALL HEALTH CARE INSURANCE RECEIVABLES AND (F)
ALL COLLATERAL SECURITY OF ANY KIND, GIVEN BY ANY ACCOUNT DEBTOR OR ANY OTHER
PERSON WITH RESPECT TO ANY OF THE FOREGOING.

 

(B)                                 “CHATTEL PAPER” MEANS ANY “CHATTEL PAPER,”
AS SUCH TERM IS DEFINED IN THE CODE, INCLUDING ELECTRONIC CHATTEL PAPER, NOW
OWNED OR HEREAFTER ACQUIRED BY ANY GRANTOR.

 

(C)                                  “CODE” MEANS THE UNIFORM COMMERCIAL CODE AS
THE SAME MAY, FROM TIME TO TIME, BE ENACTED AND IN EFFECT IN THE STATE OF NEW
YORK; PROVIDED, THAT TO THE EXTENT THAT THE CODE IS USED TO DEFINE ANY TERM
HEREIN OR IN ANY LOAN DOCUMENT AND SUCH TERM IS DEFINED DIFFERENTLY IN DIFFERENT
ARTICLES OR DIVISIONS OF THE CODE, THE DEFINITION OF SUCH TERM CONTAINED IN
ARTICLE OR DIVISION 9 SHALL GOVERN; PROVIDED FURTHER, THAT IN THE EVENT THAT, BY
REASON OF MANDATORY PROVISIONS OF LAW, ANY OR ALL OF THE ATTACHMENT, PERFECTION
OR PRIORITY OF, OR REMEDIES WITH RESPECT TO, AGENT’S OR ANY LENDER’S LIEN ON ANY
COLLATERAL IS GOVERNED BY THE UNIFORM COMMERCIAL CODE AS ENACTED AND IN EFFECT
IN A JURISDICTION OTHER THAN THE STATE OF NEW YORK, THE TERM “CODE” SHALL MEAN
THE UNIFORM COMMERCIAL CODE AS ENACTED AND IN EFFECT IN SUCH OTHER JURISDICTION
SOLELY FOR PURPOSES OF THE PROVISIONS THEREOF RELATING TO SUCH ATTACHMENT,
PERFECTION, PRIORITY OR REMEDIES AND FOR PURPOSES OF DEFINITIONS RELATED TO SUCH
PROVISIONS.

 

(D)                                 “CONTRACTS” MEANS ALL “CONTRACTS,” AS SUCH
TERM IS DEFINED IN THE CODE, NOW OWNED OR HEREAFTER ACQUIRED BY ANY GRANTOR, IN
ANY EVENT, INCLUDING ALL CONTRACTS, UNDERTAKINGS, OR AGREEMENTS (OTHER THAN
RIGHTS EVIDENCED BY CHATTEL PAPER, DOCUMENTS OR INSTRUMENTS) IN OR UNDER WHICH
ANY GRANTOR MAY NOW OR HEREAFTER HAVE ANY RIGHT, TITLE OR INTEREST, INCLUDING
ANY AGREEMENT RELATING TO THE TERMS OF PAYMENT OR THE TERMS OF PERFORMANCE OF
ANY ACCOUNT.

 

(E)                                  “CONTROL LETTER” MEANS A LETTER AGREEMENT
BETWEEN AGENT AND (I) THE ISSUER OF UNCERTIFICATED SECURITIES WITH RESPECT TO
UNCERTIFICATED SECURITIES IN THE NAME OF

 

2

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any Grantor, (ii) a securities intermediary with respect to securities, whether
certificated or uncertificated, securities entitlements and other financial
assets held in a securities account in the name of any Grantor, (iii) a futures
commission merchant or clearing house, as applicable, with respect to commodity
accounts and commodity contracts held by any Grantor, whereby, among other
things, the issuer, securities intermediary or futures commission merchant
disclaims (or subordinates in a manner satisfactory to Agent in its sole
discretion) any security interest in the applicable financial assets,
acknowledges the Lien of Agent, on behalf of itself and Lenders, on such
financial assets, and agrees to follow the instructions or entitlement orders of
Agent without further consent by the affected Grantor.

 

(F)                                    “COPYRIGHT LICENSE” MEANS ANY AND ALL
RIGHTS NOW OWNED OR HEREAFTER ACQUIRED BY ANY GRANTOR UNDER ANY WRITTEN
AGREEMENT GRANTING ANY RIGHT TO USE ANY COPYRIGHT OR COPYRIGHT REGISTRATION.

 

(G)                                 “COPYRIGHTS” MEANS ALL OF THE FOLLOWING NOW
OWNED OR HEREAFTER ADOPTED OR ACQUIRED BY ANY GRANTOR: (A) ALL COPYRIGHTS AND
GENERAL INTANGIBLES OF LIKE NATURE (WHETHER REGISTERED OR UNREGISTERED), ALL
REGISTRATIONS AND RECORDINGS THEREOF, AND ALL APPLICATIONS IN CONNECTION
THEREWITH, INCLUDING ALL REGISTRATIONS, RECORDINGS AND APPLICATIONS IN THE
UNITED STATES COPYRIGHT OFFICE OR IN ANY SIMILAR OFFICE OR AGENCY OF THE UNITED
STATES, ANY STATE OR TERRITORY THEREOF, OR ANY OTHER COUNTRY OR ANY POLITICAL
SUBDIVISION THEREOF, AND (B) ALL REISSUES, EXTENSIONS OR RENEWALS THEREOF.

 

(H)                                 “DEPOSIT ACCOUNTS” MEANS ALL “DEPOSIT
ACCOUNTS” AS SUCH TERM IS DEFINED IN THE CODE, NOW OR HEREAFTER HELD IN THE NAME
OF ANY GRANTOR.

 

(I)                                     “DOCUMENTS” MEANS ALL “DOCUMENTS,” AS
SUCH TERM IS DEFINED IN THE CODE, NOW OWNED OR HEREAFTER ACQUIRED BY ANY
GRANTOR, WHEREVER LOCATED.

 

(J)                                     “EQUIPMENT” MEANS ALL “EQUIPMENT,” AS
SUCH TERM IS DEFINED IN THE CODE, NOW OWNED OR HEREAFTER ACQUIRED BY ANY
GRANTOR, WHEREVER LOCATED AND, IN ANY EVENT, INCLUDING ALL SUCH GRANTOR’S
MACHINERY AND EQUIPMENT, INCLUDING PROCESSING EQUIPMENT, CONVEYORS, MACHINE
TOOLS, DATA PROCESSING AND COMPUTER EQUIPMENT, INCLUDING EMBEDDED SOFTWARE AND
PERIPHERAL EQUIPMENT AND ALL ENGINEERING, PROCESSING AND MANUFACTURING
EQUIPMENT, OFFICE MACHINERY, FURNITURE, MATERIALS HANDLING EQUIPMENT, TOOLS,
ATTACHMENTS, ACCESSORIES, AUTOMOTIVE EQUIPMENT, TRAILERS, TRUCKS, FORKLIFTS,
MOLDS, DIES, STAMPS, MOTOR VEHICLES, ROLLING STOCK AND OTHER EQUIPMENT OF EVERY
KIND AND NATURE, TRADE FIXTURES AND FIXTURES NOT FORMING A PART OF REAL
PROPERTY, TOGETHER WITH ALL ADDITIONS AND ACCESSIONS THERETO, REPLACEMENTS
THEREFOR, ALL PARTS THEREFOR, ALL SUBSTITUTES FOR ANY OF THE FOREGOING, FUEL
THEREFOR, AND ALL MANUALS, DRAWINGS, INSTRUCTIONS, WARRANTIES AND RIGHTS WITH
RESPECT THERETO, AND ALL PRODUCTS AND PROCEEDS THEREOF AND CONDEMNATION AWARDS
AND INSURANCE PROCEEDS WITH RESPECT THERETO.

 

(K)                                  “FIXTURES” MEANS ALL “FIXTURES” AS SUCH
TERM IS DEFINED IN THE CODE, NOW OWNED OR HEREAFTER ACQUIRED BY ANY GRANTOR.

 

3

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

 

(L)                                     “GENERAL INTANGIBLES” MEANS ALL “GENERAL
INTANGIBLES,” AS SUCH TERM IS DEFINED IN THE CODE, NOW OWNED OR HEREAFTER
ACQUIRED BY ANY GRANTOR, INCLUDING ALL RIGHT, TITLE AND INTEREST THAT SUCH
GRANTOR MAY NOW OR HEREAFTER HAVE IN OR UNDER ANY CONTRACT, ALL PAYMENT
INTANGIBLES, CUSTOMER LISTS, LICENSES, COPYRIGHTS, TRADEMARKS, PATENTS, AND ALL
APPLICATIONS THEREFOR AND REISSUES, EXTENSIONS OR RENEWALS THEREOF, RIGHTS IN
INTELLECTUAL PROPERTY, INTERESTS IN PARTNERSHIPS, JOINT VENTURES AND OTHER
BUSINESS ASSOCIATIONS, LICENSES, PERMITS, COPYRIGHTS, TRADE SECRETS, PROPRIETARY
OR CONFIDENTIAL INFORMATION, INVENTIONS (WHETHER OR NOT PATENTED OR PATENTABLE),
TECHNICAL INFORMATION, PROCEDURES, DESIGNS, KNOWLEDGE, KNOW-HOW, SOFTWARE, DATA
BASES, DATA, SKILL, EXPERTISE, EXPERIENCE, PROCESSES, MODELS, DRAWINGS,
MATERIALS AND RECORDS, GOODWILL (INCLUDING THE GOODWILL ASSOCIATED WITH ANY
TRADEMARK OR TRADEMARK LICENSE), ALL RIGHTS AND CLAIMS IN OR UNDER INSURANCE
POLICIES (INCLUDING INSURANCE FOR FIRE, DAMAGE, LOSS AND CASUALTY, WHETHER
COVERING PERSONAL PROPERTY, REAL PROPERTY, TANGIBLE RIGHTS OR INTANGIBLE RIGHTS,
ALL LIABILITY, LIFE, KEY MAN AND BUSINESS INTERRUPTION INSURANCE, AND ALL
UNEARNED PREMIUMS), UNCERTIFICATED SECURITIES, CHOSES IN ACTION, DEPOSIT,
CHECKING AND OTHER BANK ACCOUNTS, RIGHTS TO RECEIVE TAX REFUNDS AND OTHER
PAYMENTS, RIGHTS TO RECEIVE DIVIDENDS, DISTRIBUTIONS, CASH, INSTRUMENTS AND
OTHER PROPERTY IN RESPECT OF OR IN EXCHANGE FOR PLEDGED STOCK AND INVESTMENT
PROPERTY, RIGHTS OF INDEMNIFICATION, ALL BOOKS AND RECORDS, CORRESPONDENCE,
CREDIT FILES, INVOICES AND OTHER PAPERS, INCLUDING WITHOUT LIMITATION ALL TAPES,
CARDS, COMPUTER RUNS AND OTHER PAPERS AND DOCUMENTS IN THE POSSESSION OR UNDER
THE CONTROL OF SUCH GRANTOR OR ANY COMPUTER BUREAU OR SERVICE COMPANY FROM TIME
TO TIME ACTING FOR SUCH GRANTOR.

 

(M)                               “GOODS” MEANS ALL “GOODS” AS DEFINED IN THE
CODE, NOW OWNED OR HEREAFTER ACQUIRED BY ANY GRANTOR, WHEREVER LOCATED,
INCLUDING EMBEDDED SOFTWARE TO THE EXTENT INCLUDED IN “GOODS” AS DEFINED IN THE
CODE, MANUFACTURED HOMES, STANDING TIMBER THAT IS CUT AND REMOVED FOR SALE AND
UNBORN YOUNG OF ANIMALS.

 

(N)                                 “INDEMNIFIED PERSON” MEANS EACH OF AGENT,
LENDERS AND THEIR RESPECTIVE AFFILIATES, AND EACH SUCH PERSON’S RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AGENTS AND REPRESENTATIVES.

 

(O)                                 “INSTRUMENTS” MEANS ALL “INSTRUMENTS,” AS
SUCH TERM IS DEFINED IN THE CODE, NOW OWNED OR HEREAFTER ACQUIRED BY ANY
GRANTOR, WHEREVER LOCATED, AND, IN ANY EVENT, INCLUDING ALL CERTIFICATED
SECURITIES, ALL CERTIFICATES OF DEPOSIT, AND ALL PROMISSORY NOTES AND OTHER
EVIDENCES OF INDEBTEDNESS, OTHER THAN INSTRUMENTS THAT CONSTITUTE, OR ARE A PART
OF A GROUP OF WRITINGS THAT CONSTITUTE, CHATTEL PAPER.

 

(P)                                 “INTELLECTUAL PROPERTY” MEANS ANY AND ALL
LICENSES, PATENTS, COPYRIGHTS, TRADEMARKS, AND THE GOODWILL ASSOCIATED WITH SUCH
TRADEMARKS.

 

(Q)                                 “INVENTORY” MEANS ALL “INVENTORY,” AS SUCH
TERM IS DEFINED IN THE CODE, NOW OWNED OR HEREAFTER ACQUIRED BY ANY GRANTOR,
WHEREVER LOCATED, AND IN ANY EVENT INCLUDING INVENTORY, MERCHANDISE, GOODS AND
OTHER PERSONAL PROPERTY THAT ARE HELD BY OR ON BEHALF OF ANY GRANTOR FOR SALE OR
LEASE OR ARE FURNISHED OR ARE TO BE FURNISHED UNDER A CONTRACT OF SERVICE, OR
THAT CONSTITUTE RAW MATERIALS, WORK IN PROCESS, FINISHED GOODS, RETURNED GOODS,
OR MATERIALS OR SUPPLIES OF ANY KIND, NATURE OR DESCRIPTION USED OR

 

4

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CONSUMED OR TO BE USED OR CONSUMED IN SUCH GRANTOR’S BUSINESS OR IN THE
PROCESSING, PRODUCTION, PACKAGING, PROMOTION, DELIVERY OR SHIPPING OF THE SAME,
INCLUDING ALL SUPPLIES AND EMBEDDED SOFTWARE.

 

(R)                                    “INVESTMENT PROPERTY” MEANS ALL
“INVESTMENT PROPERTY” AS SUCH TERM IS DEFINED IN THE CODE NOW OWNED OR HEREAFTER
ACQUIRED BY ANY GRANTOR, WHEREVER LOCATED, INCLUDING (I) ALL SECURITIES, WHETHER
CERTIFICATED OR UNCERTIFICATED, INCLUDING STOCKS, BONDS, INTERESTS IN LIMITED
LIABILITY COMPANIES, PARTNERSHIP INTERESTS, TREASURIES, CERTIFICATES OF DEPOSIT,
AND MUTUAL FUND SHARES; (II) ALL SECURITIES ENTITLEMENTS OF ANY GRANTOR,
INCLUDING THE RIGHTS OF ANY GRANTOR TO ANY SECURITIES ACCOUNT AND THE FINANCIAL
ASSETS HELD BY A SECURITIES INTERMEDIARY IN SUCH SECURITIES ACCOUNT AND ANY FREE
CREDIT BALANCE OR OTHER MONEY OWING BY ANY SECURITIES INTERMEDIARY WITH RESPECT
TO THAT ACCOUNT; (III) ALL SECURITIES ACCOUNTS OF ANY GRANTOR; (IV) ALL
COMMODITY CONTRACTS OF ANY GRANTOR; AND (V) ALL COMMODITY ACCOUNTS HELD BY ANY
GRANTOR.

 

(S)                                  “LETTER-OF-CREDIT RIGHTS” MEANS
“LETTER-OF-CREDIT RIGHTS” AS SUCH TERM IS DEFINED IN THE CODE, NOW OWNED OR
HEREAFTER ACQUIRED BY ANY GRANTOR, INCLUDING RIGHTS TO PAYMENT OR PERFORMANCE
UNDER A LETTER OF CREDIT, WHETHER OR NOT SUCH GRANTOR, AS BENEFICIARY, HAS
DEMANDED OR IS ENTITLED TO DEMAND PAYMENT OR PERFORMANCE.

 

(T)                                    “LICENSE” MEANS ANY COPYRIGHT LICENSE,
PATENT LICENSE, TRADEMARK LICENSE OR OTHER LICENSE OF RIGHTS OR INTERESTS NOW
HELD OR HEREAFTER ACQUIRED BY ANY GRANTOR.

 

(U)                                 “PATENT LICENSE” MEANS RIGHTS UNDER ANY
WRITTEN AGREEMENT NOW OWNED OR HEREAFTER ACQUIRED BY ANY GRANTOR GRANTING ANY
RIGHT WITH RESPECT TO ANY INVENTION ON WHICH A PATENT IS IN EXISTENCE.

 

(V)                                 “PATENTS” MEANS ALL OF THE FOLLOWING IN
WHICH ANY GRANTOR NOW HOLDS OR HEREAFTER ACQUIRES ANY INTEREST: (A) ALL LETTERS
PATENT OF THE UNITED STATES OR OF ANY OTHER COUNTRY, ALL REGISTRATIONS AND
RECORDINGS THEREOF, AND ALL APPLICATIONS FOR LETTERS PATENT OF THE UNITED STATES
OR OF ANY OTHER COUNTRY, INCLUDING REGISTRATIONS, RECORDINGS AND APPLICATIONS IN
THE UNITED STATES PATENT AND TRADEMARK OFFICE OR IN ANY SIMILAR OFFICE OR AGENCY
OF THE UNITED STATES, ANY STATE, OR ANY OTHER COUNTRY, AND (B) ALL REISSUES,
CONTINUATIONS, CONTINUATIONS-IN-PART OR EXTENSIONS THEREOF.

 

(W)                               “PROCEEDS” MEANS “PROCEEDS,” AS SUCH TERM IS
DEFINED IN THE CODE, INCLUDING (A) ANY AND ALL PROCEEDS OF ANY INSURANCE,
INDEMNITY, WARRANTY OR GUARANTY PAYABLE TO GRANTOR FROM TIME TO TIME WITH
RESPECT TO ANY OF THE COLLATERAL, (B) ANY AND ALL PAYMENTS (IN ANY FORM
WHATSOEVER) MADE OR DUE AND PAYABLE TO GRANTOR FROM TIME TO TIME IN CONNECTION
WITH ANY REQUISITION, CONFISCATION, CONDEMNATION, SEIZURE OR FORFEITURE OF ALL
OR ANY PART OF THE COLLATERAL BY ANY GOVERNMENTAL AUTHORITY (OR ANY PERSON
ACTING UNDER COLOR OF GOVERNMENTAL AUTHORITY), (C) ANY CLAIM OF GRANTOR AGAINST
THIRD PARTIES (I) FOR PAST, PRESENT OR FUTURE INFRINGEMENT OF ANY PATENT OR
PATENT LICENSE, OR (II) FOR PAST, PRESENT OR FUTURE INFRINGEMENT OR DILUTION OF
ANY COPYRIGHT, COPYRIGHT LICENSE, TRADEMARK OR TRADEMARK LICENSE, OR FOR INJURY
TO THE GOODWILL ASSOCIATED WITH ANY TRADEMARK OR TRADEMARK LICENSE, (D) ANY
RECOVERIES BY GRANTOR AGAINST THIRD PARTIES WITH

 

5

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RESPECT TO ANY LITIGATION OR DISPUTE CONCERNING ANY OF THE COLLATERAL INCLUDING
CLAIMS ARISING OUT OF THE LOSS OR NONCONFORMITY OF, INTERFERENCE WITH THE USE
OF, DEFECTS IN, OR INFRINGEMENT OF RIGHTS IN, OR DAMAGE TO, COLLATERAL, (E) ALL
AMOUNTS COLLECTED ON, OR DISTRIBUTED ON ACCOUNT OF, OTHER COLLATERAL, INCLUDING
DIVIDENDS, INTEREST, DISTRIBUTIONS AND INSTRUMENTS WITH RESPECT TO INVESTMENT
PROPERTY AND PLEDGED STOCK, AND (F) ANY AND ALL OTHER AMOUNTS, RIGHTS TO PAYMENT
OR OTHER PROPERTY ACQUIRED UPON THE SALE, LEASE, LICENSE, EXCHANGE OR OTHER
DISPOSITION OF COLLATERAL AND ALL RIGHTS ARISING OUT OF COLLATERAL.

 

(X)                                   “SOFTWARE” MEANS ALL “SOFTWARE” AS SUCH
TERM IS DEFINED IN THE CODE, NOW OWNED OR HEREAFTER ACQUIRED BY ANY GRANTOR,
OTHER THAN SOFTWARE EMBEDDED IN ANY CATEGORY OF GOODS, INCLUDING ALL COMPUTER
PROGRAMS AND ALL SUPPORTING INFORMATION PROVIDED IN CONNECTION WITH A
TRANSACTION RELATED TO ANY PROGRAM.

 

(Y)                                 “SUPPORTING OBLIGATIONS” MEANS ALL
“SUPPORTING OBLIGATIONS” AS SUCH TERM IS DEFINED IN THE CODE, INCLUDING LETTERS
OF CREDIT AND GUARANTIES ISSUED IN SUPPORT OF ACCOUNTS, CHATTEL PAPER,
DOCUMENTS, GENERAL INTANGIBLES, INSTRUMENTS, OR INVESTMENT PROPERTY.

 

(Z)                                   “TERMINATION DATE” MEANS THE DATE ON WHICH
(A) THE LOANS HAVE BEEN INDEFEASIBLY REPAID IN FULL IN CASH, (B) ALL OTHER
OBLIGATIONS UNDER THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS HAVE BEEN
COMPLETELY DISCHARGED, (C) ALL L/C OBLIGATIONS HAVE BEEN CASH COLLATERALIZED,
CANCELED OR BACKED BY STANDBY LETTERS OF CREDIT IN ACCORDANCE WITH SECTION 2.5
OF THE CREDIT AGREEMENT, AND (D) BORROWER SHALL NOT HAVE ANY FURTHER RIGHT TO
BORROW ANY MONIES UNDER THE CREDIT AGREEMENT.

 

(AA)                            “TRADEMARK LICENSE” MEANS RIGHTS UNDER ANY
WRITTEN AGREEMENT NOW OWNED OR HEREAFTER ACQUIRED BY ANY GRANTOR GRANTING ANY
RIGHT TO USE ANY TRADEMARK.

 

(BB)                          “TRADEMARKS” MEANS ALL OF THE FOLLOWING NOW OWNED
OR HEREAFTER EXISTING OR ADOPTED OR ACQUIRED BY ANY GRANTOR: (A) ALL TRADEMARKS,
TRADE NAMES, CORPORATE NAMES, BUSINESS NAMES, TRADE STYLES, SERVICE MARKS,
LOGOS, OTHER SOURCE OR BUSINESS IDENTIFIERS, PRINTS AND LABELS ON WHICH ANY OF
THE FOREGOING HAVE APPEARED OR APPEAR, DESIGNS AND GENERAL INTANGIBLES OF LIKE
NATURE (WHETHER REGISTERED OR UNREGISTERED), ALL REGISTRATIONS AND RECORDINGS
THEREOF, AND ALL APPLICATIONS IN CONNECTION THEREWITH, INCLUDING REGISTRATIONS,
RECORDINGS AND APPLICATIONS IN THE UNITED STATES PATENT AND TRADEMARK OFFICE OR
IN ANY SIMILAR OFFICE OR AGENCY OF THE UNITED STATES, ANY STATE OR TERRITORY
THEREOF, OR ANY OTHER COUNTRY OR ANY POLITICAL SUBDIVISION THEREOF; (B) ALL
REISSUES, EXTENSIONS OR RENEWALS THEREOF; AND (C) ALL GOODWILL ASSOCIATED WITH
OR SYMBOLIZED BY ANY OF THE FOREGOING.

 

(CC)                            “UNIFORM COMMERCIAL CODE JURISDICTION” MEANS ANY
JURISDICTION THAT HAS ADOPTED ALL OR SUBSTANTIALLY ALL OF ARTICLE 9 AS CONTAINED
IN THE 2000 OFFICIAL TEXT OF THE UNIFORM COMMERCIAL CODE, AS RECOMMENDED BY THE
NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS AND THE AMERICAN LAW
INSTITUTE, TOGETHER WITH ANY SUBSEQUENT AMENDMENTS OR MODIFICATIONS TO THE
OFFICIAL TEXT.

 

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2.                                       GRANT OF LIEN.

 

(A)                                  TO SECURE THE PROMPT AND COMPLETE PAYMENT,
PERFORMANCE AND OBSERVANCE OF ALL OF THE OBLIGATIONS, EACH GRANTOR HEREBY
GRANTS, ASSIGNS, CONVEYS, MORTGAGES, PLEDGES, HYPOTHECATES AND TRANSFERS, TO
AGENT, FOR ITSELF AND THE BENEFIT OF LENDERS, A LIEN UPON ALL OF THEIR RIGHT,
TITLE AND INTEREST IN, TO AND UNDER ALL PERSONAL PROPERTY AND OTHER ASSETS,
WHETHER NOW OWNED BY OR OWING TO, OR HEREAFTER ACQUIRED BY OR ARISING IN FAVOR
OF GRANTORS (INCLUDING UNDER ANY TRADE NAMES, STYLES OR DERIVATIONS THEREOF),
AND WHETHER OWNED OR CONSIGNED BY OR TO, OR LEASED FROM OR TO, GRANTORS, AND
REGARDLESS OF WHERE LOCATED (ALL OF WHICH BEING HEREINAFTER COLLECTIVELY
REFERRED TO AS THE “COLLATERAL”), INCLUDING:

 

I.                                          ALL ACCOUNTS;

 

II.                                       ALL CHATTEL PAPER;

 

III.                                    ALL DOCUMENTS;

 

IV.                                   ALL GENERAL INTANGIBLES (INCLUDING PAYMENT
INTANGIBLES AND SOFTWARE);

 

V.                                      ALL GOODS (INCLUDING INVENTORY,
EQUIPMENT AND FIXTURES);

 

VI.                                   ALL INSTRUMENTS;

 

VII.                                ALL INVESTMENT PROPERTY;

 

VIII.                             ALL DEPOSIT ACCOUNTS, OF GRANTOR, INCLUDING
ALL BLOCKED ACCOUNTS, GOVERNMENT RECEIVABLES DEPOSIT ACCOUNTS, CONCENTRATION
ACCOUNTS, DISBURSEMENT ACCOUNTS, AND ALL OTHER BANK ACCOUNTS AND ALL DEPOSITS
THEREIN;

 

IX.                                     ALL MONEY, CASH OR CASH EQUIVALENTS OF
GRANTOR;

 

X.                                        ALL SUPPORTING OBLIGATIONS AND
LETTER-OF-CREDIT RIGHTS OF GRANTOR;

 

XI.                                     THE FOLLOWING COMMERCIAL TORT CLAIM:

 

Curative Health Services, Inc. has filed a counterclaim alleging fraud and
fraudulent inducement, breach of license agreement, misuse and misappropriation
of proprietary information, and intentional interference with current business
relations in E@M Health Services, Inc. v. Curative Health Services, Inc. and
Presbyterian Hospital of Winnsboro, 116th District Court of Dallas County,
Texas, Case No. 02-5415, and removed to the United States District Court for the
Northern District of Texas, Dallas Division, Civil Action No. 3-02CV-1562D.

 

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XII.                                  ALL BOOKS, RECORDS, LEDGER CARDS, FILES,
CORRESPONDENCE, COMPUTER PROGRAMS, TAPES, DISKS AND RELATED DATA PROCESSING
SOFTWARE THAT AT ANY TIME EVIDENCE OR CONTAIN INFORMATION RELATING TO ANY OF THE
COLLATERAL DESCRIBED IN CLAUSES (I) THROUGH (XI) ABOVE OR ARE OTHERWISE
NECESSARY OR HELPFUL IN THE COLLECTION THEREOF OR REALIZATION THEREON; AND

 

XIII.                               TO THE EXTENT NOT OTHERWISE INCLUDED, ALL
PROCEEDS, TORT CLAIMS, INSURANCE CLAIMS AND OTHER RIGHTS TO PAYMENTS NOT
OTHERWISE INCLUDED IN THE FOREGOING AND PRODUCTS OF THE FOREGOING AND ALL
ACCESSIONS TO, SUBSTITUTIONS AND REPLACEMENTS FOR, AND RENTS AND PROFITS OF,
EACH OF THE FOREGOING.

 

Notwithstanding the foregoing, “Collateral” shall not include any Equipment that
is (i) leased by Grantor or any rights of Grantor under such lease (other than
such Grantor’s rights to payment under such lease constituting Accounts or
General Intangibles for money due or to become due), or (ii) is subject to a
purchase money lien to the extent and only to the extent that such lien is
expressly permitted under the Credit Agreement, in each case if and only for so
long as the grant of a security interest by such Grantor in such Equipment or
lease violates the terms of such lease or, in the case of any purchase money
lien on Equipment violates the terms of the financing documents evidencing or
securing such purchase money indebtedness; provided that the Grantor shall be
deemed to have granted a security interest in such Equipment, and such Equipment
shall be included in the Collateral, at such time that such grant no longer
violates such lease or, in the case of any purchase money lien on Equipment, the
terms of the financing documents evidencing or securing such purchase money
indebtedness.

 

(B)                                 IN ADDITION, TO SECURE THE PROMPT AND
COMPLETE PAYMENT, PERFORMANCE AND OBSERVANCE OF THE OBLIGATIONS AND IN ORDER TO
INDUCE AGENT AND LENDERS AS AFORESAID, GRANTORS HEREBY GRANT TO AGENT, FOR
ITSELF AND THE BENEFIT OF LENDERS, A RIGHT OF SETOFF AGAINST THE PROPERTY OF
GRANTORS HELD BY AGENT OR ANY LENDER, CONSISTING OF PROPERTY DESCRIBED ABOVE IN
SECTION 2(A) NOW OR HEREAFTER IN THE POSSESSION OR CUSTODY OF OR IN TRANSIT TO
AGENT OR ANY LENDER, FOR ANY PURPOSE, INCLUDING SAFEKEEPING, COLLECTION OR
PLEDGE, FOR THE ACCOUNT OF GRANTORS, OR AS TO WHICH GRANTORS MAY HAVE ANY RIGHT
OR POWER.

 

3.                                       AGENT’S AND LENDERS’ RIGHTS:
LIMITATIONS ON AGENT’S AND LENDERS’ OBLIGATIONS.

 

(A)                                  IT IS EXPRESSLY AGREED BY GRANTOR THAT,
ANYTHING HEREIN TO THE CONTRARY NOTWITHSTANDING, GRANTOR SHALL REMAIN LIABLE
UNDER EACH OF ITS CONTRACTS AND EACH OF ITS LICENSES TO OBSERVE AND PERFORM ALL
THE CONDITIONS AND OBLIGATIONS TO BE OBSERVED AND PERFORMED BY IT THEREUNDER
EXCEPT WHERE SUCH FAILURE COULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT.  NEITHER AGENT NOR ANY LENDER SHALL HAVE ANY OBLIGATION OR
LIABILITY UNDER ANY CONTRACT OR LICENSE BY REASON OF OR ARISING OUT OF THIS
SECURITY AGREEMENT OR THE GRANTING HEREIN OF A LIEN THEREON OR THE RECEIPT BY
AGENT OR ANY LENDER OF ANY PAYMENT RELATING TO ANY CONTRACT OR LICENSE PURSUANT
HERETO.  NEITHER AGENT NOR ANY LENDER SHALL BE REQUIRED OR OBLIGATED IN ANY
MANNER TO PERFORM OR FULFILL ANY OF THE OBLIGATIONS OF GRANTOR UNDER OR PURSUANT
TO ANY CONTRACT OR LICENSE, OR TO MAKE ANY PAYMENT, OR TO MAKE ANY INQUIRY AS TO
THE NATURE OR THE SUFFICIENCY OF ANY PAYMENT

 

8

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RECEIVED BY IT OR THE SUFFICIENCY OF ANY PERFORMANCE BY ANY PARTY UNDER ANY
CONTRACT OR LICENSE, OR TO PRESENT OR FILE ANY CLAIMS, OR TO TAKE ANY ACTION TO
COLLECT OR ENFORCE ANY PERFORMANCE OR THE PAYMENT OF ANY AMOUNTS WHICH MAY HAVE
BEEN ASSIGNED TO IT OR TO WHICH IT MAY BE ENTITLED AT ANY TIME OR TIMES.

 

(B)                                 AGENT MAY AT ANY TIME AFTER AN EVENT OF
DEFAULT HAS OCCURRED AND BE CONTINUING (OR IF ANY RIGHTS OF SET-OFF (OTHER THAN
SET-OFFS AGAINST AN ACCOUNT ARISING UNDER THE CONTRACT GIVING RISE TO THE SAME
ACCOUNT) OR CONTRA ACCOUNTS MAY BE ASSERTED WITH RESPECT TO THE FOLLOWING),
WITHOUT PRIOR NOTICE TO GRANTOR, NOTIFY ACCOUNT DEBTORS AND OTHER PERSONS
OBLIGATED ON THE COLLATERAL THAT AGENT HAS A SECURITY INTEREST THEREIN, AND THAT
PAYMENTS SHALL BE MADE DIRECTLY TO AGENT.  UPON THE REQUEST OF AGENT, GRANTOR
SHALL SO NOTIFY ACCOUNT DEBTORS AND OTHER PERSONS OBLIGATED ON COLLATERAL.  ONCE
ANY SUCH NOTICE HAS BEEN GIVEN TO ANY ACCOUNT DEBTOR OR OTHER PERSON OBLIGATED
ON THE COLLATERAL, GRANTOR SHALL NOT GIVE ANY CONTRARY INSTRUCTIONS TO SUCH
ACCOUNT DEBTOR OR OTHER PERSON WITHOUT AGENT’S PRIOR WRITTEN CONSENT.

 

(C)                                  AGENT MAY AT ANY TIME IN AGENT’S OWN NAME,
IN THE NAME OF A NOMINEE OF AGENT OR IN THE NAME OF GRANTOR COMMUNICATE (BY
MAIL, TELEPHONE, FACSIMILE OR OTHERWISE) WITH ACCOUNT DEBTORS, PARTIES TO
CONTRACTS AND OBLIGORS IN RESPECT OF INSTRUMENTS TO VERIFY WITH SUCH PERSONS, TO
AGENT’S SATISFACTION, THE EXISTENCE, AMOUNT TERMS OF, AND ANY OTHER MATTER
RELATING TO, ACCOUNTS, PAYMENT INTANGIBLES, INSTRUMENTS OR CHATTEL PAPER.  IF A
DEFAULT OR EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING, GRANTOR, AT
ITS OWN EXPENSE, SHALL CAUSE THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS THEN
ENGAGED BY GRANTOR TO PREPARE AND DELIVER TO AGENT AND EACH LENDER AT ANY TIME
AND FROM TIME TO TIME PROMPTLY UPON AGENT’S REQUEST THE FOLLOWING REPORTS WITH
RESPECT TO GRANTOR: (I) A RECONCILIATION OF ALL ACCOUNTS; (II) AN AGING OF ALL
ACCOUNTS; (III) TRIAL BALANCES; AND (IV) A TEST VERIFICATION OF SUCH ACCOUNTS AS
AGENT MAY REQUEST.  GRANTOR, AT ITS OWN EXPENSE, SHALL DELIVER TO AGENT THE
RESULTS OF EACH PHYSICAL VERIFICATION, IF ANY, WHICH GRANTOR MAY IN ITS
DISCRETION HAVE MADE, OR CAUSED ANY OTHER PERSON TO HAVE MADE ON ITS BEHALF, OF
ALL OR ANY PORTION OF ITS INVENTORY.

 

4.                                       REPRESENTATIONS AND WARRANTIES. 
GRANTOR REPRESENTS AND WARRANTS THAT:

 

(A)                                  GRANTOR HAS RIGHTS IN AND THE POWER TO
TRANSFER EACH ITEM OF THE COLLATERAL UPON WHICH IT PURPORTS TO GRANT A LIEN
HEREUNDER FREE AND CLEAR OF ANY AND ALL LIENS OTHER THAN PERMITTED ENCUMBRANCES;

 

(B)                                 NO EFFECTIVE SECURITY AGREEMENT, FINANCING
STATEMENT, EQUIVALENT SECURITY OR LIEN INSTRUMENT OR CONTINUATION STATEMENT
COVERING ALL OR ANY PART OF THE COLLATERAL IS ON FILE OR OF RECORD IN ANY PUBLIC
OFFICE, EXCEPT SUCH AS MAY HAVE BEEN FILED (I) BY GRANTOR IN FAVOR OF AGENT
PURSUANT TO THIS SECURITY AGREEMENT OR THE OTHER LOAN DOCUMENTS, AND (II) IN
CONNECTION WITH ANY OTHER PERMITTED ENCUMBRANCES;

 

(C)                                  THIS SECURITY AGREEMENT IS EFFECTIVE TO
CREATE A VALID AND CONTINUING LIEN ON AND, UPON THE FILING OF THE APPROPRIATE
FINANCING STATEMENTS LISTED ON SCHEDULE I HERETO, A PERFECTED LIEN IN FAVOR OF
AGENT, FOR ITSELF AND THE BENEFIT OF LENDERS, ON THE

 

9

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COLLATERAL WITH RESPECT TO WHICH A LIEN MAY BE PERFECTED BY FILING PURSUANT TO
THE CODE.  SUCH LIEN IS PRIOR TO ALL OTHER LIENS, EXCEPT PERMITTED ENCUMBRANCES
THAT WOULD BE PRIOR TO LIENS IN FAVOR OF AGENT FOR THE BENEFIT OF AGENT AND
LENDERS AS A MATTER OF LAW, AND IS ENFORCEABLE AS SUCH AS AGAINST ANY AND ALL
CREDITORS OF AND PURCHASERS FROM GRANTOR (OTHER THAN PURCHASERS AND LESSEES OF
INVENTORY IN THE ORDINARY COURSE OF BUSINESS AND NON-EXCLUSIVE LICENSEES OF
GENERAL INTANGIBLES IN THE ORDINARY COURSE OF BUSINESS).  ALL ACTION BY GRANTOR
NECESSARY OR DESIRABLE TO PROTECT AND PERFECT SUCH LIEN ON EACH ITEM OF THE
COLLATERAL HAS BEEN DULY TAKEN;

 

(D)                                 SCHEDULE II HERETO LISTS ALL INSTRUMENTS,
LETTER OF CREDIT RIGHTS AND CHATTEL PAPER OF GRANTOR.  ALL ACTION BY GRANTOR
NECESSARY OR DESIRABLE TO PROTECT AND PERFECT THE LIEN OF AGENT ON EACH ITEM SET
FORTH ON SCHEDULE II (INCLUDING THE DELIVERY OF ALL ORIGINALS THEREOF TO AGENT
AND THE LEGENDING OF ALL CHATTEL PAPER AS REQUIRED BY SECTION 5(B) HEREOF) HAS
BEEN DULY TAKEN.  THE LIEN OF AGENT, FOR THE BENEFIT OF AGENT AND LENDERS, ON
THE COLLATERAL LISTED ON SCHEDULE II HERETO IS PRIOR TO ALL OTHER LIENS, EXCEPT
PERMITTED ENCUMBRANCES THAT WOULD BE PRIOR TO THE LIENS IN FAVOR OF AGENT AS A
MATTER OF LAW, AND IS ENFORCEABLE AS SUCH AGAINST ANY AND ALL CREDITORS OF AND
PURCHASERS FROM GRANTOR;

 

(E)                                  GRANTORS’ NAME AS EACH APPEARS IN OFFICIAL
FILINGS IN EACH GRANTOR’S STATE OF INCORPORATION OR OTHER ORGANIZATION, THE TYPE
OF ENTITY OF EACH GRANTOR (INCLUDING CORPORATION, PARTNERSHIP, LIMITED
PARTNERSHIP OR LIMITED LIABILITY COMPANY), ORGANIZATIONAL IDENTIFICATION NUMBER
ISSUED BY EACH GRANTOR’S STATE OF INCORPORATION OR ORGANIZATION OR A STATEMENT
THAT NO SUCH NUMBER HAS BEEN ISSUED, EACH GRANTOR’S STATE OF ORGANIZATION OR
INCORPORATION, THE LOCATION OF EACH GRANTOR’S CHIEF EXECUTIVE OFFICE, PRINCIPAL
PLACE OF BUSINESS, OFFICES, ALL WAREHOUSES AND PREMISES WHERE COLLATERAL IS
STORED OR LOCATED, AND THE LOCATIONS OF ITS BOOKS AND RECORDS CONCERNING THE
COLLATERAL ARE SET FORTH ON SCHEDULE III-A, SCHEDULE III-B, SCHEDULE III-C,
SCHEDULE III-D, SCHEDULE III-E, SCHEDULE III-F, SCHEDULE III-G, SCHEDULE III-H,
SCHEDULE III-I, SCHEDULE III-J, SCHEDULE III-K AND SCHEDULE III-L HERETO. 
GRANTORS EACH HAVE ONLY ONE STATE OF INCORPORATION OR ORGANIZATION;

 

(F)                                    WITH RESPECT TO THE ACCOUNTS, EXCEPT AS
SPECIFICALLY DISCLOSED IN THE MOST RECENT COLLATERAL REPORT DELIVERED TO AGENT
(I) THEY REPRESENT BONA FIDE SALES OF INVENTORY OR RENDERING OF SERVICES TO
ACCOUNT DEBTORS IN THE ORDINARY COURSE OF GRANTOR’S BUSINESS AND ARE NOT
EVIDENCED BY A JUDGMENT, INSTRUMENT OR CHATTEL PAPER; (II) THERE ARE NO SETOFFS,
CLAIMS OR DISPUTES EXISTING OR ASSERTED WITH RESPECT THERETO AND GRANTOR HAS NOT
MADE ANY AGREEMENT WITH ANY ACCOUNT DEBTOR FOR ANY EXTENSION OF TIME FOR THE
PAYMENT THEREOF, ANY COMPROMISE OR SETTLEMENT FOR LESS THAN THE FULL AMOUNT
THEREOF, ANY RELEASE OF ANY ACCOUNT DEBTOR FROM LIABILITY THEREFOR, OR ANY
DEDUCTION THEREFROM EXCEPT A DISCOUNT OR ALLOWANCE ALLOWED BY GRANTOR IN THE
ORDINARY COURSE OF ITS BUSINESS FOR PROMPT PAYMENT AND DISCLOSED TO AGENT; (III)
TO GRANTOR’S KNOWLEDGE, THERE ARE NO FACTS, EVENTS OR OCCURRENCES WHICH IN ANY
WAY IMPAIR THE VALIDITY OR ENFORCEABILITY THEREOF OR COULD REASONABLY BE
EXPECTED TO REDUCE THE AMOUNT PAYABLE THEREUNDER AS SHOWN ON GRANTOR’S BOOKS AND
RECORDS AND ANY INVOICES, STATEMENTS AND COLLATERAL REPORTS DELIVERED TO AGENT
AND LENDERS WITH RESPECT THERETO; (IV) GRANTOR HAS NOT RECEIVED ANY NOTICE OF
PROCEEDINGS OR ACTIONS WHICH ARE THREATENED OR PENDING AGAINST ANY ACCOUNT

 

10

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DEBTOR WHICH MIGHT RESULT IN ANY ADVERSE CHANGE IN SUCH ACCOUNT DEBTOR’S
FINANCIAL CONDITION; AND (V) GRANTOR HAS NO KNOWLEDGE THAT ANY ACCOUNT DEBTOR IS
UNABLE GENERALLY TO PAY ITS DEBTS AS THEY BECOME DUE.  FURTHER WITH RESPECT TO
THE ACCOUNTS (X) THE AMOUNTS SHOWN ON ALL INVOICES, STATEMENTS AND COLLATERAL
REPORTS WHICH MAY BE DELIVERED TO THE AGENT WITH RESPECT THERETO ARE ACTUALLY
AND ABSOLUTELY OWING TO GRANTOR AS INDICATED THEREON AND ARE NOT IN ANY WAY
CONTINGENT; (Y) NO PAYMENTS HAVE BEEN OR SHALL BE MADE THEREON EXCEPT PAYMENTS
IMMEDIATELY DELIVERED TO THE APPLICABLE BLOCKED ACCOUNTS OR THE AGENT AS
REQUIRED PURSUANT TO THE TERMS OF SECTION 6.16 OF THE CREDIT AGREEMENT; AND (Z)
TO GRANTOR’S KNOWLEDGE, ALL ACCOUNT DEBTORS HAVE THE CAPACITY TO CONTRACT;

 

(G)                                 WITH RESPECT TO ANY INVENTORY SCHEDULED OR
LISTED ON THE MOST RECENT COLLATERAL REPORT DELIVERED TO AGENT PURSUANT TO THE
TERMS OF THIS SECURITY AGREEMENT OR THE CREDIT AGREEMENT, (I) SUCH INVENTORY IS
LOCATED AT ONE OF GRANTOR’S LOCATIONS SET FORTH ON SCHEDULE III HERETO, (II) NO
INVENTORY IS NOW, OR SHALL AT ANY TIME OR TIMES HEREAFTER BE STORED AT ANY OTHER
LOCATION WITHOUT AGENT’S PRIOR CONSENT, AND IF AGENT GIVES SUCH CONSENT, GRANTOR
WILL CONCURRENTLY THEREWITH OBTAIN, TO THE EXTENT REQUIRED BY THE CREDIT
AGREEMENT, BAILEE, LANDLORD AND MORTGAGEE AGREEMENTS, (III) GRANTOR HAS GOOD,
INDEFEASIBLE AND MERCHANTABLE TITLE TO SUCH INVENTORY AND SUCH INVENTORY IS NOT
SUBJECT TO ANY LIEN OR SECURITY INTEREST OR DOCUMENT WHATSOEVER EXCEPT FOR THE
LIEN GRANTED TO AGENT, FOR THE BENEFIT OF AGENT AND LENDERS, AND EXCEPT FOR
PERMITTED ENCUMBRANCES, (IV) EXCEPT AS SPECIFICALLY DISCLOSED IN THE MOST RECENT
COLLATERAL REPORT DELIVERED TO AGENT, SUCH INVENTORY IS ELIGIBLE INVENTORY OF
GOOD AND MERCHANTABLE QUALITY, FREE FROM ANY DEFECTS, (V) SUCH INVENTORY IS NOT
SUBJECT TO ANY LICENSING, PATENT, ROYALTY, TRADEMARK, TRADE NAME OR COPYRIGHT
AGREEMENTS WITH ANY THIRD PARTIES WHICH WOULD REQUIRE ANY CONSENT OF ANY THIRD
PARTY UPON SALE OR DISPOSITION OF THAT INVENTORY OR THE PAYMENT OF ANY MONIES TO
ANY THIRD PARTY UPON SUCH SALE OR OTHER DISPOSITION, AND (VI) THE COMPLETION OF
MANUFACTURE, SALE OR OTHER DISPOSITION OF SUCH INVENTORY BY AGENT FOLLOWING AN
EVENT OF DEFAULT SHALL NOT REQUIRE THE CONSENT OF ANY PERSON AND SHALL NOT
CONSTITUTE A BREACH OR DEFAULT UNDER ANY CONTRACT OR AGREEMENT TO WHICH GRANTOR
IS A PARTY OR TO WHICH SUCH PROPERTY IS SUBJECT; AND

 

(H)                                 GRANTOR DOES NOT HAVE ANY INTEREST IN, OR
TITLE TO, ANY PATENT, TRADEMARK OR COPYRIGHT EXCEPT AS SET FORTH IN SCHEDULE IV
HERETO.  THIS SECURITY AGREEMENT IS EFFECTIVE TO CREATE A VALID AND CONTINUING
LIEN ON AND, UPON FILING OF THE COPYRIGHT SECURITY AGREEMENTS WITH THE UNITED
STATES COPYRIGHT OFFICE AND FILING OF THE PATENT SECURITY AGREEMENTS AND THE
TRADEMARK SECURITY AGREEMENTS WITH THE UNITED STATES PATENT AND TRADEMARK
OFFICE, PERFECTED LIENS IN FAVOR OF AGENT ON GRANTOR’S PATENTS, TRADEMARKS AND
COPYRIGHTS AND SUCH PERFECTED LIENS ARE ENFORCEABLE AS SUCH AS AGAINST ANY AND
ALL CREDITORS OF AND PURCHASERS FROM GRANTOR.  UPON FILING OF THE COPYRIGHT
SECURITY AGREEMENTS WITH THE UNITED STATES COPYRIGHT OFFICE AND FILING OF THE
PATENT SECURITY AGREEMENTS AND THE TRADEMARK SECURITY AGREEMENTS WITH THE UNITED
STATES PATENT AND TRADEMARK OFFICE AND THE FILING OF APPROPRIATE FINANCING
STATEMENTS LISTED ON SCHEDULE I HERETO, ALL ACTION NECESSARY OR DESIRABLE TO
PROTECT AND PERFECT AGENT’S LIEN ON GRANTOR’S PATENTS, TRADEMARKS OR COPYRIGHTS
SHALL HAVE BEEN DULY TAKEN.

 

(I)                                     ALL MOTOR VEHICLES OWNED BY GRANTOR ARE
LISTED ON SCHEDULE V HERETO, BY MODEL, MODEL YEAR AND VEHICLE IDENTIFICATION
NUMBER (“VIN”).  GRANTOR SHALL DELIVER TO

 

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AGENT MOTOR VEHICLE TITLE CERTIFICATES FOR ALL MOTOR VEHICLES FROM TIME TO TIME
OWNED BY IT AND SHALL CAUSE THOSE TITLE CERTIFICATES TO BE FILED (WITH AGENT’S
LIEN NOTED THEREON) IN THE APPROPRIATE STATE MOTOR VEHICLE FILING OFFICE.

 

5.                                       COVENANTS.  GRANTOR COVENANTS AND
AGREES WITH AGENT, FOR THE BENEFIT OF AGENT AND LENDERS, THAT FROM AND AFTER THE
DATE OF THIS SECURITY AGREEMENT AND UNTIL THE TERMINATION DATE:

 

(A)                                  FURTHER ASSURANCES: PLEDGE OF INSTRUMENTS;
CHATTEL PAPER.

 

I.                                          AT ANY TIME AND FROM TIME TO TIME,
UPON THE WRITTEN REQUEST OF AGENT AND AT THE SOLE EXPENSE OF GRANTOR, GRANTOR
SHALL PROMPTLY AND DULY EXECUTE AND DELIVER ANY AND ALL SUCH FURTHER INSTRUMENTS
AND DOCUMENTS AND TAKE SUCH FURTHER ACTIONS AS MAY BE NECESSARY OR AS AGENT MAY
REASONABLY REQUEST TO OBTAIN THE FULL BENEFITS OF THIS SECURITY AGREEMENT AND OF
THE RIGHTS AND POWERS HEREIN GRANTED, INCLUDING (A) USING ITS BEST EFFORTS TO
SECURE ALL CONSENTS AND APPROVALS NECESSARY OR APPROPRIATE FOR THE ASSIGNMENT TO
OR FOR THE BENEFIT OF AGENT OF ANY LICENSE OR CONTRACT HELD BY GRANTOR AND TO
ENFORCE THE SECURITY INTERESTS GRANTED HEREUNDER AND (B) FILING ANY FINANCING OR
CONTINUATION STATEMENTS UNDER THE CODE WITH RESPECT TO THE LIENS GRANTED
HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT AS TO THOSE JURISDICTIONS THAT ARE
NOT UNIFORM COMMERCIAL CODE JURISDICTIONS.

 

II.                                       UNLESS AGENT SHALL OTHERWISE CONSENT
IN WRITING (WHICH CONSENT MAY BE REVOKED), GRANTOR SHALL DELIVER TO AGENT ALL
COLLATERAL CONSISTING OF NEGOTIABLE DOCUMENTS, CERTIFICATED SECURITIES, CHATTEL
PAPER AND INSTRUMENTS (IN EACH CASE, ACCOMPANIED BY STOCK POWERS, ALLONGES OR
OTHER INSTRUMENTS OF TRANSFER EXECUTED IN BLANK) PROMPTLY AFTER SUCH GRANTOR
RECEIVES THE SAME.

 

III.                                    GRANTOR SHALL, IN ACCORDANCE WITH THE
TERMS OF THE CREDIT AGREEMENT, OBTAIN OR USE ITS BEST EFFORTS TO OBTAIN WAIVERS
OR SUBORDINATIONS OF LIENS FROM LANDLORDS AND MORTGAGEES, AND EACH GRANTOR SHALL
IN ALL INSTANCES OBTAIN SIGNED ACKNOWLEDGEMENTS OF AGENT’S LIENS FROM BAILEES
HAVING POSSESSION OF GRANTOR’S GOODS THAT THEY HOLD FOR THE BENEFIT OF AGENT.

 

IV.                                   IF REQUIRED BY THE TERMS OF THE CREDIT
AGREEMENT AND NOT WAIVED BY AGENT IN WRITING (WHICH WAIVER MAY BE REVOKED),
GRANTOR SHALL OBTAIN AUTHENTICATED CONTROL LETTERS FROM EACH ISSUER OF
UNCERTIFICATED SECURITIES, SECURITIES INTERMEDIARY, OR COMMODITIES INTERMEDIARY
ISSUING OR HOLDING ANY FINANCIAL ASSETS OR COMMODITIES TO OR FOR GRANTOR.

 

V.                                      IN ACCORDANCE WITH SECTION 6.16 OF THE
CREDIT AGREEMENT, GRANTOR SHALL OBTAIN A BLOCKED ACCOUNT, LOCKBOX OR SIMILAR
AGREEMENT WITH EACH BANK OR FINANCIAL INSTITUTION HOLDING A DEPOSIT ACCOUNT FOR
GRANTOR.

 

VI.                                   GRANTOR THAT IS OR BECOMES THE BENEFICIARY
OF A LETTER OF CREDIT SHALL PROMPTLY, AND IN ANY EVENT WITHIN TWO (2) BUSINESS
DAYS AFTER BECOMING A BENEFICIARY, NOTIFY AGENT THEREOF AND ENTER INTO A
TRI-PARTY AGREEMENT WITH AGENT

 

12

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AND THE ISSUER AND/OR CONFIRMATION BANK WITH RESPECT TO LETTER-OF-CREDIT RIGHTS
ASSIGNING SUCH LETTER-OF-CREDIT RIGHTS TO AGENT AND DIRECTING ALL PAYMENTS
THEREUNDER TO THE COLLECTION ACCOUNT, ALL IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO AGENT.

 

VII.                                GRANTOR SHALL TAKE ALL STEPS NECESSARY TO
GRANT THE AGENT CONTROL OF ALL ELECTRONIC CHATTEL PAPER IN ACCORDANCE WITH THE
CODE AND ALL “TRANSFERABLE RECORDS” AS DEFINED IN EACH OF THE UNIFORM ELECTRONIC
TRANSACTIONS ACT AND THE ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE
ACT.

 

VIII.                             GRANTOR HEREBY IRREVOCABLY AUTHORIZES THE
AGENT AT ANY TIME AND FROM TIME TO TIME TO FILE IN ANY FILING OFFICE IN ANY
UNIFORM COMMERCIAL CODE JURISDICTION ANY INITIAL FINANCING STATEMENTS AND
AMENDMENTS THERETO THAT (A) INDICATE THE COLLATERAL (I) AS ALL ASSETS OF GRANTOR
OR WORDS OF SIMILAR EFFECT, REGARDLESS OF WHETHER ANY PARTICULAR ASSET COMPRISED
IN THE COLLATERAL FALLS WITHIN THE SCOPE OF ARTICLE 9 OF THE CODE OR SUCH
JURISDICTION, OR (II) AS BEING OF AN EQUAL OR LESSER SCOPE OR WITH GREATER
DETAIL, AND (B) CONTAIN ANY OTHER INFORMATION REQUIRED BY PART 5 OF ARTICLE 9 OF
THE CODE FOR THE SUFFICIENCY OR FILING OFFICE ACCEPTANCE OF ANY FINANCING
STATEMENT OR AMENDMENT, INCLUDING (I) WHETHER GRANTOR IS AN ORGANIZATION, THE
TYPE OF ORGANIZATION AND ANY ORGANIZATION IDENTIFICATION NUMBER ISSUED TO
GRANTOR, AND (II) IN THE CASE OF A FINANCING STATEMENT FILED AS A FIXTURE FILING
OR INDICATING COLLATERAL AS AS-EXTRACTED COLLATERAL OR TIMBER TO BE CUT, A
SUFFICIENT DESCRIPTION OF REAL PROPERTY TO WHICH THE COLLATERAL RELATES. 
GRANTOR AGREES TO FURNISH ANY SUCH INFORMATION TO THE AGENT PROMPTLY UPON
REQUEST.  GRANTOR ALSO RATIFIES ITS AUTHORIZATION FOR THE AGENT TO HAVE FILED IN
ANY UNIFORM COMMERCIAL CODE JURISDICTION ANY INITIAL FINANCING STATEMENTS OR
AMENDMENTS THERETO IF FILED PRIOR TO THE DATE HEREOF.

 

IX.                                     GRANTOR SHALL PROMPTLY, AND IN ANY EVENT
WITHIN TWO (2) BUSINESS DAYS AFTER THE SAME IS ACQUIRED BY IT, NOTIFY AGENT OF
ANY COMMERCIAL TORT CLAIM (AS DEFINED IN THE CODE) ACQUIRED BY IT AND UNLESS
OTHERWISE CONSENTED BY AGENT, GRANTOR SHALL ENTER INTO A SUPPLEMENT TO THIS
SECURITY AGREEMENT, GRANTING TO AGENT A LIEN IN SUCH COMMERCIAL TORT CLAIM.

 

(B)                                 MAINTENANCE OF RECORDS.  GRANTOR SHALL KEEP
AND MAINTAIN, AT ITS OWN COST AND EXPENSE, SATISFACTORY AND COMPLETE RECORDS OF
THE COLLATERAL, INCLUDING A RECORD OF ANY AND ALL PAYMENTS RECEIVED AND ANY AND
ALL CREDITS GRANTED WITH RESPECT TO THE COLLATERAL AND ALL OTHER DEALINGS WITH
THE COLLATERAL.  GRANTOR SHALL MARK ITS BOOKS AND RECORDS PERTAINING TO THE
COLLATERAL TO EVIDENCE THIS SECURITY AGREEMENT AND THE LIENS GRANTED HEREBY.  IF
GRANTOR RETAINS POSSESSION OF ANY CHATTEL PAPER OR INSTRUMENTS WITH AGENT’S
CONSENT, SUCH CHATTEL PAPER AND INSTRUMENTS SHALL BE MARKED WITH THE FOLLOWING
LEGEND: “THIS WRITING AND THE OBLIGATIONS EVIDENCED OR SECURED HEREBY ARE
SUBJECT TO THE SECURITY INTEREST OF GENERAL ELECTRIC CAPITAL CORPORATION, AS
AGENT, FOR THE BENEFIT OF AGENT AND CERTAIN LENDERS.”

 

(C)                                  COVENANTS REGARDING PATENT, TRADEMARK AND
COPYRIGHT COLLATERAL.

 

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I.                                          GRANTOR SHALL NOTIFY AGENT WITHIN
TWO (2) BUSINESS DAYS IF IT KNOWS OR HAS REASON TO KNOW THAT ANY APPLICATION OR
REGISTRATION RELATING TO ANY PATENT, TRADEMARK OR COPYRIGHT (NOW OR HEREAFTER
EXISTING) MAY BECOME ABANDONED OR DEDICATED, OR OF ANY ADVERSE DETERMINATION OR
DEVELOPMENT (INCLUDING THE INSTITUTION OF, OR ANY SUCH DETERMINATION OR
DEVELOPMENT IN, ANY PROCEEDING IN THE UNITED STATES PATENT AND TRADEMARK OFFICE,
THE UNITED STATES COPYRIGHT OFFICE OR ANY COURT) REGARDING GRANTOR’S OWNERSHIP
OF ANY PATENT, TRADEMARK OR COPYRIGHT, ITS RIGHT TO REGISTER THE SAME, OR TO
KEEP AND MAINTAIN THE SAME UNLESS THE GRANTOR SHALL DETERMINE THAT SUCH PATENT,
TRADEMARK OR COPYRIGHT IS NOT MATERIAL TO THE CONDUCT OF ITS BUSINESS.

 

II.                                       IN NO EVENT SHALL GRANTOR, EITHER
ITSELF OR THROUGH ANY AGENT, EMPLOYEE, LICENSEE OR DESIGNEE, FILE AN APPLICATION
FOR THE REGISTRATION OF ANY PATENT, TRADEMARK OR COPYRIGHT WITH THE UNITED
STATES PATENT AND TRADEMARK OFFICE, THE UNITED STATES COPYRIGHT OFFICE OR ANY
SIMILAR OFFICE OR AGENCY WITHOUT GIVING AGENT PRIOR WRITTEN NOTICE THEREOF, AND,
UPON REQUEST OF AGENT, GRANTOR SHALL EXECUTE AND DELIVER ANY AND ALL PATENT
SECURITY AGREEMENTS, COPYRIGHT SECURITY AGREEMENTS OR TRADEMARK SECURITY
AGREEMENTS AS AGENT MAY REQUEST TO EVIDENCE AGENT’S LIEN ON SUCH PATENT,
TRADEMARK OR COPYRIGHT, AND THE GENERAL INTANGIBLES OF GRANTOR RELATING THERETO
OR REPRESENTED THEREBY.

 

III.                                    GRANTOR SHALL TAKE ALL ACTIONS NECESSARY
OR REASONABLY REQUESTED BY AGENT TO MAINTAIN AND PURSUE EACH APPLICATION, TO
OBTAIN THE RELEVANT REGISTRATION AND TO MAINTAIN THE REGISTRATION OF EACH OF THE
PATENTS, TRADEMARKS AND COPYRIGHTS (NOW OR HEREAFTER EXISTING), INCLUDING THE
FILING OF APPLICATIONS FOR RENEWAL, AFFIDAVITS OF USE, AFFIDAVITS OF
NONCONTESTABILITY AND OPPOSITION AND INTERFERENCE AND CANCELLATION PROCEEDINGS,
UNLESS THE GRANTOR SHALL DETERMINE THAT SUCH PATENT, TRADEMARK OR COPYRIGHT IS
NOT MATERIAL TO THE CONDUCT OF ITS BUSINESS.

 

IV.                                   IN THE EVENT THAT ANY OF THE PATENT,
TRADEMARK OR COPYRIGHT COLLATERAL IS INFRINGED UPON, OR MISAPPROPRIATED OR
DILUTED BY A THIRD PARTY, GRANTOR SHALL, UNLESS GRANTOR SHALL REASONABLY
DETERMINE THAT SUCH PATENT, TRADEMARK OR COPYRIGHT COLLATERAL IS NOT MATERIAL TO
THE CONDUCT OF ITS BUSINESS OR OPERATIONS, PROMPTLY SUE FOR INFRINGEMENT,
MISAPPROPRIATION OR DILUTION AND TO RECOVER ANY AND ALL DAMAGES FOR SUCH
INFRINGEMENT, MISAPPROPRIATION OR DILUTION, AND SHALL TAKE SUCH OTHER ACTIONS AS
AGENT SHALL DEEM APPROPRIATE UNDER THE CIRCUMSTANCES TO PROTECT SUCH PATENT,
TRADEMARK OR COPYRIGHT COLLATERAL.

 

(D)                                 INDEMNIFICATION.  IN ANY SUIT, PROCEEDING OR
ACTION BROUGHT BY AGENT OR ANY LENDER RELATING TO ANY COLLATERAL FOR ANY SUM
OWING WITH RESPECT THERETO OR TO ENFORCE ANY RIGHTS OR CLAIMS WITH RESPECT
THERETO, GRANTOR WILL SAVE, INDEMNIFY AND KEEP AGENT AND LENDERS HARMLESS FROM
AND AGAINST ALL EXPENSE (INCLUDING REASONABLE ATTORNEYS’ FEES AND EXPENSES),
LOSS OR DAMAGE SUFFERED BY REASON OF ANY DEFENSE, SETOFF, COUNTERCLAIM,
RECOUPMENT OR REDUCTION OF LIABILITY WHATSOEVER OF THE ACCOUNT DEBTOR OR OTHER
PERSON OBLIGATED ON THE COLLATERAL, ARISING OUT OF A BREACH BY GRANTOR OF ANY
OBLIGATION THEREUNDER OR ARISING OUT OF ANY OTHER AGREEMENT, INDEBTEDNESS OR
LIABILITY AT ANY TIME OWING TO, OR IN FAVOR OF, SUCH OBLIGOR OR ITS SUCCESSORS
FROM GRANTOR, EXCEPT IN THE CASE OF

 

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AGENT OR ANY LENDER, TO THE EXTENT SUCH EXPENSE, LOSS, OR DAMAGE IS ATTRIBUTABLE
SOLELY TO THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF AGENT OR SUCH LENDER AS
FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION.  AN INDEMNITEE UNDER
THIS SECTION 5(D) SHALL ENDEAVOR TO NOTIFY THE BORROWER REPRESENTATIVE OF ANY
EVENT REQUIRING INDEMNIFICATION WITHIN TEN (10) BUSINESS DAYS FOLLOWING SUCH
INDEMNITEE’S RECEIPT OF NOTICE OF COMMENCEMENT OF ANY ACTION OR PROCEEDING, OR
SUCH INDEMNITEE’S OBTAINING KNOWLEDGE OF THE OCCURRENCE OF ANY EVENT, GIVING
RISE TO A CLAIM FOR INDEMNIFICATION HEREUNDER, PROVIDED THAT THE FAILURE TO GIVE
SUCH NOTICE SHALL NOT INVALIDATE OR OTHERWISE IMPAIR THE RIGHTS OF THE
INDEMNITEE TO INDEMNIFICATION UNDER THIS SECTION 5(D) OR RESULT IN ANY LIABILITY
OF SUCH INDEMNITEE, THE AGENT OR ANY LENDER TO ANY CREDIT PARTY OR ANY OTHER
PERSON.  ALL SUCH OBLIGATIONS OF GRANTOR SHALL BE AND REMAIN ENFORCEABLE AGAINST
AND ONLY AGAINST GRANTOR AND SHALL NOT BE ENFORCEABLE AGAINST AGENT OR ANY
LENDER.

 

(E)                                  COMPLIANCE WITH TERMS OF ACCOUNTS, ETC.  IN
ALL MATERIAL RESPECTS, GRANTOR WILL PERFORM AND COMPLY WITH ALL OBLIGATIONS IN
RESPECT OF THE COLLATERAL AND ALL OTHER AGREEMENTS TO WHICH IT IS A PARTY OR BY
WHICH IT IS BOUND RELATING TO THE COLLATERAL.

 

(F)                                    LIMITATION ON LIENS ON COLLATERAL. 
GRANTOR WILL NOT CREATE, PERMIT OR SUFFER TO EXIST, AND GRANTOR WILL DEFEND THE
COLLATERAL AGAINST, AND TAKE SUCH OTHER ACTION AS IS NECESSARY TO REMOVE, ANY
LIEN ON THE COLLATERAL EXCEPT PERMITTED ENCUMBRANCES, AND WILL DEFEND THE RIGHT,
TITLE AND INTEREST OF AGENT AND LENDERS IN AND TO ANY OF GRANTOR’S RIGHTS UNDER
THE COLLATERAL AGAINST THE CLAIMS AND DEMANDS OF ALL PERSONS WHOMSOEVER OTHER
THAN HOLDERS OF PERMITTED ENCUMBRANCES.

 

(G)                                 LIMITATIONS ON DISPOSITION.  GRANTOR WILL
NOT SELL, LICENSE, LEASE, TRANSFER OR OTHERWISE DISPOSE OF ANY OF THE
COLLATERAL, OR ATTEMPT OR CONTRACT TO DO SO EXCEPT AS PERMITTED BY THE CREDIT
AGREEMENT.

 

(H)                                 FURTHER IDENTIFICATION OF COLLATERAL. 
GRANTOR WILL, IF SO REQUESTED BY AGENT, FURNISH TO AGENT, AS OFTEN AS AGENT
REASONABLY REQUESTS, STATEMENTS AND SCHEDULES FURTHER IDENTIFYING AND DESCRIBING
THE COLLATERAL AND SUCH OTHER REPORTS IN CONNECTION WITH THE COLLATERAL AS AGENT
MAY REASONABLY REQUEST, ALL IN SUCH DETAIL AS AGENT MAY REASONABLY SPECIFY.

 

(I)                                     NOTICES.  GRANTOR WILL ADVISE AGENT
PROMPTLY, IN REASONABLE DETAIL, (I) OF ANY LIEN (OTHER THAN PERMITTED
ENCUMBRANCES) OR CLAIM MADE OR ASSERTED AGAINST ANY OF THE COLLATERAL, AND (II)
OF THE OCCURRENCE OF ANY OTHER EVENT WHICH WOULD HAVE A MATERIAL ADVERSE EFFECT
ON THE AGGREGATE VALUE OF THE COLLATERAL OR ON THE LIENS CREATED HEREUNDER OR
UNDER ANY OTHER LOAN DOCUMENT.

 

(J)                                     GOOD STANDING CERTIFICATES.  NOT LESS
FREQUENTLY THAN ONCE DURING EACH CALENDAR QUARTER, GRANTOR SHALL, UNLESS AGENT
SHALL OTHERWISE CONSENT, PROVIDE TO AGENT A CERTIFICATE OF GOOD STANDING FROM
ITS STATE OF INCORPORATION OR ORGANIZATION.

 

(K)                                  NO REINCORPORATION.  EXCEPT FOR THE
REORGANIZATION EXPRESSLY DESCRIBED IN AND PERMITTED UNDER THE CREDIT AGREEMENT
IN CONNECTION WITH THE PERMITTED RESTRUCTURING, GRANTOR SHALL NOT REINCORPORATE
OR REORGANIZE ITSELF UNDER THE LAWS OF ANY JURISDICTION

 

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OTHER THAN THE JURISDICTION IN WHICH IT IS INCORPORATED OR ORGANIZED AS OF THE
DATE HEREOF WITHOUT THE PRIOR WRITTEN CONSENT OF AGENT.

 

(L)                                     TERMINATIONS; AMENDMENTS NOT
AUTHORIZED.  GRANTOR ACKNOWLEDGES THAT IT IS NOT AUTHORIZED TO FILE ANY
FINANCING STATEMENT OR AMENDMENT OR TERMINATION STATEMENT WITH RESPECT TO ANY
FINANCING STATEMENT WITHOUT THE PRIOR WRITTEN CONSENT OF AGENT AND AGREES THAT
IT WILL NOT DO SO WITHOUT THE PRIOR WRITTEN CONSENT OF AGENT, SUBJECT TO
GRANTOR’S RIGHTS UNDER SECTION 9-509(D)(2) OF THE CODE.

 

(M)                               AUTHORIZED TERMINATIONS.  UPON PAYMENT IN FULL
IN CASH AND PERFORMANCE OF ALL OF THE OBLIGATIONS (OTHER THAN INDEMNIFICATION
OBLIGATIONS), TERMINATION OF THE COMMITMENTS AND A RELEASE OF ALL CLAIMS AGAINST
AGENT AND LENDERS, AND SO LONG AS NO SUITS, ACTIONS, PROCEEDINGS OR CLAIMS ARE
PENDING OR THREATENED AGAINST ANY INDEMNIFIED PERSON ASSERTING ANY DAMAGES,
LOSSES OR LIABILITIES THAT ARE INDEMNIFIED LIABILITIES UNDER SECTION 9.2 OF THE
CREDIT AGREEMENT, AGENT SHALL, AT GRANTOR’S EXPENSE, PROMPTLY DELIVER TO GRANTOR
OR AUTHORIZE GRANTOR TO PREPARE AND FILE TERMINATION STATEMENTS, MORTGAGE
RELEASES AND OTHER DOCUMENTS NECESSARY OR APPROPRIATE TO EVIDENCE THE
TERMINATION OF THE LIENS SECURING PAYMENT OF THE OBLIGATIONS.

 

(N)                                 FEDERAL CLAIMS.  GRANTOR SHALL NOTIFY AGENT
OF ANY COLLATERAL (OTHER THAN GOVERNMENT ACCOUNTS) WHICH CONSTITUTES A CLAIM
AGAINST THE UNITED STATES GOVERNMENT OR ANY INSTRUMENTALITY OR AGENCY THEREOF,
THE ASSIGNMENT OF WHICH CLAIM IS RESTRICTED BY FEDERAL LAW.  UPON THE REQUEST OF
AGENT, GRANTOR SHALL TAKE SUCH STEPS AS MAY BE NECESSARY TO COMPLY WITH ANY
APPLICABLE FEDERAL ASSIGNMENT OF CLAIMS LAWS AND OTHER COMPARABLE LAWS.

 

(O)                                 HOT GOODS.  NONE OF THE INVENTORY OF GRANTOR
HAS BEEN OR WILL BE PRODUCED IN VIOLATION OF ANY PROVISION OF THE FAIR LABOR
STANDARDS ACT OF 1938, AS AMENDED, OR IN VIOLATION OF ANY OTHER LAW.

 

6.                                       AGENT’S APPOINTMENT AS
ATTORNEY-IN-FACT.

 

On the Closing Date, Grantor shall execute and deliver to Agent a power of
attorney (the “Power of Attorney”) substantially in the form attached hereto as
Exhibit A.  The power of attorney granted pursuant to the Power of Attorney is a
power coupled with an interest and shall be irrevocable until the Termination
Date.  The powers conferred on Agent, for the benefit of Agent and Lenders,
under the Power of Attorney are solely to protect Agent’s interests (for the
benefit of Agent and Lenders) in the Collateral and shall not impose any duty
upon Agent or any Lender to exercise any such powers.  Agent agrees that (a)
except for the powers granted in clause (h) of the Power of Attorney, it shall
not exercise any power or authority granted under the Power of Attorney unless
an Event of Default has occurred and is continuing, and (b) Agent shall account
for any moneys received by Agent in respect of any foreclosure on or disposition
of Collateral pursuant to the Power of Attorney provided that none of Agent or
any Lender shall have any duty as to any Collateral, and Agent and Lenders shall
be accountable only for amounts that they actually receive as a result of the
exercise of such powers.  NONE OF AGENT, LENDERS OR THEIR RESPECTIVE AFFILIATES,

 

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OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE
TO GRANTOR FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR
OTHERWISE, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL
DAMAGES.

 

7.                                       REMEDIES:  RIGHTS UPON DEFAULT.

 

(A)                                  IN ADDITION TO ALL OTHER RIGHTS AND
REMEDIES GRANTED TO IT UNDER THIS SECURITY AGREEMENT, THE CREDIT AGREEMENT, THE
OTHER LOAN DOCUMENTS AND UNDER ANY OTHER INSTRUMENT OR AGREEMENT SECURING,
EVIDENCING OR RELATING TO ANY OF THE OBLIGATIONS, IF ANY EVENT OF DEFAULT SHALL
HAVE OCCURRED AND BE CONTINUING, AGENT MAY EXERCISE ALL RIGHTS AND REMEDIES OF A
SECURED PARTY UNDER THE CODE.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
GRANTOR EXPRESSLY AGREES THAT IN ANY SUCH EVENT AGENT, WITHOUT DEMAND OF
PERFORMANCE OR OTHER DEMAND, ADVERTISEMENT OR NOTICE OF ANY KIND (EXCEPT THE
NOTICE SPECIFIED BELOW OF TIME AND PLACE OF PUBLIC OR PRIVATE SALE) TO OR UPON
GRANTOR OR ANY OTHER PERSON (ALL AND EACH OF WHICH DEMANDS, ADVERTISEMENTS AND
NOTICES ARE HEREBY EXPRESSLY WAIVED TO THE MAXIMUM EXTENT PERMITTED BY THE CODE
AND OTHER APPLICABLE LAW), MAY FORTHWITH ENTER UPON THE PREMISES OF GRANTOR
WHERE ANY COLLATERAL IS LOCATED THROUGH SELF-HELP, WITHOUT JUDICIAL PROCESS,
WITHOUT FIRST OBTAINING A FINAL JUDGMENT OR GIVING GRANTOR OR ANY OTHER PERSON
NOTICE AND OPPORTUNITY FOR A HEARING ON AGENT’S CLAIM OR ACTION AND MAY COLLECT,
RECEIVE, ASSEMBLE, PROCESS, APPROPRIATE AND REALIZE UPON THE COLLATERAL, OR ANY
PART THEREOF, AND MAY FORTHWITH SELL, LEASE, LICENSE, ASSIGN, GIVE AN OPTION OR
OPTIONS TO PURCHASE, OR SELL OR OTHERWISE DISPOSE OF AND DELIVER SAID COLLATERAL
(OR CONTRACT TO DO SO), OR ANY PART THEREOF, IN ONE OR MORE PARCELS AT A PUBLIC
OR PRIVATE SALE OR SALES, AT ANY EXCHANGE AT SUCH PRICES AS IT MAY DEEM
ACCEPTABLE, FOR CASH OR ON CREDIT OR FOR FUTURE DELIVERY WITHOUT ASSUMPTION OF
ANY CREDIT RISK.  AGENT OR ANY LENDER SHALL HAVE THE RIGHT UPON ANY SUCH PUBLIC
SALE OR SALES AND, TO THE EXTENT PERMITTED BY LAW, UPON ANY SUCH PRIVATE SALE OR
SALES, TO PURCHASE FOR THE BENEFIT OF AGENT AND LENDERS, THE WHOLE OR ANY PART
OF SAID COLLATERAL SO SOLD, FREE OF ANY RIGHT OR EQUITY OF REDEMPTION, WHICH
EQUITY OF REDEMPTION GRANTOR HEREBY RELEASES.  SUCH SALES MAY BE ADJOURNED AND
CONTINUED FROM TIME TO TIME WITH OR WITHOUT NOTICE.  AGENT SHALL HAVE THE RIGHT
TO CONDUCT SUCH SALES ON GRANTOR’S PREMISES OR ELSEWHERE AND SHALL HAVE THE
RIGHT TO USE GRANTOR’S PREMISES WITHOUT CHARGE FOR SUCH TIME OR TIMES AS AGENT
DEEMS NECESSARY OR ADVISABLE.

 

IF ANY EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING, GRANTOR FURTHER
AGREES, AT AGENT’S REQUEST, TO ASSEMBLE THE COLLATERAL AND MAKE IT AVAILABLE TO
AGENT AT A PLACE OR PLACES DESIGNATED BY AGENT WHICH ARE REASONABLY CONVENIENT
TO AGENT AND GRANTOR, WHETHER AT GRANTOR’S PREMISES OR ELSEWHERE.  UNTIL AGENT
IS ABLE TO EFFECT A SALE, LEASE, OR OTHER DISPOSITION OF COLLATERAL, AGENT SHALL
HAVE THE RIGHT TO HOLD OR USE COLLATERAL, OR ANY PART THEREOF, TO THE EXTENT
THAT IT DEEMS APPROPRIATE FOR THE PURPOSE OF PRESERVING COLLATERAL OR ITS VALUE
OR FOR ANY OTHER PURPOSE DEEMED APPROPRIATE BY AGENT.  AGENT SHALL HAVE NO
OBLIGATION TO GRANTOR TO MAINTAIN OR PRESERVE THE RIGHTS OF GRANTOR AS AGAINST
THIRD PARTIES WITH RESPECT TO COLLATERAL WHILE COLLATERAL IS IN THE POSSESSION
OF AGENT.  AGENT MAY, IF IT SO ELECTS, SEEK THE APPOINTMENT OF A RECEIVER OR
KEEPER TO TAKE

 

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POSSESSION OF COLLATERAL AND TO ENFORCE ANY OF AGENT’S REMEDIES (FOR THE BENEFIT
OF AGENT AND LENDERS), WITH RESPECT TO SUCH APPOINTMENT WITHOUT PRIOR NOTICE OR
HEARING AS TO SUCH APPOINTMENT.  AGENT SHALL APPLY THE NET PROCEEDS OF ANY SUCH
COLLECTION, RECOVERY, RECEIPT, APPROPRIATION, REALIZATION OR SALE TO THE
OBLIGATIONS AS PROVIDED IN THE CREDIT AGREEMENT, AND ONLY AFTER SO PAYING OVER
SUCH NET PROCEEDS, AND AFTER THE PAYMENT BY AGENT OF ANY OTHER AMOUNT REQUIRED
BY ANY PROVISION OF LAW, NEED AGENT ACCOUNT FOR THE SURPLUS, IF ANY, TO
GRANTOR.  TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, GRANTOR WAIVES ALL
CLAIMS, DAMAGES, AND DEMANDS AGAINST AGENT OR ANY LENDER ARISING OUT OF THE
REPOSSESSION, RETENTION OR SALE OF THE COLLATERAL EXCEPT SUCH AS ARISE SOLELY
OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF AGENT OR SUCH LENDER AS
FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION.  GRANTOR AGREES THAT
TEN (10) DAYS PRIOR NOTICE BY AGENT OF THE TIME AND PLACE OF ANY PUBLIC SALE OR
OF THE TIME AFTER WHICH A PRIVATE SALE MAY TAKE PLACE IS REASONABLE NOTIFICATION
OF SUCH MATTERS.  GRANTOR SHALL REMAIN LIABLE FOR ANY DEFICIENCY IF THE PROCEEDS
OF ANY SALE OR DISPOSITION OF THE COLLATERAL ARE INSUFFICIENT TO PAY ALL
OBLIGATIONS, INCLUDING ANY ATTORNEYS’ FEES AND OTHER EXPENSES INCURRED BY AGENT
OR ANY LENDER TO COLLECT SUCH DEFICIENCY.

 

(B)                                 EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
HEREIN OR IN THE CREDIT AGREEMENT, GRANTOR HEREBY WAIVES PRESENTMENT, DEMAND,
PROTEST OR ANY NOTICE (TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW) OF ANY
KIND IN CONNECTION WITH THIS SECURITY AGREEMENT OR ANY COLLATERAL.

 

(C)                                  TO THE EXTENT THAT APPLICABLE LAW IMPOSES
DUTIES ON THE AGENT TO EXERCISE REMEDIES IN A COMMERCIALLY REASONABLE MANNER,
GRANTOR ACKNOWLEDGES AND AGREES THAT IT IS NOT COMMERCIALLY UNREASONABLE FOR THE
AGENT (I) TO FAIL TO INCUR EXPENSES REASONABLY DEEMED SIGNIFICANT BY THE AGENT
TO PREPARE COLLATERAL FOR DISPOSITION OR OTHERWISE TO COMPLETE RAW MATERIAL OR
WORK IN PROCESS INTO FINISHED GOODS OR OTHER FINISHED PRODUCTS FOR DISPOSITION,
(II) TO FAIL TO OBTAIN THIRD PARTY CONSENTS FOR ACCESS TO COLLATERAL TO BE
DISPOSED OF, OR TO OBTAIN OR, IF NOT REQUIRED BY OTHER LAW, TO FAIL TO OBTAIN
GOVERNMENTAL OR THIRD PARTY CONSENTS FOR THE COLLECTION OR DISPOSITION OF
COLLATERAL TO BE COLLECTED OR DISPOSED OF, (III) TO FAIL TO EXERCISE COLLECTION
REMEDIES AGAINST ACCOUNT DEBTORS OR OTHER PERSONS OBLIGATED ON COLLATERAL OR TO
REMOVE LIENS ON OR ANY ADVERSE CLAIMS AGAINST COLLATERAL, (IV) TO EXERCISE
COLLECTION REMEDIES AGAINST ACCOUNT DEBTORS AND OTHER PERSONS OBLIGATED ON
COLLATERAL DIRECTLY OR THROUGH THE USE OF COLLECTION AGENCIES AND OTHER
COLLECTION SPECIALISTS, (V) TO ADVERTISE DISPOSITIONS OF COLLATERAL THROUGH
PUBLICATIONS OR MEDIA OF GENERAL CIRCULATION, WHETHER OR NOT THE COLLATERAL IS
OF A SPECIALIZED NATURE, (VI) TO CONTACT OTHER PERSONS, WHETHER OR NOT IN THE
SAME BUSINESS AS GRANTOR, FOR EXPRESSIONS OF INTEREST IN ACQUIRING ALL OR ANY
PORTION OF SUCH COLLATERAL, (VII) TO HIRE ONE OR MORE PROFESSIONAL AUCTIONEERS
TO ASSIST IN THE DISPOSITION OF COLLATERAL, WHETHER OR NOT THE COLLATERAL IS OF
A SPECIALIZED NATURE, (VIII) TO DISPOSE OF COLLATERAL BY UTILIZING INTERNET
SITES THAT PROVIDE FOR THE AUCTION OF ASSETS OF THE TYPES INCLUDED IN THE
COLLATERAL OR THAT HAVE THE REASONABLE CAPACITY OF DOING SO, OR THAT MATCH
BUYERS AND SELLERS OF ASSETS, (IX) TO DISPOSE OF ASSETS IN WHOLESALE RATHER THAN
RETAIL MARKETS, (X) TO DISCLAIM DISPOSITION WARRANTIES, SUCH AS TITLE,
POSSESSION OR QUIET ENJOYMENT, (XI) TO PURCHASE INSURANCE OR CREDIT ENHANCEMENTS
TO INSURE THE AGENT AGAINST RISKS OF LOSS, COLLECTION OR DISPOSITION OF
COLLATERAL OR TO PROVIDE TO THE AGENT A GUARANTEED RETURN FROM THE COLLECTION OR
DISPOSITION OF COLLATERAL, OR (XII) TO THE EXTENT DEEMED APPROPRIATE BY THE
AGENT, TO OBTAIN

 

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THE SERVICES OF OTHER BROKERS, INVESTMENT BANKERS, CONSULTANTS AND OTHER
PROFESSIONALS TO ASSIST THE AGENT IN THE COLLECTION OR DISPOSITION OF ANY OF THE
COLLATERAL.  GRANTOR ACKNOWLEDGES THAT THE PURPOSE OF THIS SECTION 7(C) IS TO
PROVIDE NON-EXHAUSTIVE INDICATIONS OF WHAT ACTIONS OR OMISSIONS BY THE AGENT
WOULD NOT BE COMMERCIALLY UNREASONABLE IN THE AGENT’S EXERCISE OF REMEDIES
AGAINST THE COLLATERAL AND THAT OTHER ACTIONS OR OMISSIONS BY THE AGENT SHALL
NOT BE DEEMED COMMERCIALLY UNREASONABLE SOLELY ON ACCOUNT OF NOT BEING INDICATED
IN THIS SECTION 7(C).  WITHOUT LIMITATION UPON THE FOREGOING, NOTHING CONTAINED
IN THIS SECTION 7(C) SHALL BE CONSTRUED TO GRANT ANY RIGHTS TO GRANTOR OR TO
IMPOSE ANY DUTIES ON AGENT THAT WOULD NOT HAVE BEEN GRANTED OR IMPOSED BY THIS
SECURITY AGREEMENT OR BY APPLICABLE LAW IN THE ABSENCE OF THIS SECTION 7(C).

 

(D)                                 NEITHER THE AGENT NOR THE LENDERS SHALL BE
REQUIRED TO MAKE ANY DEMAND UPON, OR PURSUE OR EXHAUST ANY OF THEIR RIGHTS OR
REMEDIES AGAINST, GRANTOR, ANY OTHER OBLIGOR, GUARANTOR, PLEDGOR OR ANY OTHER
PERSON WITH RESPECT TO THE PAYMENT OF THE OBLIGATIONS OR TO PURSUE OR EXHAUST
ANY OF THEIR RIGHTS OR REMEDIES WITH RESPECT TO ANY COLLATERAL THEREFOR OR ANY
DIRECT OR INDIRECT GUARANTEE THEREOF.  NEITHER THE AGENT NOR THE LENDERS SHALL
BE REQUIRED TO MARSHAL THE COLLATERAL OR ANY GUARANTEE OF THE OBLIGATIONS OR TO
RESORT TO THE COLLATERAL OR ANY SUCH GUARANTEE IN ANY PARTICULAR ORDER, AND ALL
OF ITS AND THEIR RIGHTS HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT SHALL BE
CUMULATIVE.  TO THE EXTENT IT MAY LAWFULLY DO SO, GRANTOR ABSOLUTELY AND
IRREVOCABLY WAIVES AND RELINQUISHES THE BENEFIT AND ADVANTAGE OF, AND COVENANTS
NOT TO ASSERT AGAINST THE AGENT OR ANY LENDER, ANY VALUATION, STAY,
APPRAISEMENT, EXTENSION, REDEMPTION OR SIMILAR LAWS AND ANY AND ALL RIGHTS OR
DEFENSES IT MAY HAVE AS A SURETY NOW OR HEREAFTER EXISTING WHICH, BUT FOR THIS
PROVISION, MIGHT BE APPLICABLE TO THE SALE OF ANY COLLATERAL MADE UNDER THE
JUDGMENT, ORDER OR DECREE OF ANY COURT, OR PRIVATELY UNDER THE POWER OF SALE
CONFERRED BY THIS SECURITY AGREEMENT, OR OTHERWISE.

 

8.                                       GRANT OF LICENSE TO USE INTELLECTUAL
PROPERTY COLLATERAL.  FOR THE PURPOSE OF ENABLING AGENT TO EXERCISE RIGHTS AND
REMEDIES UNDER SECTION 7 HEREOF (INCLUDING, WITHOUT LIMITING THE TERMS OF
SECTION 7 HEREOF, IN ORDER TO TAKE POSSESSION OF, HOLD, PRESERVE, PROCESS,
ASSEMBLE, PREPARE FOR SALE, MARKET FOR SALE, SELL OR OTHERWISE DISPOSE OF
COLLATERAL) AT SUCH TIME AS AGENT SHALL BE LAWFULLY ENTITLED TO EXERCISE SUCH
RIGHTS AND REMEDIES, GRANTOR HEREBY GRANTS TO AGENT, FOR THE BENEFIT OF AGENT
AND LENDERS, AN IRREVOCABLE, NONEXCLUSIVE LICENSE (EXERCISABLE WITHOUT PAYMENT
OF ROYALTY OR OTHER COMPENSATION TO GRANTOR) TO USE, LICENSE OR SUBLICENSE ANY
INTELLECTUAL PROPERTY NOW OWNED OR HEREAFTER ACQUIRED BY GRANTOR, AND WHEREVER
THE SAME MAY BE LOCATED, AND INCLUDING IN SUCH LICENSE ACCESS TO ALL MEDIA IN
WHICH ANY OF THE LICENSED ITEMS MAY BE RECORDED OR STORED AND TO ALL COMPUTER
SOFTWARE AND PROGRAMS USED FOR THE COMPILATION OR PRINTOUT THEREOF.

 

9.                                       LIMITATION ON AGENT’S AND LENDERS’ DUTY
IN RESPECT OF COLLATERAL.  AGENT AND EACH LENDER SHALL USE REASONABLE CARE WITH
RESPECT TO THE COLLATERAL IN ITS POSSESSION OR UNDER ITS CONTROL.  NEITHER AGENT
NOR ANY LENDER SHALL HAVE ANY OTHER DUTY AS TO ANY COLLATERAL IN ITS POSSESSION
OR CONTROL OR IN THE POSSESSION OR CONTROL OF ANY AGENT OR NOMINEE OF AGENT OR
SUCH LENDER, OR ANY INCOME THEREON OR AS TO THE PRESERVATION OF RIGHTS AGAINST
PRIOR PARTIES OR ANY OTHER RIGHTS PERTAINING THERETO.

 

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10.                                 REINSTATEMENT.  THIS SECURITY AGREEMENT
SHALL REMAIN IN FULL FORCE AND EFFECT AND CONTINUE TO BE EFFECTIVE SHOULD ANY
PETITION BE FILED BY OR AGAINST GRANTOR FOR LIQUIDATION OR REORGANIZATION,
SHOULD GRANTOR BECOME INSOLVENT OR MAKE AN ASSIGNMENT FOR THE BENEFIT OF ANY
CREDITOR OR CREDITORS OR SHOULD A RECEIVER OR TRUSTEE BE APPOINTED FOR ALL OR
ANY SIGNIFICANT PART OF GRANTOR’S ASSETS, AND SHALL CONTINUE TO BE EFFECTIVE OR
BE REINSTATED, AS THE CASE MAY BE, IF AT ANY TIME PAYMENT AND PERFORMANCE OF THE
OBLIGATIONS, OR ANY PART THEREOF, IS, PURSUANT TO APPLICABLE LAW, RESCINDED OR
REDUCED IN AMOUNT, OR MUST OTHERWISE BE RESTORED OR RETURNED BY ANY OBLIGEE OF
THE OBLIGATIONS, WHETHER AS A “VOIDABLE PREFERENCE,” “FRAUDULENT CONVEYANCE,” OR
OTHERWISE, ALL AS THOUGH SUCH PAYMENT OR PERFORMANCE HAD NOT BEEN MADE.  IN THE
EVENT THAT ANY PAYMENT, OR ANY PART THEREOF, IS RESCINDED, REDUCED, RESTORED OR
RETURNED, THE OBLIGATIONS SHALL BE REINSTATED AND DEEMED REDUCED ONLY BY SUCH
AMOUNT PAID AND NOT SO RESCINDED, REDUCED, RESTORED OR RETURNED.

 

11.                                 NOTICES.  EXCEPT AS OTHERWISE PROVIDED
HEREIN, WHENEVER IT IS PROVIDED HEREIN THAT ANY NOTICE, DEMAND, REQUEST,
CONSENT, APPROVAL, DECLARATION OR OTHER COMMUNICATION SHALL OR MAY BE GIVEN TO
OR SERVED UPON ANY OF THE PARTIES BY ANY OTHER PARTY, OR WHENEVER ANY OF THE
PARTIES DESIRES TO GIVE AND SERVE UPON ANY OTHER PARTY ANY COMMUNICATION WITH
RESPECT TO THIS SECURITY AGREEMENT, EACH SUCH NOTICE, DEMAND, REQUEST, CONSENT,
APPROVAL, DECLARATION OR OTHER COMMUNICATION SHALL BE IN WRITING AND SHALL BE
GIVEN IN THE MANNER, AND DEEMED RECEIVED, AS PROVIDED FOR IN THE CREDIT
AGREEMENT.

 

12.                                 SEVERABILITY.  WHENEVER POSSIBLE, EACH
PROVISION OF THIS SECURITY AGREEMENT SHALL BE INTERPRETED IN A MANNER AS TO BE
EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS SECURITY
AGREEMENT SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION
SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY WITHOUT
INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
SECURITY AGREEMENT.  THIS SECURITY AGREEMENT IS TO BE READ, CONSTRUED AND
APPLIED TOGETHER WITH THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS WHICH,
TAKEN TOGETHER, SET FORTH THE COMPLETE UNDERSTANDING AND AGREEMENT OF AGENT,
LENDERS AND GRANTOR WITH RESPECT TO THE MATTERS REFERRED TO HEREIN AND THEREIN.

 

13.                                 NO WAIVER; CUMULATIVE REMEDIES.  NEITHER
AGENT NOR ANY LENDER SHALL BY ANY ACT, DELAY, OMISSION OR OTHERWISE BE DEEMED TO
HAVE WAIVED ANY OF ITS RIGHTS OR REMEDIES HEREUNDER, AND NO WAIVER SHALL BE
VALID UNLESS IN WRITING, SIGNED BY AGENT AND THEN ONLY TO THE EXTENT THEREIN SET
FORTH.  A WAIVER BY AGENT OF ANY RIGHT OR REMEDY HEREUNDER ON ANY ONE OCCASION
SHALL NOT BE CONSTRUED AS A BAR TO ANY RIGHT OR REMEDY WHICH AGENT WOULD
OTHERWISE HAVE HAD ON ANY FUTURE OCCASION.  NO FAILURE TO EXERCISE NOR ANY DELAY
IN EXERCISING ON THE PART OF AGENT OR ANY LENDER, ANY RIGHT, POWER OR PRIVILEGE
HEREUNDER, SHALL OPERATE AS A WAIVER THEREOF, NOR SHALL ANY SINGLE OR PARTIAL
EXERCISE OF ANY RIGHT, POWER OR PRIVILEGE HEREUNDER PRECLUDE ANY OTHER OR FUTURE
EXERCISE THEREOF OR THE EXERCISE OF ANY OTHER RIGHT, POWER OR PRIVILEGE.  THE
RIGHTS AND REMEDIES HEREUNDER PROVIDED ARE CUMULATIVE AND MAY BE EXERCISED
SINGLY OR CONCURRENTLY, AND ARE NOT EXCLUSIVE OF ANY RIGHTS AND REMEDIES
PROVIDED BY LAW.  NONE OF THE TERMS OR PROVISIONS OF THIS SECURITY AGREEMENT MAY
BE WAIVED, ALTERED, MODIFIED OR AMENDED EXCEPT BY AN INSTRUMENT IN WRITING, DULY
EXECUTED BY AGENT AND GRANTOR.

 

20

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

 

14.                                 LIMITATION BY LAW.  ALL RIGHTS, REMEDIES AND
POWERS PROVIDED IN THIS SECURITY AGREEMENT MAY BE EXERCISED ONLY TO THE EXTENT
THAT THE EXERCISE THEREOF DOES NOT VIOLATE ANY APPLICABLE PROVISION OF LAW, AND
ALL THE PROVISIONS OF THIS SECURITY AGREEMENT ARE INTENDED TO BE SUBJECT TO ALL
APPLICABLE MANDATORY PROVISIONS OF LAW THAT MAY BE CONTROLLING AND TO BE LIMITED
TO THE EXTENT NECESSARY SO THAT THEY SHALL NOT RENDER THIS SECURITY AGREEMENT
INVALID, UNENFORCEABLE, IN WHOLE OR IN PART, OR NOT ENTITLED TO BE RECORDED,
REGISTERED OR FILED UNDER THE PROVISIONS OF ANY APPLICABLE LAW.

 

15.                                 TERMINATION OF THIS SECURITY AGREEMENT. 
SUBJECT TO SECTION 10 HEREOF, THIS SECURITY AGREEMENT SHALL TERMINATE UPON THE
TERMINATION DATE.

 

16.                                 SUCCESSORS AND ASSIGNS.  THIS SECURITY
AGREEMENT AND ALL OBLIGATIONS OF GRANTOR HEREUNDER SHALL BE BINDING UPON THE
SUCCESSORS AND ASSIGNS OF GRANTOR (INCLUDING ANY DEBTOR-IN-POSSESSION ON BEHALF
OF GRANTOR) AND SHALL, TOGETHER WITH THE RIGHTS AND REMEDIES OF AGENT, FOR THE
BENEFIT OF AGENT AND LENDERS, HEREUNDER, INURE TO THE BENEFIT OF AGENT AND
LENDERS, ALL FUTURE HOLDERS OF ANY INSTRUMENT EVIDENCING ANY OF THE OBLIGATIONS
AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.  NO SALES OF PARTICIPATIONS, OTHER
SALES, ASSIGNMENTS, TRANSFERS OR OTHER DISPOSITIONS OF ANY AGREEMENT GOVERNING
OR INSTRUMENT EVIDENCING THE OBLIGATIONS OR ANY PORTION THEREOF OR INTEREST
THEREIN SHALL IN ANY MANNER IMPAIR THE LIEN GRANTED TO AGENT, FOR THE BENEFIT OF
AGENT AND LENDERS, HEREUNDER.  GRANTOR MAY NOT ASSIGN, SELL, HYPOTHECATE OR
OTHERWISE TRANSFER ANY INTEREST IN OR OBLIGATION UNDER THIS SECURITY AGREEMENT
EXCEPT FOR SUCH TRANSFERS AND ASSIGNMENTS TO OTHER CREDIT PARTIES TO THE EXTENT
EXPRESSLY PERMITTED IN THE CREDIT AGREEMENT IN CONNECTION WITH THE PERMITTED
RESTRUCTURING.

 

17.                                 COUNTERPARTS.  THIS SECURITY AGREEMENT MAY
BE AUTHENTICATED IN ANY NUMBER OF SEPARATE COUNTERPARTS, EACH OF WHICH SHALL
COLLECTIVELY AND SEPARATELY CONSTITUTE ONE AGREEMENT.  THIS SECURITY AGREEMENT
MAY BE AUTHENTICATED BY MANUAL SIGNATURE, FACSIMILE OR, IF APPROVED IN WRITING
BY AGENT, ELECTRONIC MEANS, ALL OF WHICH SHALL BE EQUALLY VALID.

 

18.                                 GOVERNING LAW.  THIS SECURITY AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK.  BORROWER HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF
ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.  BORROWER IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM
THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.  EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO SERVICE
OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.3 OF THE CREDIT

 

21

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

 

AGREEMENT.  NOTHING IN THIS SECURITY AGREEMENT WILL AFFECT THE RIGHT OF ANY
PARTY TO THIS SECURITY AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW.

 

19.                                 WAIVER OF JURY TRIAL.  EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY AND TO THE FULLEST EXTENT PERMITTED BY LAW WAIVES ANY
RIGHTS THAT IT MAY HAVE TO CLAIM OR RECEIVE CONSEQUENTIAL OR SPECIAL DAMAGES IN
CONNECTION WITH ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.

 

20.                                 SECTION TITLES.  THE SECTION TITLES
CONTAINED IN THIS SECURITY AGREEMENT ARE AND SHALL BE WITHOUT SUBSTANTIVE
MEANING OR CONTENT OF ANY KIND WHATSOEVER AND ARE NOT A PART OF THE AGREEMENT
BETWEEN THE PARTIES HERETO.

 

21.                                 NO STRICT CONSTRUCTION.  THE PARTIES HERETO
HAVE PARTICIPATED JOINTLY IN THE NEGOTIATION AND DRAFTING OF THIS SECURITY
AGREEMENT.  IN THE EVENT AN AMBIGUITY OR QUESTION OF INTENT OR INTERPRETATION
ARISES, THIS SECURITY AGREEMENT SHALL BE CONSTRUED AS IF DRAFTED JOINTLY BY THE
PARTIES HERETO AND NO PRESUMPTION OR BURDEN OF PROOF SHALL ARISE FAVORING OR
DISFAVORING ANY PARTY BY VIRTUE OF THE AUTHORSHIP OF ANY PROVISIONS OF THIS
SECURITY AGREEMENT.

 

22.                                 ADVICE OF COUNSEL.  EACH OF THE PARTIES
REPRESENTS TO EACH OTHER PARTY HERETO THAT IT HAS DISCUSSED THIS SECURITY
AGREEMENT AND, SPECIFICALLY, THE PROVISIONS OF SECTION 18 AND SECTION 19, WITH
ITS COUNSEL.

 

23.                                 BENEFIT OF LENDERS.  ALL LIENS GRANTED OR
CONTEMPLATED HEREBY SHALL BE FOR THE BENEFIT OF AGENT, INDIVIDUALLY, AND
LENDERS, AND ALL PROCEEDS OR PAYMENTS REALIZED FROM COLLATERAL IN ACCORDANCE
HEREWITH SHALL BE APPLIED TO THE OBLIGATIONS IN ACCORDANCE WITH THE TERMS OF THE
CREDIT AGREEMENT.

 

[Remainder of page intentionally left blank; signature pages follow]

 

22

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

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Borrower Security
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.

 

 

BORROWERS:

 

 

 

CURATIVE HEALTH SERVICES, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

EBIOCARE.COM, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

HEMOPHILIA ACCESS, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

[Signature Page to Borrower Security Agreement]

 

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

 

 

APEX THERAPEUTIC CARE, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

CHS SERVICES, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

CURATIVE HEALTH SERVICES OF NEW YORK, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

OPTIMAL CARE PLUS, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

INFINITY INFUSION, LLC

 

 

 

By: Curative Health Services, Inc., its Sole Member

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

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

 

 

INFINITY INFUSION II, LLC

 

 

 

By: Curative Health Services, Inc., its Sole Member

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

INFINITY INFUSION CARE, LTD.

 

 

 

By: Infinity Infusion II, LLC, its Sole General Partner

 

 

 

By: Curative Health Services, Inc., the Sole Member of Infinity Infusion II, LLC

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

MEDCARE, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

CURATIVE PHARMACY SERVICES, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

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

 

 

GENERAL ELECTRIC CAPITAL CORPORATION, as Agent

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

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

 

SCHEDULE I

to

SECURITY AGREEMENT

 

FILING JURISDICTIONS

 

 

i.

 

Curative Health Services, Inc.

 

Minnesota

 

 

 

 

 

ii.

 

eBioCare.com, Inc.:

 

Delaware

 

 

 

 

 

iii.

 

Hemophilia Access, Inc.

 

Tennessee

 

 

 

 

 

iv.

 

Apex Therapeutic Care, Inc.

 

California

 

 

 

 

 

v.

 

CHS Services, Inc.

 

Delaware

 

 

 

 

 

vi.

 

Curative Health Services of New York, Inc.

 

New York

 

 

 

 

 

vii.

 

Infinity Infusion, LLC

 

Delaware

 

 

 

 

 

viii.

 

Infinity Infusion II, LLC

 

Delaware

 

 

 

 

 

ix.

 

Optimal Care Plus, Inc.

 

Delaware

 

 

 

 

 

x.

 

Infinity Infusion care, Ltd.

 

Texas

 

 

 

 

 

xi.

 

MedCare, Inc.

 

Delaware

 

 

 

 

 

xii.

 

Curative Pharmacy Services, Inc.

 

Delaware

 

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

 

SCHEDULE II

to

SECURITY AGREEMENT

 

INSTRUMENTS

 

CHATTEL PAPER

 

AND

 

LETTER OF CREDIT RIGHTS

 

 

None

 

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

 

SCHEDULE III-A

to

SECURITY AGREEMENT

 

SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL

 

AND RECORDS CONCERNING BORROWER’S COLLATERAL

 

 

I.                                         Grantor’s official
name:                     Curative Health Services, Inc.

 

II.                                     Type of entity:                
Corporation

 

III.                                 Organizational identification number issued
by Grantor’s state of incorporation:

 

MN4T-750

 

IV.                                 State or Incorporation of
Borrower:    Minnesota

 

V.                                     Chief Executive Office/Corporate Office
and principal place of business of Borrower:

 

150 Motor Parkway

Hauppauge, NY 11788

 

VI.                                 Warehouses and Other Premises at which
Collateral is Stored or Located:

 

150 Motor Parkway

Hauppauge, NY 11788

 

2105 Woodside Road

Second Floor

Woodside, CA  94062

 

VII.                             Locations of Records Concerning Collateral:    
(see V. above)

 

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

 

SCHEDULE III-B

to

SECURITY AGREEMENT

 

 

SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS CONCERNING EBIOCARE.COM, INC.’S COLLATERAL

 

I.                                         Grantor’s official
name:                     eBioCare.com, Inc.

 

II.                                     Type of entity:                
Corporation

 

III.                                 Organizational identification number issued
by Grantor’s state of incorporation:

DE2838307

 

IV.                                 State of Incorporation of eBioCare.com,
Inc.:    Delaware

 

V.                                     Chief Executive Office/Corporate Office
and principal place of business of eBioCare.com, Inc.:

 

1160 Industrial Road

Unit 19

San Carlos, CA  94070

 

VI.                                 Warehouses and Other Premises at which
Collateral is Stored or Located:

1160 Industrial Road

Unit 19

San Carlos, CA  94070

 

VII.                             Locations of Records Concerning
Collateral:     (see V. above)

 

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

 

SCHEDULE III-C

to

SECURITY AGREEMENT

 

 

SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS CONCERNING HEMOPHILIA ACCESS, INC.’S COLLATERAL

 

I.                                         Grantor’s official
name:                     Hemophilia Access, Inc.

 

II.                                     Type of entity:                
Corporation

 

III.                                 Organizational identification number issued
by Grantor’s state of incorporation:

TN0275344

 

IV.                                 State of Incorporation of Hemophilia Access,
Inc.:                      Tennessee

 

V.                                     Chief Executive Office/Corporate Office
and principal place of business of Hemophilia Access Inc.:

100 Winners Circle

Suite 120

Brentwood, TN  37027

 

VI.                                 Warehouses and Other Premises at which
Collateral is Stored or Located:

 

100 Winners Circle

Suite 120

Brentwood, TN  37027

 

VII.                             Locations of Records Concerning
Collateral:     (see V. above)

 

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

 

SCHEDULE III-D

to

SECURITY AGREEMENT

 

 

SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS CONCERNING APEX THERAPEUTIC CARE, INC.’S COLLATERAL

 

I.                                         Grantor’s official
name:                     Apex Therapeutic Care, Inc.

 

II.                                     Type of entity:                
Corporation

 

III.                                 Organizational identification number issued
by Grantor’s state of incorporation:

CAC2026547

 

IV.                                 State of Incorporation of Apex Therapeutic
Care, Inc.:   California

 

V.                                     Chief Executive Office/Corporate Office
and principal place of business of Apex Therapeutic Care, Inc.:

 

31332 Via Colinas

Suite 106

Westlake Village, CA  91362

 

VI.                                 Warehouses and Other Premises at which
Collateral is Stored or Located:

 

31332 Via Colinas

Suite 106

Westlake Village, CA  91362

 

623 N. Main Street

Unit D6-8

Corona, CA  92880

 

211 South Ryan Street

Lake Charles, LA  70601

 

VII.                             Locations of Records Concerning
Collateral:      (see V. above)

 

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

 

SCHEDULE III-E

to

SECURITY AGREEMENT

 

SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS CONCERNING CHS SERVICES, INC.’S COLLATERAL

 

I.                                         Grantor’s official
name:                     CHS Services, Inc.

 

II.                                     Type of entity:                
Corporation

 

III.                                 Organizational identification number issued
by Grantor’s state of incorporation:

 

DE2578204

 

IV.                                 State of Incorporation of CHS Services,
Inc.:                                                     Delaware

 

V.                                     Chief Executive Office/Corporate Office
and principal place of business of CHS Services, Inc.:

 

150 Motor Parkway

Hauppauge, NY  11788

 

VI.                                 Warehouses and Other Premises at which
Collateral is Stored or Located:

 

150 Motor Parkway

Hauppauge, NY  11788

 

103 Foulk Road

Suite 200

Wilmington, DE  19803

 

VII.                             Locations of Records Concerning
Collateral:    (see V. above)

 

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

 

SCHEDULE III-F

to

SECURITY AGREEMENT

 

 

SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS CONCERNING CURATIVE HEALTH SERVICES OF NEW YORK, INC.’S COLLATERAL

 

I.                                         Grantor’s official
name:                     Curative Health Services of New York, Inc.

 

II.                                     Type of entity:                
Corporation

 

III.                                 Organizational identification number issued
by Grantor’s state of incorporation:

 

Not issued by state of incorporation

 

IV.                                 State of Incorporation of Curative Health
Services of New York, Inc.:                     New York

 

V.                                     Chief Executive Office/Corporate Office
and principal place of business of Curative Health Services of New York, Inc.:

 

144 Freeman’s Bridge Road

Glenville, NY  13202

 

VI.                                 Warehouses and Other Premises at which
Collateral is Stored or Located:

 

144 Freeman’s Bridge Road

Glenville, NY  13202

 

VII.                             Locations of Records Concerning
Collateral:       (see V. above)

 

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

 

SCHEDULE III-G

to

SECURITY AGREEMENT

 

 

SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS CONCERNING INFINITY INFUSION, LLC’S COLLATERAL

 

I.                                         Grantor’s official
name:                     Infinity Infusion, LLC

 

II.                                     Type of entity:                 Limited
Liability Company

 

III.                                 Organizational identification number issued
by Grantor’s state of organization:

 

DE3529163

 

IV.                                 State of organization of Infinity Infusion,
LLC:                                           Delaware

 

V.                                     Chief Executive Office/Corporate Office
and principal place of business of Infinity Infusion, LLC:

 

150 Motor Parkway

Hauppauge, NY  11788

 

VI.                                 Warehouses and Other Premises at which
Collateral is Stored or Located:

 

150 Motor Parkway

Hauppauge, NY  11788

 

VII.                             Locations of Records Concerning Collateral:
    (see V. above)

 

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

 

SCHEDULE III-H

to

SECURITY AGREEMENT

 

SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS CONCERNING INFINITY INFUSION II, LLC’S COLLATERAL

 

I.                                         Grantor’s official
name:                     Infinity Infusion II, LLC

 

II.                                     Type of entity:                 Limited
Liability Company

 

III.                                 Organizational identification number issued
by Grantor’s state of organization:

 

DE3529166

 

IV.                                 State of organization of Infinity Infusion
II, LLC:                                Delaware

 

V.                                     Chief Executive Office/Corporate Office
and principal place of business of Infinity Infusion II, LLC

 

150 Motor Parkway

Hauppauge, NY  11788

 

VI.                                 Warehouses and Other Premises at which
Collateral is Stored or Located:

 

150 Motor Parkway

Hauppauge, NY  11788

 

VII.                             Locations of Records Concerning
Collateral:    (see V. above)

 

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

 

SCHEDULE III-I

to

SECURITY AGREEMENT

 

 

SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS CONCERNING OPTIMAL CARE PLUS, INC. COLLATERAL

 

 

I.                                         Grantor’s official
name:                     Optimal Care Plus, Inc.

 

II.                                     Type of entity:                
Corporation

 

III.                                 Organizational identification number issued
by Grantor’s state of incorporation:

 

DE3579727

 

IV.                                 State of Incorporation of Optimal Care Plus,
Inc.:                               Delaware

 

V.                                     Chief Executive Office/Corporate Office
and principal place of business of Optimal Care Plus, Inc.:

 

12761 Darby Brooke Court

Woodbridge, VA  22192

 

VI.                                 Warehouses and Other Premises at which
Collateral is Stored or Located:

 

12761 Darby Brooke Court

Woodbridge, VA  22192

 

VII.                             Locations of Records Concerning
Collateral:    (see V. above)

 

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

 

SCHEDULE III-J

to

SECURITY AGREEMENT

 

 

SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS CONCERNING INFINITY INFUSION CARE, LTD. COLLATERAL

 

I.                                         Grantor’s official
name:                     Infinity Infusion Care, Ltd.

 

II.                                     Type of entity:                 Limited
Partnership

 

III.                                 Organizational identification number issued
by Grantor’s state of organization:

 

TX           [pending]

 

IV.                                 State of organization of Infinity Infusion
Care, Ltd.:                 Texas

 

V.                                     Chief Executive Office/Corporate Office
and principal place of business of Infinity Infusion Care, Ltd.:

 

9701 Richmond Avenue

Houston, TX  77042

 

VI.                                 Warehouses and Other Premises at which
Collateral is Stored or Located:

 

9701 Richmond Avenue

Houston, TX  77042

 

VII.                             Locations of Records Concerning
Collateral:    (see V. above)

 

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

 

SCHEDULE III-K

to

SECURITY AGREEMENT

 

 

SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS CONCERNING CURATIVE PHARMACY SERVICES, INC. COLLATERAL

 

 

I.                                         Grantor’s official
name:                     Curative Pharmacy Services, Inc.

 

II.                                     Type of
entity:                                                                
Corporation

 

III.                                 Organizational identification number issued
by Grantor’s state of incorporation:

 

DE3646680

 

IV.                                 State or Incorporation of Curative Pharmacy
Services, Inc.:                         Delaware

 

V.                                     Chief Executive Office/Corporate Office
and principal place of business of Curative Pharmacy Services, Inc.:

 

150 Motor Parkway

Hauppauge, NY  11788

 

VI.                                 Warehouses and Other Premises at which
Collateral is Stored or Located:

 

150 Motor Parkway

Hauppauge, NY  11788

 

VII.                             Locations of Records Concerning
Collateral:     (see V. above)

 

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

 

SCHEDULE III-L

to

SECURITY AGREEMENT

 

 

SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS CONCERNING MEDCARE, INC. COLLATERAL

 

 

I.                                         Grantor’s official
name:                     MedCare, Inc.

 

II.                                     Type of entity:                
Corporation

 

III.                                 Organizational identification number issued
by Grantor’s state of incorporation:

 

DE3613625

 

IV.                                 State or Incorporation of MedCare,
Inc.:                            Delaware

 

V.                                     Chief Executive Office/Corporate Office
and principal place of business of MedCare, Inc.:

 

107A David Green Road

Birmingham, AL  35244

 

VI.                                 Warehouses and Other Premises at which
Collateral is Stored or Located:

 

107A David Green Road

Birmingham, AL  35244

 

402 Wilkins Wise Road

Suite #34

Columbus, MS  39705

 

3761 Teays Valley Road

Suite A

Hurricane, WV  25526

 

4854 Woodbine Road

Pace, FL  32571

 

VII.                             Locations of Records Concerning
Collateral:     (see V. above)

 

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

 

SCHEDULE IV

to

SECURITY AGREEMENT

 

 

PATENTS, TRADEMARKS AND COPYRIGHTS

 

 

 

Curative Health Services, Inc.

 

 

 

 

Registration
Number:

 

 

 

 

 

Patents:

 

 

 

 

 

 

 

Device for Evaluating Protective Sensation

 

6,234,976

 

Folding Card Device for Evaluating Protective Sensation

 

6,200,272

 

Method for Inducing Human Myocardial All Proliferation

 

N/A

 

Monofilament Probe

 

N/A

 

 

 

 

 

Trademarks:

 

 

 

 

 

 

 

Centro de Cuidado de Herida ®

 

35,643

 

Footsense ®

 

2,122,321

 

Sensacheck ™

 

N/A

 

Starlink ®

 

2,381,075

 

Wound Care 2000 ™

 

 

 

Wound Care Center ® (name and logo)

 

2,009,399

 

 

Copyrights:

 

Copyrights on all forms, documents, and materials developed by Curative Health
                                                 Services, Inc.

 

Other

 

 

 

Registration
Number:

 

 

 

 

 

Trademarks:

 

 

 

 

 

 

 

Apex Therapeutic Care, Inc.

Avances ®

 

2,624,532

 

Infinity Infusion Care, Ltd.

Infinity Infusion Care

 

 

 

 

(Ultimate Care Beyond Compare)

 

 

 

 

(name and logo)

 

 

 

 

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

 

Copyrights:

 

Copyrights on all forms, documents, and materials developed by Apex Therapeutic
Care, Inc. and Infinity Infusion Care, Ltd.

 

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

 

SCHEDULE V

to

SECURITY AGREEMENT

 

Name of Grantor

 

Motor Vehicle
Make/Model

 

Model Year

 

VIN

 

 

 

 

 

 

 

 

 

 

NONE

 

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

 

EXHIBIT A

 

POWER OF ATTORNEY

 

This Power of Attorney is executed and delivered by [                    ], a
                                          (“Grantor”) to General Electric
Capital Corporation, a Delaware corporation (hereinafter referred to as
“Attorney”), as Agent for the benefit of Agent and Lenders, under a Credit
Agreement and a Security Agreement, both dated as of June 9, 2003, and other
related documents (the “Loan Documents”).  No person to whom this Power of
Attorney is presented, as authority for Attorney to take any action or actions
contemplated hereby, shall be required to inquire into or seek confirmation from
Grantor as to the authority of Attorney to take any action described below, or
as to the existence of or fulfillment of any condition to this Power of
Attorney, which is intended to grant to Attorney unconditionally the authority
to take and perform the actions contemplated herein, and Grantor irrevocably
waives any right to commence any suit or action, in law or equity, against any
person or entity which acts in reliance upon or acknowledges the authority
granted under this Power of Attorney.  The power of attorney granted hereby is
coupled with an interest and, prior to the Termination Date, may not be revoked
or canceled by Grantor without Attorney’ s written consent.

 

Grantor hereby irrevocably constitutes and appoints Attorney (and all officers,
employees or agents designated by Attorney), with full power of substitution, as
Grantor’s true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of Grantor and in the name of Grantor or in its
own name, from time to time in Attorney’s discretion after an Event of Default
has occurred and is continuing, to take any and all appropriate action and to
execute and deliver any and all documents and instruments which may be necessary
or desirable to accomplish the purposes of the Loan Documents and, without
limiting the generality of the foregoing, Grantor hereby grants to Attorney the
power and right, on behalf of Grantor, without notice to or assent by Grantor,
and at any time after an Event of Default has occurred and is continuing, to do
the following: (a) change the mailing address of Grantor, open a post office box
on behalf of Grantor, open mail for Grantor, and ask, demand, collect, give
acquittances and receipts for, take possession of, endorse any invoices, freight
or express bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, and notices in connection with any property
of Grantor; (b) effect any repairs to any asset of Grantor, or continue or
obtain any insurance and pay all or any part of the premiums therefor and costs
thereof, and make, settle and adjust all claims under such policies of
insurance, and make all determinations and decisions with respect to such
policies; (c) pay or discharge any taxes, liens, security interests, or other
encumbrances levied or placed on or threatened against Grantor or its property;
(d) defend any suit, action or proceeding brought against Grantor if Grantor
does not defend such suit, action or proceeding or if Attorney believes that
Grantor is not pursuing such defense in a manner that will maximize the recovery
to Attorney, and settle, compromise or adjust any suit, action, or proceeding
described above and, in connection therewith, give such discharges or releases
as Attorney may deem appropriate; (e) file or prosecute any claim, litigation,
suit or proceeding in any court of competent jurisdiction or before any
arbitrator, or take any other action otherwise deemed appropriate by Attorney
for the purpose of collecting any and all such moneys due to Grantor whenever
payable and to enforce any other right in respect of Grantor’s property; (f)
cause the certified public accountants then

 

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engaged by Grantor to prepare and deliver to Attorney at any time and from time
to time, promptly upon Attorney’s request, the following reports: (1) a
reconciliation of all accounts, (2) an aging of all accounts, (3) trial
balances, (4) test verifications of such accounts as Attorney may request, and
(5) the results of each physical verification of inventory; (g) communicate in
its own name with any party to any Contract with regard to the assignment of the
right, title and interest of Grantor in and under the Contracts and other
matters relating thereto; (h) to file such financing statements with respect to
the Security Agreement, with or without Grantor’s signature, or to file a
photocopy of the Security Agreement in substitution for a financing statement,
as the Agent may deem appropriate and to execute in Grantor’s name such
financing statements and amendments thereto and continuation statements which
may require the Grantor’s signature; and (i) execute, in connection with any
sale provided for in any Loan Document, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral and to
otherwise direct such sale or resale, all as though Attorney were the absolute
owner of the property of Grantor for all purposes, and to do, at Attorney’s
option and Grantor’s expense, at any time or from time to time, all acts and
other things that Attorney reasonably deems necessary to perfect, preserve, or
realize upon Grantor’s property or assets and Attorney’s Liens thereon, all as
fully and effectively as Grantor might do.  Grantor hereby ratifies, to the
extent permitted by law, all that said Attorney shall lawfully do or cause to be
done by virtue hereof.

 

IN WITNESS WHEREOF, this Power of Attorney is executed by Grantor, and Grantor
has caused its seal to be affixed pursuant to the authority of its board of
directors this          day of         , 20        .

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

NOTARY PUBLIC CERTIFICATE

 

On this         day of        , 20       ,                              who is
personally known to me appeared before me in his/her capacity as the
              of [                            ] (“Grantor”) and executed on
behalf of Grantor the Power of Attorney in favor of General Electric Capital
Corporation to which this Certificate is attached.

 

 

 

 

 

Notary Public

 

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EXHIBIT F

to

CREDIT AGREEMENT

 

BORROWER PLEDGE AGREEMENT

 

BORROWER PLEDGE AGREEMENT (together with all amendments, supplements and
modifications, if any, from time to time hereto, this “Agreement”), dated as of
                                 , 20    , by and among CURATIVE HEALTH
SERVICES, INC., a Minnesota corporation, EBIOCARE.COM, INC., a Delaware
corporation, HEMOPHILIA ACCESS, INC., a Tennessee corporation, APEX THERAPEUTIC
CARE, INC., a California corporation, CHS SERVICES, INC., a Delaware
corporation, CURATIVE HEALTH SERVICES OF NEW YORK, INC., a New York corporation,
OPTIMAL CARE PLUS, INC., a Delaware corporation, INFINITY INFUSION, LLC, a
Delaware limited liability company, INFINITY INFUSION II, LLC, a Delaware
limited liability company, INFINITY INFUSION CARE, LTD., a Texas limited
partnership, MEDCARE, INC., a Delaware corporation, CURATIVE PHARMACY SERVICES,
INC., a Delaware corporation (collectively, the “Pledgors”) and GENERAL ELECTRIC
CAPITAL CORPORATION, a Delaware corporation, individually and in its capacity as
Agent for Lenders (“Agent”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to that certain Credit Agreement, dated as of the date hereof,
by and among Pledgors, the other Persons named therein as Credit Parties, Agent
and the Persons signatory thereto from time to time as Lenders (including all
annexes, exhibits and schedules thereto, and as from time to time amended,
restated, supplemented or otherwise modified (the “Credit Agreement”) the
Lenders have agreed, subject to certain terms and conditions, to make Loans to,
and incur L/C Obligations for the benefit of, Pledgors;

 

WHEREAS, Pledgors are the record and beneficial owner of the shares of Stock
listed in Part A of Schedule I hereto and the owner of the promissory notes and
instruments listed in Part B of Schedule I hereto;

 

WHEREAS, Pledgors benefit from the credit facilities made available to them
under the Credit Agreement;

 

WHEREAS, in order to induce Agent and Lenders to make the Loans and to incur the
L/C Obligations as provided for in the Credit Agreement, Pledgors have agreed to
pledge the Pledged Collateral to Agent in accordance herewith;

 

NOW, THEREFORE, in consideration of the premises and the covenants hereinafter
contained and to induce Lenders to make Loans and to incur L/C Obligations under
the Credit Agreement, it is agreed as follows:

 

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1.                                       DEFINITIONS.  UNLESS OTHERWISE DEFINED
HEREIN, TERMS DEFINED IN THE CREDIT AGREEMENT ARE USED HEREIN AS THEREIN
DEFINED, AND THE FOLLOWING SHALL HAVE (UNLESS OTHERWISE PROVIDED ELSEWHERE IN
THIS AGREEMENT) THE FOLLOWING RESPECTIVE MEANINGS (SUCH MEANINGS BEING EQUALLY
APPLICABLE TO BOTH THE SINGULAR AND PLURAL FORM OF THE TERMS DEFINED):

 

“Bankruptcy Code” means title 11, United States Code, as amended from time to
time, and any successor statute thereto.

 

“Code” means the Uniform Commercial Code as the same may, from time to time, be
enacted and in effect in the State of New York; provided, that to the extent
that the Code is used to define any term herein or in any Loan Document and such
term is defined differently in different Articles or Divisions of the Code, the
definition of such term contained in Article or Division 9 shall govern;
provided further, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection or priority of, or remedies with
respect to, Agent’s or any Lender’s Lien on any Collateral is governed by the
Uniform Commercial Code as enacted and in effect in a jurisdiction other than
the State of New York, the term “Code” shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority or remedies
and for purposes of definitions related to such provisions.

 

“Pledged Collateral” has the meaning assigned to such term in Section 2 hereof.

 

“Pledged Entity” means an issuer of Pledged Shares or Pledged Indebtedness.

 

“Pledged Indebtedness” means the Indebtedness evidenced by promissory notes and
instruments listed on Part B of Schedule I hereto;

 

“Pledged Shares” means those shares listed on Part A of Schedule I hereto.

 

“Secured Obligations” has the meaning assigned to such term in Section 3 hereof.

 

“Termination Date” means the date on which (a) the Loans have been indefeasibly
repaid in full in cash, (b) all other Obligations under the Credit Agreement and
the other Loan Documents have been completely discharged, (c) all L/C
Obligations have been cash collateralized, canceled or backed by standby letters
of credit in accordance with Section 2.5 of the Credit Agreement, and (d)
Pledgors shall not have any further right to borrow any monies under the Credit
Agreement.

 

“Unmatured Tax Liens” means Liens for taxes or assessments or other governmental
Charges not yet due and payable or which are the subject of a Permitted Contest.

 

2.                                       PLEDGE.  EACH PLEDGOR HEREBY PLEDGES TO
AGENT, AND GRANTS TO AGENT FOR ITSELF AND THE BENEFIT OF LENDERS, A FIRST
PRIORITY SECURITY INTEREST IN ALL OF THE FOLLOWING (COLLECTIVELY, THE “PLEDGED
COLLATERAL”):

 

(A)                                  THE PLEDGED SHARES AND THE CERTIFICATES
REPRESENTING THE PLEDGED SHARES,

 

2

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and all dividends, distributions, cash, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Shares;

 

(B)                                 SUCH PORTION, AS DETERMINED BY AGENT AS
PROVIDED IN SECTION 6(D) BELOW, OF ANY ADDITIONAL SHARES OF STOCK OF A PLEDGED
ENTITY FROM TIME TO TIME ACQUIRED BY PLEDGORS IN ANY MANNER (WHICH SHARES SHALL
BE DEEMED TO BE PART OF THE PLEDGED SHARES), AND THE CERTIFICATES REPRESENTING
SUCH ADDITIONAL SHARES, AND ALL DIVIDENDS, DISTRIBUTIONS, CASH, INSTRUMENTS AND
OTHER PROPERTY OR PROCEEDS FROM TIME TO TIME RECEIVED, RECEIVABLE OR OTHERWISE
DISTRIBUTED IN RESPECT OF OR IN EXCHANGE FOR ANY OR ALL OF SUCH STOCK;

 

(C)                                  THE PLEDGED INDEBTEDNESS AND THE PROMISSORY
NOTES OR INSTRUMENTS EVIDENCING THE PLEDGED INDEBTEDNESS, AND ALL INTEREST,
CASH, INSTRUMENTS AND OTHER PROPERTY AND ASSETS FROM TIME TO TIME RECEIVED,
RECEIVABLE OR OTHERWISE DISTRIBUTED IN RESPECT OF THE PLEDGED INDEBTEDNESS; AND

 

(D)                                 ALL ADDITIONAL INDEBTEDNESS ARISING AFTER
THE DATE HEREOF AND OWING TO ANY PLEDGOR AND EVIDENCED BY PROMISSORY NOTES OR
OTHER INSTRUMENTS, TOGETHER WITH SUCH PROMISSORY NOTES AND INSTRUMENTS,  AND ALL
INTEREST, CASH, INSTRUMENTS AND OTHER PROPERTY AND ASSETS FROM TIME TO TIME
RECEIVED, RECEIVABLE OR OTHERWISE DISTRIBUTED IN RESPECT OF THAT PLEDGED
INDEBTEDNESS.

 

3.                                       SECURITY FOR OBLIGATIONS.  THIS
AGREEMENT SECURES, AND THE PLEDGED COLLATERAL IS SECURITY FOR, THE PROMPT
PAYMENT IN FULL WHEN DUE, WHETHER AT STATED MATURITY, BY ACCELERATION OR
OTHERWISE, AND PERFORMANCE OF ALL OBLIGATIONS OF ANY KIND UNDER OR IN CONNECTION
WITH THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ALL OBLIGATIONS OF
PLEDGORS NOW OR HEREAFTER EXISTING UNDER THIS AGREEMENT INCLUDING, WITHOUT
LIMITATION, ALL FEES, COSTS AND EXPENSES WHETHER IN CONNECTION WITH COLLECTION
ACTIONS HEREUNDER OR OTHERWISE (COLLECTIVELY, THE “SECURED OBLIGATIONS”).

 

4.                                       DELIVERY OF PLEDGED COLLATERAL.  ALL
CERTIFICATES AND ALL PROMISSORY NOTES AND INSTRUMENTS EVIDENCING THE PLEDGED
COLLATERAL SHALL BE DELIVERED TO AND HELD BY OR ON BEHALF OF AGENT, FOR ITSELF
AND THE BENEFIT OF LENDERS, PURSUANT HERETO.  ALL PLEDGED SHARES SHALL BE
ACCOMPANIED BY DULY EXECUTED INSTRUMENTS OF TRANSFER OR ASSIGNMENT IN BLANK, ALL
IN FORM AND SUBSTANCE SATISFACTORY TO AGENT AND ALL PROMISSORY NOTES OR OTHER
INSTRUMENTS EVIDENCING THE PLEDGED INDEBTEDNESS SHALL BE ENDORSED BY PLEDGORS.

 

5.                                       REPRESENTATIONS AND WARRANTIES.  EACH
PLEDGOR REPRESENTS AND WARRANTS TO AGENT THAT:

 

(A)                                  PLEDGOR IS, AND AT THE TIME OF DELIVERY OF
THE PLEDGED SHARES TO AGENT WILL BE, THE SOLE HOLDER OF RECORD AND THE SOLE
BENEFICIAL OWNER OF SUCH PLEDGED COLLATERAL PLEDGED BY SUCH PLEDGOR FREE AND
CLEAR OF ANY LIEN THEREON OR AFFECTING THE TITLE THERETO, EXCEPT FOR UNMATURED
TAX LIENS AND ANY LIEN CREATED BY THIS AGREEMENT.  SUCH PLEDGOR IS AND AT THE
TIME OF DELIVERY OF THE PLEDGED INDEBTEDNESS TO AGENT WILL BE, THE SOLE OWNER OF
SUCH PLEDGED COLLATERAL FREE AND CLEAR OF ANY LIEN THEREON OR AFFECTING TITLE
THERETO, EXCEPT FOR UNMATURED TAX

 

3

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LIENS AND ANY LIEN CREATED BY THIS AGREEMENT;

 

(B)                                 ALL OF THE PLEDGED SHARES HAVE BEEN DULY
AUTHORIZED, VALIDLY ISSUED AND ARE FULLY PAID AND NON-ASSESSABLE.  THE PLEDGED
INDEBTEDNESS HAS BEEN DULY AUTHORIZED, AUTHENTICATED OR ISSUED AND DELIVERED BY,
AND IS THE LEGAL, VALID AND BINDING OBLIGATIONS OF, THE PLEDGED ENTITIES, AND NO
SUCH PLEDGED ENTITY IS IN DEFAULT THEREUNDER;

 

(C)                                  PLEDGOR HAS THE RIGHT AND REQUISITE
AUTHORITY TO PLEDGE, ASSIGN, TRANSFER, DELIVER, DEPOSIT AND SET OVER THE PLEDGED
COLLATERAL PLEDGED BY SUCH PLEDGOR TO AGENT AS PROVIDED HEREIN;

 

(D)                                 NONE OF THE PLEDGED SHARES OR PLEDGED
INDEBTEDNESS HAS BEEN ISSUED OR TRANSFERRED IN VIOLATION OF THE SECURITIES
REGISTRATION, SECURITIES DISCLOSURE OR SIMILAR LAWS OF ANY JURISDICTION TO WHICH
SUCH ISSUANCE OR TRANSFER MAY BE SUBJECT;

 

(E)                                  ALL OF THE PLEDGED SHARES ARE PRESENTLY
OWNED BY PLEDGOR, AND ARE PRESENTLY REPRESENTED BY THE CERTIFICATES LISTED ON
PART A OF SCHEDULE I HERETO.  AS OF THE DATE HEREOF, THERE ARE NO EXISTING
OPTIONS, WARRANTS, CALLS OR COMMITMENTS OF ANY CHARACTER WHATSOEVER RELATING TO
THE PLEDGED SHARES;

 

(F)                                    NO CONSENT, APPROVAL, AUTHORIZATION OR
OTHER ORDER OR OTHER ACTION BY, AND NO NOTICE TO OR FILING WITH, ANY
GOVERNMENTAL AUTHORITY OR ANY OTHER PERSON IS REQUIRED (I) FOR THE PLEDGE BY ANY
PLEDGOR OF THE PLEDGED COLLATERAL PURSUANT TO THIS AGREEMENT OR FOR THE
EXECUTION, DELIVERY OR PERFORMANCE OF THIS AGREEMENT BY ANY PLEDGOR, OR (II) FOR
THE EXERCISE BY AGENT OF THE VOTING OR OTHER RIGHTS PROVIDED FOR IN THIS
AGREEMENT OR THE REMEDIES IN RESPECT OF THE PLEDGED COLLATERAL PURSUANT TO THIS
AGREEMENT, EXCEPT AS MAY BE REQUIRED IN CONNECTION WITH SUCH DISPOSITION BY LAWS
AFFECTING THE OFFERING AND SALE OF SECURITIES GENERALLY;

 

(G)                                 THE PLEDGE, ASSIGNMENT AND DELIVERY OF THE
PLEDGED COLLATERAL PURSUANT TO THIS AGREEMENT WILL CREATE A VALID FIRST PRIORITY
LIEN ON AND A FIRST PRIORITY PERFECTED SECURITY INTEREST IN FAVOR OF THE AGENT
FOR THE BENEFIT OF AGENT AND LENDERS IN THE PLEDGED COLLATERAL AND THE PROCEEDS
THEREOF, SECURING THE PAYMENT OF THE SECURED OBLIGATIONS, SUBJECT TO NO OTHER
LIEN OTHER THAN UNMATURED TAX LIENS;

 

(H)                                 THIS AGREEMENT HAS BEEN DULY AUTHORIZED,
EXECUTED AND DELIVERED BY EACH OF THE PLEDGORS AND CONSTITUTES A LEGAL, VALID
AND BINDING OBLIGATION OF PLEDGORS ENFORCEABLE AGAINST PLEDGORS IN ACCORDANCE
WITH ITS TERMS;

 

(I)                                     THE PLEDGED SHARES CONSTITUTE 100% OF
THE ISSUED AND OUTSTANDING SHARES OF STOCK OF EACH PLEDGED ENTITY; AND

 

(J)                                     EXCEPT AS DISCLOSED ON PART B OF
SCHEDULE I, NONE OF THE PLEDGED INDEBTEDNESS IS SUBORDINATED IN RIGHT OF PAYMENT
TO OTHER INDEBTEDNESS (EXCEPT FOR THE SECURED OBLIGATIONS) OR SUBJECT TO THE
TERMS OF AN INDENTURE.

 

4

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The representations and warranties set forth in this Section 5 shall survive the
execution and delivery of this Agreement.

 

6.                                       COVENANTS.  EACH PLEDGOR COVENANTS AND
AGREES THAT UNTIL THE TERMINATION DATE:

 

(A)                                  WITHOUT THE PRIOR WRITTEN CONSENT OF AGENT,
NONE OF THE PLEDGORS WILL SELL, ASSIGN, TRANSFER, PLEDGE, OR OTHERWISE ENCUMBER
ANY OF ITS RIGHTS IN OR TO THE PLEDGED COLLATERAL, OR ANY UNPAID DIVIDENDS,
INTEREST OR OTHER DISTRIBUTIONS OR PAYMENTS WITH RESPECT TO THE PLEDGED
COLLATERAL OR GRANT A LIEN IN THE PLEDGED COLLATERAL, UNLESS OTHERWISE EXPRESSLY
PERMITTED BY THE CREDIT AGREEMENT;

 

(B)                                 EACH OF THE PLEDGORS WILL, AT ITS EXPENSE,
PROMPTLY EXECUTE, ACKNOWLEDGE AND DELIVER ALL SUCH INSTRUMENTS AND TAKE ALL SUCH
ACTIONS AS AGENT FROM TIME TO TIME MAY REQUEST IN ORDER TO ENSURE TO AGENT AND
LENDERS THE BENEFITS OF THE LIENS IN AND TO THE PLEDGED COLLATERAL INTENDED TO
BE CREATED BY THIS AGREEMENT, INCLUDING THE FILING OF ANY NECESSARY CODE
FINANCING STATEMENTS, WHICH MAY BE FILED BY AGENT WITH OR (TO THE EXTENT
PERMITTED BY LAW) WITHOUT THE SIGNATURE OF SUCH PLEDGOR, AND WILL COOPERATE WITH
AGENT, AT SUCH PLEDGORS’S EXPENSE, IN OBTAINING ALL NECESSARY APPROVALS AND
MAKING ALL NECESSARY FILINGS UNDER FEDERAL, STATE, LOCAL OR FOREIGN LAW IN
CONNECTION WITH SUCH LIENS OR ANY SALE OR TRANSFER OF THE PLEDGED COLLATERAL;

 

(C)                                  EACH OF THE PLEDGORS HAS AND WILL DEFEND
THE TITLE TO THE PLEDGED COLLATERAL AND THE LIENS OF AGENT IN THE PLEDGED
COLLATERAL AGAINST THE CLAIM OF ANY PERSON AND WILL MAINTAIN AND PRESERVE SUCH
LIENS; AND

 

(D)                                 EACH OF THE PLEDGORS WILL, UPON OBTAINING
OWNERSHIP OF ANY ADDITIONAL STOCK OR PROMISSORY NOTES OR INSTRUMENTS OF A
PLEDGED ENTITY OR STOCK OR PROMISSORY NOTES OR INSTRUMENTS OTHERWISE REQUIRED TO
BE PLEDGED TO AGENT PURSUANT TO ANY OF THE LOAN DOCUMENTS, WHICH STOCK, NOTES OR
INSTRUMENTS ARE NOT ALREADY PLEDGED COLLATERAL, PROMPTLY (AND IN ANY EVENT
WITHIN THREE (3) BUSINESS DAYS) DELIVER TO AGENT A PLEDGE AMENDMENT, DULY
EXECUTED BY SUCH PLEDGOR, IN SUBSTANTIALLY THE FORM OF SCHEDULE II HERETO (A
“PLEDGE AMENDMENT”) IN RESPECT OF ANY SUCH ADDITIONAL STOCK, NOTES OR
INSTRUMENTS, PURSUANT TO WHICH SUCH PLEDGOR SHALL PLEDGE TO AGENT ALL OF SUCH
ADDITIONAL STOCK, NOTES AND INSTRUMENTS.  EACH OF THE PLEDGORS HEREBY AUTHORIZES
AGENT TO ATTACH EACH PLEDGE AMENDMENT TO THIS AGREEMENT AND AGREES THAT ALL
PLEDGED SHARES AND PLEDGED INDEBTEDNESS LISTED ON ANY PLEDGE AMENDMENT DELIVERED
TO AGENT SHALL FOR ALL PURPOSES HEREUNDER BE CONSIDERED PLEDGED COLLATERAL.

 

(E)                                  EACH PLEDGOR CONSENTS TO EACH PLEDGED
ENTITY’S ENTERING INTO A CONTROL AGREEMENT WITH AGENT IN THE FORM OF SCHEDULE
III HERETO (A “CONTROL AGREEMENT”) AND AGREES TO BE BOUND BY THE TERMS AND
CONDITIONS OF EACH SUCH CONTROL AGREEMENT, EXCEPT THAT THE AGENT SHALL NOT BE
ENTITLED TO GIVE INSTRUCTIONS TO ANY PLEDGED ENTITY WITH RESPECT TO THE PLEDGED
STOCK ISSUED BY SUCH PLEDGED ENTITY UNLESS AN EVENT OF DEFAULT HAS OCCURRED AND
IS CONTINUING.

 

7.                                       PLEDGORS’ RIGHTS.  AS LONG AS NO
DEFAULT OR EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING AND UNTIL
WRITTEN NOTICE SHALL BE GIVEN TO PLEDGORS IN ACCORDANCE WITH SECTION 8(A)
HEREOF:

 

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(A)                                  PLEDGORS SHALL HAVE THE RIGHT, FROM TIME TO
TIME, TO VOTE AND GIVE CONSENTS WITH RESPECT TO THE PLEDGED COLLATERAL, OR ANY
PART THEREOF FOR ALL PURPOSES NOT INCONSISTENT WITH THE PROVISIONS OF THIS
AGREEMENT, THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT; PROVIDED, HOWEVER,
THAT NO VOTE SHALL BE CAST, AND NO CONSENT SHALL BE GIVEN OR ACTION TAKEN, WHICH
WOULD HAVE THE EFFECT OF IMPAIRING THE POSITION OR INTEREST OF AGENT IN RESPECT
OF THE PLEDGED COLLATERAL OR WHICH WOULD AUTHORIZE, EFFECT OR CONSENT TO (UNLESS
AND TO THE EXTENT EXPRESSLY PERMITTED BY THE CREDIT AGREEMENT OR CONSENTED TO BY
AGENT):

 

(I)                                     THE DISSOLUTION OR LIQUIDATION, IN WHOLE
OR IN PART, OF A PLEDGED ENTITY;

 

(II)                                  THE CONSOLIDATION OR MERGER OF A PLEDGED
ENTITY WITH ANY OTHER PERSON;

 

(III)                               THE SALE, DISPOSITION OR ENCUMBRANCE OF ALL
OR SUBSTANTIALLY ALL OF THE ASSETS OF A PLEDGED ENTITY, EXCEPT FOR LIENS IN
FAVOR OF AGENT;

 

(IV)                              ANY CHANGE IN THE AUTHORIZED NUMBER OF SHARES,
THE STATED CAPITAL OR THE AUTHORIZED SHARE CAPITAL OF A PLEDGED ENTITY OR THE
ISSUANCE OF ANY ADDITIONAL SHARES OF ITS STOCK; OR

 

(V)                                 THE ALTERATION OF THE VOTING RIGHTS WITH
RESPECT TO THE STOCK OF A PLEDGED ENTITY;

 

(B)                                 PLEDGORS SHALL BE ENTITLED, FROM TIME TO
TIME, TO COLLECT AND RECEIVE FOR THIEE OWN USE ALL CASH DIVIDENDS AND INTEREST
PAID IN RESPECT OF THE PLEDGED SHARES AND PLEDGED INDEBTEDNESS TO THE EXTENT NOT
IN VIOLATION OF THE CREDIT AGREEMENT OTHER THAN ANY AND ALL: (A) DIVIDENDS AND
INTEREST PAID OR PAYABLE OTHER THAN IN CASH IN RESPECT OF ANY PLEDGED
COLLATERAL, AND INSTRUMENTS AND OTHER PROPERTY RECEIVED, RECEIVABLE OR OTHERWISE
DISTRIBUTED IN RESPECT OF, OR IN EXCHANGE FOR, ANY PLEDGED COLLATERAL;  (B)
DIVIDENDS AND OTHER DISTRIBUTIONS PAID OR PAYABLE IN CASH IN RESPECT OF ANY
PLEDGED SHARES IN CONNECTION WITH A PARTIAL OR TOTAL LIQUIDATION OR DISSOLUTION
OR IN CONNECTION WITH A REDUCTION OF CAPITAL, CAPITAL SURPLUS OR PAID-IN CAPITAL
OF A PLEDGED ENTITY; AND (C) CASH PAID, PAYABLE OR OTHERWISE DISTRIBUTED, IN
RESPECT OF PRINCIPAL OF, OR IN REDEMPTION OF, OR IN EXCHANGE FOR, ANY PLEDGED
COLLATERAL; PROVIDED, HOWEVER, THAT UNTIL ACTUALLY PAID ALL RIGHTS TO SUCH
DISTRIBUTIONS SHALL REMAIN SUBJECT TO THE LIEN CREATED BY THIS AGREEMENT; AND

 

(C)                                  ALL DIVIDENDS AND INTEREST (OTHER THAN SUCH
CASH DIVIDENDS AND INTEREST AS ARE PERMITTED TO BE PAID TO PLEDGORS IN
ACCORDANCE WITH CLAUSE (I) ABOVE) AND ALL OTHER DISTRIBUTIONS IN RESPECT OF ANY
OF THE PLEDGED SHARES OR PLEDGED INDEBTEDNESS, WHENEVER PAID OR MADE, SHALL BE
DELIVERED TO AGENT TO HOLD AS PLEDGED COLLATERAL AND SHALL, IF RECEIVED BY
PLEDGORS, BE RECEIVED IN TRUST FOR THE BENEFIT OF AGENT, BE SEGREGATED FROM THE
OTHER PROPERTY OR FUNDS OF PLEDGORS, AND BE FORTHWITH DELIVERED TO AGENT AS
PLEDGED COLLATERAL IN THE SAME FORM AS SO

 

6

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RECEIVED (WITH ANY NECESSARY INDORSEMENT).

 

8.                                       DEFAULTS AND REMEDIES; PROXY.

 

(A)                                  UPON THE OCCURRENCE OF AN EVENT OF DEFAULT
AND DURING THE CONTINUATION OF SUCH EVENT OF DEFAULT, AND CONCURRENTLY WITH
WRITTEN NOTICE TO PLEDGORS, AGENT (PERSONALLY OR THROUGH AN AGENT) IS HEREBY
AUTHORIZED AND EMPOWERED TO TRANSFER AND REGISTER IN ITS NAME OR IN THE NAME OF
ITS NOMINEE THE WHOLE OR ANY PART OF THE PLEDGED COLLATERAL, TO EXCHANGE
CERTIFICATES OR INSTRUMENTS REPRESENTING OR EVIDENCING PLEDGED COLLATERAL FOR
CERTIFICATES OR INSTRUMENTS OF SMALLER OR LARGER DENOMINATIONS, TO EXERCISE THE
VOTING AND ALL OTHER RIGHTS AS A HOLDER WITH RESPECT THERETO, TO COLLECT AND
RECEIVE ALL CASH DIVIDENDS, INTEREST, PRINCIPAL AND OTHER DISTRIBUTIONS MADE
THEREON, TO SELL IN ONE OR MORE SALES AFTER TEN (10) DAYS’ NOTICE OF THE TIME
AND PLACE OF ANY PUBLIC SALE OR OF THE TIME AT WHICH A PRIVATE SALE IS TO TAKE
PLACE (WHICH NOTICE PLEDGORS AGREE IS COMMERCIALLY REASONABLE) THE WHOLE OR ANY
PART OF THE PLEDGED COLLATERAL AND TO OTHERWISE ACT WITH RESPECT TO THE PLEDGED
COLLATERAL AS THOUGH AGENT WAS THE OUTRIGHT OWNER THEREOF.  ANY SALE SHALL BE
MADE AT A PUBLIC OR PRIVATE SALE AT AGENT’S PLACE OF BUSINESS, OR AT ANY PLACE
TO BE NAMED IN THE NOTICE OF SALE, EITHER FOR CASH OR UPON CREDIT OR FOR FUTURE
DELIVERY AT SUCH PRICE AS AGENT MAY DEEM FAIR, AND AGENT MAY BE THE PURCHASER OF
THE WHOLE OR ANY PART OF THE PLEDGED COLLATERAL SO SOLD AND HOLD THE SAME
THEREAFTER IN ITS OWN RIGHT FREE FROM ANY CLAIM OF PLEDGORS OR ANY RIGHT OF
REDEMPTION.  EACH SALE SHALL BE MADE TO THE HIGHEST BIDDER, BUT AGENT RESERVES
THE RIGHT TO REJECT ANY AND ALL BIDS AT SUCH SALE WHICH, IN ITS DISCRETION, IT
SHALL DEEM INADEQUATE.  DEMANDS OF PERFORMANCE, EXCEPT AS OTHERWISE HEREIN
SPECIFICALLY PROVIDED FOR OR AS SPECIFICALLY PROVIDED FOR IN THE CREDIT
AGREEMENT, NOTICES OF SALE, ADVERTISEMENTS AND THE PRESENCE OF PROPERTY AT SALE
ARE HEREBY WAIVED AND ANY SALE HEREUNDER MAY BE CONDUCTED BY AN AUCTIONEER OR
ANY OFFICER OR AGENT OF AGENT.  EACH OF THE PLEDGORS HEREBY IRREVOCABLY
CONSTITUTES UNTIL THE TERMINATION DATE AND APPOINTS AGENT AS THE PROXY AND
ATTORNEY-IN-FACT OF SUCH PLEDGOR WITH RESPECT TO THE PLEDGED COLLATERAL,
INCLUDING THE RIGHT TO VOTE THE PLEDGED SHARES, WITH FULL POWER OF SUBSTITUTION
TO DO SO AS PROVIDED IN SECTION 7(A) AFTER THE OCCURRENCE OF AN EVENT OF
DEFAULT.  THE APPOINTMENT OF AGENT AS PROXY AND ATTORNEY-IN-FACT IS COUPLED WITH
AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE TERMINATION DATE.  IN ADDITION TO
THE RIGHT TO VOTE THE PLEDGED SHARES, THE APPOINTMENT OF AGENT AS PROXY AND
ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS,
PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF THE PLEDGED SHARES WOULD BE
ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS,
CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH MEETINGS) AFTER THE
OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT. SUCH PROXY SHALL
BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION (INCLUDING
ANY TRANSFER OF ANY PLEDGED SHARES ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY
ANY PESON (INCLUDING THE ISSUER OF THE PLEDGED SHARES OR ANY OFFICER OR AGENT
THEREOF), UPON THE OCCURRENCE OF AN EVENT OF DEFAULT AND DURING THE CONTINUANCE
THEREOF.  NOTWITHSTANDING THE FOREGOING, AGENT SHALL NOT HAVE ANY

 

7

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DUTY TO EXERCISE ANY SUCH RIGHT OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE
FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO.

 

(B)                                 IF, AT THE ORIGINAL TIME OR TIMES APPOINTED
FOR THE SALE OF THE WHOLE OR ANY PART OF THE PLEDGED COLLATERAL, THE HIGHEST
BID, IF THERE BE BUT ONE SALE, SHALL BE INADEQUATE TO DISCHARGE IN FULL ALL THE
SECURED OBLIGATIONS, OR IF THE PLEDGED COLLATERAL BE OFFERED FOR SALE IN LOTS,
IF AT ANY OF SUCH SALES, THE HIGHEST BID FOR THE LOT OFFERED FOR SALE WOULD
INDICATE TO AGENT, IN ITS DISCRETION, THAT THE PROCEEDS OF THE SALES OF THE
WHOLE OF THE PLEDGED COLLATERAL WOULD BE UNLIKELY TO BE SUFFICIENT TO DISCHARGE
ALL THE SECURED OBLIGATIONS, AGENT MAY, ON ONE OR MORE OCCASIONS AND IN ITS
DISCRETION, POSTPONE ANY OF SAID SALES BY PUBLIC ANNOUNCEMENT AT THE TIME OF
SALE OR THE TIME OF PREVIOUS POSTPONEMENT OF SALE, AND NO OTHER NOTICE OF SUCH
POSTPONEMENT OR POSTPONEMENTS OF SALE NEED BE GIVEN, ANY OTHER NOTICE BEING
HEREBY WAIVED; PROVIDED, HOWEVER, THAT ANY SALE OR SALES MADE AFTER SUCH
POSTPONEMENT SHALL BE AFTER TEN (10) DAYS’ NOTICE TO PLEDGORS.

 

(C)                                  IF, AT ANY TIME WHEN AGENT IN ITS SOLE
DISCRETION DETERMINES, FOLLOWING THE OCCURRENCE AND DURING THE CONTINUANCE OF AN
EVENT OF DEFAULT, THAT, IN CONNECTION WITH ANY ACTUAL OR CONTEMPLATED EXERCISE
OF ITS RIGHTS (WHEN PERMITTED UNDER THIS SECTION 8) TO SELL THE WHOLE OR ANY
PART OF THE PLEDGED SHARES HEREUNDER, IT IS NECESSARY OR ADVISABLE TO EFFECT A
PUBLIC REGISTRATION OF ALL OR PART OF THE PLEDGED COLLATERAL PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (OR ANY SIMILAR STATUTE THEN IN EFFECT) (THE
“ACT”), PLEDGORS SHALL, IN AN EXPEDITIOUS MANNER, CAUSE THE PLEDGED ENTITIES TO:

 

(I)                                     PREPARE AND FILE WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE “COMMISSION”) A REGISTRATION STATEMENT WITH RESPECT TO
THE PLEDGED SHARES AND IN GOOD FAITH USE COMMERCIALLY REASONABLE EFFORTS TO
CAUSE SUCH REGISTRATION STATEMENT TO BECOME AND REMAIN EFFECTIVE;

 

(II)                                  PREPARE AND FILE WITH THE COMMISSION SUCH
AMENDMENTS AND SUPPLEMENTS TO SUCH REGISTRATION STATEMENT AND THE PROSPECTUS
USED IN CONNECTION THEREWITH AS MAY BE NECESSARY TO KEEP SUCH REGISTRATION
STATEMENT EFFECTIVE AND TO COMPLY WITH THE PROVISIONS OF THE ACT WITH RESPECT TO
THE SALE OR OTHER DISPOSITION OF THE PLEDGED SHARES COVERED BY SUCH REGISTRATION
STATEMENT WHENEVER AGENT SHALL DESIRE TO SELL OR OTHERWISE DISPOSE OF THE
PLEDGED SHARES;

 

(III)                               FURNISH TO AGENT SUCH NUMBERS OF COPIES OF A
PROSPECTUS AND A PRELIMINARY PROSPECTUS, IN CONFORMITY WITH THE REQUIREMENTS OF
THE ACT, AND SUCH OTHER DOCUMENTS AS AGENT MAY REQUEST IN ORDER TO FACILITATE
THE PUBLIC SALE OR OTHER DISPOSITION OF THE PLEDGED SHARES BY AGENT;

 

(IV)                              USE COMMERCIALLY REASONABLE EFFORTS TO
REGISTER OR QUALIFY THE PLEDGED SHARES COVERED BY SUCH REGISTRATION STATEMENT
UNDER SUCH OTHER SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTIONS WITHIN THE
UNITED STATES AND PUERTO RICO AS AGENT SHALL REQUEST, AND DO SUCH OTHER
REASONABLE ACTS AND THINGS AS MAY BE REQUIRED OF IT TO ENABLE AGENT TO
CONSUMMATE THE PUBLIC SALE OR OTHER DISPOSITION IN SUCH JURISDICTIONS OF THE

 

8

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

 

PLEDGED SHARES BY AGENT;

 

(V)                                 FURNISH, AT THE REQUEST OF AGENT, ON THE
DATE THAT SHARES OF THE PLEDGED COLLATERAL ARE DELIVERED TO THE UNDERWRITERS FOR
SALE PURSUANT TO SUCH REGISTRATION OR, IF THE SECURITY IS NOT BEING SOLD THROUGH
UNDERWRITERS, ON THE DATE THAT THE REGISTRATION STATEMENT WITH RESPECT TO SUCH
PLEDGED SHARES BECOMES EFFECTIVE, (A) AN OPINION, DATED SUCH DATE, OF THE
INDEPENDENT COUNSEL REPRESENTING SUCH REGISTRANT FOR THE PURPOSES OF SUCH
REGISTRATION, ADDRESSED TO THE UNDERWRITERS, IF ANY, AND IN THE EVENT THE
PLEDGED SHARES ARE NOT BEING SOLD THROUGH UNDERWRITERS, THEN TO AGENT, IN
CUSTOMARY FORM AND COVERING MATTERS OF THE TYPE CUSTOMARILY COVERED IN SUCH
LEGAL OPINIONS; AND (B) A COMFORT LETTER, DATED SUCH DATE, FROM THE INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS OF SUCH REGISTRANT, ADDRESSED TO THE UNDERWRITERS,
IF ANY, AND IN THE EVENT THE PLEDGED SHARES ARE NOT BEING SOLD THROUGH
UNDERWRITERS, THEN TO AGENT, IN A CUSTOMARY FORM AND COVERING MATTERS OF THE
TYPE CUSTOMARILY COVERED BY SUCH COMFORT LETTERS AND AS THE UNDERWRITERS OR
AGENT SHALL REASONABLY REQUEST.  THE OPINION OF COUNSEL REFERRED TO ABOVE SHALL
ADDITIONALLY COVER SUCH OTHER LEGAL MATTERS WITH RESPECT TO THE REGISTRATION IN
RESPECT OF WHICH SUCH OPINION IS BEING GIVEN AS AGENT MAY REASONABLY REQUEST. 
THE LETTER REFERRED TO ABOVE FROM THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
SHALL ADDITIONALLY COVER SUCH OTHER FINANCIAL MATTERS (INCLUDING INFORMATION AS
TO THE PERIOD ENDING NOT MORE THAN FIVE (5) BUSINESS DAYS PRIOR TO THE DATE OF
SUCH LETTER) WITH RESPECT TO THE REGISTRATION IN RESPECT OF WHICH SUCH LETTER IS
BEING GIVEN AS AGENT MAY REASONABLY REQUEST; AND

 

(VI)                              OTHERWISE USE COMMERCIALLY REASONABLE EFFORTS
TO COMPLY WITH ALL APPLICABLE RULES AND REGULATIONS OF THE COMMISSION, AND MAKE
AVAILABLE TO ITS SECURITY HOLDERS, AS SOON AS REASONABLY PRACTICABLE BUT NOT
LATER THAN 18 MONTHS AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT, AN
EARNINGS STATEMENT COVERING THE PERIOD OF AT LEAST 12 MONTHS BEGINNING WITH THE
FIRST FULL MONTH AFTER THE EFFECTIVE DATE OF SUCH REGISTRATION STATEMENT, WHICH
EARNINGS STATEMENT SHALL SATISFY THE PROVISIONS OF SECTION 11(A) OF THE ACT.

 

(D)                                 ALL EXPENSES INCURRED IN COMPLYING WITH
SECTION 8(C) HEREOF, INCLUDING, WITHOUT LIMITATION, ALL REGISTRATION AND FILING
FEES (INCLUDING ALL EXPENSES INCIDENT TO FILING WITH THE NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC.), PRINTING EXPENSES, FEES AND DISBURSEMENTS OF COUNSEL
FOR THE REGISTRANT, THE FEES AND EXPENSES OF COUNSEL FOR AGENT, EXPENSES OF THE
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS (INCLUDING ANY SPECIAL AUDITS INCIDENT
TO OR REQUIRED BY ANY SUCH REGISTRATION) AND EXPENSES OF COMPLYING WITH THE
SECURITIES OR BLUE SKY LAWS OR ANY JURISDICTIONS, SHALL BE PAID BY PLEDGORS.

 

(E)                                  IF, AT ANY TIME WHEN AGENT SHALL DETERMINE
TO EXERCISE ITS RIGHT TO SELL THE WHOLE OR ANY PART OF THE PLEDGED COLLATERAL
HEREUNDER, SUCH PLEDGED COLLATERAL OR THE PART THEREOF TO BE SOLD SHALL NOT, FOR
ANY REASON WHATSOEVER, BE EFFECTIVELY REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (OR ANY SIMILAR STATUTE THEN IN EFFECT) (THE “ACT”), AGENT MAY,
IN ITS DISCRETION (SUBJECT ONLY TO APPLICABLE REQUIREMENTS OF LAW), SELL SUCH
PLEDGED COLLATERAL OR PART THEREOF BY PRIVATE SALE IN SUCH MANNER AND UNDER SUCH
CIRCUMSTANCES AS AGENT MAY DEEM NECESSARY OR ADVISABLE, BUT SUBJECT TO THE OTHER
REQUIREMENTS OF THIS SECTION 8, AND SHALL NOT BE

 

9

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REQUIRED TO EFFECT SUCH REGISTRATION OR TO CAUSE THE SAME TO BE EFFECTED. 
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, IN ANY SUCH EVENT, AGENT IN
ITS DISCRETION (X) MAY, IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS, PROCEED
TO MAKE SUCH PRIVATE SALE NOTWITHSTANDING THAT A REGISTRATION STATEMENT FOR THE
PURPOSE OF REGISTERING SUCH PLEDGED COLLATERAL OR PART THEREOF COULD BE OR SHALL
HAVE BEEN FILED UNDER SAID ACT (OR SIMILAR STATUTE), (Y) MAY APPROACH AND
NEGOTIATE WITH A SINGLE POSSIBLE PURCHASER TO EFFECT SUCH SALE, AND (Z) MAY
RESTRICT SUCH SALE TO A PURCHASER WHO IS AN ACCREDITED INVESTOR UNDER THE ACT
AND WHO WILL REPRESENT AND AGREE THAT SUCH PURCHASER IS PURCHASING FOR ITS OWN
ACCOUNT, FOR INVESTMENT AND NOT WITH A VIEW TO THE DISTRIBUTION OR SALE OF SUCH
PLEDGED COLLATERAL OR ANY PART THEREOF.  IN ADDITION TO A PRIVATE SALE AS
PROVIDED ABOVE IN THIS SECTION 8, IF ANY OF THE PLEDGED COLLATERAL SHALL NOT BE
FREELY DISTRIBUTABLE TO THE PUBLIC WITHOUT REGISTRATION UNDER THE ACT (OR
SIMILAR STATUTE) AT THE TIME OF ANY PROPOSED SALE PURSUANT TO THIS SECTION 8,
THEN AGENT SHALL NOT BE REQUIRED TO EFFECT SUCH REGISTRATION OR CAUSE THE SAME
TO BE EFFECTED BUT, IN ITS DISCRETION (SUBJECT ONLY TO APPLICABLE REQUIREMENTS
OF LAW), MAY REQUIRE THAT ANY SALE HEREUNDER (INCLUDING A SALE AT AUCTION) BE
CONDUCTED SUBJECT TO RESTRICTIONS:

 

(I)                                     AS TO THE FINANCIAL SOPHISTICATION AND
ABILITY OF ANY PERSON PERMITTED TO BID OR PURCHASE AT ANY SUCH SALE;

 

(II)                                  AS TO THE CONTENT OF LEGENDS TO BE PLACED
UPON ANY CERTIFICATES REPRESENTING THE PLEDGED COLLATERAL SOLD IN SUCH SALE,
INCLUDING RESTRICTIONS ON FUTURE TRANSFER THEREOF;

 

(III)                               AS TO THE REPRESENTATIONS REQUIRED TO BE
MADE BY EACH PERSON BIDDING OR PURCHASING AT SUCH SALE RELATING TO THAT PERSON’S
ACCESS TO FINANCIAL INFORMATION ABOUT PLEDGORS AND SUCH PERSON’S INTENTIONS AS
TO THE HOLDING OF THE PLEDGED COLLATERAL SO SOLD FOR INVESTMENT FOR ITS OWN
ACCOUNT AND NOT WITH A VIEW TO THE DISTRIBUTION THEREOF; AND

 

(IV)                              AS TO SUCH OTHER MATTERS AS AGENT MAY, IN ITS
DISCRETION, DEEM NECESSARY OR APPROPRIATE IN ORDER THAT SUCH SALE
(NOTWITHSTANDING ANY FAILURE SO TO REGISTER) MAY BE EFFECTED IN COMPLIANCE WITH
THE BANKRUPTCY CODE AND OTHER LAWS AFFECTING THE ENFORCEMENT OF CREDITORS’
RIGHTS AND THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS.

 

(F)                                    EACH OF THE PLEDGORS RECOGNIZES THAT
AGENT MAY BE UNABLE TO EFFECT A PUBLIC SALE OF ANY OR ALL THE PLEDGED COLLATERAL
AND MAY BE COMPELLED TO RESORT TO ONE OR MORE PRIVATE SALES THEREOF IN
ACCORDANCE WITH CLAUSE (E) ABOVE.  EACH OF THE PLEDGORS ALSO ACKNOWLEDGES THAT
ANY SUCH PRIVATE SALE MAY RESULT IN PRICES AND OTHER TERMS LESS FAVORABLE TO THE
SELLER THAN IF SUCH SALE WERE A PUBLIC SALE AND, NOTWITHSTANDING SUCH
CIRCUMSTANCES, AGREES THAT ANY SUCH PRIVATE SALE SHALL NOT BE DEEMED TO HAVE
BEEN MADE IN A COMMERCIALLY UNREASONABLE MANNER SOLELY BY VIRTUE OF SUCH SALE
BEING PRIVATE.  AGENT SHALL BE UNDER NO OBLIGATION TO DELAY A SALE OF ANY OF THE
PLEDGED COLLATERAL FOR THE PERIOD OF TIME NECESSARY TO PERMIT THE PLEDGED ENTITY
TO REGISTER SUCH SECURITIES FOR PUBLIC SALE UNDER THE ACT, OR UNDER APPLICABLE
STATE SECURITIES LAWS, EVEN IF PLEDGORS AND THE PLEDGED ENTITY WOULD AGREE TO DO
SO.

 

(G)                                 EACH OF THE PLEDGORS AGREES TO THE MAXIMUM
EXTENT PERMITTED BY

 

10

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

 

APPLICABLE LAW THAT FOLLOWING THE OCCURRENCE AND DURING THE CONTINUANCE OF AN
EVENT OF DEFAULT IT WILL NOT AT ANY TIME PLEAD, CLAIM OR TAKE THE BENEFIT OF ANY
APPRAISAL, VALUATION, STAY, EXTENSION, MORATORIUM OR REDEMPTION LAW NOW OR
HEREAFTER IN FORCE IN ORDER TO PREVENT OR DELAY THE ENFORCEMENT OF THIS
AGREEMENT, OR THE ABSOLUTE SALE OF THE WHOLE OR ANY PART OF THE PLEDGED
COLLATERAL OR THE POSSESSION THEREOF BY ANY PURCHASER AT ANY SALE HEREUNDER, AND
EACH OF THE PLEDGORS WAIVES THE BENEFIT OF ALL SUCH LAWS TO THE EXTENT IT
LAWFULLY MAY DO SO.  EACH OF THE PLEDGORS AGREES THAT IT WILL NOT INTERFERE WITH
ANY RIGHT, POWER AND REMEDY OF AGENT PROVIDED FOR IN THIS AGREEMENT OR NOW OR
HEREAFTER EXISTING AT LAW OR IN EQUITY OR BY STATUTE OR OTHERWISE, OR THE
EXERCISE OR BEGINNING OF THE EXERCISE BY AGENT OF ANY ONE OR MORE OF SUCH
RIGHTS, POWERS OR REMEDIES.  NO FAILURE OR DELAY ON THE PART OF AGENT TO
EXERCISE ANY SUCH RIGHT, POWER OR REMEDY AND NO NOTICE OR DEMAND WHICH MAY BE
GIVEN TO OR MADE UPON PLEDGORS BY AGENT WITH RESPECT TO ANY SUCH REMEDIES SHALL
OPERATE AS A WAIVER THEREOF, OR LIMIT OR IMPAIR AGENT’S RIGHT TO TAKE ANY ACTION
OR TO EXERCISE ANY POWER OR REMEDY HEREUNDER, WITHOUT NOTICE OR DEMAND, OR
PREJUDICE ITS RIGHTS AS AGAINST PLEDGORS IN ANY RESPECT.

 

(H)                                 EACH OF THE PLEDGORS FURTHER AGREES THAT A
BREACH OF ANY OF THE COVENANTS CONTAINED IN THIS SECTION 8 WILL CAUSE
IRREPARABLE INJURY TO AGENT, THAT AGENT SHALL HAVE NO ADEQUATE REMEDY AT LAW IN
RESPECT OF SUCH BREACH AND, AS A CONSEQUENCE, AGREES THAT EACH AND EVERY
COVENANT CONTAINED IN THIS SECTION 8 SHALL BE SPECIFICALLY ENFORCEABLE AGAINST
EACH OF THE PLEDGORS, AND EACH OF THE PLEDGORS HEREBY WAIVES AND AGREES NOT TO
ASSERT ANY DEFENSES AGAINST AN ACTION FOR SPECIFIC PERFORMANCE OF SUCH COVENANTS
EXCEPT FOR A DEFENSE THAT THE SECURED OBLIGATIONS ARE NOT THEN DUE AND PAYABLE
IN ACCORDANCE WITH THE AGREEMENTS AND INSTRUMENTS GOVERNING AND EVIDENCING SUCH
OBLIGATIONS.

 

9.                                       WAIVER.  NO DELAY ON AGENT’S PART IN
EXERCISING ANY POWER OF SALE, LIEN, OPTION OR OTHER RIGHT HEREUNDER, AND NO
NOTICE OR DEMAND WHICH MAY BE GIVEN TO OR MADE UPON ANY OF THE PLEDGORS BY AGENT
WITH RESPECT TO ANY POWER OF SALE, LIEN, OPTION OR OTHER RIGHT HEREUNDER, SHALL
CONSTITUTE A WAIVER THEREOF, OR LIMIT OR IMPAIR AGENT’S RIGHT TO TAKE ANY ACTION
OR TO EXERCISE ANY POWER OF SALE, LIEN, OPTION, OR ANY OTHER RIGHT HEREUNDER,
WITHOUT NOTICE OR DEMAND, OR PREJUDICE AGENT’S RIGHTS AS AGAINST ANY PLEDGOR IN
ANY RESPECT.

 

10.                                 ASSIGNMENT.  AGENT MAY ASSIGN, INDORSE OR
TRANSFER ANY INSTRUMENT EVIDENCING ALL OR ANY PART OF THE SECURED OBLIGATIONS AS
PROVIDED IN, AND IN ACCORDANCE WITH, THE CREDIT AGREEMENT, AND THE HOLDER OF
SUCH INSTRUMENT SHALL BE ENTITLED TO THE BENEFITS OF THIS AGREEMENT.

 

11.                                 TERMINATION.  IMMEDIATELY FOLLOWING THE
TERMINATION DATE, AGENT SHALL DELIVER TO PLEDGORS THE PLEDGED COLLATERAL PLEDGED
BY PLEDGORS AT THE TIME SUBJECT TO THIS AGREEMENT AND ALL INSTRUMENTS OF
ASSIGNMENT EXECUTED IN CONNECTION THEREWITH, FREE AND CLEAR OF THE LIENS HEREOF
AND, EXCEPT AS OTHERWISE PROVIDED HEREIN, ALL OF PLEDGORS’ OBLIGATIONS HEREUNDER
SHALL AT SUCH TIME TERMINATE.

 

12.                                 LIEN ABSOLUTE.  ALL RIGHTS OF AGENT
HEREUNDER, AND ALL OBLIGATIONS OF PLEDGORS HEREUNDER, SHALL BE ABSOLUTE AND
UNCONDITIONAL IRRESPECTIVE OF:

 

(A)                                  ANY LACK OF VALIDITY OR ENFORCEABILITY OF
THE CREDIT AGREEMENT, ANY OTHER

 

11

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LOAN DOCUMENT OR ANY OTHER AGREEMENT OR INSTRUMENT GOVERNING OR EVIDENCING ANY
SECURED OBLIGATIONS;

 

(B)                                 ANY CHANGE IN THE TIME, MANNER OR PLACE OF
PAYMENT OF, OR IN ANY OTHER TERM OF, ALL OR ANY PART OF THE SECURED OBLIGATIONS,
OR ANY OTHER AMENDMENT OR WAIVER OF OR ANY CONSENT TO ANY DEPARTURE FROM THE
CREDIT AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY OTHER AGREEMENT OR INSTRUMENT
GOVERNING OR EVIDENCING ANY SECURED OBLIGATIONS;

 

(C)                                  ANY EXCHANGE, RELEASE OR NON-PERFECTION OF
ANY OTHER COLLATERAL, OR ANY RELEASE OR AMENDMENT OR WAIVER OF OR CONSENT TO
DEPARTURE FROM ANY GUARANTY, FOR ALL OR ANY OF THE SECURED OBLIGATIONS;

 

(D)                                 THE INSOLVENCY OF ANY CREDIT PARTY; OR

 

(E)                                  ANY OTHER CIRCUMSTANCE WHICH MIGHT
OTHERWISE CONSTITUTE A DEFENSE AVAILABLE TO, OR A DISCHARGE OF, PLEDGORS.

 

13.                                 RELEASE.  EACH OF THE PLEDGORS CONSENTS AND
AGREES THAT AGENT MAY AT ANY TIME, OR FROM TIME TO TIME, IN ITS DISCRETION:

 

(A)                                  RENEW, EXTEND OR CHANGE THE TIME OF
PAYMENT, AND/OR THE MANNER, PLACE OR TERMS OF PAYMENT OF ALL OR ANY PART OF THE
SECURED OBLIGATIONS; AND

 

(B)                                 EXCHANGE, RELEASE AND/OR SURRENDER ALL OR
ANY OF THE COLLATERAL (INCLUDING THE PLEDGED COLLATERAL), OR ANY PART THEREOF,
BY WHOMSOEVER DEPOSITED, WHICH IS NOW OR MAY HEREAFTER BE HELD BY AGENT IN
CONNECTION WITH ALL OR ANY OF THE SECURED OBLIGATIONS; ALL IN SUCH MANNER AND
UPON SUCH TERMS AS AGENT MAY DEEM PROPER, AND WITHOUT NOTICE TO OR FURTHER
ASSENT FROM ANY OF THE PLEDGORS, IT BEING HEREBY AGREED THAT EACH OF THE
PLEDGORS SHALL BE AND REMAIN BOUND UPON THIS AGREEMENT, IRRESPECTIVE OF THE
VALUE OR CONDITION OF ANY OF THE COLLATERAL, AND NOTWITHSTANDING ANY SUCH
CHANGE, EXCHANGE, SETTLEMENT, COMPROMISE, SURRENDER, RELEASE, RENEWAL OR
EXTENSION, AND NOTWITHSTANDING ALSO THAT THE SECURED OBLIGATIONS MAY, AT ANY
TIME, EXCEED THE AGGREGATE PRINCIPAL AMOUNT THEREOF SET FORTH IN THE CREDIT
AGREEMENT, OR ANY OTHER AGREEMENT GOVERNING ANY SECURED OBLIGATIONS.  EACH OF
THE PLEDGORS HEREBY WAIVES NOTICE OF ACCEPTANCE OF THIS AGREEMENT, AND ALSO
PRESENTMENT, DEMAND, PROTEST AND NOTICE OF DISHONOR OF ANY AND ALL OF THE
SECURED OBLIGATIONS, AND PROMPTNESS IN COMMENCING SUIT AGAINST ANY PARTY HERETO
OR LIABLE HEREON, AND IN GIVING ANY NOTICE TO OR OF MAKING ANY CLAIM OR DEMAND
HEREUNDER UPON ANY PLEDGOR.  NO ACT OR OMISSION OF ANY KIND ON AGENT’S PART
SHALL IN ANY EVENT AFFECT OR IMPAIR THIS AGREEMENT.

 

14.                                 REINSTATEMENT.  THIS AGREEMENT SHALL REMAIN
IN FULL FORCE AND EFFECT AND CONTINUE TO BE EFFECTIVE SHOULD ANY PETITION BE
FILED BY OR AGAINST EACH OF THE PLEDGORS OR ANY PLEDGED ENTITY FOR LIQUIDATION
OR REORGANIZATION, SHOULD ANY OF THE PLEDGORS OR ANY PLEDGED ENTITY BECOME
INSOLVENT OR MAKE AN ASSIGNMENT FOR THE BENEFIT OF CREDITORS OR SHOULD A
RECEIVER OR TRUSTEE BE APPOINTED FOR ALL OR ANY SIGNIFICANT PART OF SUCH
PLEDGOR’S OR A PLEDGED ENTITY’S ASSETS, AND SHALL CONTINUE TO BE EFFECTIVE OR BE
REINSTATED, AS THE CASE MAY BE, IF AT ANY TIME PAYMENT AND

 

12

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performance of the Secured Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Secured Obligations, whether as a “voidable
preference”, “fraudulent conveyance”, or otherwise, all as though such payment
or performance had not been made.  In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Secured Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.

 

15.                                 MISCELLANEOUS.

 

(A)                                  AGENT MAY EXECUTE ANY OF ITS DUTIES
HEREUNDER BY OR THROUGH AGENTS OR EMPLOYEES AND SHALL BE ENTITLED TO ADVICE OF
COUNSEL CONCERNING ALL MATTERS PERTAINING TO ITS DUTIES HEREUNDER.

 

(B)                                 EACH OF THE PLEDGORS AGREES TO PROMPTLY
REIMBURSE AGENT FOR ACTUAL OUT-OF-POCKET EXPENSES, INCLUDING, WITHOUT
LIMITATION, REASONABLE COUNSEL FEES, INCURRED BY AGENT IN CONNECTION WITH THE
ADMINISTRATION AND ENFORCEMENT OF THIS AGREEMENT.

 

(C)                                  NEITHER AGENT, NOR ANY OF ITS RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR COUNSEL SHALL BE LIABLE FOR ANY ACTION
LAWFULLY TAKEN OR OMITTED TO BE TAKEN BY IT OR THEM HEREUNDER OR IN CONNECTION
HEREWITH, EXCEPT FOR ITS OR THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS
FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION.

 

(D)                                 THIS AGREEMENT SHALL BE BINDING UPON EACH OF
THE PLEDGORS AND ITS SUCCESSORS AND ASSIGNS (INCLUDING A DEBTOR-IN-POSSESSION ON
BEHALF OF ANY PLEDGOR), AND SHALL INURE TO THE BENEFIT OF, AND BE ENFORCEABLE
BY, AGENT AND ITS SUCCESSORS AND ASSIGNS, AND SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE, AND NONE OF THE TERMS
OR PROVISIONS OF THIS AGREEMENT MAY BE WAIVED, ALTERED, MODIFIED OR AMENDED
EXCEPT IN WRITING DULY SIGNED FOR AND ON BEHALF OF AGENT AND PLEDGORS.

 

16.                                 SEVERABILITY.  IF FOR ANY REASON ANY
PROVISION OR PROVISIONS HEREOF ARE DETERMINED TO BE INVALID AND CONTRARY TO ANY
EXISTING OR FUTURE LAW, SUCH INVALIDITY SHALL NOT IMPAIR THE OPERATION OF OR
EFFECT THOSE PORTIONS OF THIS AGREEMENT WHICH ARE VALID.

 

17.                                 NOTICES.  EXCEPT AS OTHERWISE PROVIDED
HEREIN, WHENEVER IT IS PROVIDED HEREIN THAT ANY NOTICE, DEMAND, REQUEST,
CONSENT, APPROVAL, DECLARATION OR OTHER COMMUNICATION SHALL OR MAY BE GIVEN TO
OR SERVED UPON ANY OF THE PARTIES BY ANY OTHER PARTY, OR WHENEVER ANY OF THE
PARTIES DESIRES TO GIVE AND SERVE UPON ANY OTHER PARTY ANY COMMUNICATION WITH
RESPECT TO THIS SECURITY AGREEMENT, EACH SUCH NOTICE, DEMAND, REQUEST, CONSENT,
APPROVAL, DECLARATION OR OTHER COMMUNICATION SHALL BE IN WRITING AND SHALL BE
GIVEN IN THE MANNER, AND DEEMED RECEIVED, AS PROVIDED FOR IN THE CREDIT
AGREEMENT.

 

13

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18.                                 SECTION TITLES.  THE SECTION TITLES
CONTAINED IN THIS AGREEMENT ARE AND SHALL BE WITHOUT SUBSTANTIVE MEANING OR
CONTENT OF ANY KIND WHATSOEVER AND ARE NOT A PART OF THE AGREEMENT BETWEEN THE
PARTIES HERETO.

 

19.                                 COUNTERPARTS.  THIS AGREEMENT MAY BE
EXECUTED IN ANY NUMBER OF COUNTERPARTS, WHICH SHALL, COLLECTIVELY AND
SEPARATELY, CONSTITUTE ONE AGREEMENT.

 

20.                                 BENEFIT OF LENDERS.  ALL SECURITY INTERESTS
GRANTED OR CONTEMPLATED HEREBY SHALL BE FOR THE BENEFIT OF AGENT AND LENDERS,
AND ALL PROCEEDS OR PAYMENTS REALIZED FROM THE PLEDGED COLLATERAL IN ACCORDANCE
HEREWITH SHALL BE APPLIED TO THE OBLIGATIONS IN ACCORDANCE WITH THE TERMS OF THE
CREDIT AGREEMENT.

 

 

[Remainder of page intentionally left blank]

 

14

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IN WITNESS WHEREOF, the parties hereto have caused this Borrowers Pledge
Agreement to be duly executed as of the date first written above.

 

 

 

PLEDGORS:

 

 

 

CURATIVE HEALTH SERVICES, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

EBIOCARE.COM, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

HEMOPHILIA ACCESS, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

[Signature Page to Borrower Pledge Agreement]

 

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

 

 

APEX THERAPEUTIC CARE, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

CHS SERVICES, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

CURATIVE HEALTH SERVICES OF NEW YORK, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

OPTIMAL CARE PLUS, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

INFINITY INFUSION, LLC

 

 

 

By: Curative Health Services, Inc., its Sole Member

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

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

 

 

INFINITY INFUSION II, LLC

 

 

 

By: Curative Health Services, Inc., its Sole Member

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

INFINITY INFUSION CARE, LTD.

 

 

 

By: Infinity Infusion II, LLC, its Sole General Partner

 

 

 

By: Curative Health Services, Inc., the Sole Member of Infinity Infusion II, LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

MEDCARE, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

CURATIVE PHARMACY SERVICES, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

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

 

 

GENERAL ELECTRIC CAPITAL CORPORATION, as Agent

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

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

 

SCHEDULE I

 

PART A

 

PLEDGED SHARES

 

1.  Curative Health Services, Inc.

 

 

Pledged Entity

 

Class
of Stock

 

Stock Certificate
Number(s)

 

Number
of Shares

 

Percentage of
Outstanding Shares

 

eBioCare.com, Inc.

 

Common

 

40

 

13,086,666

 

100

%

Hemophilia Access, Inc.

 

Common

 

2

 

100

 

100

%

Apex Therapeutic Care, Inc.

 

Common

 

13

 

120,000

 

100

%

Curative Health Services of New York, Inc.

 

Common

 

2

 

200

 

100

%

CHS Services, Inc.

 

Common

 

2

 

100

 

100

%

Curative Pharmacy Services, Inc.

 

Common

 

1

 

200

 

100

%

Optimal Care Plus, Inc.

 

Common

 

1

 

200

 

100

%

Infinity Infusion, LLC

 

Uncertificated shares of limited liability company interests

 

100

%

Infinity Infusion II, LLC

 

Uncertificated shares of limited liability company interests

 

100

%

MedCare, Inc.

 

Common

 

1

 

200

 

100

%

 

2.  eBioCare.com, Inc.

 

None.

 

3.  Hemophilia Access, Inc.

 

None.

 

4.  Apex Therapeutic Care, Inc.

 

None.

 

5.  Curative Health Services of New York, Inc.

 

None.

 

6.  CHS Services, Inc.

 

None.

 

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

 

7.  Optimal Care Plus, Inc.

 

None.

 

8.  Infinity Infusion, LLC

 

Pledged Entity

 

Class
of Stock

 

Stock Certificate
Number(s)

 

Number
of Shares

 

Percentage of
Outstanding Shares

 

Infinity Infusion Care, Ltd.

 

Limited Partnership Interest

 

G-1

 

Not Applicable

 

99.00

%

 

9.  Infinity Infusion II, LLC

 

Pledged Entity

 

Class
of Stock

 

Stock Certificate
Number(s)

 

Number
of Shares

 

Percentage of
Outstanding Shares

 

Infinity Infusion Care, Ltd.

 

Limited Partnership Interest

 

L-1

 

Not Applicable

 

1.00

%

 

10.  MedCare, Inc.

 

None.

 

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

 

PART B

 

PLEDGED INDEBTEDNESS

 

1.  Curative Health Services, Inc.

 

Pledged Entity

 

Principal Amount

 

Issue Date

 

Maturity Date

 

Interest Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.  eBioCare.com, Inc.

 

None.

 

3.  Hemophilia Access, Inc.

 

None.

 

4.  Apex Therapeutic Care, Inc.

 

None.

 

5.  Curative Health Services of New York, Inc.

 

None.

 

6.  CHS Services, Inc.

 

None.

 

7.  Optimal Care Plus, Inc.

 

None.

 

8.  Infinity Infusion, LLC

 

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

 

 

None.

 

9.  Infinity Infusion II, LLC

 

None.

 

10.  MedCare, Inc.

 

None.

 

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

 

SCHEDULE II

 

PLEDGE AMENDMENT

 

 

This Pledge Amendment, dated                                 ,        is
delivered pursuant to Section 6(d) of the Pledge Agreement referred to below. 
All defined terms herein shall have the meanings ascribed thereto or
incorporated by reference in the Pledge Agreement.  The undersigned hereby
certifies that the representations and warranties in Section 5 of the Pledge
Agreement are and continue to be true and correct, both as to the promissory
notes, instruments and shares pledged prior to this Pledge Amendment and as to
the promissory notes, instruments and shares pledged pursuant to this Pledge
Amendment.  The undersigned further agrees that this Pledge Amendment may be
attached to that certain Borrower Pledge Agreement, dated June 9, 2003, by and
among each of the Persons executing the signature page thereof as a Pledgor and
General Electric Capital Corporation, as Agent (as amended, supplemented,
restated or modified from time to time, the “Pledge Agreement”) and that the
Pledged Shares and Pledged Indebtedness listed on this Pledge Amendment shall be
and become a part of the Pledged Collateral referred to in said Pledge Agreement
and shall secure all Secured Obligations referred to in said Pledge Agreement. 
The undersigned acknowledges that any promissory notes, instruments or shares
not included in the Pledged Collateral at the discretion of Agent may not
otherwise be pledged by Pledgor to any other Person or otherwise used as
security for any obligations other than the Secured Obligations.

 

[NAME OF PLEDGOR]

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

Name and
Address of Pledgor

 

Pledged Entity

 

Class
of Stock

 

Certificate
Number(s)

 

Number
Of Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pledged Entity

 

Initial
Principal Amount

 

Issue Date

 

Maturity Date

 

Interest Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

SCHEDULE III

 

CONTROL AGREEMENT

 

The undersigned                                             , a
                                             (“Pledged Entity”), hereby
acknowledges receipt of a completed and executed counterpart of the Borrower
Pledge Agreement, dated as of June 9, 2003, by and among Curative Health
Services, Inc., eBioCare.com, Inc., Hemophilia Access, Inc., Apex Therapeutic
Care, Inc., CHS Services, Inc., Curative Health Services of New York, Inc.,
Optimal Care Plus, Inc., Infinity Infusion, LLC, Infinity Infusion II, LLC,
Infinity Infusion Care, Ltd., MedCare, Inc., Curative Pharmacy Services, Inc.
(collectively, the “Pledgors”) and General Electric Capital Corporation, as
agent (the “Agent”), and agrees to be bound thereby.  The Pledged Entity further
agrees that it will comply with instructions originated by the Agent (or its
successors or assigns)  with respect to the Pledged Stock issued by the Pledged
Entity without further consent of the Pledgor.  The Pledged Entity further
agrees to mark its other Stock records to reflect that the Pledged Stock issued
by the Pledged Entity is subject to Agent’s security interest.

 

IN WITNESS WHEREOF, the Pledged Entity has executed this Control Agreement as of
the date first above written.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

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

 

EXHIBIT G

to

CREDIT AGREEMENT

 

FORM OF GUARANTY

 

 

This GUARANTY (this “Guaranty”), dated as of                    ,         , by
and among the Guarantors identified as such on the signature page hereof (each,
a “Guarantor” and collectively, “Guarantors”), and GENERAL ELECTRIC CAPITAL
CORPORATION, a Delaware corporation, individually and as agent (in such
capacity, “Agent”) for itself and the lenders from time to time signatory to the
Credit Agreement hereinafter defined (“Lenders”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to that certain Credit Agreement dated as of the date hereof
by and among [Name of Borrower] (the “Borrower”) the Persons named therein as
Credit Parties, Agent and the Persons signatory thereto from time to time as
Lenders (as from time to time amended, restated, supplemented or otherwise
modified, the “Credit Agreement”) Lenders have agreed to make Loans to, and
incur LC Obligations for the benefit of, Borrower.

 

WHEREAS, Guarantors are [Describe Relationships With Borrower(s)] and as such
will derive direct and indirect economic benefits from the making of the Loans
and other financial accommodations provided to the Borrower pursuant to the
Credit Agreement; and

 

WHEREAS, in order to induce Agent and Lenders to enter into the Credit Agreement
and other Loan Documents and to induce Lenders to make the Loans and to incur LC
Obligations as provided for in the Credit Agreement, Guarantors have agreed to
guarantee payment of the Obligations;

 

NOW, THEREFORE, in consideration of the premises and the covenants hereinafter
contained, and to induce Lenders to provide the Loans and other financial
accommodations under the Credit Agreement, it is agreed as follows:

 

1.                                       DEFINITIONS.

 

(a)                                  Capitalized terms used herein shall have
the meanings assigned to them in the Credit Agreement, unless otherwise defined
herein.

 

(b)                                 References to this “Guaranty” shall mean
this Guaranty, including all amendments, modifications and supplements and any
annexes, exhibits and schedules to any of the foregoing, and shall refer to this
Guaranty as the same may be in effect at the time such reference becomes
operative.

 

(c)                                  References to the “Termination Date” shall
mean the date on which (a) the Loans have been repaid in full in cash, (b) all
other Obligations under the Credit Agreement and the other Loan Documents have
been completely discharged (c) all LC Obligations have been

 

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

 

cash collateralized, canceled or backed by standby letters of credit in
accordance with Section 2.5 of the Credit Agreement, and (d) Borrower shall not
have any further right to borrow any monies under the Credit Agreement.

 

2.                                       THE GUARANTY.

 

2.1.                              GUARANTY OF GUARANTEED OBLIGATIONS OF
BORROWER.  EACH GUARANTOR HEREBY JOINTLY AND SEVERALLY UNCONDITIONALLY
GUARANTEES TO AGENT AND LENDERS, AND THEIR RESPECTIVE SUCCESSORS, ENDORSEES,
TRANSFEREES AND ASSIGNS, THE PROMPT PAYMENT (WHETHER AT STATED MATURITY, BY
ACCELERATION OR OTHERWISE) AND PERFORMANCE OF THE OBLIGATIONS OF BORROWER
(HEREINAFTER THE “GUARANTEED OBLIGATIONS”).  GUARANTORS AGREE THAT THIS GUARANTY
IS A GUARANTY OF PAYMENT AND PERFORMANCE AND NOT OF COLLECTION, AND THAT THEIR
OBLIGATIONS UNDER THIS GUARANTY SHALL BE PRIMARY, ABSOLUTE AND UNCONDITIONAL,
IRRESPECTIVE OF, AND UNAFFECTED BY:

 

(A)                                  THE GENUINENESS, VALIDITY, REGULARITY,
ENFORCEABILITY OR ANY FUTURE AMENDMENT OF, OR CHANGE IN THIS GUARANTY, ANY OTHER
LOAN DOCUMENT OR ANY OTHER AGREEMENT, DOCUMENT OR INSTRUMENT TO WHICH ANY CREDIT
PARTY AND/OR GUARANTORS ARE OR MAY BECOME A PARTY;

 

(B)                                 THE ABSENCE OF ANY ACTION TO ENFORCE THIS
GUARANTY OR ANY OTHER LOAN DOCUMENT OR THE WAIVER OR CONSENT BY AGENT AND/OR
LENDERS WITH RESPECT TO ANY OF THE PROVISIONS THEREOF;

 

(C)                                  THE EXISTENCE, VALUE OR CONDITION OF, OR
FAILURE TO PERFECT ITS LIEN AGAINST, ANY COLLATERAL FOR THE GUARANTEED
OBLIGATIONS OR ANY ACTION, OR THE ABSENCE OF ANY ACTION, BY AGENT IN RESPECT
THEREOF (INCLUDING, WITHOUT LIMITATION, THE RELEASE OF ANY SUCH SECURITY); OR

 

(D)                                 THE INSOLVENCY OF ANY CREDIT PARTY; OR

 

(E)                                  ANY OTHER ACTION OR CIRCUMSTANCES WHICH
MIGHT OTHERWISE CONSTITUTE A LEGAL OR EQUITABLE DISCHARGE OR DEFENSE OF A SURETY
OR GUARANTOR,

 

it being agreed by each Guarantor that its obligations under this Guaranty shall
not be discharged until the Termination Date.  Each Guarantor shall be regarded,
and shall be in the same position, as principal debtor with respect to the
Guaranteed Obligations.  Each Guarantor agrees that any notice or directive
given at any time to Agent which is inconsistent with the waiver in the
immediately preceding sentence shall be null and void and may be ignored by
Agent and Lenders, and, in addition, may not be pleaded or introduced as
evidence in any litigation relating to this Guaranty for the reason that such
pleading or introduction would be at variance with the written terms of this
Guaranty, unless Agent and Lenders have specifically agreed otherwise in
writing.  It is agreed among each Guarantor, Agent and Lenders that the
foregoing waivers are of the essence of the transaction contemplated by the Loan
Documents and that, but for this Guaranty and such waivers, Agent and Lenders
would decline to enter into the Credit Agreement.

 

2

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

 

2.2.                              DEMAND BY AGENT OR LENDERS.  IN ADDITION TO
THE TERMS OF THE GUARANTY SET FORTH IN SECTION 2.1 HEREOF, AND IN NO MANNER
IMPOSING ANY LIMITATION ON SUCH TERMS, IT IS EXPRESSLY UNDERSTOOD AND AGREED
THAT, IF, AT ANY TIME, THE OUTSTANDING PRINCIPAL AMOUNT OF THE GUARANTEED
OBLIGATIONS UNDER THE CREDIT AGREEMENT (INCLUDING ALL ACCRUED INTEREST THEREON)
IS DECLARED TO BE IMMEDIATELY DUE AND PAYABLE, THEN GUARANTORS SHALL, WITHOUT
DEMAND, PAY TO THE HOLDERS OF THE GUARANTEED OBLIGATIONS THE ENTIRE OUTSTANDING
GUARANTEED OBLIGATIONS DUE AND OWING TO SUCH HOLDERS.  PAYMENT BY GUARANTORS
SHALL BE MADE TO AGENT IN IMMEDIATELY AVAILABLE FEDERAL FUNDS TO AN ACCOUNT
DESIGNATED BY AGENT OR AT THE ADDRESS SET FORTH HEREIN FOR THE GIVING OF NOTICE
TO AGENT OR AT ANY OTHER ADDRESS THAT MAY BE SPECIFIED IN WRITING FROM TIME TO
TIME BY AGENT, AND SHALL BE CREDITED AND APPLIED TO THE GUARANTEED OBLIGATIONS.

 

2.3.                              ENFORCEMENT OF GUARANTY.  IN NO EVENT SHALL
AGENT HAVE ANY OBLIGATION (ALTHOUGH IT IS ENTITLED, AT ITS OPTION) TO PROCEED
AGAINST ANY BORROWER OR ANY OTHER CREDIT PARTY OR ANY COLLATERAL PLEDGED TO
SECURE GUARANTEED OBLIGATIONS BEFORE SEEKING SATISFACTION FROM ANY OR ALL OF THE
GUARANTORS, AND AGENT MAY PROCEED, PRIOR OR SUBSEQUENT TO, OR SIMULTANEOUSLY
WITH, THE ENFORCEMENT OF AGENT’S RIGHTS HEREUNDER, TO EXERCISE ANY RIGHT OR
REMEDY WHICH IT MAY HAVE AGAINST ANY COLLATERAL, AS A RESULT OF ANY LIEN IT MAY
HAVE AS SECURITY FOR ALL OR ANY PORTION OF THE GUARANTEED OBLIGATIONS.

 

2.4.                              WAIVER.  IN ADDITION TO THE WAIVERS CONTAINED
IN SECTION 2.1 HEREOF, GUARANTORS WAIVE, AND AGREE THAT THEY SHALL NOT AT ANY
TIME INSIST UPON, PLEAD OR IN ANY MANNER WHATEVER CLAIM OR TAKE THE BENEFIT OR
ADVANTAGE OF, ANY APPRAISAL, VALUATION, STAY, EXTENSION, MARSHALING OF ASSETS OR
REDEMPTION LAWS, OR EXEMPTION, WHETHER NOW OR AT ANY TIME HEREAFTER IN FORCE,
WHICH MAY DELAY, PREVENT OR OTHERWISE AFFECT THE PERFORMANCE BY GUARANTORS OF
THEIR GUARANTEED OBLIGATIONS UNDER, OR THE ENFORCEMENT BY AGENT OR LENDERS OF,
THIS GUARANTY. GUARANTORS HEREBY WAIVE DILIGENCE, PRESENTMENT AND DEMAND
(WHETHER FOR NON-PAYMENT OR PROTEST OR OF ACCEPTANCE, MATURITY, EXTENSION OF
TIME, CHANGE IN NATURE OR FORM OF THE GUARANTEED OBLIGATIONS, ACCEPTANCE OF
FURTHER SECURITY, RELEASE OF FURTHER SECURITY, COMPOSITION OR AGREEMENT ARRIVED
AT AS TO THE AMOUNT OF, OR THE TERMS OF, THE GUARANTEED OBLIGATIONS, NOTICE OF
ADVERSE CHANGE IN ANY BORROWER’S FINANCIAL CONDITION OR ANY OTHER FACT WHICH
MIGHT INCREASE THE RISK TO GUARANTORS) WITH RESPECT TO ANY OF THE GUARANTEED
OBLIGATIONS OR ALL OTHER DEMANDS WHATSOEVER AND WAIVE THE BENEFIT OF ALL
PROVISIONS OF LAW WHICH ARE OR MIGHT BE IN CONFLICT WITH THE TERMS OF THIS
GUARANTY.  GUARANTORS REPRESENT, WARRANT AND JOINTLY AND SEVERALLY AGREE THAT,
AS OF THE DATE OF THIS GUARANTY, THEIR OBLIGATIONS UNDER THIS GUARANTY ARE NOT
SUBJECT TO ANY OFFSETS OR DEFENSES AGAINST AGENT OR LENDERS OR ANY CREDIT PARTY
OF ANY KIND. GUARANTORS FURTHER JOINTLY AND SEVERALLY AGREE THAT THEIR
OBLIGATIONS UNDER THIS GUARANTY SHALL NOT BE SUBJECT TO ANY COUNTERCLAIMS,
OFFSETS OR DEFENSES AGAINST AGENT OR ANY LENDER OR AGAINST ANY CREDIT PARTY OF
ANY KIND WHICH MAY ARISE IN THE FUTURE.

 

2.5.                              BENEFIT OF GUARANTY.  THE PROVISIONS OF THIS
GUARANTY ARE FOR THE BENEFIT OF AGENT AND LENDERS AND THEIR RESPECTIVE
SUCCESSORS, TRANSFEREES, ENDORSEES AND ASSIGNS, AND NOTHING HEREIN CONTAINED
SHALL IMPAIR, AS BETWEEN ANY CREDIT PARTY AND AGENT OR LENDERS, THE OBLIGATIONS
OF ANY CREDIT PARTY UNDER THE LOAN DOCUMENTS.  IN THE EVENT ALL OR ANY PART OF
THE GUARANTEED OBLIGATIONS ARE TRANSFERRED, INDORSED OR ASSIGNED BY AGENT OR ANY
LENDER TO ANY PERSON OR PERSONS, ANY REFERENCE TO “AGENT” OR “LENDER” HEREIN
SHALL BE DEEMED TO REFER EQUALLY TO SUCH PERSON OR PERSONS.

 

3

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

 

2.6.                              MODIFICATION OF GUARANTEED OBLIGATIONS, ETC. 
EACH GUARANTOR HEREBY ACKNOWLEDGES AND AGREES THAT AGENT AND LENDERS MAY AT ANY
TIME OR FROM TIME TO TIME, WITH OR WITHOUT THE CONSENT OF, OR NOTICE TO,
GUARANTORS OR ANY OF THEM:

 

(A)                                  CHANGE OR EXTEND THE MANNER, PLACE OR TERMS
OF PAYMENT OF, OR RENEW OR ALTER ALL OR ANY PORTION OF, THE GUARANTEED
OBLIGATIONS;

 

(B)                                 TAKE ANY ACTION UNDER OR IN RESPECT OF THE
LOAN DOCUMENTS IN THE EXERCISE OF ANY REMEDY, POWER OR PRIVILEGE CONTAINED
THEREIN OR AVAILABLE TO IT AT LAW, EQUITY OR OTHERWISE, OR WAIVE OR REFRAIN FROM
EXERCISING ANY SUCH REMEDIES, POWERS OR PRIVILEGES;

 

(C)                                  AMEND OR MODIFY, IN ANY MANNER WHATSOEVER,
THE LOAN DOCUMENTS;

 

(D)                                 EXTEND OR WAIVE THE TIME FOR ANY CREDIT
PARTY’S PERFORMANCE OF, OR COMPLIANCE WITH, ANY TERM, COVENANT OR AGREEMENT ON
ITS PART TO BE PERFORMED OR OBSERVED UNDER THE LOAN DOCUMENTS, OR WAIVE SUCH
PERFORMANCE OR COMPLIANCE OR CONSENT TO A FAILURE OF, OR DEPARTURE FROM, SUCH
PERFORMANCE OR COMPLIANCE;

 

(E)                                  TAKE AND HOLD COLLATERAL FOR THE PAYMENT OF
THE GUARANTEED OBLIGATIONS GUARANTEED HEREBY OR SELL, EXCHANGE, RELEASE, DISPOSE
OF, OR OTHERWISE DEAL WITH, ANY PROPERTY PLEDGED, MORTGAGED OR CONVEYED, OR IN
WHICH AGENT OR LENDERS HAVE BEEN GRANTED A LIEN, TO SECURE ANY OBLIGATIONS;

 

(F)                                    RELEASE ANYONE WHO MAY BE LIABLE IN ANY
MANNER FOR THE PAYMENT OF ANY AMOUNTS OWED BY GUARANTORS OR ANY CREDIT PARTY TO
AGENT OR ANY LENDER;

 

(G)                                 MODIFY OR TERMINATE THE TERMS OF ANY
INTERCREDITOR OR SUBORDINATION AGREEMENT PURSUANT TO WHICH CLAIMS OF OTHER
CREDITORS OF ANY GUARANTOR OR ANY CREDIT PARTY ARE SUBORDINATED TO THE CLAIMS OF
AGENT AND LENDERS; AND/OR

 

(H)                                 APPLY ANY SUMS BY WHOMEVER PAID OR HOWEVER
REALIZED TO ANY AMOUNTS OWING BY ANY GUARANTOR OR ANY CREDIT PARTY TO AGENT OR
ANY LENDER IN SUCH MANNER AS AGENT OR ANY LENDER SHALL DETERMINE IN ITS
DISCRETION;

 

and Agent and Lenders shall not incur any liability to Guarantors as a result
thereof, and no such action shall impair or release the Guaranteed Obligations
of Guarantors or any of them under this Guaranty.

 

2.7.                              REINSTATEMENT.  THIS GUARANTY SHALL REMAIN IN
FULL FORCE AND EFFECT AND CONTINUE TO BE EFFECTIVE SHOULD ANY PETITION BE FILED
BY OR AGAINST ANY CREDIT PARTY OR ANY GUARANTOR FOR LIQUIDATION OR
REORGANIZATION, SHOULD ANY CREDIT PARTY OR ANY GUARANTOR BECOME INSOLVENT OR
MAKE AN ASSIGNMENT FOR THE BENEFIT OF CREDITORS OR SHOULD A RECEIVER OR TRUSTEE
BE APPOINTED FOR ALL OR ANY SIGNIFICANT PART OF SUCH CREDIT PARTY’S OR SUCH
GUARANTOR’S ASSETS, AND SHALL CONTINUE TO BE EFFECTIVE OR BE REINSTATED, AS THE
CASE MAY BE, IF AT ANY TIME PAYMENT AND PERFORMANCE OF THE GUARANTEED
OBLIGATIONS, OR ANY PART THEREOF, IS, PURSUANT TO APPLICABLE LAW, RESCINDED OR
REDUCED IN AMOUNT, OR MUST OTHERWISE BE RESTORED OR RETURNED BY AGENT OR ANY

 

4

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

 

LENDER, WHETHER AS A “VOIDABLE PREFERENCE,” “FRAUDULENT CONVEYANCE,” OR
OTHERWISE, ALL AS THOUGH SUCH PAYMENT OR PERFORMANCE HAD NOT BEEN MADE.  IN THE
EVENT THAT ANY PAYMENT, OR ANY PART THEREOF, IS RESCINDED, REDUCED, RESTORED OR
RETURNED, THE GUARANTEED OBLIGATIONS SHALL BE REINSTATED AND DEEMED REDUCED ONLY
BY SUCH AMOUNT PAID AND NOT SO RESCINDED, REDUCED, RESTORED OR RETURNED.

 

2.8.                              DEFERRAL OF SUBROGATION, ETC.  NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THIS GUARANTY, OR IN ANY OTHER LOAN DOCUMENT, EACH
GUARANTOR HEREBY:

 

(A)                                  EXPRESSLY AND IRREVOCABLY WAIVES, ON BEHALF
OF ITSELF AND ITS SUCCESSORS AND ASSIGNS (INCLUDING ANY SURETY) UNTIL THE
TERMINATION DATE, ANY AND ALL RIGHTS AT LAW OR IN EQUITY TO SUBROGATION, TO
REIMBURSEMENT, TO EXONERATION, TO CONTRIBUTION, TO INDEMNIFICATION, TO SET OFF
OR TO ANY OTHER RIGHTS THAT COULD ACCRUE TO A SURETY AGAINST A PRINCIPAL, TO A
GUARANTOR AGAINST A PRINCIPAL, TO A GUARANTOR AGAINST A MAKER OR OBLIGOR, TO AN
ACCOMMODATION PARTY AGAINST THE PARTY ACCOMMODATED, TO A HOLDER OR TRANSFEREE
AGAINST A MAKER, OR TO THE HOLDER OF ANY CLAIM AGAINST ANY PERSON, AND WHICH
SUCH GUARANTOR MAY HAVE OR HEREAFTER ACQUIRE AGAINST ANY CREDIT PARTY IN
CONNECTION WITH OR AS A RESULT OF SUCH GUARANTOR’S EXECUTION, DELIVERY AND/OR
PERFORMANCE OF THIS GUARANTY, OR ANY OTHER DOCUMENTS TO WHICH SUCH GUARANTOR IS
A PARTY OR OTHERWISE; AND

 

(B)                                 ACKNOWLEDGES AND AGREES (I) THAT THIS WAIVER
IS INTENDED TO BENEFIT AGENT AND LENDERS AND SHALL NOT LIMIT OR OTHERWISE EFFECT
ANY GUARANTOR’S LIABILITY HEREUNDER OR THE ENFORCEABILITY OF THIS GUARANTY, AND
(II) THAT AGENT, LENDERS AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS ARE
INTENDED THIRD PARTY BENEFICIARIES OF THE WAIVERS AND AGREEMENTS SET FORTH IN
THIS SECTION 2.8 AND THEIR RIGHTS UNDER THIS SECTION 2.8 SHALL SURVIVE PAYMENT
IN FULL OF THE GUARANTEED OBLIGATIONS.

 

2.9.                              ELECTION OF REMEDIES.   IF AGENT MAY, UNDER
APPLICABLE LAW, PROCEED TO REALIZE BENEFITS UNDER ANY OF THE LOAN DOCUMENTS
GIVING AGENT AND LENDERS A LIEN UPON ANY COLLATERAL OWNED BY ANY CREDIT PARTY,
EITHER BY JUDICIAL FORECLOSURE OR BY NON-JUDICIAL SALE OR ENFORCEMENT, AGENT
MAY, AT ITS SOLE OPTION, DETERMINE WHICH OF SUCH REMEDIES OR RIGHTS IT MAY
PURSUE WITHOUT AFFECTING ANY OF SUCH RIGHTS AND REMEDIES UNDER THIS GUARANTY. 
IF, IN THE EXERCISE OF ANY OF ITS RIGHTS AND REMEDIES, AGENT SHALL FORFEIT ANY
OF ITS RIGHTS OR REMEDIES, INCLUDING ITS RIGHT TO ENTER A DEFICIENCY JUDGMENT
AGAINST ANY CREDIT PARTY, WHETHER BECAUSE OF ANY APPLICABLE LAWS PERTAINING TO
“ELECTION OF REMEDIES” OR THE LIKE, GUARANTORS HEREBY CONSENT TO SUCH ACTION BY
AGENT AND WAIVE ANY CLAIM BASED UPON SUCH ACTION, EVEN IF SUCH ACTION BY AGENT
SHALL RESULT IN A FULL OR PARTIAL LOSS OF ANY RIGHTS OF SUBROGATION WHICH
GUARANTORS MIGHT OTHERWISE HAVE HAD BUT FOR SUCH ACTION BY AGENT.  ANY ELECTION
OF REMEDIES WHICH RESULTS IN THE DENIAL OR IMPAIRMENT OF THE RIGHT OF AGENT TO
SEEK A DEFICIENCY JUDGMENT AGAINST ANY CREDIT PARTY SHALL NOT IMPAIR EACH
GUARANTOR’S OBLIGATION TO PAY THE FULL AMOUNT OF THE GUARANTEED OBLIGATIONS.  IN
THE EVENT AGENT SHALL BID AT ANY FORECLOSURE OR TRUSTEE’S SALE OR AT ANY PRIVATE
SALE PERMITTED BY LAW OR THE LOAN DOCUMENTS, AGENT MAY BID ALL OR LESS THAN THE
AMOUNT OF THE GUARANTEED OBLIGATIONS AND THE AMOUNT OF SUCH BID NEED NOT BE PAID
BY AGENT BUT SHALL BE CREDITED AGAINST THE GUARANTEED OBLIGATIONS.  THE AMOUNT
OF THE SUCCESSFUL BID AT ANY SUCH SALE SHALL BE CONCLUSIVELY DEEMED TO BE THE
FAIR MARKET VALUE OF THE COLLATERAL AND THE DIFFERENCE BETWEEN SUCH BID AMOUNT
AND THE REMAINING BALANCE OF THE GUARANTEED OBLIGATIONS SHALL BE CONCLUSIVELY
DEEMED TO BE THE AMOUNT

 

5

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

 

OF THE GUARANTEED OBLIGATIONS GUARANTEED UNDER THIS GUARANTY, NOTWITHSTANDING
THAT ANY PRESENT OR FUTURE LAW OR COURT DECISION OR RULING MAY HAVE THE EFFECT
OF REDUCING THE AMOUNT OF ANY DEFICIENCY CLAIM TO WHICH AGENT AND LENDERS MIGHT
OTHERWISE BE ENTITLED BUT FOR SUCH BIDDING AT ANY SUCH SALE.

 

2.10.                        FUNDS TRANSFERS.  IF ANY GUARANTOR SHALL ENGAGE IN
ANY TRANSACTION AS A RESULT OF WHICH ANY BORROWER IS REQUIRED TO MAKE A
MANDATORY PREPAYMENT WITH RESPECT TO THE GUARANTEED OBLIGATIONS UNDER THE TERMS
OF THE CREDIT AGREEMENT (INCLUDING ANY ISSUANCE OR SALE OF SUCH GUARANTOR’S
STOCK OR ANY SALE OF ITS ASSETS), SUCH GUARANTOR SHALL DISTRIBUTE TO, OR MAKE A
CONTRIBUTION TO THE CAPITAL OF, THE BORROWER AN AMOUNT EQUAL TO THE MANDATORY
PREPAYMENT REQUIRED UNDER THE TERMS OF THE CREDIT AGREEMENT.

 

3.                                       DELIVERIES.

 

In a form satisfactory to Agent, Guarantors shall deliver to Agent (with
sufficient copies for each Lender), concurrently with the execution of this
Guaranty and the Credit Agreement, the Loan Documents and other instruments,
certificates and documents as are required to be delivered by Guarantors to
Agent under the Credit Agreement.

 

4.                                       REPRESENTATIONS AND WARRANTIES.

 

To induce Lenders to make the Loans and incur LC Obligations under the Credit
Agreement, Guarantors jointly and severally make the representations and
warranties as to each Guarantor contained in the Credit Agreement, each of which
is incorporated herein by reference, and the following representations and
warranties to Agent and each Lender, each and all of which shall survive the
execution and delivery of this Guaranty:

 

4.1.                              CORPORATE EXISTENCE; COMPLIANCE WITH LAW. 
EACH GUARANTOR (I) IS A CORPORATION DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD
STANDING UNDER THE LAWS OF ITS JURISDICTION OF INCORPORATION; (II) IS DULY
QUALIFIED TO DO BUSINESS AND IS IN GOOD STANDING UNDER THE LAWS OF EACH
JURISDICTION WHERE ITS OWNERSHIP OR LEASE OF PROPERTY OR THE CONDUCT OF ITS
BUSINESS REQUIRES SUCH QUALIFICATION; (III) HAS THE REQUISITE CORPORATE POWER
AND AUTHORITY AND THE LEGAL RIGHT TO OWN, PLEDGE, MORTGAGE AND OPERATE ITS
PROPERTIES, TO LEASE THE PROPERTY IT OPERATES UNDER LEASE, AND TO CONDUCT ITS
BUSINESS AS NOW, HERETOFORE AND PROPOSED TO BE CONDUCTED; (IV) HAS ALL LICENSES,
PERMITS, CONSENTS OR APPROVALS FROM OR BY, AND HAS MADE ALL MATERIAL FILINGS
WITH, AND HAS GIVEN ALL NOTICES TO, ALL GOVERNMENTAL AUTHORITIES HAVING
JURISDICTION, TO THE EXTENT REQUIRED FOR SUCH OWNERSHIP, OPERATION AND CONDUCT;
(V) IS IN COMPLIANCE WITH ITS CHARTER AND BY-LAWS; AND (VI) IS IN COMPLIANCE
WITH ALL APPLICABLE PROVISIONS OF LAW, EXCEPT WHERE THE FAILURE TO COMPLY,
INDIVIDUALLY OR IN THE AGGREGATE, COULD NOT REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT.

 

4.2.                              EXECUTIVE OFFICES.  EACH GUARANTOR’S EXECUTIVE
OFFICE AND PRINCIPAL PLACE OF BUSINESS ARE AS SET FORTH IN SCHEDULE III OF THE
GUARANTOR SECURITY AGREEMENT.

 

6

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4.3.                              CORPORATE POWER; AUTHORIZATION; ENFORCEABLE
GUARANTEED OBLIGATIONS.  THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS
GUARANTY AND ALL OTHER LOAN DOCUMENTS AND ALL INSTRUMENTS AND DOCUMENTS TO BE
DELIVERED BY EACH GUARANTOR HEREUNDER AND UNDER THE CREDIT AGREEMENT ARE WITHIN
SUCH GUARANTOR’S CORPORATE POWER, HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY OR
PROPER CORPORATE ACTION, INCLUDING THE CONSENT OF STOCKHOLDERS WHERE REQUIRED,
ARE NOT IN CONTRAVENTION OF ANY PROVISION OF SUCH GUARANTOR’S CHARTER OR
BY-LAWS, DO NOT VIOLATE ANY LAW OR REGULATION, OR ANY ORDER OR DECREE OF ANY
GOVERNMENTAL AUTHORITY, DO NOT CONFLICT WITH OR RESULT IN THE BREACH OF, OR
CONSTITUTE A DEFAULT UNDER, OR ACCELERATE OR PERMIT THE ACCELERATION OF ANY
PERFORMANCE REQUIRED BY, ANY INDENTURE, MORTGAGE, DEED OF TRUST, LEASE,
AGREEMENT OR OTHER INSTRUMENT TO WHICH ANY GUARANTOR IS A PARTY OR BY WHICH ANY
GUARANTOR OR ANY OF ITS PROPERTY IS BOUND, DO NOT RESULT IN THE CREATION OR
IMPOSITION OF ANY LIEN UPON ANY OF THE PROPERTY OF ANY GUARANTOR, OTHER THAN
THOSE IN FAVOR OF AGENT, FOR ITSELF AND THE BENEFIT OF LENDERS, AND THE SAME DO
NOT REQUIRE THE CONSENT OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY OR ANY OTHER
PERSON EXCEPT THOSE REFERRED TO IN SECTION 2.1(C) OF THE CREDIT AGREEMENT, ALL
OF WHICH HAVE BEEN DULY OBTAINED, MADE OR COMPLIED WITH PRIOR TO THE CLOSING
DATE.  ON OR PRIOR TO THE CLOSING DATE, THIS GUARANTY AND EACH OF THE LOAN
DOCUMENTS TO WHICH ANY GUARANTOR IS A PARTY SHALL HAVE BEEN DULY EXECUTED AND
DELIVERED FOR THE BENEFIT OF OR ON BEHALF OF SUCH GUARANTOR, AND EACH SHALL THEN
CONSTITUTE A LEGAL, VALID AND BINDING OBLIGATION OF SUCH GUARANTOR, ENFORCEABLE
AGAINST SUCH GUARANTOR IN ACCORDANCE WITH ITS TERMS.

 

5.                                       FURTHER ASSURANCES.

 

Each Guarantor agrees, upon the written request of Agent or any Lender, to
execute and deliver to Agent or such Lender, from time to time, any additional
instruments or documents reasonably considered necessary by Agent or such Lender
to cause this Guaranty to be, become or remain valid and effective in accordance
with its terms.

 

6.                                       PAYMENTS FREE AND CLEAR OF TAXES.

 

All payments required to be made by each Guarantor hereunder shall be made to
Agent and Lenders free and clear of, and without deduction for, any and all
present and future Taxes.  If any Guarantor shall be required by law to deduct
any Taxes from or in respect of any sum payable hereunder, (a) the sum payable
shall be increased as much as shall be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 6) Agent or Lenders, as applicable, receive an amount equal
to the sum they would have received had no such deductions been made, (b) such
Guarantor shall make such deductions, and (c) such Guarantor shall pay the full
amount deducted to the relevant taxing or other authority in accordance with
applicable law.  Within thirty (30) days after the date of any payment of Taxes,
each applicable Guarantor shall furnish to Agent the original or a certified
copy of a receipt evidencing payment thereof. Each Guarantor shall jointly and
severally indemnify and, within ten (10) days of demand therefor, pay Agent and
each Lender for the full amount of Taxes (including any Taxes imposed by any
jurisdiction on amounts payable under this Section 6) paid by Agent or such
Lender, as appropriate, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted.

 

7

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7.                                       OTHER TERMS.

 

7.1.                              ENTIRE AGREEMENT.  THIS GUARANTY, TOGETHER
WITH THE OTHER LOAN DOCUMENTS, CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE
PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDES ALL PRIOR
AGREEMENTS RELATING TO A GUARANTY OF THE LOANS AND ADVANCES UNDER THE LOAN
DOCUMENTS AND/OR THE GUARANTEED OBLIGATIONS.

 

7.2.                              HEADINGS.  THE HEADINGS IN THIS GUARANTY ARE
FOR CONVENIENCE OF REFERENCE ONLY AND ARE NOT PART OF THE SUBSTANCE OF THIS
GUARANTY.

 

7.3.                              SEVERABILITY.  WHENEVER POSSIBLE, EACH
PROVISION OF THIS GUARANTY SHALL BE INTERPRETED IN SUCH A MANNER TO BE EFFECTIVE
AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS GUARANTY SHALL BE
PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE
INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT
INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
GUARANTY.

 

7.4.                              NOTICES.  WHENEVER IT IS PROVIDED HEREIN THAT
ANY NOTICE, DEMAND, REQUEST, CONSENT, APPROVAL, DECLARATION OR OTHER
COMMUNICATION SHALL OR MAY BE GIVEN TO OR SERVED UPON ANY OF THE PARTIES BY ANY
OTHER PARTY, OR WHENEVER ANY OF THE PARTIES DESIRES TO GIVE OR SERVE UPON
ANOTHER ANY SUCH COMMUNICATION WITH RESPECT TO THIS GUARANTY, EACH SUCH NOTICE,
DEMAND, REQUEST, CONSENT, APPROVAL, DECLARATION OR OTHER COMMUNICATION SHALL BE
IN WRITING AND SHALL BE ADDRESSED TO THE PARTY TO BE NOTIFIED AS FOLLOWS:

 

(A)                                  IF TO AGENT, AT:

 

General Electric Capital Corporation

 

Attention:

Telecopy Number:

 

 

with copies to:

 

 

Attention:

 

Telecopy Number:

 

(B)                                 IF TO ANY LENDER, AT THE ADDRESS OF SUCH
LENDER SPECIFIED IN THE CREDIT AGREEMENT.

 

(C)                                  IF TO ANY GUARANTOR, AT THE ADDRESS OF SUCH
GUARANTOR SPECIFIED ON SCHEDULE I HERETO.

 

8

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or at such other address as may be substituted by notice given as herein
provided.  The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice.  Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been validly served, given or delivered (i) upon the earlier of actual
receipt and three (3) Business Days after the same shall have been deposited
with the United States mail, registered or certified mail, return receipt
requested, with proper postage prepaid, (ii) upon transmission, when sent by
telecopy or other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal delivery or
United States mail as otherwise provided in this Section 7.4), (iii) one (1)
Business Day after deposit with a reputable overnight carrier with all charges
prepaid, or (iv) when delivered, if hand-delivered by messenger.

 

7.5.                              SUCCESSORS AND ASSIGNS.  THIS GUARANTY AND ALL
OBLIGATIONS OF GUARANTORS HEREUNDER SHALL BE BINDING UPON THE SUCCESSORS AND
ASSIGNS OF EACH GUARANTOR (INCLUDING A DEBTOR-IN-POSSESSION ON BEHALF OF SUCH
GUARANTOR) AND SHALL, TOGETHER WITH THE RIGHTS AND REMEDIES OF AGENT, FOR ITSELF
AND FOR THE BENEFIT OF LENDERS, HEREUNDER, INURE TO THE BENEFIT OF AGENT AND
LENDERS, ALL FUTURE HOLDERS OF ANY INSTRUMENT EVIDENCING ANY OF THE OBLIGATIONS
AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.  NO SALES OF PARTICIPATIONS, OTHER
SALES, ASSIGNMENTS, TRANSFERS OR OTHER DISPOSITIONS OF ANY AGREEMENT GOVERNING
OR INSTRUMENT EVIDENCING THE OBLIGATIONS OR ANY PORTION THEREOF OR INTEREST
THEREIN SHALL IN ANY MANNER AFFECT THE RIGHTS OF AGENT AND LENDERS HEREUNDER. 
GUARANTORS MAY NOT ASSIGN, SELL, HYPOTHECATE OR OTHERWISE TRANSFER ANY INTEREST
IN OR OBLIGATION UNDER THIS GUARANTY.

 

7.6.                              NO WAIVER; CUMULATIVE REMEDIES; AMENDMENTS. 
NEITHER AGENT NOR ANY LENDER SHALL BY ANY ACT, DELAY, OMISSION OR OTHERWISE BE
DEEMED TO HAVE WAIVED ANY OF ITS RIGHTS OR REMEDIES HEREUNDER, AND NO WAIVER
SHALL BE VALID UNLESS IN WRITING, SIGNED BY AGENT AND THEN ONLY TO THE EXTENT
THEREIN SET FORTH.  A WAIVER BY AGENT, FOR ITSELF AND THE RATABLE BENEFIT OF
LENDERS, OF ANY RIGHT OR REMEDY HEREUNDER ON ANY ONE OCCASION SHALL NOT BE
CONSTRUED AS A BAR TO ANY RIGHT OR REMEDY WHICH AGENT WOULD OTHERWISE HAVE HAD
ON ANY FUTURE OCCASION.  NO FAILURE TO EXERCISE NOR ANY DELAY IN EXERCISING ON
THE PART OF AGENT OR ANY LENDER, ANY RIGHT, POWER OR PRIVILEGE HEREUNDER, SHALL
OPERATE AS A WAIVER THEREOF, NOR SHALL ANY SINGLE OR PARTIAL EXERCISE OF ANY
RIGHT, POWER OR PRIVILEGE HEREUNDER PRECLUDE ANY OTHER OR FUTURE EXERCISE
THEREOF OR THE EXERCISE OF ANY OTHER RIGHT, POWER OR PRIVILEGE.  THE RIGHTS AND
REMEDIES HEREUNDER PROVIDED ARE CUMULATIVE AND MAY BE EXERCISED SINGLY OR
CONCURRENTLY, AND ARE NOT EXCLUSIVE OF ANY RIGHTS AND REMEDIES PROVIDED BY LAW. 
NONE OF THE TERMS OR PROVISIONS OF THIS GUARANTY MAY BE WAIVED, ALTERED,
MODIFIED, SUPPLEMENTED OR AMENDED EXCEPT BY AN INSTRUMENT IN WRITING, DULY
EXECUTED BY AGENT AND GUARANTORS.

 

7.7.                              TERMINATION.  THIS GUARANTY IS A CONTINUING
GUARANTY AND SHALL REMAIN IN FULL FORCE AND EFFECT UNTIL THE TERMINATION DATE. 
UPON PAYMENT AND PERFORMANCE IN FULL OF THE GUARANTEED OBLIGATIONS, AGENT SHALL
DELIVER TO GUARANTORS SUCH DOCUMENTS AS GUARANTORS MAY REASONABLY REQUEST TO
EVIDENCE SUCH TERMINATION.

 

7.8.                              COUNTERPARTS.  THIS GUARANTY MAY BE EXECUTED
IN ANY NUMBER OF COUNTERPARTS, EACH OF WHICH SHALL COLLECTIVELY AND SEPARATELY
CONSTITUTE ONE AND THE SAME AGREEMENT.

 

9

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7.9.                            GOVERNING LAW; CONSENT TO JURISDICTION AND
VENUE. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, THIS
GUARANTY AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.  AGENT
AND EACH GUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK
STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED
HEREBY.  EACH GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. 
EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE
MANNER PROVIDED FOR NOTICES IN SECTION 7.4.  NOTHING IN THIS AGREEMENT WILL
AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.

 

7.10.                        WAIVER OF JURY TRIAL.  AGENT AND EACH OF THE
GUARANTORS HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED THEREBY AND TO THE FULLEST EXTENT PERMITTED BY LAW
WAIVES ANY RIGHTS THAT IT MAY HAVE TO CLAIM OR RECEIVE CONSEQUENTIAL OR SPECIAL
DAMAGES IN CONNECTION WITH ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.

 

7.11.                        LIMITATION ON GUARANTEED OBLIGATIONS. 
NOTWITHSTANDING ANY PROVISION HEREIN CONTAINED TO THE CONTRARY, EACH GUARANTOR’S
LIABILITY HEREUNDER SHALL BE LIMITED TO AN AMOUNT NOT TO EXCEED AS OF ANY DATE
OF DETERMINATION THE GREATER OF:

 

(a)                                  the net amount of all Loans and other
extensions of credit (including Letters of Credit) advanced under the Credit
Agreement and directly or indirectly re-loaned or otherwise transferred to, or
incurred for the benefit of, such Guarantor, plus interest thereon at the
applicable rate specified in the Credit Agreement; or

 

(b)                                 the amount which could be claimed by the
Agent and Lenders from such Guarantor under this Guaranty without rendering such
claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy
Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law

 

10

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after taking into account, among other things, such Guarantor’s right of
contribution and indemnification from each other Guarantor under Section 7.12.

 

7.12.                        CONTRIBUTION WITH RESPECT TO GUARANTEED
OBLIGATIONS.

 

(a)                                  To the extent that any Guarantor shall make
a payment under this Guaranty of all or any of the Guaranteed Obligations (a
“Guarantor Payment”) which, taking into account all other Guarantor Payments
then previously or concurrently made by the other Guarantors, exceeds the amount
which such Guarantor would otherwise have paid if each Guarantor had paid the
aggregate Guaranteed Obligations satisfied by such Guarantor Payment in the same
proportion that such Guarantor’s “Allocable Amount” (as defined below) (in
effect immediately prior to such Guarantor Payment) bore to the aggregate
Allocable Amounts of all of Guarantors in effect immediately prior to the making
of such Guarantor Payment, then, following indefeasible payment in full in cash
of the Obligations and termination of the Commitments, such Guarantor shall be
entitled to receive contribution and indemnification payments from, and be
reimbursed by, each of the other Guarantors for the amount of such excess, pro
rata based upon their respective Allocable Amounts in effect immediately prior
to such Guarantor Payment.

 

(b)                                 As of any date of determination, the
“Allocable Amount” of any Guarantor shall be equal to the maximum amount of the
claim which could then be recovered from such Guarantor under this Guaranty
without rendering such claim voidable or avoidable under Section 548 of Chapter
11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent
Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common
law.

 

(c)                                  This Section 7.12 is intended only to
define the relative rights of Guarantors and nothing set forth in this Section
7.12 is intended to or shall impair the obligations of Guarantors, jointly and
severally, to pay any amounts as and when the same shall become due and payable
in accordance with the terms of this Guaranty.

 

(d)                                 The rights of the parties under this Section
7.12 shall be exercisable upon the full and indefeasible payment of the
Guaranteed Obligations and the termination of the Credit Agreement and the other
Loan Documents.

 

(e)                                  The parties hereto acknowledge that the
rights of contribution and indemnification hereunder shall constitute assets of
any Guarantor to which such contribution and indemnification is owing.

 

8.                                       SECURITY.

 

To secure payment of each Guarantor’s obligations under this Guaranty,
concurrently with the execution of this Guaranty, each Guarantor has entered
into a Guarantor Security Agreement pursuant to which each Guarantor has granted
to Agent for the benefit of Lenders a security interest in substantially all of
its personal property and has entered into a Pledge Agreement pursuant to which
each Guarantor has pledged all of the Stock of each of its Subsidiaries to Agent
for the benefit of Lenders.

 

11

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9.                                       CREDIT AGREEMENT.

 

Each Guarantor agrees to perform, comply with and be bound by the covenants
contained in Sections 5 and 6 of the Credit Agreement (which provisions are
incorporated herein by reference) as if each Guarantor were a Credit Party
signatory to the Credit Agreement.

 

[Remainder of page intentionally blank; signature pages follow]

 

12

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Guaranty
as of the date first above written.

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

GENERAL ELECTRIC CAPITAL CORPORATION, as Agent

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

Its Duly Authorized Signatory

 

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

 

 

 

Schedule I

 

 

 

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EXHIBIT H

to

CREDIT AGREEMENT

 

GUARANTOR SECURITY AGREEMENT

 

GUARANTOR SECURITY AGREEMENT (this “Security Agreement”), dated as of
                  , 20    , among the Grantors signatory hereto (sometimes
collectively referred to herein as “Grantors” and individually as a “Grantor”),
and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, individually
and in its capacity as Agent for Lenders (“Agent”).

 

W I T N E S S T H:

 

WHEREAS, pursuant to that certain Credit Agreement dated as of the date hereof
by and among Borrowers (the “Borrower”), the Persons named therein as Credit
Parties, Agent and Lenders (including all annexes, exhibits and schedules
thereto, as from time to time amended, restated, supplemented or otherwise
modified, the “Credit Agreement”), Lenders have agreed, subject to certain terms
and conditions, to make the Loans and to incur L/C Obligations on behalf of the
Borrower;

 

WHEREAS, Grantors are either direct or indirect subsidiaries of Borrower and as
such will derive direct and indirect economic benefits from the making of the
Loans and other financial accommodations provided to the Borrower pursuant to
the Credit Agreement; and

 

WHEREAS, in order to induce Agent and Lenders to enter into the Credit Agreement
and other Loan Documents and to induce Lenders to make the Loans and to incur
L/C Obligations as provided for in the Credit Agreement, Grantors have entered
into that certain Guaranty Agreement dated as of                   , 20     (the
“Guaranty Agreement”) in favor of Agent and Lenders, pursuant to which Grantors
have unconditionally guarantied all of the Obligations;

 

WHEREAS, in order to induce Agent and Lenders to enter into the Credit Agreement
and other Loan Documents and to induce Lenders to make the Loans and to incur
L/C Obligations as provided for in the Credit Agreement, Grantors have agreed to
grant a continuing Lien on the Collateral (as hereinafter defined) to secure the
Obligations;

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

1.                                       DEFINED TERMS.

 

Capitalized terms used in this Agreement shall have the meanings ascribed to
them in this Section 1 unless the context indicates otherwise.  All capitalized
terms used but not otherwise defined herein have the meanings given to them in
Section 1.1 of the

 

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

 

Credit Agreement.  Any other terms contained in this Security Agreement not
defined in this Agreement or in the Credit Agreement have the meanings provided
for by the Code to the extent the same are used or defined therein.

 

(A)                                  “ACCOUNTS” MEANS ALL “ACCOUNTS,” AS SUCH
TERM IS DEFINED IN THE CODE, NOW OWNED OR HEREAFTER ACQUIRED BY ANY CREDIT
PARTY, INCLUDING (A) ALL ACCOUNTS RECEIVABLE, OTHER RECEIVABLES, BOOK DEBTS AND
OTHER FORMS OF OBLIGATIONS (OTHER THAN FORMS OF OBLIGATIONS EVIDENCED BY CHATTEL
PAPER, OR INSTRUMENTS), (INCLUDING ANY SUCH OBLIGATIONS THAT MAY BE
CHARACTERIZED AS AN ACCOUNT OR CONTRACT RIGHT UNDER THE CODE), (B) ALL OF EACH
CREDIT PARTY’S RIGHTS IN, TO AND UNDER ALL PURCHASE ORDERS OR RECEIPTS FOR GOODS
OR SERVICES, (C) ALL OF EACH CREDIT PARTY’S RIGHTS TO ANY GOODS REPRESENTED BY
ANY OF THE FOREGOING (INCLUDING UNPAID SELLERS’ RIGHTS OF RESCISSION, REPLEVIN,
RECLAMATION AND STOPPAGE IN TRANSIT AND RIGHTS TO RETURNED, RECLAIMED OR
REPOSSESSED GOODS), (D) ALL RIGHTS TO PAYMENT DUE TO ANY CREDIT PARTY FOR
PROPERTY SOLD, LEASED, LICENSED, ASSIGNED OR OTHERWISE DISPOSED OF, FOR A POLICY
OF INSURANCE ISSUED OR TO BE ISSUED, FOR A SECONDARY OBLIGATION INCURRED OR TO
BE INCURRED, FOR ENERGY PROVIDED OR TO BE PROVIDED, FOR THE USE OR HIRE OF A
VESSEL UNDER A CHARTER OR OTHER CONTRACT, ARISING OUT OF THE USE OF A CREDIT
CARD OR CHARGE CARD, OR FOR SERVICES RENDERED OR TO BE RENDERED BY SUCH CREDIT
PARTY OR IN CONNECTION WITH ANY OTHER TRANSACTION (WHETHER OR NOT YET EARNED BY
PERFORMANCE ON THE PART OF SUCH CREDIT PARTY), (E) ALL HEALTH CARE INSURANCE
RECEIVABLES AND (F) ALL COLLATERAL SECURITY OF ANY KIND, GIVEN BY ANY ACCOUNT
DEBTOR OR ANY OTHER PERSON WITH RESPECT TO ANY OF THE FOREGOING.

 

(B)                                 “CHATTEL PAPER” MEANS ANY “CHATTEL PAPER,”
AS SUCH TERM IS DEFINED IN THE CODE, INCLUDING ELECTRONIC CHATTEL PAPER, NOW
OWNED OR HEREAFTER ACQUIRED BY ANY CREDIT PARTY.

 

(C)                                  “CODE” MEANS THE UNIFORM COMMERCIAL CODE AS
THE SAME MAY, FROM TIME TO TIME, BE ENACTED AND IN EFFECT IN THE STATE OF NEW
YORK; PROVIDED, THAT TO THE EXTENT THAT THE CODE IS USED TO DEFINE ANY TERM
HEREIN OR IN ANY LOAN DOCUMENT AND SUCH TERM IS DEFINED DIFFERENTLY IN DIFFERENT
ARTICLES OR DIVISIONS OF THE CODE, THE DEFINITION OF SUCH TERM CONTAINED IN
ARTICLE OR DIVISION 9 SHALL GOVERN; PROVIDED FURTHER, THAT IN THE EVENT THAT, BY
REASON OF MANDATORY PROVISIONS OF LAW, ANY OR ALL OF THE ATTACHMENT, PERFECTION
OR PRIORITY OF, OR REMEDIES WITH RESPECT TO, AGENT’S OR ANY LENDER’S LIEN ON ANY
COLLATERAL IS GOVERNED BY THE UNIFORM COMMERCIAL CODE AS ENACTED AND IN EFFECT
IN A JURISDICTION OTHER THAN THE STATE OF NEW YORK, THE TERM “CODE” SHALL MEAN
THE UNIFORM COMMERCIAL CODE AS ENACTED AND IN EFFECT IN SUCH OTHER JURISDICTION
SOLELY FOR PURPOSES OF THE PROVISIONS THEREOF RELATING TO SUCH ATTACHMENT,
PERFECTION, PRIORITY OR REMEDIES AND FOR PURPOSES OF DEFINITIONS RELATED TO SUCH
PROVISIONS.

 

(D)                                 “CONTRACTS” MEANS ALL “CONTRACTS,” AS SUCH
TERM IS DEFINED IN THE CODE, NOW OWNED OR HEREAFTER ACQUIRED BY ANY CREDIT
PARTY, IN ANY EVENT, INCLUDING ALL CONTRACTS, UNDERTAKINGS, OR AGREEMENTS (OTHER
THAN RIGHTS EVIDENCED BY CHATTEL PAPER, DOCUMENTS OR INSTRUMENTS) IN OR UNDER
WHICH ANY CREDIT PARTY MAY NOW OR HEREAFTER HAVE ANY RIGHT, TITLE OR INTEREST,
INCLUDING ANY AGREEMENT RELATING TO THE TERMS OF PAYMENT OR THE TERMS OF
PERFORMANCE OF ANY ACCOUNT.

 

2

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(E)                                  “CONTROL LETTER” MEANS A LETTER AGREEMENT
BETWEEN AGENT AND (I) THE ISSUER OF UNCERTIFICATED SECURITIES WITH RESPECT TO
UNCERTIFICATED SECURITIES IN THE NAME OF ANY CREDIT PARTY, (II) A SECURITIES
INTERMEDIARY WITH RESPECT TO SECURITIES, WHETHER CERTIFICATED OR UNCERTIFICATED,
SECURITIES ENTITLEMENTS AND OTHER FINANCIAL ASSETS HELD IN A SECURITIES ACCOUNT
IN THE NAME OF ANY CREDIT PARTY, (III) A FUTURES COMMISSION MERCHANT OR CLEARING
HOUSE, AS APPLICABLE, WITH RESPECT TO COMMODITY ACCOUNTS AND COMMODITY CONTRACTS
HELD BY ANY CREDIT PARTY, WHEREBY, AMONG OTHER THINGS, THE ISSUER, SECURITIES
INTERMEDIARY OR FUTURES COMMISSION MERCHANT DISCLAIMS ANY SECURITY INTEREST IN
THE APPLICABLE FINANCIAL ASSETS, ACKNOWLEDGES THE LIEN OF AGENT, ON BEHALF OF
ITSELF AND LENDERS, ON SUCH FINANCIAL ASSETS, AND AGREES TO FOLLOW THE
INSTRUCTIONS OR ENTITLEMENT ORDERS OF AGENT WITHOUT FURTHER CONSENT BY THE
AFFECTED CREDIT PARTY.

 

(F)                                    “COPYRIGHT LICENSE” MEANS ANY AND ALL
RIGHTS NOW OWNED OR HEREAFTER ACQUIRED BY ANY CREDIT PARTY UNDER ANY WRITTEN
AGREEMENT GRANTING ANY RIGHT TO USE ANY COPYRIGHT OR COPYRIGHT REGISTRATION.

 

(G)                                 “COPYRIGHTS” MEANS ALL OF THE FOLLOWING NOW
OWNED OR HEREAFTER ADOPTED OR ACQUIRED BY ANY CREDIT PARTY: (A) ALL COPYRIGHTS
AND GENERAL INTANGIBLES OF LIKE NATURE (WHETHER REGISTERED OR UNREGISTERED), ALL
REGISTRATIONS AND RECORDINGS THEREOF, AND ALL APPLICATIONS IN CONNECTION
THEREWITH, INCLUDING ALL REGISTRATIONS, RECORDINGS AND APPLICATIONS IN THE
UNITED STATES COPYRIGHT OFFICE OR IN ANY SIMILAR OFFICE OR AGENCY OF THE UNITED
STATES, ANY STATE OR TERRITORY THEREOF, OR ANY OTHER COUNTRY OR ANY POLITICAL
SUBDIVISION THEREOF, AND (B) ALL REISSUES, EXTENSIONS OR RENEWALS THEREOF.

 

(H)                                 “DEPOSIT ACCOUNTS” MEANS ALL “DEPOSIT
ACCOUNTS” AS SUCH TERM IS DEFINED IN THE CODE, NOW OR HEREAFTER HELD IN THE NAME
OF ANY CREDIT PARTY.

 

(I)                                     “DOCUMENTS” MEANS ALL “DOCUMENTS,” AS
SUCH TERM IS DEFINED IN THE CODE, NOW OWNED OR HEREAFTER ACQUIRED BY ANY CREDIT
PARTY, WHEREVER LOCATED.

 

(J)                                     “EQUIPMENT” MEANS ALL “EQUIPMENT,” AS
SUCH TERM IS DEFINED IN THE CODE, NOW OWNED OR HEREAFTER ACQUIRED BY ANY CREDIT
PARTY, WHEREVER LOCATED AND, IN ANY EVENT, INCLUDING ALL SUCH CREDIT PARTY’S
MACHINERY AND EQUIPMENT, INCLUDING PROCESSING EQUIPMENT, CONVEYORS, MACHINE
TOOLS, DATA PROCESSING AND COMPUTER EQUIPMENT, INCLUDING EMBEDDED SOFTWARE AND
PERIPHERAL EQUIPMENT AND ALL ENGINEERING, PROCESSING AND MANUFACTURING
EQUIPMENT, OFFICE MACHINERY, FURNITURE, MATERIALS HANDLING EQUIPMENT, TOOLS,
ATTACHMENTS, ACCESSORIES, AUTOMOTIVE EQUIPMENT, TRAILERS, TRUCKS, FORKLIFTS,
MOLDS, DIES, STAMPS, MOTOR VEHICLES, ROLLING STOCK AND OTHER EQUIPMENT OF EVERY
KIND AND NATURE, TRADE FIXTURES AND FIXTURES NOT FORMING A PART OF REAL
PROPERTY, TOGETHER WITH ALL ADDITIONS AND ACCESSIONS THERETO, REPLACEMENTS
THEREFOR, ALL PARTS THEREFOR, ALL SUBSTITUTES FOR ANY OF THE FOREGOING, FUEL
THEREFOR, AND ALL MANUALS, DRAWINGS, INSTRUCTIONS, WARRANTIES AND RIGHTS WITH
RESPECT THERETO, AND ALL PRODUCTS AND PROCEEDS THEREOF AND CONDEMNATION AWARDS
AND INSURANCE PROCEEDS WITH RESPECT THERETO.

 

(K)                                  “FIXTURES” MEANS ALL “FIXTURES” AS SUCH
TERM IS DEFINED IN THE CODE, NOW OWNED OR HEREAFTER ACQUIRED BY ANY CREDIT
PARTY.

 

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(L)                                     “GENERAL INTANGIBLES” MEANS ALL “GENERAL
INTANGIBLES,” AS SUCH TERM IS DEFINED IN THE CODE, NOW OWNED OR HEREAFTER
ACQUIRED BY ANY CREDIT PARTY, INCLUDING ALL RIGHT, TITLE AND INTEREST THAT SUCH
CREDIT PARTY MAY NOW OR HEREAFTER HAVE IN OR UNDER ANY CONTRACT, ALL PAYMENT
INTANGIBLES, CUSTOMER LISTS, LICENSES, COPYRIGHTS, TRADEMARKS, PATENTS, AND ALL
APPLICATIONS THEREFOR AND REISSUES, EXTENSIONS OR RENEWALS THEREOF, RIGHTS IN
INTELLECTUAL PROPERTY, INTERESTS IN PARTNERSHIPS, JOINT VENTURES AND OTHER
BUSINESS ASSOCIATIONS, LICENSES, PERMITS, COPYRIGHTS, TRADE SECRETS, PROPRIETARY
OR CONFIDENTIAL INFORMATION, INVENTIONS (WHETHER OR NOT PATENTED OR PATENTABLE),
TECHNICAL INFORMATION, PROCEDURES, DESIGNS, KNOWLEDGE, KNOW-HOW, SOFTWARE, DATA
BASES, DATA, SKILL, EXPERTISE, EXPERIENCE, PROCESSES, MODELS, DRAWINGS,
MATERIALS AND RECORDS, GOODWILL (INCLUDING THE GOODWILL ASSOCIATED WITH ANY
TRADEMARK OR TRADEMARK LICENSE), ALL RIGHTS AND CLAIMS IN OR UNDER INSURANCE
POLICIES (INCLUDING INSURANCE FOR FIRE, DAMAGE, LOSS AND CASUALTY, WHETHER
COVERING PERSONAL PROPERTY, REAL PROPERTY, TANGIBLE RIGHTS OR INTANGIBLE RIGHTS,
ALL LIABILITY, LIFE, KEY MAN AND BUSINESS INTERRUPTION INSURANCE, AND ALL
UNEARNED PREMIUMS), UNCERTIFICATED SECURITIES, CHOSES IN ACTION, DEPOSIT,
CHECKING AND OTHER BANK ACCOUNTS, RIGHTS TO RECEIVE TAX REFUNDS AND OTHER
PAYMENTS, RIGHTS TO RECEIVE DIVIDENDS, DISTRIBUTIONS, CASH, INSTRUMENTS AND
OTHER PROPERTY IN RESPECT OF OR IN EXCHANGE FOR PLEDGED STOCK AND INVESTMENT
PROPERTY, RIGHTS OF INDEMNIFICATION, ALL BOOKS AND RECORDS, CORRESPONDENCE,
CREDIT FILES, INVOICES AND OTHER PAPERS, INCLUDING WITHOUT LIMITATION ALL TAPES,
CARDS, COMPUTER RUNS AND OTHER PAPERS AND DOCUMENTS IN THE POSSESSION OR UNDER
THE CONTROL OF SUCH CREDIT PARTY OR ANY COMPUTER BUREAU OR SERVICE COMPANY FROM
TIME TO TIME ACTING FOR SUCH CREDIT PARTY.

 

(M)                               “GOODS” MEANS ALL “GOODS” AS DEFINED IN THE
CODE, NOW OWNED OR HEREAFTER ACQUIRED BY ANY CREDIT PARTY, WHEREVER LOCATED,
INCLUDING EMBEDDED SOFTWARE TO THE EXTENT INCLUDED IN “GOODS” AS DEFINED IN THE
CODE, MANUFACTURED HOMES, STANDING TIMBER THAT IS CUT AND REMOVED FOR SALE AND
UNBORN YOUNG OF ANIMALS.

 

(N)                                 “INDEMNIFIED PERSON” MEANS EACH OF AGENT,
LENDERS AND THEIR RESPECTIVE AFFILIATES, AND EACH SUCH PERSON’S RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AGENTS AND REPRESENTATIVES.

 

(O)                                 “INSTRUMENTS” MEANS ALL “INSTRUMENTS,” AS
SUCH TERM IS DEFINED IN THE CODE, NOW OWNED OR HEREAFTER ACQUIRED BY ANY CREDIT
PARTY, WHEREVER LOCATED, AND, IN ANY EVENT, INCLUDING ALL CERTIFICATED
SECURITIES, ALL CERTIFICATES OF DEPOSIT, AND ALL PROMISSORY NOTES AND OTHER
EVIDENCES OF INDEBTEDNESS, OTHER THAN INSTRUMENTS THAT CONSTITUTE, OR ARE A PART
OF A GROUP OF WRITINGS THAT CONSTITUTE, CHATTEL PAPER.

 

(P)                                 “INTELLECTUAL PROPERTY” MEANS ANY AND ALL
LICENSES, PATENTS, COPYRIGHTS, TRADEMARKS, AND THE GOODWILL ASSOCIATED WITH SUCH
TRADEMARKS.

 

(Q)                                 “INVENTORY” MEANS ALL “INVENTORY,” AS SUCH
TERM IS DEFINED IN THE CODE, NOW OWNED OR HEREAFTER ACQUIRED BY ANY CREDIT
PARTY, WHEREVER LOCATED, AND IN ANY EVENT INCLUDING INVENTORY, MERCHANDISE,
GOODS AND OTHER PERSONAL PROPERTY THAT ARE HELD BY OR ON BEHALF OF ANY CREDIT
PARTY FOR SALE OR LEASE OR ARE FURNISHED OR ARE TO BE FURNISHED UNDER A CONTRACT
OF SERVICE, OR THAT CONSTITUTE RAW MATERIALS, WORK IN PROCESS, FINISHED GOODS,
RETURNED GOODS, OR MATERIALS OR SUPPLIES OF ANY KIND, NATURE OR DESCRIPTION USED
OR

 

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CONSUMED OR TO BE USED OR CONSUMED IN SUCH CREDIT PARTY’S BUSINESS OR IN THE
PROCESSING, PRODUCTION, PACKAGING, PROMOTION, DELIVERY OR SHIPPING OF THE SAME,
INCLUDING ALL SUPPLIES AND EMBEDDED SOFTWARE.

 

(R)                                    “INVESTMENT PROPERTY” MEANS ALL
“INVESTMENT PROPERTY” AS SUCH TERM IS DEFINED IN THE CODE NOW OWNED OR HEREAFTER
ACQUIRED BY ANY CREDIT PARTY, WHEREVER LOCATED, INCLUDING (I) ALL SECURITIES,
WHETHER CERTIFICATED OR UNCERTIFICATED, INCLUDING STOCKS, BONDS, INTERESTS IN
LIMITED LIABILITY COMPANIES, PARTNERSHIP INTERESTS, TREASURIES, CERTIFICATES OF
DEPOSIT, AND MUTUAL FUND SHARES; (II) ALL SECURITIES ENTITLEMENTS OF ANY CREDIT
PARTY, INCLUDING THE RIGHTS OF ANY CREDIT PARTY TO ANY SECURITIES ACCOUNT AND
THE FINANCIAL ASSETS HELD BY A SECURITIES INTERMEDIARY IN SUCH SECURITIES
ACCOUNT AND ANY FREE CREDIT BALANCE OR OTHER MONEY OWING BY ANY SECURITIES
INTERMEDIARY WITH RESPECT TO THAT ACCOUNT; (III) ALL SECURITIES ACCOUNTS OF ANY
CREDIT PARTY; (IV) ALL COMMODITY CONTRACTS OF ANY CREDIT PARTY; AND (V) ALL
COMMODITY ACCOUNTS HELD BY ANY CREDIT PARTY.

 

(S)                                  “LETTER-OF-CREDIT RIGHTS” MEANS
“LETTER-OF-CREDIT RIGHTS” AS SUCH TERM IS DEFINED IN THE CODE, NOW OWNED OR
HEREAFTER ACQUIRED BY ANY CREDIT PARTY, INCLUDING RIGHTS TO PAYMENT OR
PERFORMANCE UNDER A LETTER OF CREDIT, WHETHER OR NOT SUCH CREDIT PARTY, AS
BENEFICIARY, HAS DEMANDED OR IS ENTITLED TO DEMAND PAYMENT OR PERFORMANCE.

 

(T)                                    “LICENSE” MEANS ANY COPYRIGHT LICENSE,
PATENT LICENSE, TRADEMARK LICENSE OR OTHER LICENSE OF RIGHTS OR INTERESTS NOW
HELD OR HEREAFTER ACQUIRED BY ANY CREDIT PARTY.

 

(U)                                 “PATENT LICENSE” MEANS RIGHTS UNDER ANY
WRITTEN AGREEMENT NOW OWNED OR HEREAFTER ACQUIRED BY ANY CREDIT PARTY GRANTING
ANY RIGHT WITH RESPECT TO ANY INVENTION ON WHICH A PATENT IS IN EXISTENCE.

 

(V)                                 “PATENTS” MEANS ALL OF THE FOLLOWING IN
WHICH ANY CREDIT PARTY NOW HOLDS OR HEREAFTER ACQUIRES ANY INTEREST: (A) ALL
LETTERS PATENT OF THE UNITED STATES OR OF ANY OTHER COUNTRY, ALL REGISTRATIONS
AND RECORDINGS THEREOF, AND ALL APPLICATIONS FOR LETTERS PATENT OF THE UNITED
STATES OR OF ANY OTHER COUNTRY, INCLUDING REGISTRATIONS, RECORDINGS AND
APPLICATIONS IN THE UNITED STATES PATENT AND TRADEMARK OFFICE OR IN ANY SIMILAR
OFFICE OR AGENCY OF THE UNITED STATES, ANY STATE, OR ANY OTHER COUNTRY, AND (B)
ALL REISSUES, CONTINUATIONS, CONTINUATIONS-IN-PART OR EXTENSIONS THEREOF.

 

(W)                               “SOFTWARE” MEANS ALL “SOFTWARE” AS SUCH TERM
IS DEFINED IN THE CODE, NOW OWNED OR HEREAFTER ACQUIRED BY ANY CREDIT PARTY,
OTHER THAN SOFTWARE EMBEDDED IN ANY CATEGORY OF GOODS, INCLUDING ALL COMPUTER
PROGRAMS AND ALL SUPPORTING INFORMATION PROVIDED IN CONNECTION WITH A
TRANSACTION RELATED TO ANY PROGRAM.

 

(X)                                   “SUPPORTING OBLIGATIONS” MEANS ALL
“SUPPORTING OBLIGATIONS” AS SUCH TERM IS DEFINED IN THE CODE, INCLUDING LETTERS
OF CREDIT AND GUARANTIES ISSUED IN SUPPORT OF ACCOUNTS, CHATTEL PAPER,
DOCUMENTS, GENERAL INTANGIBLES, INSTRUMENTS, OR INVESTMENT PROPERTY.

 

(Y)                                 “TERMINATION DATE” MEANS THE DATE ON WHICH
(A) THE LOANS HAVE BEEN INDEFEASIBLY REPAID IN FULL IN CASH, (B) ALL OTHER
OBLIGATIONS UNDER THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS HAVE BEEN
COMPLETELY DISCHARGED (C) ALL L/C OBLIGATIONS

 

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HAVE BEEN CASH COLLATERALIZED, CANCELED OR BACKED BY STANDBY LETTERS OF CREDIT
IN ACCORDANCE WITH SECTION 2.5 OF THE CREDIT AGREEMENT, AND (D) THE BORROWER
SHALL NOT HAVE ANY FURTHER RIGHT TO BORROW ANY MONIES UNDER THE CREDIT
AGREEMENT.

 

(Z)                                   “TRADEMARK LICENSE” MEANS RIGHTS UNDER ANY
WRITTEN AGREEMENT NOW OWNED OR HEREAFTER ACQUIRED BY ANY CREDIT PARTY GRANTING
ANY RIGHT TO USE ANY TRADEMARK.

 

(AA)                            “TRADEMARKS” MEANS ALL OF THE FOLLOWING NOW
OWNED OR HEREAFTER EXISTING OR ADOPTED OR ACQUIRED BY ANY CREDIT PARTY: (A) ALL
TRADEMARKS, TRADE NAMES, CORPORATE NAMES, BUSINESS NAMES, TRADE STYLES, SERVICE
MARKS, LOGOS, OTHER SOURCE OR BUSINESS IDENTIFIERS, PRINTS AND LABELS ON WHICH
ANY OF THE FOREGOING HAVE APPEARED OR APPEAR, DESIGNS AND GENERAL INTANGIBLES OF
LIKE NATURE (WHETHER REGISTERED OR UNREGISTERED), ALL REGISTRATIONS AND
RECORDINGS THEREOF, AND ALL APPLICATIONS IN CONNECTION THEREWITH, INCLUDING
REGISTRATIONS, RECORDINGS AND APPLICATIONS IN THE UNITED STATES PATENT AND
TRADEMARK OFFICE OR IN ANY SIMILAR OFFICE OR AGENCY OF THE UNITED STATES, ANY
STATE OR TERRITORY THEREOF, OR ANY OTHER COUNTRY OR ANY POLITICAL SUBDIVISION
THEREOF; (B) ALL REISSUES, EXTENSIONS OR RENEWALS THEREOF; AND (C) ALL GOODWILL
ASSOCIATED WITH OR SYMBOLIZED BY ANY OF THE FOREGOING.

 

(BB)                          “UNIFORM COMMERCIAL CODE JURISDICTION” MEANS ANY
JURISDICTION THAT HAS ADOPTED ALL OR SUBSTANTIALLY ALL OF ARTICLE 9 AS CONTAINED
IN THE 2000 OFFICIAL TEXT OF THE UNIFORM COMMERCIAL CODE, AS RECOMMENDED BY THE
NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS AND THE AMERICAN LAW
INSTITUTE, TOGETHER WITH ANY SUBSEQUENT AMENDMENTS OR MODIFICATIONS TO THE
OFFICIAL TEXT.

 

2.                                       GRANT OF LIEN.

 

(A)                                  TO SECURE THE PROMPT AND COMPLETE PAYMENT,
PERFORMANCE AND OBSERVANCE OF ALL OF THE OBLIGATIONS (SPECIFICALLY INCLUDING,
WITHOUT LIMITATION, EACH GRANTOR’S OBLIGATIONS ARISING UNDER THE GUARANTY
AGREEMENT), EACH GRANTOR HEREBY GRANTS, ASSIGNS, CONVEYS, MORTGAGES, PLEDGES,
HYPOTHECATES AND TRANSFERS TO AGENT, FOR ITSELF AND THE BENEFIT OF LENDERS, A
LIEN UPON ALL OF ITS RIGHT, TITLE AND INTEREST IN, TO AND UNDER ALL PERSONAL
PROPERTY AND OTHER ASSETS, WHETHER NOW OWNED BY OR OWING TO, OR HEREAFTER
ACQUIRED BY OR ARISING IN FAVOR OF SUCH GRANTOR (INCLUDING UNDER ANY TRADE
NAMES, STYLES OR DERIVATIONS THEREOF), AND WHETHER OWNED OR CONSIGNED BY OR TO,
OR LEASED FROM OR TO, SUCH GRANTOR, AND REGARDLESS OF WHERE LOCATED (ALL OF
WHICH BEING HEREINAFTER COLLECTIVELY REFERRED TO AS THE “COLLATERAL”),
INCLUDING:

 

(I)                                     ALL ACCOUNTS;

 

(II)                                  ALL CHATTEL PAPER;

 

(III)                               ALL DOCUMENTS;

 

(IV)                              ALL GENERAL INTANGIBLES (INCLUDING PAYMENT
INTANGIBLES AND SOFTWARE);

 

(V)                                 ALL GOODS (INCLUDING INVENTORY, EQUIPMENT
AND FIXTURES);

 

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(VI)                              ALL INSTRUMENTS;

 

(VII)                           ALL INVESTMENT PROPERTY;

 

(VIII)                        ALL DEPOSIT ACCOUNTS, OF ANY GRANTOR, INCLUDING
ALL BLOCKED ACCOUNTS, GOVERNMENT RECEIVABLES DEPOSIT ACCOUNTS, CONCENTRATION
ACCOUNTS, DISBURSEMENT ACCOUNTS, AND ALL OTHER BANK ACCOUNTS AND ALL DEPOSITS
THEREIN;

 

(IX)                                ALL MONEY, CASH OR CASH EQUIVALENTS OF ANY
GRANTOR;

 

(X)                                   ALL SUPPORTING OBLIGATIONS AND
LETTER-OF-CREDIT RIGHTS OF ANY GRANTOR;

 

(XI)                                THE FOLLOWING COMMERCIAL TORT
CLAIMS:_________________;

 

(XII)                             ALL BOOKS, RECORDS, LEDGER CARDS, FILES,
CORRESPONDENCE, COMPUTER PROGRAMS, TAPES, DISKS AND RELATED DATA PROCESSING
SOFTWARE THAT AT ANY TIME EVIDENCE OR CONTAIN INFORMATION RELATING TO ANY OF THE
COLLATERAL DESCRIBED IN CLAUSES (I) THROUGH (XI) ABOVE OR ARE OTHERWISE
NECESSARY OR HELPFUL IN THE COLLECTION THEREOF OR REALIZATION THEREON; AND

 

(XIII)                          TO THE EXTENT NOT OTHERWISE INCLUDED, ALL
PROCEEDS, TORT CLAIMS, INSURANCE CLAIMS AND OTHER RIGHTS TO PAYMENTS NOT
OTHERWISE INCLUDED IN THE FOREGOING AND PRODUCTS OF THE FOREGOING AND ALL
ACCESSIONS TO, SUBSTITUTIONS AND REPLACEMENTS FOR, AND RENTS AND PROFITS OF,
EACH OF THE FOREGOING.

 

(B)                                 IN ADDITION, TO SECURE THE PROMPT AND
COMPLETE PAYMENT, PERFORMANCE AND OBSERVANCE OF THE OBLIGATIONS AND IN ORDER TO
INDUCE AGENT AND LENDERS AS AFORESAID, EACH GRANTOR HEREBY GRANTS TO AGENT, FOR
ITSELF AND THE BENEFIT OF LENDERS, A RIGHT OF SETOFF AGAINST THE PROPERTY OF
SUCH GRANTOR HELD BY AGENT OR ANY LENDER, CONSISTING OF PROPERTY DESCRIBED ABOVE
IN SECTION 2(A) NOW OR HEREAFTER IN THE POSSESSION OR CUSTODY OF OR IN TRANSIT
TO AGENT OR ANY LENDER, FOR ANY PURPOSE, INCLUDING SAFEKEEPING, COLLECTION OR
PLEDGE, FOR THE ACCOUNT OF SUCH GRANTOR, OR AS TO WHICH SUCH GRANTOR MAY HAVE
ANY RIGHT OR POWER.

 

3.                                       AGENT’S AND LENDERS’ RIGHTS:
LIMITATIONS ON AGENT’S AND LENDERS’ OBLIGATIONS.

 

(A)                                  IT IS EXPRESSLY AGREED BY GRANTORS THAT,
ANYTHING HEREIN TO THE CONTRARY NOTWITHSTANDING, EACH GRANTOR SHALL REMAIN
LIABLE UNDER EACH OF ITS CONTRACTS AND EACH OF ITS LICENSES TO OBSERVE AND
PERFORM ALL THE CONDITIONS AND OBLIGATIONS TO BE OBSERVED AND PERFORMED BY IT
THEREUNDER.  NEITHER AGENT NOR ANY LENDER SHALL HAVE ANY OBLIGATION OR LIABILITY
UNDER ANY CONTRACT OR LICENSE BY REASON OF OR ARISING OUT OF THIS SECURITY
AGREEMENT OR THE GRANTING HEREIN OF A LIEN THEREON OR THE RECEIPT BY AGENT OR
ANY LENDER OF ANY PAYMENT RELATING TO ANY CONTRACT OR LICENSE PURSUANT HERETO. 
NEITHER AGENT NOR ANY LENDER SHALL BE REQUIRED OR OBLIGATED IN ANY MANNER TO
PERFORM OR FULFILL ANY OF THE OBLIGATIONS OF ANY GRANTOR UNDER OR PURSUANT TO
ANY CONTRACT OR LICENSE, OR TO MAKE ANY PAYMENT, OR TO MAKE ANY INQUIRY AS TO
THE NATURE OR THE SUFFICIENCY OF ANY PAYMENT

 

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RECEIVED BY IT OR THE SUFFICIENCY OF ANY PERFORMANCE BY ANY PARTY UNDER ANY
CONTRACT OR LICENSE, OR TO PRESENT OR FILE ANY CLAIMS, OR TO TAKE ANY ACTION TO
COLLECT OR ENFORCE ANY PERFORMANCE OR THE PAYMENT OF ANY AMOUNTS WHICH MAY HAVE
BEEN ASSIGNED TO IT OR TO WHICH IT MAY BE ENTITLED AT ANY TIME OR TIMES.

 

(B)                                 AGENT MAY AT ANY TIME AFTER AN EVENT OF
DEFAULT HAS OCCURRED AND BE CONTINUING (OR IF ANY RIGHTS OF SET-OFF (OTHER THAN
SET-OFFS AGAINST AN ACCOUNT ARISING UNDER THE CONTRACT GIVING RISE TO THE SAME
ACCOUNT) OR CONTRA ACCOUNTS MAY BE ASSERTED WITH RESPECT TO THE FOLLOWING),
WITHOUT PRIOR NOTICE TO ANY GRANTOR, NOTIFY ACCOUNT DEBTORS AND OTHER PERSONS
OBLIGATED ON THE COLLATERAL THAT AGENT HAS A SECURITY INTEREST THEREIN, AND THAT
PAYMENTS SHALL BE MADE DIRECTLY TO AGENT.  UPON THE REQUEST OF AGENT, EACH
GRANTOR SHALL SO NOTIFY ACCOUNT DEBTORS AND OTHER PERSONS OBLIGATED ON
COLLATERAL.  ONCE ANY SUCH NOTICE HAS BEEN GIVEN TO ANY ACCOUNT DEBTOR OR OTHER
PERSON OBLIGATED ON THE COLLATERAL, THE AFFECTED GRANTOR SHALL NOT GIVE ANY
CONTRARY INSTRUCTIONS TO SUCH ACCOUNT DEBTOR OR OTHER PERSON WITHOUT AGENT’S
PRIOR WRITTEN CONSENT.

 

(C)                                  AGENT MAY AT ANY TIME IN AGENT’S OWN NAME,
IN THE NAME OF A NOMINEE OF AGENT OR IN THE NAME OF ANY GRANTOR COMMUNICATE (BY
MAIL, TELEPHONE, FACSIMILE OR OTHERWISE) WITH ACCOUNT DEBTORS, PARTIES TO
CONTRACTS AND OBLIGORS IN RESPECT OF INSTRUMENTS TO VERIFY WITH SUCH PERSONS, TO
AGENT’S SATISFACTION, THE EXISTENCE, AMOUNT TERMS OF, AND ANY OTHER MATTER
RELATING TO, ACCOUNTS, PAYMENT INTANGIBLES, INSTRUMENTS OR CHATTEL PAPER.  IF A
DEFAULT OR EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING, EACH GRANTOR,
AT ITS OWN EXPENSE, SHALL CAUSE THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
THEN ENGAGED BY SUCH GRANTOR TO PREPARE AND DELIVER TO AGENT AND EACH LENDER AT
ANY TIME AND FROM TIME TO TIME PROMPTLY UPON AGENT’S REQUEST THE FOLLOWING
REPORTS WITH RESPECT TO EACH GRANTOR: (I) A RECONCILIATION OF ALL ACCOUNTS; (II)
AN AGING OF ALL ACCOUNTS; (III) TRIAL BALANCES; AND (IV) A TEST VERIFICATION OF
SUCH ACCOUNTS AS AGENT MAY REQUEST.  EACH GRANTOR, AT ITS OWN EXPENSE, SHALL
DELIVER TO AGENT THE RESULTS OF EACH PHYSICAL VERIFICATION, IF ANY, WHICH SUCH
GRANTOR MAY IN ITS DISCRETION HAVE MADE, OR CAUSED ANY OTHER PERSON TO HAVE MADE
ON ITS BEHALF, OF ALL OR ANY PORTION OF ITS INVENTORY.

 

4.                                       REPRESENTATIONS AND WARRANTIES.  Each
Grantor represents and warrants that:

 

(A)                                  EACH GRANTOR HAS RIGHTS IN AND THE POWER TO
TRANSFER EACH ITEM OF THE COLLATERAL UPON WHICH IT PURPORTS TO GRANT A LIEN
HEREUNDER FREE AND CLEAR OF ANY AND ALL LIENS OTHER THAN PERMITTED ENCUMBRANCES;

 

(B)                                 NO EFFECTIVE SECURITY AGREEMENT, FINANCING
STATEMENT, EQUIVALENT SECURITY OR LIEN INSTRUMENT OR CONTINUATION STATEMENT
COVERING ALL OR ANY PART OF THE COLLATERAL IS ON FILE OR OF RECORD IN ANY PUBLIC
OFFICE, EXCEPT SUCH AS MAY HAVE BEEN FILED (I) BY ANY GRANTOR IN FAVOR OF AGENT
PURSUANT TO THIS SECURITY AGREEMENT OR THE OTHER LOAN DOCUMENTS, AND (II) IN
CONNECTION WITH ANY OTHER PERMITTED ENCUMBRANCES;

 

(C)                                  THIS SECURITY AGREEMENT IS EFFECTIVE TO
CREATE A VALID AND CONTINUING LIEN ON AND, UPON THE FILING OF THE APPROPRIATE
FINANCING STATEMENTS LISTED ON SCHEDULE I HERETO, A PERFECTED LIEN IN FAVOR OF
AGENT, FOR ITSELF AND THE BENEFIT OF LENDERS, ON THE COLLATERAL

 

8

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WITH RESPECT TO WHICH A LIEN MAY BE PERFECTED BY FILING PURSUANT TO THE CODE. 
SUCH LIEN IS PRIOR TO ALL OTHER LIENS, EXCEPT PERMITTED ENCUMBRANCES THAT WOULD
BE PRIOR TO LIENS IN FAVOR OF AGENT FOR THE BENEFIT OF AGENT AND LENDERS AS A
MATTER OF LAW, AND IS ENFORCEABLE AS SUCH AS AGAINST ANY AND ALL CREDITORS OF
AND PURCHASERS FROM ANY GRANTOR (OTHER THAN PURCHASERS AND LESSEES OF INVENTORY
IN THE ORDINARY COURSE OF BUSINESS [AND NON-EXCLUSIVE LICENSEES OF GENERAL
INTANGIBLES IN THE ORDINARY COURSE OF BUSINESS]).  ALL ACTION BY ANY GRANTOR
NECESSARY OR DESIRABLE TO PROTECT AND PERFECT SUCH LIEN ON EACH ITEM OF THE
COLLATERAL HAS BEEN DULY TAKEN;

 

(D)                                 SCHEDULE II HERETO LISTS ALL INSTRUMENTS,
LETTER OF CREDIT RIGHTS AND CHATTEL PAPER OF EACH GRANTOR.  ALL ACTION BY ANY
GRANTOR NECESSARY OR DESIRABLE TO PROTECT AND PERFECT THE LIEN OF AGENT ON EACH
ITEM SET FORTH ON SCHEDULE II (INCLUDING THE DELIVERY OF ALL ORIGINALS THEREOF
TO AGENT AND THE LEGENDING OF ALL CHATTEL PAPER AS REQUIRED BY SECTION 5(B)
HEREOF) HAS BEEN DULY TAKEN.  THE LIEN OF AGENT, FOR THE BENEFIT OF AGENT AND
LENDERS, ON THE COLLATERAL LISTED ON SCHEDULE II HERETO IS PRIOR TO ALL OTHER
LIENS, EXCEPT PERMITTED ENCUMBRANCES THAT WOULD BE PRIOR TO THE LIENS IN FAVOR
OF AGENT AS A MATTER OF LAW, AND IS ENFORCEABLE AS SUCH AGAINST ANY AND ALL
CREDITORS OF AND PURCHASERS FROM ANY GRANTOR;

 

(E)                                  EACH GRANTOR’S NAME AS IT APPEARS IN
OFFICIAL FILINGS IN THE STATE OF ITS INCORPORATION OR OTHER ORGANIZATION, THE
TYPE OF ENTITY OF EACH GRANTOR (INCLUDING CORPORATION, PARTNERSHIP, LIMITED
PARTNERSHIP OR LIMITED LIABILITY COMPANY), ORGANIZATIONAL IDENTIFICATION NUMBER
ISSUED BY EACH GRANTOR’S STATE OF INCORPORATION OR ORGANIZATION OR A STATEMENT
THAT NO SUCH NUMBER HAS BEEN ISSUED, EACH GRANTOR’S STATE OF ORGANIZATION OR
INCORPORATION, THE LOCATION OF EACH GRANTOR’S CHIEF EXECUTIVE OFFICE, PRINCIPAL
PLACE OF BUSINESS, OFFICES, ALL WAREHOUSES AND PREMISES WHERE COLLATERAL IS
STORED OR LOCATED, AND THE LOCATIONS OF ITS BOOKS AND RECORDS CONCERNING THE
COLLATERAL ARE SET FORTH ON SCHEDULE    .  EACH GRANTOR HAS ONLY ONE STATE OF
INCORPORATION OR ORGANIZATION;

 

(F)                                    WITH RESPECT TO THE ACCOUNTS, EXCEPT AS
SPECIFICALLY DISCLOSED IN THE MOST RECENT COLLATERAL REPORT DELIVERED TO AGENT
(I) THEY REPRESENT BONA FIDE SALES OF INVENTORY OR RENDERING OF SERVICES TO
ACCOUNT DEBTORS IN THE ORDINARY COURSE OF EACH GRANTOR’S BUSINESS AND ARE NOT
EVIDENCED BY A JUDGMENT, INSTRUMENT OR CHATTEL PAPER; (II) THERE ARE NO SETOFFS,
CLAIMS OR DISPUTES EXISTING OR ASSERTED WITH RESPECT THERETO AND NO GRANTOR HAS
MADE ANY AGREEMENT WITH ANY ACCOUNT DEBTOR FOR ANY EXTENSION OF TIME FOR THE
PAYMENT THEREOF, ANY COMPROMISE OR SETTLEMENT FOR LESS THAN THE FULL AMOUNT
THEREOF, ANY RELEASE OF ANY ACCOUNT DEBTOR FROM LIABILITY THEREFOR, OR ANY
DEDUCTION THEREFROM EXCEPT A DISCOUNT OR ALLOWANCE ALLOWED BY SUCH GRANTOR IN
THE ORDINARY COURSE OF ITS BUSINESS FOR PROMPT PAYMENT AND DISCLOSED TO AGENT;
(III) TO EACH GRANTOR’S KNOWLEDGE, THERE ARE NO FACTS, EVENTS OR OCCURRENCES
WHICH IN ANY WAY IMPAIR THE VALIDITY OR ENFORCEABILITY THEREOF OR COULD
REASONABLY BE EXPECTED TO REDUCE THE AMOUNT PAYABLE THEREUNDER AS SHOWN ON ANY
GRANTOR’S BOOKS AND RECORDS AND ANY INVOICES, STATEMENTS AND COLLATERAL REPORTS
DELIVERED TO AGENT AND LENDERS WITH RESPECT THERETO; (IV) NO GRANTOR HAS
RECEIVED ANY NOTICE OF PROCEEDINGS OR ACTIONS WHICH ARE THREATENED OR PENDING
AGAINST ANY ACCOUNT DEBTOR WHICH MIGHT RESULT IN ANY ADVERSE CHANGE IN SUCH
ACCOUNT DEBTOR’S FINANCIAL CONDITION; AND (V) NO GRANTOR HAS KNOWLEDGE THAT ANY
ACCOUNT DEBTOR IS UNABLE GENERALLY TO PAY ITS DEBTS AS THEY BECOME DUE.  FURTHER
WITH RESPECT TO THE ACCOUNTS (X) THE AMOUNTS

 

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SHOWN ON ALL INVOICES, STATEMENTS AND COLLATERAL REPORTS WHICH MAY BE DELIVERED
TO THE AGENT WITH RESPECT THERETO ARE ACTUALLY AND ABSOLUTELY OWING TO SUCH
GRANTOR AS INDICATED THEREON AND ARE NOT IN ANY WAY CONTINGENT; (Y) NO PAYMENTS
HAVE BEEN OR SHALL BE MADE THEREON EXCEPT PAYMENTS IMMEDIATELY DELIVERED TO THE
APPLICABLE BLOCKED ACCOUNTS OR THE AGENT AS REQUIRED PURSUANT TO THE TERMS OF
SECTION 6.16 OF THE CREDIT AGREEMENT; AND (Z) TO EACH GRANTOR’S KNOWLEDGE, ALL
ACCOUNT DEBTORS HAVE THE CAPACITY TO CONTRACT;

 

(G)                                 WITH RESPECT TO ANY INVENTORY SCHEDULED OR
LISTED ON THE MOST RECENT COLLATERAL REPORT DELIVERED TO AGENT PURSUANT TO THE
TERMS OF THIS SECURITY AGREEMENT OR THE CREDIT AGREEMENT, (I) SUCH INVENTORY IS
LOCATED AT ONE OF THE APPLICABLE GRANTOR’S LOCATIONS SET FORTH ON SCHEDULE
III-A, SCHEDULE III-B, SCHEDULE III-C, SCHEDULE III-D, SCHEDULE III-E, SCHEDULE
III-F, SCHEDULE III-G, SCHEDULE III-H, SCHEDULE III-I, [SCHEDULE III-J] AND
[SCHEDULE III-K] HERETO, AS APPLICABLE, (II) NO INVENTORY IS NOW, OR SHALL AT
ANY TIME OR TIMES HEREAFTER BE STORED AT ANY OTHER LOCATION WITHOUT AGENT’S
PRIOR CONSENT, AND IF AGENT GIVES SUCH CONSENT, EACH APPLICABLE GRANTOR WILL
CONCURRENTLY THEREWITH OBTAIN, TO THE EXTENT REQUIRED BY THE CREDIT AGREEMENT,
BAILEE, LANDLORD AND MORTGAGEE AGREEMENTS, (III) THE APPLICABLE GRANTOR HAS
GOOD, INDEFEASIBLE AND MERCHANTABLE TITLE TO SUCH INVENTORY AND SUCH INVENTORY
IS NOT SUBJECT TO ANY LIEN OR SECURITY INTEREST OR DOCUMENT WHATSOEVER EXCEPT
FOR THE LIEN GRANTED TO AGENT, FOR THE BENEFIT OF AGENT AND LENDERS, AND EXCEPT
FOR PERMITTED ENCUMBRANCES, (IV) EXCEPT AS SPECIFICALLY DISCLOSED IN THE MOST
RECENT COLLATERAL REPORT DELIVERED TO AGENT, SUCH INVENTORY IS ELIGIBLE
INVENTORY OF GOOD AND MERCHANTABLE QUALITY, FREE FROM ANY DEFECTS, (V) SUCH
INVENTORY IS NOT SUBJECT TO ANY LICENSING, PATENT, ROYALTY, TRADEMARK, TRADE
NAME OR COPYRIGHT AGREEMENTS WITH ANY THIRD PARTIES WHICH WOULD REQUIRE ANY
CONSENT OF ANY THIRD PARTY UPON SALE OR DISPOSITION OF THAT INVENTORY OR THE
PAYMENT OF ANY MONIES TO ANY THIRD PARTY UPON SUCH SALE OR OTHER DISPOSITION,
AND (VI) THE COMPLETION OF MANUFACTURE, SALE OR OTHER DISPOSITION OF SUCH
INVENTORY BY AGENT FOLLOWING AN EVENT OF DEFAULT SHALL NOT REQUIRE THE CONSENT
OF ANY PERSON AND SHALL NOT CONSTITUTE A BREACH OR DEFAULT UNDER ANY CONTRACT OR
AGREEMENT TO WHICH ANY GRANTOR IS A PARTY OR TO WHICH SUCH PROPERTY IS SUBJECT.

 

(H)                                 NO GRANTOR HAS ANY INTEREST IN, OR TITLE TO,
ANY PATENT, TRADEMARK OR COPYRIGHT EXCEPT AS SET FORTH IN SCHEDULE IV HERETO. 
THIS SECURITY AGREEMENT IS EFFECTIVE TO CREATE A VALID AND CONTINUING LIEN ON
AND, UPON FILING OF THE COPYRIGHT SECURITY AGREEMENTS WITH THE UNITED STATES
COPYRIGHT OFFICE AND FILING OF THE PATENT SECURITY AGREEMENTS AND THE TRADEMARK
SECURITY AGREEMENTS WITH THE UNITED STATE PATENT AND TRADEMARK OFFICE, PERFECTED
LIENS IN FAVOR OF AGENT ON EACH GRANTOR’ S PATENTS, TRADEMARKS AND COPYRIGHTS
AND SUCH PERFECTED LIENS ARE ENFORCEABLE AS SUCH AS AGAINST ANY AND ALL
CREDITORS OF AND PURCHASERS FROM ANY GRANTOR.  UPON FILING OF THE COPYRIGHT
SECURITY AGREEMENTS WITH THE UNITED STATES COPYRIGHT OFFICE AND FILING OF THE
PATENT SECURITY AGREEMENTS AND THE TRADEMARK SECURITY AGREEMENTS WITH THE UNITED
STATE PATENT AND TRADEMARK OFFICE AND THE FILING OF APPROPRIATE FINANCING
STATEMENTS LISTED ON SCHEDULE I HERETO, ALL ACTION NECESSARY OR DESIRABLE TO
PROTECT AND PERFECT AGENT’S LIEN ON EACH GRANTOR’S PATENTS, TRADEMARKS OR
COPYRIGHTS SHALL HAVE BEEN DULY TAKEN.

 

(I)                                     [ALL MOTOR VEHICLES OWNED BY GRANTORS
ARE LISTED ON SCHEDULE V HERETO, BY MODEL, MODEL YEAR AND VEHICLE IDENTIFICATION
NUMBER (“VIN”).  GRANTORS SHALL DELIVER TO AGENT MOTOR VEHICLE TITLE
CERTIFICATES FOR ALL MOTOR VEHICLES FROM TIME TO TIME OWNED BY IT

 

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AND SHALL CAUSE THOSE TITLE CERTIFICATES TO BE FILED (WITH AGENT’S LIEN NOTED
THEREON) IN THE APPROPRIATE STATE MOTOR VEHICLE FILING OFFICE.]

 

5.                                       COVENANTS.  Each Grantor covenants and
agrees with Agent, for the benefit of Agent and Lenders, that from and after the
date of this Security Agreement and until the Termination Date:

 

(A)                                  FURTHER ASSURANCES: PLEDGE OF INSTRUMENTS;
CHATTEL PAPER.

 

(I)                                     AT ANY TIME AND FROM TIME TO TIME, UPON
THE WRITTEN REQUEST OF AGENT AND AT THE SOLE EXPENSE OF GRANTORS, EACH GRANTOR
SHALL PROMPTLY AND DULY EXECUTE AND DELIVER ANY AND ALL SUCH FURTHER INSTRUMENTS
AND DOCUMENTS AND TAKE SUCH FURTHER ACTIONS AS AGENT MAY DEEM DESIRABLE TO
OBTAIN THE FULL BENEFITS OF THIS SECURITY AGREEMENT AND OF THE RIGHTS AND POWERS
HEREIN GRANTED, INCLUDING (A) USING ITS BEST EFFORTS TO SECURE ALL CONSENTS AND
APPROVALS NECESSARY OR APPROPRIATE FOR THE ASSIGNMENT TO OR FOR THE BENEFIT OF
AGENT OF ANY LICENSE OR CONTRACT HELD BY SUCH GRANTOR AND TO ENFORCE THE
SECURITY INTERESTS GRANTED HEREUNDER; AND (B) FILING ANY FINANCING OR
CONTINUATION STATEMENTS UNDER THE CODE WITH RESPECT TO THE LIENS GRANTED
HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT AS TO THOSE JURISDICTIONS THAT ARE
NOT UNIFORM COMMERCIAL CODE JURISDICTIONS.

 

(II)                                  UNLESS AGENT SHALL OTHERWISE CONSENT IN
WRITING (WHICH CONSENT MAY BE REVOKED), EACH GRANTOR SHALL DELIVER TO AGENT ALL
COLLATERAL CONSISTING OF NEGOTIABLE DOCUMENTS, CERTIFICATED SECURITIES, CHATTEL
PAPER AND INSTRUMENTS (IN EACH CASE, ACCOMPANIED BY STOCK POWERS, ALLONGES OR
OTHER INSTRUMENTS OF TRANSFER EXECUTED IN BLANK) PROMPTLY AFTER SUCH CREDIT
PARTY RECEIVES THE SAME.

 

(III)                               EACH GRANTOR SHALL, IN ACCORDANCE WITH THE
TERMS OF THE CREDIT AGREEMENT, OBTAIN OR USE ITS BEST EFFORTS TO OBTAIN WAIVERS
OR SUBORDINATIONS OF LIENS FROM LANDLORDS AND MORTGAGEES, AND EACH CREDIT PARTY
SHALL IN ALL INSTANCES OBTAIN SIGNED ACKNOWLEDGEMENTS OF AGENT’S LIENS FROM
BAILEES HAVING POSSESSION OF ANY GRANTOR’S GOODS THAT THEY HOLD FOR THE BENEFIT
OF AGENT.

 

(IV)                              IF REQUIRED BY THE TERMS OF THE CREDIT
AGREEMENT AND NOT WAIVED BY AGENT IN WRITING (WHICH WAIVER MAY BE REVOKED), EACH
GRANTOR SHALL OBTAIN AUTHENTICATED CONTROL LETTERS FROM EACH ISSUER OF
UNCERTIFICATED SECURITIES, SECURITIES INTERMEDIARY, OR COMMODITIES INTERMEDIARY
ISSUING OR HOLDING ANY FINANCIAL ASSETS OR COMMODITIES TO OR FOR ANY GRANTOR.

 

(V)                                 IN ACCORDANCE WITH SECTION 6.16 OF THE
CREDIT AGREEMENT, EACH GRANTOR SHALL OBTAIN A BLOCKED ACCOUNT, LOCKBOX OR
SIMILAR AGREEMENT WITH EACH BANK OR FINANCIAL INSTITUTION HOLDING A DEPOSIT
ACCOUNT FOR SUCH GRANTOR.

 

(VI)                              EACH GRANTOR THAT IS OR BECOMES THE
BENEFICIARY OF A LETTER OF CREDIT SHALL PROMPTLY, AND IN ANY EVENT WITHIN TWO
(2) BUSINESS DAYS AFTER BECOMING A BENEFICIARY, NOTIFY AGENT THEREOF AND ENTER
INTO A TRI-PARTY AGREEMENT WITH AGENT AND THE ISSUER AND/OR CONFIRMATION BANK
WITH RESPECT TO LETTER-OF-CREDIT RIGHTS ASSIGNING SUCH LETTER-OF-CREDIT RIGHTS
TO AGENT AND DIRECTING ALL PAYMENTS

 

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THEREUNDER TO THE COLLECTION ACCOUNT, ALL IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO AGENT.

 

(VII)                           EACH GRANTOR SHALL TAKE ALL STEPS NECESSARY TO
GRANT THE AGENT CONTROL OF ALL ELECTRONIC CHATTEL PAPER IN ACCORDANCE WITH THE
CODE AND ALL “TRANSFERABLE RECORDS” AS DEFINED IN EACH OF THE UNIFORM ELECTRONIC
TRANSACTIONS ACT AND THE ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE
ACT.

 

(VIII)                        EACH GRANTOR HEREBY IRREVOCABLY AUTHORIZES THE
AGENT AT ANY TIME AND FROM TIME TO TIME TO FILE IN ANY FILING OFFICE IN ANY
UNIFORM COMMERCIAL CODE JURISDICTION ANY INITIAL FINANCING STATEMENTS AND
AMENDMENTS THERETO THAT (A) INDICATE THE COLLATERAL (I) AS ALL ASSETS OF SUCH
GRANTOR OR WORDS OF SIMILAR EFFECT, REGARDLESS OF WHETHER ANY PARTICULAR ASSET
COMPRISED IN THE COLLATERAL FALLS WITHIN THE SCOPE OF ARTICLE 9 OF THE CODE OR
SUCH JURISDICTION, OR (II) AS BEING OF AN EQUAL OR LESSER SCOPE OR WITH GREATER
DETAIL, AND (B) CONTAIN ANY OTHER INFORMATION REQUIRED BY PART 5 OF ARTICLE 9 OF
THE CODE FOR THE SUFFICIENCY OR FILING OFFICE ACCEPTANCE OF ANY FINANCING
STATEMENT OR AMENDMENT, INCLUDING (I) WHETHER SUCH GRANTOR IS AN ORGANIZATION,
THE TYPE OF ORGANIZATION AND ANY ORGANIZATION IDENTIFICATION NUMBER ISSUED TO
SUCH GRANTOR, AND (II) IN THE CASE OF A FINANCING STATEMENT FILED AS A FIXTURE
FILING OR INDICATING COLLATERAL AS AS-EXTRACTED COLLATERAL OR TIMBER TO BE CUT,
A SUFFICIENT DESCRIPTION OF REAL PROPERTY TO WHICH THE COLLATERAL RELATES.  EACH
GRANTOR AGREES TO FURNISH ANY SUCH INFORMATION TO THE AGENT PROMPTLY UPON
REQUEST.  EACH GRANTOR ALSO RATIFIES ITS AUTHORIZATION FOR THE AGENT TO HAVE
FILED IN ANY UNIFORM COMMERCIAL CODE JURISDICTION ANY INITIAL FINANCING
STATEMENTS OR AMENDMENTS THERETO IF FILED PRIOR TO THE DATE HEREOF.

 

(IX)                                EACH GRANTOR SHALL PROMPTLY, AND IN ANY
EVENT WITHIN TWO (2) BUSINESS DAYS AFTER THE SAME IS ACQUIRED BY IT, NOTIFY
AGENT OF ANY COMMERCIAL TORT CLAIM (AS DEFINED IN THE CODE) ACQUIRED BY IT AND
UNLESS OTHERWISE CONSENTED BY AGENT, SUCH GRANTOR SHALL ENTER INTO A SUPPLEMENT
TO THIS SECURITY AGREEMENT, GRANTING TO AGENT A LIEN IN SUCH COMMERCIAL TORT
CLAIM.

 

(B)                                 MAINTENANCE OF RECORDS.  GRANTORS SHALL KEEP
AND MAINTAIN, AT THEIR OWN COST AND EXPENSE, SATISFACTORY AND COMPLETE RECORDS
OF THE COLLATERAL, INCLUDING A RECORD OF ANY AND ALL PAYMENTS RECEIVED AND ANY
AND ALL CREDITS GRANTED WITH RESPECT TO THE COLLATERAL AND ALL OTHER DEALINGS
WITH THE COLLATERAL.  GRANTORS SHALL MARK THEIR BOOKS AND RECORDS PERTAINING TO
THE COLLATERAL TO EVIDENCE THIS SECURITY AGREEMENT AND THE LIENS GRANTED
HEREBY.  IF ANY GRANTOR RETAINS POSSESSION OF ANY CHATTEL PAPER OR INSTRUMENTS
WITH AGENT’S CONSENT, SUCH CHATTEL PAPER AND INSTRUMENTS SHALL BE MARKED WITH
THE FOLLOWING LEGEND: “THIS WRITING AND THE OBLIGATIONS EVIDENCED OR SECURED
HEREBY ARE SUBJECT TO THE SECURITY INTEREST OF GENERAL ELECTRIC CAPITAL
CORPORATION, AS AGENT, FOR THE BENEFIT OF AGENT AND CERTAIN LENDERS.”

 

(C)                                  COVENANTS REGARDING PATENT, TRADEMARK AND
COPYRIGHT COLLATERAL.

 

(I)                                     GRANTORS SHALL NOTIFY AGENT IMMEDIATELY
IF THEY KNOW OR HAVE REASON TO KNOW THAT ANY APPLICATION OR REGISTRATION
RELATING TO ANY PATENT,

 

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TRADEMARK OR COPYRIGHT (NOW OR HEREAFTER EXISTING) MAY BECOME ABANDONED OR
DEDICATED, OR OF ANY ADVERSE DETERMINATION OR DEVELOPMENT (INCLUDING THE
INSTITUTION OF, OR ANY SUCH DETERMINATION OR DEVELOPMENT IN, ANY PROCEEDING IN
THE UNITED STATES PATENT AND TRADEMARK OFFICE, THE UNITED STATES COPYRIGHT
OFFICE OR ANY COURT) REGARDING ANY GRANTOR’S OWNERSHIP OF ANY PATENT, TRADEMARK
OR COPYRIGHT, ITS RIGHT TO REGISTER THE SAME, OR TO KEEP AND MAINTAIN THE SAME.

 

(II)                                  IN NO EVENT SHALL ANY GRANTOR, EITHER
ITSELF OR THROUGH ANY AGENT, EMPLOYEE, LICENSEE OR DESIGNEE, FILE AN APPLICATION
FOR THE REGISTRATION OF ANY PATENT, TRADEMARK OR COPYRIGHT WITH THE UNITED
STATES PATENT AND TRADEMARK OFFICE, THE UNITED STATES COPYRIGHT OFFICE OR ANY
SIMILAR OFFICE OR AGENCY WITHOUT GIVING AGENT PRIOR WRITTEN NOTICE THEREOF, AND,
UPON REQUEST OF AGENT, GRANTOR SHALL EXECUTE AND DELIVER ANY AND ALL PATENT
SECURITY AGREEMENTS, COPYRIGHT SECURITY AGREEMENTS OR TRADEMARK SECURITY
AGREEMENTS AS AGENT MAY REQUEST TO EVIDENCE AGENT’S LIEN ON SUCH PATENT,
TRADEMARK OR COPYRIGHT, AND THE GENERAL INTANGIBLES OF SUCH GRANTOR RELATING
THERETO OR REPRESENTED THEREBY.

 

(III)                               GRANTORS SHALL TAKE ALL ACTIONS NECESSARY OR
REQUESTED BY AGENT TO MAINTAIN AND PURSUE EACH APPLICATION, TO OBTAIN THE
RELEVANT REGISTRATION AND TO MAINTAIN THE REGISTRATION OF EACH OF THE PATENTS,
TRADEMARKS AND COPYRIGHTS (NOW OR HEREAFTER EXISTING), INCLUDING THE FILING OF
APPLICATIONS FOR RENEWAL, AFFIDAVITS OF USE, AFFIDAVITS OF NONCONTESTABILITY AND
OPPOSITION AND INTERFERENCE AND CANCELLATION PROCEEDINGS[, UNLESS THE APPLICABLE
GRANTOR SHALL DETERMINE THAT SUCH PATENT, TRADEMARK OR COPYRIGHT IS NOT MATERIAL
TO THE CONDUCT OF ITS BUSINESS].

 

(IV)                              IN THE EVENT THAT ANY OF THE PATENT, TRADEMARK
OR COPYRIGHT COLLATERAL IS INFRINGED UPON, OR MISAPPROPRIATED OR DILUTED BY A
THIRD PARTY, SUCH GRANTOR SHALL COMPLY WITH SECTION 5(A)(IX) OF THIS SECURITY
AGREEMENT.  SUCH GRANTOR SHALL, UNLESS SUCH GRANTOR SHALL REASONABLY DETERMINE
THAT SUCH PATENT, TRADEMARK OR COPYRIGHT COLLATERAL IS IN NO WAY MATERIAL TO THE
CONDUCT OF ITS BUSINESS OR OPERATIONS, PROMPTLY SUE FOR INFRINGEMENT,
MISAPPROPRIATION OR DILUTION AND TO RECOVER ANY AND ALL DAMAGES FOR SUCH
INFRINGEMENT, MISAPPROPRIATION OR DILUTION, AND SHALL TAKE SUCH OTHER ACTIONS AS
AGENT SHALL DEEM APPROPRIATE UNDER THE CIRCUMSTANCES TO PROTECT SUCH PATENT,
TRADEMARK OR COPYRIGHT COLLATERAL.

 

(D)                                 INDEMNIFICATION.  IN ANY SUIT, PROCEEDING OR
ACTION BROUGHT BY AGENT OR ANY LENDER RELATING TO ANY COLLATERAL FOR ANY SUM
OWING WITH RESPECT THERETO OR TO ENFORCE ANY RIGHTS OR CLAIMS WITH RESPECT
THERETO, EACH GRANTOR WILL SAVE, INDEMNIFY AND KEEP AGENT AND LENDERS HARMLESS
FROM AND AGAINST ALL EXPENSE (INCLUDING REASONABLE ATTORNEYS’ FEES AND
EXPENSES), LOSS OR DAMAGE SUFFERED BY REASON OF ANY DEFENSE, SETOFF,
COUNTERCLAIM, RECOUPMENT OR REDUCTION OF LIABILITY WHATSOEVER OF THE ACCOUNT
DEBTOR OR OTHER PERSON OBLIGATED ON THE COLLATERAL, ARISING OUT OF A BREACH BY
ANY GRANTOR OF ANY OBLIGATION THEREUNDER OR ARISING OUT OF ANY OTHER AGREEMENT,
INDEBTEDNESS OR LIABILITY AT ANY TIME OWING TO, OR IN FAVOR OF, SUCH OBLIGOR OR
ITS SUCCESSORS FROM SUCH GRANTOR, EXCEPT IN THE CASE OF AGENT OR ANY LENDER, TO
THE EXTENT SUCH EXPENSE, LOSS, OR DAMAGE IS ATTRIBUTABLE SOLELY TO THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF AGENT OR SUCH LENDER

 

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AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION. ALL SUCH OBLIGATIONS
OF GRANTORS SHALL BE AND REMAIN ENFORCEABLE AGAINST AND ONLY AGAINST GRANTORS
AND SHALL NOT BE ENFORCEABLE AGAINST AGENT OR ANY LENDER.

 

(E)                                  COMPLIANCE WITH TERMS OF ACCOUNTS, ETC.  IN
ALL MATERIAL RESPECTS, EACH GRANTOR WILL PERFORM AND COMPLY WITH ALL OBLIGATIONS
IN RESPECT OF THE COLLATERAL AND ALL OTHER AGREEMENTS TO WHICH IT IS A PARTY OR
BY WHICH IT IS BOUND RELATING TO THE COLLATERAL.

 

(F)                                    LIMITATION ON LIENS ON COLLATERAL.  NO
GRANTOR WILL CREATE, PERMIT OR SUFFER TO EXIST, AND EACH GRANTOR WILL DEFEND THE
COLLATERAL AGAINST, AND TAKE SUCH OTHER ACTION AS IS NECESSARY TO REMOVE, ANY
LIEN ON THE COLLATERAL EXCEPT PERMITTED ENCUMBRANCES, AND WILL DEFEND THE RIGHT,
TITLE AND INTEREST OF AGENT AND LENDERS IN AND TO ANY OF SUCH GRANTOR’S RIGHTS
UNDER THE COLLATERAL AGAINST THE CLAIMS AND DEMANDS OF ALL PERSONS WHOMSOEVER.

 

(G)                                 LIMITATIONS ON DISPOSITION.  NO GRANTOR WILL
SELL, LICENSE, LEASE, TRANSFER OR OTHERWISE DISPOSE OF ANY OF THE COLLATERAL, OR
ATTEMPT OR CONTRACT TO DO SO EXCEPT AS PERMITTED BY THE CREDIT AGREEMENT.

 

(H)                                 FURTHER IDENTIFICATION OF COLLATERAL. 
GRANTORS WILL, IF SO REQUESTED BY AGENT, FURNISH TO AGENT, AS OFTEN AS AGENT
REQUESTS, STATEMENTS AND SCHEDULES FURTHER IDENTIFYING AND DESCRIBING THE
COLLATERAL AND SUCH OTHER REPORTS IN CONNECTION WITH THE COLLATERAL AS AGENT MAY
REASONABLY REQUEST, ALL IN SUCH DETAIL AS AGENT MAY SPECIFY.

 

(I)                                     NOTICES.  GRANTORS WILL ADVISE AGENT
PROMPTLY, IN REASONABLE DETAIL, (I) OF ANY LIEN (OTHER THAN PERMITTED
ENCUMBRANCES) OR CLAIM MADE OR ASSERTED AGAINST ANY OF THE COLLATERAL, AND (II)
OF THE OCCURRENCE OF ANY OTHER EVENT WHICH WOULD HAVE A MATERIAL ADVERSE EFFECT
ON THE AGGREGATE VALUE OF THE COLLATERAL OR ON THE LIENS CREATED HEREUNDER OR
UNDER ANY OTHER LOAN DOCUMENT.

 

(J)                                     GOOD STANDING CERTIFICATES.  NOT LESS
FREQUENTLY THAN ONCE DURING EACH CALENDAR QUARTER, EACH GRANTOR SHALL, UNLESS
AGENT SHALL OTHERWISE CONSENT, PROVIDE TO AGENT A CERTIFICATE OF GOOD STANDING
FROM ITS STATE OF INCORPORATION OR ORGANIZATION.

 

(K)                                  NO REINCORPORATION.  WITHOUT LIMITING THE
PROHIBITIONS ON MERGERS INVOLVING THE GRANTORS CONTAINED IN THE CREDIT
AGREEMENT, NO GRANTOR SHALL REINCORPORATE OR REORGANIZE ITSELF UNDER THE LAWS OF
ANY JURISDICTION OTHER THAN THE JURISDICTION IN WHICH IT IS INCORPORATED OR
ORGANIZED AS OF THE DATE HEREOF WITHOUT THE PRIOR WRITTEN CONSENT OF AGENT.

 

(L)                                     TERMINATIONS; AMENDMENTS NOT
AUTHORIZED.  EACH GRANTOR ACKNOWLEDGES THAT IT IS NOT AUTHORIZED TO FILE ANY
FINANCING STATEMENT OR AMENDMENT OR TERMINATION STATEMENT WITH RESPECT TO ANY
FINANCING STATEMENT WITHOUT THE PRIOR WRITTEN CONSENT OF AGENT AND AGREES THAT
IT WILL NOT DO SO WITHOUT THE PRIOR WRITTEN CONSENT OF AGENT, SUBJECT TO SUCH
GRANTOR’S RIGHTS UNDER SECTION 9-509(D)(2) OF THE CODE.

 

(M)                               AUTHORIZED TERMINATIONS.  UPON PAYMENT IN FULL
IN CASH AND PERFORMANCE OF ALL OF THE OBLIGATIONS (OTHER THAN INDEMNIFICATION
OBLIGATIONS), TERMINATION OF THE COMMITMENTS AND A RELEASE OF ALL CLAIMS AGAINST
AGENT AND LENDERS, AND SO LONG AS NO

 

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SUITS, ACTIONS, PROCEEDINGS OR CLAIMS ARE PENDING OR THREATENED AGAINST ANY
INDEMNIFIED PERSON ASSERTING ANY DAMAGES, LOSSES OR LIABILITIES THAT ARE
INDEMNIFIED LIABILITIES UNDER SECTION 9.2 OF THE CREDIT AGREEMENT, AGENT SHALL,
AT GRANTOR’S EXPENSE, PROMPTLY DELIVER TO GRANTOR OR AUTHORIZE GRANTOR TO
PREPARE AND FILE TERMINATION STATEMENTS, MORTGAGE RELEASES AND OTHER DOCUMENTS
NECESSARY OR APPROPRIATE TO EVIDENCE THE TERMINATION OF THE LIENS SECURING
PAYMENT OF THE OBLIGATIONS.

 

(N)                                 FEDERAL CLAIMS.  GRANTOR SHALL NOTIFY AGENT
OF ANY COLLATERAL WHICH CONSTITUTES A CLAIM AGAINST THE UNITED STATES GOVERNMENT
OR ANY INSTRUMENTALITY OR AGENCY THEREOF, THE ASSIGNMENT OF WHICH CLAIM IS
RESTRICTED BY FEDERAL LAW.  UPON THE REQUEST OF AGENT, GRANTOR SHALL TAKE SUCH
STEPS AS MAY BE NECESSARY TO COMPLY WITH ANY APPLICABLE FEDERAL ASSIGNMENT OF
CLAIMS LAWS AND OTHER COMPARABLE LAWS.

 

(O)                                 HOT GOODS.  NONE OF THE INVENTORY OF GRANTOR
HAS BEEN OR WILL BE PRODUCED IN VIOLATION OF ANY PROVISION OF THE FAIR LABOR
STANDARDS ACT OF 1938, AS AMENDED, OR IN VIOLATION OF ANY OTHER LAW.

 

6.                                       AGENT’S APPOINTMENT AS
ATTORNEY-IN-FACT.

 

On the Closing Date each Grantor shall execute and deliver to Agent a power of
attorney (the “Power of Attorney”) substantially in the form attached hereto as
Exhibit A.  The power of attorney granted pursuant to the Power of Attorney is a
power coupled with an interest and shall be irrevocable until the Termination
Date.  The powers conferred on Agent, for the benefit of Agent and Lenders,
under the Power of Attorney are solely to protect Agent’s interests (for the
benefit of Agent and Lenders) in the Collateral and shall not impose any duty
upon Agent or any Lender to exercise any such powers.  Agent agrees that (a)
except for the powers granted in clause (h) of the Power of Attorney, it shall
not exercise any power or authority granted under the Power of Attorney unless
an Event of Default has occurred and is continuing, and (b) Agent shall account
for any moneys received by Agent in respect of any foreclosure on or disposition
of Collateral pursuant to the Power of Attorney provided that none of Agent or
any Lender shall have any duty as to any Collateral, and Agent and Lenders shall
be accountable only for amounts that they actually receive as a result of the
exercise of such powers.  NONE OF AGENT, LENDERS OR THEIR RESPECTIVE AFFILIATES,
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE
TO ANY GRANTOR FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR
OTHERWISE, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL
DAMAGES.

 

7.                                       REMEDIES:  RIGHTS UPON DEFAULT.

 

(A)                                  IN ADDITION TO ALL OTHER RIGHTS AND
REMEDIES GRANTED TO IT UNDER THIS SECURITY AGREEMENT, THE CREDIT AGREEMENT, THE
OTHER LOAN DOCUMENTS AND UNDER ANY OTHER

 

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INSTRUMENT OR AGREEMENT SECURING, EVIDENCING OR RELATING TO ANY OF THE
OBLIGATIONS, IF ANY EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING,
AGENT MAY EXERCISE ALL RIGHTS AND REMEDIES OF A SECURED PARTY UNDER THE CODE. 
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH GRANTOR EXPRESSLY AGREES
THAT IN ANY SUCH EVENT AGENT, WITHOUT DEMAND OF PERFORMANCE OR OTHER DEMAND,
ADVERTISEMENT OR NOTICE OF ANY KIND (EXCEPT THE NOTICE SPECIFIED BELOW OF TIME
AND PLACE OF PUBLIC OR PRIVATE SALE) TO OR UPON SUCH GRANTOR OR ANY OTHER PERSON
(ALL AND EACH OF WHICH DEMANDS, ADVERTISEMENTS AND NOTICES ARE HEREBY EXPRESSLY
WAIVED TO THE MAXIMUM EXTENT PERMITTED BY THE CODE AND OTHER APPLICABLE LAW),
MAY FORTHWITH ENTER UPON THE PREMISES OF SUCH GRANTOR WHERE ANY COLLATERAL IS
LOCATED THROUGH SELF-HELP, WITHOUT JUDICIAL PROCESS, WITHOUT FIRST OBTAINING A
FINAL JUDGMENT OR GIVING SUCH GRANTOR OR ANY OTHER PERSON NOTICE AND OPPORTUNITY
FOR A HEARING ON AGENT’S CLAIM OR ACTION AND MAY COLLECT, RECEIVE, ASSEMBLE,
PROCESS, APPROPRIATE AND REALIZE UPON THE COLLATERAL, OR ANY PART THEREOF, AND
MAY FORTHWITH SELL, LEASE, LICENSE, ASSIGN, GIVE AN OPTION OR OPTIONS TO
PURCHASE, OR SELL OR OTHERWISE DISPOSE OF AND DELIVER SAID COLLATERAL (OR
CONTRACT TO DO SO), OR ANY PART THEREOF, IN ONE OR MORE PARCELS AT A PUBLIC OR
PRIVATE SALE OR SALES, AT ANY EXCHANGE AT SUCH PRICES AS IT MAY DEEM ACCEPTABLE,
FOR CASH OR ON CREDIT OR FOR FUTURE DELIVERY WITHOUT ASSUMPTION OF ANY CREDIT
RISK.  AGENT OR ANY LENDER SHALL HAVE THE RIGHT UPON ANY SUCH PUBLIC SALE OR
SALES AND, TO THE EXTENT PERMITTED BY LAW, UPON ANY SUCH PRIVATE SALE OR SALES,
TO PURCHASE FOR THE BENEFIT OF AGENT AND LENDERS, THE WHOLE OR ANY PART OF SAID
COLLATERAL SO SOLD, FREE OF ANY RIGHT OR EQUITY OF REDEMPTION, WHICH EQUITY OF
REDEMPTION EACH GRANTOR HEREBY RELEASES.  SUCH SALES MAY BE ADJOURNED AND
CONTINUED FROM TIME TO TIME WITH OR WITHOUT NOTICE.  AGENT SHALL HAVE THE RIGHT
TO CONDUCT SUCH SALES ON ANY GRANTOR’S PREMISES OR ELSEWHERE AND SHALL HAVE THE
RIGHT TO USE ANY GRANTOR’S PREMISES WITHOUT CHARGE FOR SUCH TIME OR TIMES AS
AGENT DEEMS NECESSARY OR ADVISABLE.

 

If any Event of Default shall have occurred and be continuing, each Grantor
further agrees, at Agent’s request, to assemble the Collateral and make it
available to Agent at a place or places designated by Agent which are reasonably
convenient to Agent and such Grantor, , whether at such Grantor’s premises or
elsewhere.  Until Agent is able to effect a sale, lease, or other disposition of
Collateral, Agent shall have the right to hold or use Collateral, or any part
thereof, to the extent that it deems appropriate for the purpose of preserving
Collateral or its value or for any other purpose deemed appropriate by Agent. 
Agent shall have no obligation to any Grantor to maintain or preserve the rights
of such Grantor as against third parties with respect to Collateral while
Collateral is in the possession of Agent.  Agent may, if it so elects, seek the
appointment of a receiver or keeper to take possession of Collateral and to
enforce any of Agent’s remedies (for the benefit of Agent and Lenders), with
respect to such appointment without prior notice or hearing as to such
appointment.  Agent shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale to the Obligations as
provided in the Credit Agreement, and only after so paying over such net
proceeds, and after the payment by Agent of any other amount required by any
provision of law, need Agent account for the surplus, if any, to any Grantor. 
To the maximum extent permitted by applicable law, each Grantor waives all
claims, damages, and demands against Agent or any Lender arising out of the
repossession, retention or sale of the Collateral except such as arise solely
out of the gross negligence or willful misconduct of Agent or such Lender as
finally determined by a court of competent

 

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jurisdiction.  Each Grantor agrees that ten (10) days prior notice by Agent of
the time and place of any public sale or of the time after which a private sale
may take place is reasonable notification of such matters.  Grantors shall
remain liable for any deficiency if the proceeds of any sale or disposition of
the Collateral are insufficient to pay all Obligations, including any attorneys’
fees and other expenses incurred by Agent or any Lender to collect such
deficiency.

 

(B)                                 EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
HEREIN, EACH GRANTOR HEREBY WAIVES PRESENTMENT, DEMAND, PROTEST OR ANY NOTICE
(TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW) OF ANY KIND IN CONNECTION
WITH THIS SECURITY AGREEMENT OR ANY COLLATERAL.

 

(C)                                  TO THE EXTENT THAT APPLICABLE LAW IMPOSES
DUTIES ON THE AGENT TO EXERCISE REMEDIES IN A COMMERCIALLY REASONABLE MANNER,
EACH GRANTOR ACKNOWLEDGES AND AGREES THAT IT IS NOT COMMERCIALLY UNREASONABLE
FOR THE AGENT (I) TO FAIL TO INCUR EXPENSES REASONABLY DEEMED SIGNIFICANT BY THE
AGENT TO PREPARE COLLATERAL FOR DISPOSITION OR OTHERWISE TO COMPLETE RAW
MATERIAL OR WORK IN PROCESS INTO FINISHED GOODS OR OTHER FINISHED PRODUCTS FOR
DISPOSITION, (II) TO FAIL TO OBTAIN THIRD PARTY CONSENTS FOR ACCESS TO
COLLATERAL TO BE DISPOSED OF, OR TO OBTAIN OR, IF NOT REQUIRED BY OTHER LAW, TO
FAIL TO OBTAIN GOVERNMENTAL OR THIRD PARTY CONSENTS FOR THE COLLECTION OR
DISPOSITION OF COLLATERAL TO BE COLLECTED OR DISPOSED OF, (III) TO FAIL TO
EXERCISE COLLECTION REMEDIES AGAINST ACCOUNT DEBTORS OR OTHER PERSONS OBLIGATED
ON COLLATERAL OR TO REMOVE LIENS ON OR ANY ADVERSE CLAIMS AGAINST COLLATERAL,
(IV) TO EXERCISE COLLECTION REMEDIES AGAINST ACCOUNT DEBTORS AND OTHER PERSONS
OBLIGATED ON COLLATERAL DIRECTLY OR THROUGH THE USE OF COLLECTION AGENCIES AND
OTHER COLLECTION SPECIALISTS, (V) TO ADVERTISE DISPOSITIONS OF COLLATERAL
THROUGH PUBLICATIONS OR MEDIA OF GENERAL CIRCULATION, WHETHER OR NOT THE
COLLATERAL IS OF A SPECIALIZED NATURE, (VI) TO CONTACT OTHER PERSONS, WHETHER OR
NOT IN THE SAME BUSINESS AS THE GRANTOR, FOR EXPRESSIONS OF INTEREST IN
ACQUIRING ALL OR ANY PORTION OF SUCH COLLATERAL, (VII) TO HIRE ONE OR MORE
PROFESSIONAL AUCTIONEERS TO ASSIST IN THE DISPOSITION OF COLLATERAL, WHETHER OR
NOT THE COLLATERAL IS OF A SPECIALIZED NATURE, (VIII) TO DISPOSE OF COLLATERAL
BY UTILIZING INTERNET SITES THAT PROVIDE FOR THE AUCTION OF ASSETS OF THE TYPES
INCLUDED IN THE COLLATERAL OR THAT HAVE THE REASONABLE CAPACITY OF DOING SO, OR
THAT MATCH BUYERS AND SELLERS OF ASSETS, (IX) TO DISPOSE OF ASSETS IN WHOLESALE
RATHER THAN RETAIL MARKETS, (X) TO DISCLAIM DISPOSITION WARRANTIES, SUCH AS
TITLE, POSSESSION OR QUIET ENJOYMENT, (XI) TO PURCHASE INSURANCE OR CREDIT
ENHANCEMENTS TO INSURE THE AGENT AGAINST RISKS OF LOSS, COLLECTION OR
DISPOSITION OF COLLATERAL OR TO PROVIDE TO THE AGENT A GUARANTEED RETURN FROM
THE COLLECTION OR DISPOSITION OF COLLATERAL, OR (XII) TO THE EXTENT DEEMED
APPROPRIATE BY THE AGENT, TO OBTAIN THE SERVICES OF OTHER BROKERS, INVESTMENT
BANKERS, CONSULTANTS AND OTHER PROFESSIONALS TO ASSIST THE AGENT IN THE
COLLECTION OR DISPOSITION OF ANY OF THE COLLATERAL.  EACH GRANTOR ACKNOWLEDGES
THAT THE PURPOSE OF THIS SECTION 7(C) IS TO PROVIDE NON-EXHAUSTIVE INDICATIONS
OF WHAT ACTIONS OR OMISSIONS BY THE AGENT WOULD NOT BE COMMERCIALLY UNREASONABLE
IN THE AGENT’S EXERCISE OF REMEDIES AGAINST THE COLLATERAL AND THAT OTHER
ACTIONS OR OMISSIONS BY THE AGENT SHALL NOT BE DEEMED COMMERCIALLY UNREASONABLE
SOLELY ON ACCOUNT OF NOT BEING INDICATED IN THIS SECTION 7(C).  WITHOUT
LIMITATION UPON THE FOREGOING, NOTHING CONTAINED IN THIS SECTION 7(C) SHALL BE
CONSTRUED TO GRANT ANY RIGHTS TO ANY GRANTOR OR TO IMPOSE ANY DUTIES ON AGENT
THAT WOULD NOT HAVE BEEN GRANTED OR IMPOSED BY THIS SECURITY AGREEMENT OR BY
APPLICABLE LAW IN THE ABSENCE OF THIS SECTION 7(C).

 

17

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(D)                                 NEITHER THE AGENT NOR THE LENDERS SHALL BE
REQUIRED TO MAKE ANY DEMAND UPON, OR PURSUE OR EXHAUST ANY OF THEIR RIGHTS OR
REMEDIES AGAINST, ANY GRANTOR, ANY OTHER OBLIGOR, GUARANTOR, PLEDGOR OR ANY
OTHER PERSON WITH RESPECT TO THE PAYMENT OF THE OBLIGATIONS OR TO PURSUE OR
EXHAUST ANY OF THEIR RIGHTS OR REMEDIES WITH RESPECT TO ANY COLLATERAL THEREFOR
OR ANY DIRECT OR INDIRECT GUARANTEE THEREOF.  NEITHER THE AGENT NOR THE LENDERS
SHALL BE REQUIRED TO MARSHAL THE COLLATERAL OR ANY GUARANTEE OF THE OBLIGATIONS
OR TO RESORT TO THE COLLATERAL OR ANY SUCH GUARANTEE IN ANY PARTICULAR ORDER,
AND ALL OF ITS AND THEIR RIGHTS HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT SHALL
BE CUMULATIVE.  TO THE EXTENT IT MAY LAWFULLY DO SO, EACH GRANTOR ABSOLUTELY AND
IRREVOCABLY WAIVES AND RELINQUISHES THE BENEFIT AND ADVANTAGE OF, AND COVENANTS
NOT TO ASSERT AGAINST THE AGENT OR ANY LENDER, ANY VALUATION, STAY,
APPRAISEMENT, EXTENSION, REDEMPTION OR SIMILAR LAWS AND ANY AND ALL RIGHTS OR
DEFENSES IT MAY HAVE AS A SURETY NOW OR HEREAFTER EXISTING WHICH, BUT FOR THIS
PROVISION, MIGHT BE APPLICABLE TO THE SALE OF ANY COLLATERAL MADE UNDER THE
JUDGMENT, ORDER OR DECREE OF ANY COURT, OR PRIVATELY UNDER THE POWER OF SALE
CONFERRED BY THIS SECURITY AGREEMENT, OR OTHERWISE.

 

18

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8.                                       GRANT OF LICENSE TO USE INTELLECTUAL
PROPERTY COLLATERAL.  FOR THE PURPOSE OF ENABLING AGENT TO EXERCISE RIGHTS AND
REMEDIES UNDER SECTION 7 HEREOF (INCLUDING, WITHOUT LIMITING THE TERMS OF
SECTION 7 HEREOF, IN ORDER TO TAKE POSSESSION OF, HOLD, PRESERVE, PROCESS,
ASSEMBLE, PREPARE FOR SALE, MARKET FOR SALE, SELL OR OTHERWISE DISPOSE OF
COLLATERAL) AT SUCH TIME AS AGENT SHALL BE LAWFULLY ENTITLED TO EXERCISE SUCH
RIGHTS AND REMEDIES, EACH GRANTOR HEREBY GRANTS TO AGENT, FOR THE BENEFIT OF
AGENT AND LENDERS, AN IRREVOCABLE, NONEXCLUSIVE LICENSE (EXERCISABLE WITHOUT
PAYMENT OF ROYALTY OR OTHER COMPENSATION TO SUCH GRANTOR) TO USE, LICENSE OR
SUBLICENSE ANY INTELLECTUAL PROPERTY NOW OWNED OR HEREAFTER ACQUIRED BY SUCH
GRANTOR, AND WHEREVER THE SAME MAY BE LOCATED, AND INCLUDING IN SUCH LICENSE
ACCESS TO ALL MEDIA IN WHICH ANY OF THE LICENSED ITEMS MAY BE RECORDED OR STORED
AND TO ALL COMPUTER SOFTWARE AND PROGRAMS USED FOR THE COMPILATION OR PRINTOUT
THEREOF.

 

9.                                       LIMITATION ON AGENT’S AND LENDERS’ DUTY
IN RESPECT OF COLLATERAL.  AGENT AND EACH LENDER SHALL USE REASONABLE CARE WITH
RESPECT TO THE COLLATERAL IN ITS POSSESSION OR UNDER ITS CONTROL.  NEITHER AGENT
NOR ANY LENDER SHALL HAVE ANY OTHER DUTY AS TO ANY COLLATERAL IN ITS POSSESSION
OR CONTROL OR IN THE POSSESSION OR CONTROL OF ANY AGENT OR NOMINEE OF AGENT OR
SUCH LENDER, OR ANY INCOME THEREON OR AS TO THE PRESERVATION OF RIGHTS AGAINST
PRIOR PARTIES OR ANY OTHER RIGHTS PERTAINING THERETO.

 

10.                                 REINSTATEMENT.  THIS SECURITY AGREEMENT
SHALL REMAIN IN FULL FORCE AND EFFECT AND CONTINUE TO BE EFFECTIVE SHOULD ANY
PETITION BE FILED BY OR AGAINST ANY GRANTOR FOR LIQUIDATION OR REORGANIZATION,
SHOULD ANY GRANTOR BECOME INSOLVENT OR MAKE AN ASSIGNMENT FOR THE BENEFIT OF ANY
CREDITOR OR CREDITORS OR SHOULD A RECEIVER OR TRUSTEE BE APPOINTED FOR ALL OR
ANY SIGNIFICANT PART OF ANY GRANTOR’S ASSETS, AND SHALL CONTINUE TO BE EFFECTIVE
OR BE REINSTATED, AS THE CASE MAY BE, IF AT ANY TIME PAYMENT AND PERFORMANCE OF
THE OBLIGATIONS, OR ANY PART THEREOF, IS, PURSUANT TO APPLICABLE LAW, RESCINDED
OR REDUCED IN AMOUNT, OR MUST OTHERWISE BE RESTORED OR RETURNED BY ANY OBLIGEE
OF THE OBLIGATIONS, WHETHER AS A “VOIDABLE PREFERENCE,” “FRAUDULENT CONVEYANCE,”
OR OTHERWISE, ALL AS THOUGH SUCH PAYMENT OR PERFORMANCE HAD NOT BEEN MADE.  IN
THE EVENT THAT ANY PAYMENT, OR ANY PART THEREOF, IS RESCINDED, REDUCED, RESTORED
OR RETURNED, THE OBLIGATIONS SHALL BE REINSTATED AND DEEMED REDUCED ONLY BY SUCH
AMOUNT PAID AND NOT SO RESCINDED, REDUCED, RESTORED OR RETURNED.

 

11.                                 NOTICES.  EXCEPT AS OTHERWISE PROVIDED
HEREIN, WHENEVER IT IS PROVIDED HEREIN THAT ANY NOTICE, DEMAND, REQUEST,
CONSENT, APPROVAL, DECLARATION OR OTHER COMMUNICATION SHALL OR MAY BE GIVEN TO
OR SERVED UPON ANY OF THE PARTIES BY ANY OTHER PARTY, OR WHENEVER ANY OF THE
PARTIES DESIRES TO GIVE AND SERVE UPON ANY OTHER PARTY ANY COMMUNICATION WITH
RESPECT TO THIS SECURITY AGREEMENT, EACH SUCH NOTICE, DEMAND, REQUEST, CONSENT,
APPROVAL, DECLARATION OR OTHER COMMUNICATION SHALL BE IN WRITING AND SHALL BE
GIVEN IN THE MANNER, AND DEEMED RECEIVED, AS PROVIDED FOR IN THE CREDIT
AGREEMENT.

 

19

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12.                                 SEVERABILITY.  WHENEVER POSSIBLE, EACH
PROVISION OF THIS SECURITY AGREEMENT SHALL BE INTERPRETED IN A MANNER AS TO BE
EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS SECURITY
AGREEMENT SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION
SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY WITHOUT
INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
SECURITY AGREEMENT.  THIS SECURITY AGREEMENT IS TO BE READ, CONSTRUED AND
APPLIED TOGETHER WITH THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS WHICH,
TAKEN TOGETHER, SET FORTH THE COMPLETE UNDERSTANDING AND AGREEMENT OF AGENT,
LENDERS AND GRANTORS WITH RESPECT TO THE MATTERS REFERRED TO HEREIN AND THEREIN.

 

13.                                 NO WAIVER; CUMULATIVE REMEDIES.  NEITHER
AGENT NOR ANY LENDER SHALL BY ANY ACT, DELAY, OMISSION OR OTHERWISE BE DEEMED TO
HAVE WAIVED ANY OF ITS RIGHTS OR REMEDIES HEREUNDER, AND NO WAIVER SHALL BE
VALID UNLESS IN WRITING, SIGNED BY AGENT AND THEN ONLY TO THE EXTENT THEREIN SET
FORTH.  A WAIVER BY AGENT OF ANY RIGHT OR REMEDY HEREUNDER ON ANY ONE OCCASION
SHALL NOT BE CONSTRUED AS A BAR TO ANY RIGHT OR REMEDY WHICH AGENT WOULD
OTHERWISE HAVE HAD ON ANY FUTURE OCCASION.  NO FAILURE TO EXERCISE NOR ANY DELAY
IN EXERCISING ON THE PART OF AGENT OR ANY LENDER, ANY RIGHT, POWER OR PRIVILEGE
HEREUNDER, SHALL OPERATE AS A WAIVER THEREOF, NOR SHALL ANY SINGLE OR PARTIAL
EXERCISE OF ANY RIGHT, POWER OR PRIVILEGE HEREUNDER PRECLUDE ANY OTHER OR FUTURE
EXERCISE THEREOF OR THE EXERCISE OF ANY OTHER RIGHT, POWER OR PRIVILEGE.  THE
RIGHTS AND REMEDIES HEREUNDER PROVIDED ARE CUMULATIVE AND MAY BE EXERCISED
SINGLY OR CONCURRENTLY, AND ARE NOT EXCLUSIVE OF ANY RIGHTS AND REMEDIES
PROVIDED BY LAW.  NONE OF THE TERMS OR PROVISIONS OF THIS SECURITY AGREEMENT MAY
BE WAIVED, ALTERED, MODIFIED OR AMENDED EXCEPT BY AN INSTRUMENT IN WRITING, DULY
EXECUTED BY AGENT AND GRANTORS.

 

14.                                 LIMITATION BY LAW.  ALL RIGHTS, REMEDIES AND
POWERS PROVIDED IN THIS SECURITY AGREEMENT MAY BE EXERCISED ONLY TO THE EXTENT
THAT THE EXERCISE THEREOF DOES NOT VIOLATE ANY APPLICABLE PROVISION OF LAW, AND
ALL THE PROVISIONS OF THIS SECURITY AGREEMENT ARE INTENDED TO BE SUBJECT TO ALL
APPLICABLE MANDATORY PROVISIONS OF LAW THAT MAY BE CONTROLLING AND TO BE LIMITED
TO THE EXTENT NECESSARY SO THAT THEY SHALL NOT RENDER THIS SECURITY AGREEMENT
INVALID, UNENFORCEABLE, IN WHOLE OR IN PART, OR NOT ENTITLED TO BE RECORDED,
REGISTERED OR FILED UNDER THE PROVISIONS OF ANY APPLICABLE LAW.

 

15.                                 TERMINATION OF THIS SECURITY AGREEMENT. 
SUBJECT TO SECTION 10 HEREOF, THIS SECURITY AGREEMENT SHALL TERMINATE UPON THE
TERMINATION DATE.

 

16.                                 SUCCESSORS AND ASSIGNS.  THIS SECURITY
AGREEMENT AND ALL OBLIGATIONS OF GRANTORS HEREUNDER SHALL BE BINDING UPON THE
SUCCESSORS AND ASSIGNS OF EACH GRANTOR (INCLUDING ANY DEBTOR-IN-POSSESSION ON
BEHALF OF SUCH GRANTOR) AND SHALL, TOGETHER WITH THE RIGHTS AND REMEDIES OF
AGENT, FOR THE BENEFIT OF AGENT AND LENDERS, HEREUNDER, INURE TO THE BENEFIT OF
AGENT AND LENDERS, ALL FUTURE HOLDERS OF ANY INSTRUMENT EVIDENCING ANY OF THE
OBLIGATIONS AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.  NO SALES OF
PARTICIPATIONS, OTHER SALES, ASSIGNMENTS, TRANSFERS OR OTHER DISPOSITIONS OF ANY
AGREEMENT GOVERNING OR INSTRUMENT EVIDENCING THE OBLIGATIONS OR ANY PORTION
THEREOF OR INTEREST THEREIN SHALL IN ANY MANNER IMPAIR THE LIEN GRANTED TO
AGENT, FOR THE BENEFIT OF AGENT AND LENDERS, HEREUNDER.  NO GRANTOR MAY ASSIGN,
SELL, HYPOTHECATE OR OTHERWISE TRANSFER ANY INTEREST IN OR OBLIGATION UNDER THIS
SECURITY AGREEMENT.

 

20

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

 

17.                                 COUNTERPARTS.  THIS SECURITY AGREEMENT MAY
BE AUTHENTICATED IN ANY NUMBER OF SEPARATE COUNTERPARTS, EACH OF WHICH SHALL
COLLECTIVELY AND SEPARATELY CONSTITUTE ONE AGREEMENT.  THIS SECURITY AGREEMENT
MAY BE AUTHENTICATED BY MANUAL SIGNATURE, FACSIMILE OR, IF APPROVED IN WRITING
BY AGENT, ELECTRONIC MEANS, ALL OF WHICH SHALL BE EQUALLY VALID.

 

18.                                                                              
GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.  EACH GRANTOR HEREBY SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH GRANTOR IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.  EACH OF THE PARTIES HERETO IRREVOCABLY
CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION
11.3 OF THE CREDIT AGREEMENT.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT
OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW.

 

19.                               WAIVER OF JURY TRIAL.  EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY AND TO THE FULLEST EXTENT PERMITTED BY LAW WAIVES ANY
RIGHTS THAT IT MAY HAVE TO CLAIM OR RECEIVE CONSEQUENTIAL OR SPECIAL DAMAGES IN
CONNECTION WITH ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.

 

20.                                 SECTION TITLES.  THE SECTION TITLES
CONTAINED IN THIS SECURITY AGREEMENT ARE AND SHALL BE WITHOUT SUBSTANTIVE
MEANING OR CONTENT OF ANY KIND WHATSOEVER AND ARE NOT A PART OF THE AGREEMENT
BETWEEN THE PARTIES HERETO.

 

21.                                 NO STRICT CONSTRUCTION.  THE PARTIES HERETO
HAVE PARTICIPATED JOINTLY IN THE NEGOTIATION AND DRAFTING OF THIS SECURITY
AGREEMENT.  IN THE EVENT AN AMBIGUITY OR QUESTION OF INTENT OR INTERPRETATION
ARISES, THIS SECURITY AGREEMENT SHALL BE CONSTRUED AS IF DRAFTED JOINTLY BY THE
PARTIES HERETO AND NO PRESUMPTION OR BURDEN OF PROOF SHALL ARISE FAVORING OR
DISFAVORING ANY PARTY BY VIRTUE OF THE AUTHORSHIP OF ANY PROVISIONS OF THIS
SECURITY AGREEMENT.

 

21

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22.                                 ADVICE OF COUNSEL.  EACH OF THE PARTIES
REPRESENTS TO EACH OTHER PARTY HERETO THAT IT HAS DISCUSSED THIS SECURITY
AGREEMENT AND, SPECIFICALLY, THE PROVISIONS OF SECTION 18 AND SECTION 19, WITH
ITS COUNSEL.

 

23.                                 BENEFIT OF LENDERS.  ALL LIENS GRANTED OR
CONTEMPLATED HEREBY SHALL BE FOR THE BENEFIT OF AGENT, INDIVIDUALLY, AND
LENDERS, AND ALL PROCEEDS OR PAYMENTS REALIZED FROM COLLATERAL IN ACCORDANCE
HEREWITH SHALL BE APPLIED TO THE OBLIGATIONS IN ACCORDANCE WITH THE TERMS OF THE
CREDIT AGREEMENT.

 

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK; SIGNATURE PAGES FOLLOW]

 

22

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IN WITNESS WHEREOF, EACH OF THE PARTIES HERETO HAS CAUSED THIS GUARANTOR
SECURITY AGREEMENT TO BE EXECUTED AND DELIVERED BY ITS DULY AUTHORIZED OFFICER
AS OF THE DATE FIRST SET FORTH ABOVE.

 

 

GRANTOR(S):

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

GENERAL ELECTRIC CAPITAL CORPORATION, as Agent

 

By:

 

 

 

Name:

 

 

 

Its Duly Authorized Signatory

 

 

 

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

 

SCHEDULE I

to

SECURITY AGREEMENT

 

 

FILING JURISDICTIONS

 

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

 

SCHEDULE II

to

SECURITY AGREEMENT

 

 

INSTRUMENTS

CHATTEL PAPER

AND

LETTER OF CREDIT RIGHTS

 

 

[to be completed by Grantors]

 

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

 

SCHEDULE   

to

SECURITY AGREEMENT

 

 

SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS CONCERNING              ’S COLLATERAL

 

 

I.                                         Grantor’s official name:

 

II.                                     Type of entity:

 

III.                                 Organizational identification number issued
by Grantor’s state of incorporation or organization or a statement that no such
number has been issued:

 

IV.                                 State or Incorporation or Organization of
              :

 

V.                                     Chief Executive Office and principal
place of business of                    :

 

VI.                                 Corporate Offices of
                       :

 

VII.                             Warehouses:

 

VIII.                         Other Premises at which Collateral is Stored or
Located:

 

IX.                                Locations of Records Concerning Collateral:

 

[to be completed by Grantors]

 

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

 

SCHEDULE IV

to

SECURITY AGREEMENT

 

 

PATENTS, TRADEMARKS AND COPYRIGHTS

 

 

[XYZ]

 

[ABC]

 

[DEF]

 

 

 

[to be completed by Grantors]

 

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

EXHIBIT A

 

POWER OF ATTORNEY

 

This Power of Attorney is executed and delivered by the Grantors signatory
hereto (“Grantors”) to General Electric Capital Corporation, a Delaware
corporation (hereinafter referred to as “Attorney”), as Agent for the benefit of
Agent and Lenders, under a Credit Agreement, dated as of
                            , 20    , and a Guarantor Security Agreement, dated
as of                             , 20    , and other related documents (the
“Loan Documents”).  No person to whom this Power of Attorney is presented, as
authority for Attorney to take any action or actions contemplated hereby, shall
be required to inquire into or seek confirmation from Grantors as to the
authority of Attorney to take any action described below, or as to the existence
of or fulfillment of any condition to this Power of Attorney, which is intended
to grant to Attorney unconditionally the authority to take and perform the
actions contemplated herein, and Grantors irrevocably waive any right to
commence any suit or action, in law or equity, against any person or entity
which acts in reliance upon or acknowledges the authority granted under this
Power of Attorney.  The power of attorney granted hereby is coupled with an
interest, and may not be revoked or canceled by Grantors without Attorney’s
written consent.

 

Grantors hereby irrevocably constitute and appoint Attorney (and all officers,
employees or agents designated by Attorney), with full power of substitution, as
Grantors’ true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of Grantors and in the name of Grantors or in
its own name, from time to time in Attorney’s discretion, to take any and all
appropriate action and to execute and deliver any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
the Loan Documents and, without limiting the generality of the foregoing,
Grantors hereby grant to Attorney the power and right, on behalf of Grantors,
without notice to or assent by Grantors, and at any time, to do the following:
(a) change the mailing address of Grantors, open a post office box on behalf of
Grantors, open mail for Grantors, and ask, demand, collect, give acquittances
and receipts for, take possession of, endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, and notices in connection with any property of
Grantors; (b) effect any repairs to any asset of Grantors, or continue or obtain
any insurance and pay all or any part of the premiums therefor and costs
thereof, and make, settle and adjust all claims under such policies of
insurance, and make all determinations and decisions with respect to such
policies; (c) pay or discharge any taxes, liens, security interests, or other
encumbrances levied or placed on or threatened against Grantors or its property;
(d) defend any suit, action or proceeding brought against Grantors if Grantors
do not defend such suit, action or proceeding or if Attorney believes that
Grantors are not pursuing such defense in a manner that will maximize the
recovery to Attorney, and settle, compromise or adjust any suit, action, or
proceeding described above and, in connection therewith, give such discharges or
releases as Attorney may deem appropriate; (e) file or prosecute any claim,
litigation, suit or proceeding in any court of competent jurisdiction or before
any arbitrator, or take any other action otherwise deemed appropriate by
Attorney for the purpose of collecting any and all such moneys due to Grantors
whenever payable and to enforce any other right in respect of Grantors’
property; (f) cause the certified public accountants then

 

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

 

engaged by Grantors to prepare and deliver to Attorney at any time and from time
to time, promptly upon Attorney’s request, the following reports: (1) a
reconciliation of all accounts, (2) an aging of all accounts, (3) trial
balances, (4) test verifications of such accounts as Attorney may request, and
(5) the results of each physical verification of inventory; (g) communicate in
its own name with any party to any Contract with regard to the assignment of the
right, title and interest of such Grantors in and under the Contracts and other
matters relating thereto; (h) to file such financing statements with respect to
the Security Agreement, with or without Grantors’ signature, or to file a
photocopy of the Security Agreement in substitution for a financing statement,
as the Agent may deem appropriate and to execute in Grantors’ name such
financing statements and amendments thereto and continuation statements which
may require the Grantors’ signature; and (i) execute, in connection with any
sale provided for in any Loan Document, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral and to
otherwise direct such sale or resale, all as though Attorney were the absolute
owner of the property of Grantors for all purposes, and to do, at Attorney’s
option and Grantors’ expense, at any time or from time to time, all acts and
other things that Attorney reasonably deems necessary to perfect, preserve, or
realize upon Grantors’ property or assets and Attorney’s Liens thereon, all as
fully and effectively as Grantors might do.  Grantors hereby ratify, to the
extent permitted by law, all that said Attorney shall lawfully do or cause to be
done by virtue hereof.

 

IN WITNESS WHEREOF, this Power of Attorney is executed by Grantors, and Grantors
have caused its seal to be affixed pursuant to the authority of each of their
board of directors this          day of                     , 20    .

 

 

 

GRANTOR(S):

 

 

 

 

 

[                                                                      ]

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

NOTARY PUBLIC CERTIFICATE

 

On this            day of                       , 20    ,
[                          ] who is personally known to me appeared before me in
his/her capacity as the [                          ] of Grantors (“Grantors”)
and executed on behalf of Grantor the Power of Attorney in favor of General
Electric Capital Corporation to which this Certificate is attached.

 

 

 

 

Notary Public

 

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

 

EXHIBIT I

 

April 23, 2004

 

General Electric Capital Corporation, as Agent and Lender
and the Persons who are from time to time
Lenders under the Credit Agreement

2 Bethesda Metro Center, Suite 600

Bethesda, Maryland  20814

 

Ladies and Gentlemen:

 

We have acted as special counsel to Curative Health Services, Inc., a Minnesota
corporation (“Curative”), Curative Health Services Co., a Minnesota corporation
(“CHSC”), eBioCare.com, Inc., a Delaware corporation (“eBioCare”), Hemophilia
Access, Inc., a Tennessee corporation (“Access”), Apex Therapeutic Care, Inc., a
California corporation (“Apex”), CHS Services, Inc., a Delaware corporation
(“CHS”), Curative Health Services of New York, Inc., a New York corporation
(“CNY”), Critical Care Systems, Inc., a Delaware corporation (“CCS”), Infinity
Infusion, LLC, a Delaware limited liability company (“Infinity”), Infinity
Infusion II, LLC, a Delaware limited liability company (“Infinity II”), Optimal
Care Plus, Inc., a Delaware corporation (“Optimal”), Infinity Infusion Care,
Ltd., a Texas limited partnership (“Infinity Infusion”), MedCare, Inc., a
Delaware corporation (“MedCare”), and Curative Pharmacy Services, Inc., a
Delaware corporation (“CPS”; Curative, CHSC, eBioCare, Access, Apex, CHS, CNY,
CCS, Infinity, Infinity II, Optimal, Infinity Infusion, MedCare and CPS,
collectively, the “Borrowers” and individually and without distinction, a
“Borrower”) in connection with that certain Amended and Restated Credit
Agreement, dated as of April 23, 2004 (the “Credit Agreement”), among the
Borrowers, the Lenders signatory thereto, and General Electric Capital
Corporation, a Delaware corporation (“GE Capital”), individually and in its
capacity as Agent for Lenders (in such capacity, the “Agent”).  We have also
acted as special counsel to Curative Health Services III Co., a Minnesota
corporation (“CHSIII”; CHSIII, together with the Borrowers may be referred to
herein collectively as the “Credit Parties” and individually and without
distinction as a “Credit Party”) in connection with the Reaffirmation
Agreement.  As such counsel, we have reviewed the corporate actions necessary to
authorize the execution and delivery of, and have examined, the Credit Agreement
as executed by the Borrowers, the UCC financing statements attached on Exhibit B
hereto (which are referred to herein as the “Financing Statements”), and the
other agreements described on Exhibit A hereto (the Credit Agreement, the
Financing Statements, and the other agreements set

 

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

 

forth on Exhibit A hereto are referred to herein collectively as the “Loan
Documents”, and individually and without distinction, as a “Loan Document”). 
This opinion is being delivered to the Agent and the Lenders at the request of
the Credit Parties pursuant to Section 3.1(a) of the Credit Agreement.

 

Capitalized terms defined in this opinion and in the exhibits hereto are used
herein and therein as so defined.

 

In connection with this opinion, we have examined the Loan Documents and the
following documents:

 

(i)                                                             a copy of the
articles of incorporation of Curative, certified as of April 16, 2004 as a true
copy by the Minnesota Secretary of State;

 

(ii)                                                          a copy of the
articles of incorporation of CHSC, certified as of April 16, 2004 as a true copy
by the Minnesota Secretary of State;

 

(iii)                                                       a copy of the
certificate of incorporation of eBioCare, certified as of April 16, 2004 as a
true copy by the Delaware Secretary of State;

 

(iv)                                                      a copy of the charter
of Access, certified as of April 16, 2004 as a true copy by the Tennessee
Secretary of State;

 

(v)                                                         a copy of the
amended and restated articles of incorporation of Apex, certified as of
April 19, 2004 as a true copy by the California Secretary of State;

 

(vi)                                                      a copy of the restated
certificate of incorporation of CHS, certified as of April 16, 2004 as a true
copy by the Delaware Secretary of State;

 

(vii)                                                   a copy of the
certificate of incorporation of CNY, certified as of April 19, 2004 as a true
copy by the New York Secretary of State;

 

(viii)                                                a copy of the amended and
restated certificate of incorporation of CCS, certified as of April 16, 2004 as
a true copy by the Delaware Secretary of State;

 

(ix)                                                        a copy of the
certificate of incorporation of Optimal, certified as of April 16, 2004 as a
true copy by the Delaware Secretary of State;

 

(x)                                                           a copy of the
certificate of formation of Infinity, certified as of April 16, 2004 as a true
copy by the Delaware Secretary of State;

 

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(xi)                                                        a copy of the
certificate of formation of Infinity II, certified as of April 16, 2004 as a
true copy by the Delaware Secretary of State;

 

(xii)                                                     a certificate of
limited partnership of Infinity Infusion, certified as of April 16, 2004 as a
true copy by the Texas Secretary of State;

 

(xiii)                                                  a copy of the
certificate of incorporation of MedCare, certified as of April 16, 2004 as a
true copy by the Delaware Secretary of State;

 

(xiv)                                                 a copy of the certificate
of incorporation of CPS, certified as of April 16, 2004 as a true copy by the
Delaware Secretary of State;

 

(xv)                                                    a copy of the articles
of incorporation of CHSIII, certified as of April 16, 2004 as a true copy by the
Minnesota Secretary of State;

 

(xvi)                                                 a Certificate of Good
Standing concerning Curative from the Minnesota Secretary of State issued
April 16, 2004;

 

(xvii)                                              a Certificate of Good
Standing concerning CHSC from the Minnesota Secretary of State issued April 16,
2004, a certificate qualifying CHSC in the state of Alabama from the Alabama
Secretary of State issued April 20, 2004, a Certificate of Good Standing
concerning CHSC from the Arizona Corporation Commission Secretary issued
April 20, 2004, a Certificate of Good Standing concerning CHSC from the Arkansas
Secretary of State issued April 20, 2004, a Certificate of Good Standing
concerning CHSC from the California Secretary of State issued April 9, 2004, a
Certificate of Good Standing concerning CHSC from the Colorado Secretary of
State issued April 15, 2004, a Certificate of Good Standing concerning CHSC from
the Connecticut Secretary of State issued April 21, 2004, a Certificate of Good
Standing concerning CHSC from the Delaware Secretary of State issued April 19,
2004, a Certificate of Authorization concerning CHSC from the Florida Department
of State issued April 20, 2004, a Certificate of Existence concerning CHSC from
the Georgia Secretary of State issued April 20, 2004, a Certificate of Good
Standing concerning CHSC from the Illinois Secretary of State issued April 20,
2004, a Certificate of Authorization concerning CHSC from the Indiana Secretary
of State issued April 20, 2004, a Certificate of Authorization concerning CHSC
from the Iowa Secretary of State issued April 20, 2004, a Certificate of Good
Standing concerning CHSC from the Kansas Secretary of State issued April 21,
2004, a Certificate of Authorization concerning CHSC from the Kentucky Secretary
of State issued April 20, 2004, a Certificate of Good Standing concerning CHSC
from the Louisiana

 

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Secretary of State issued April 20, 2004, a Certificate of Good Standing
concerning CHSC from the Maryland Department of Assessments and Taxation issued
April 20, 2004, a Certificate of Qualification concerning CHSC from the
Massachusetts Secretary of the Commonwealth issued April 20, 2004, a Certificate
of Good Standing concerning CHSC from the Michigan Department of Consumer and
Industry Services issued April 20, 2004, a Certificate of Authority concerning
CHSC from the Mississippi Secretary of State issued April 20, 2004, a
Certificate of Good Standing concerning CHSC from the Missouri Secretary of
State issued April 21, 2004, a Certificate of Authorization concerning CHSC from
the Montana Secretary of State issued April 20, 2004, a Certificate of Good
Standing concerning CHSC from the Nebraska Secretary of State issued April 21,
2004, a Certificate of Authorization concerning CHSC from the New Hampshire
Department of State issued April 20, 2004, a Certificate of Good Standing
concerning CHSC from the New Jersey Department of Treasury issued April 20,
2004, a Certificate of Good Standing concerning CHSC from the New Mexico Office
of the Public Regulation Commission issued April 20, 2004, a certificate of
Authority to do Business concerning CHSC from the New York Secretary of State
issued April 2, 2004, a Certificate of Authorization concerning CHSC from the
North Carolina Secretary of State issued April 20, 2004, a Certificate of Good
Standing concerning CHSC from the Ohio Secretary of State issued April 20, 2004,
a Certificate of Good Standing concerning CHSC from the Oklahoma Secretary of
State issued April 20, 2004, a certificate of authority to do business
concerning CHSC from the Oregon Secretary of State issued April 20, 2004, a
Certificate of Good Standing concerning CHSC from the Rhode Island Secretary of
State issued April 21, 2004, a Certificate of Authorization concerning CHSC from
the South Carolina Secretary of State issued April 20, 2004, a Certificate of
Authorization concerning CHSC from the Tennessee Secretary of State issued
April 20, 2004, a Certificate of Authority concerning CHSC from the Texas
Secretary of State issued April 20, 2004, a Certificate of Good Standing
concerning CHSC from the Virginia State Corporation Commission issued April 20,
2004, a Certificate of Existence/Authorization concerning CHSC from the
Washington Secretary of State issued April 20, 2004, a Certificate of Good
Standing concerning CHSC from the West Virginia Secretary of State issued
April 20, 2004, and a Certificate of Good Standing concerning CHSC from the
Wisconsin Department of Financial Institutions issued April 21, 2004;

 

(xviii)                                           a Certificate of
Status—Domestic Corporation concerning Apex from the California Secretary of
State issued April 9, 2004, a Certificate of Good

 

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Standing concerning Apex from the Florida Secretary of State issued April 20,
2004, a Certificate of Good Standing concerning Apex from the Illinois Secretary
of State issued April 20, 2004, a Certificate of Good Standing concerning Apex
from the Indiana Secretary of State issued April 20, 2004,a Certificate of Good
Standing concerning Apex from the Kentucky Secretary of State issued April 20,
2004,  a Certificate of Good Standing concerning Apex from the Louisiana
Secretary of State issued April 5, 2004, a Certificate of Good Standing
concerning Apex from the Michigan Secretary of State issued April 20, 2004, a
Certificate of Good Standing concerning Apex from the Missouri Secretary of
State issued April 21, 2004, a Certificate of Good Standing concerning Apex from
the Montana Secretary of State issued April 20, 2004, a Certificate of Good
Standing concerning Apex from the Nebraska Secretary of State issued April 21,
2004, a Certificate of Good Standing concerning Apex from the New York Secretary
of State issued April 19, 2004, a Certificate of Good Standing concerning Apex
from the North Carolina Secretary of State issued April 11, 2004, a Certificate
of Good Standing concerning Apex from the Oklahoma Secretary of State issued
April 20, 2004, a Certificate of Existence concerning Apex from the Texas
Secretary of State issued April 20, 2004, a Certificate of Account Status
concerning Apex from the Texas Comptroller of Public Accounts issued April 20,
2004, a Certificate of Existence concerning Apex from the Utah Secretary of
State issued April 20, 2004, a Certificate of Good Standing concerning Apex from
the Virginia State Corporation Commission issued April 20, 2004, and a
Certificate of Existence concerning Apex from the Washington Secretary of State
issued April 20, 2004;

 

(xix)                                                   a Certificate of Good
Standing concerning CHS from the Delaware Secretary of State issued April 16,
2004;

 

(xx)                                                      a certificate of
Authority to Do Business concerning CNY from the New York Secretary of State
issued April 15, 2004;

 

(xxi)                                                   a Certificate of Good
Standing concerning CPS from the Delaware Secretary of State issued April 16,
2004;

 

(xxii)                                                a Certificate of Good
Standing concerning CCS from the Delaware Secretary of State issued April 16,
2004, a Certificate of Good Standing concerning CCS from the Alabama Secretary
of State issued April 13, 2004, a Certificate of Good Standing concerning CCS
from the Arizona Corporation Commission issued April 13, 2004, a Certificate of
Status concerning CCS from the California Secretary of State issued April 13,
2004, a Certificate of Existence

 

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concerning CCS from the Idaho Secretary of State issued April 13, 2004, a
Certificate of Good Standing concerning CCS from the Illinois Secretary of State
issued April 13, 2004, a Certificate of Authorization concerning CCS from the
Indiana Secretary of State issued April 13, 2004, a Certificate of Good Standing
concerning CCS from the Iowa Secretary of State issued April 13, 2004, a
Certificate of Good Standing concerning CCS from the Maine Secretary of State
issued April 13, 2004, a Certificate of Good Standing concerning CCS from the
Maryland Department of Assessments and Taxation issued April 13, 2004, a
Certificate of Good Standing concerning CCS from the Massachusetts Secretary of
the Commonwealth issued April 15, 2004, a Certificate of Good Standing
concerning CCS from the Michigan Department of Consumer and Industry Services
issued April 13, 2004, a Certificate of Good Standing concerning CCS from the
Mississippi Secretary of State issued April 13, 2004, a Certificate of Good
Standing concerning CCS from the Missouri Secretary of State issued April 16,
2004, a Certificate of Existence with Status in Good Standing concerning CCS
from the Nevada Secretary of State issued April 13, 2004, a Certificate of Good
Standing concerning CCS from the New Hampshire Department of State issued
April 13, 2004, a Certificate of Good Standing concerning CCS from the Ohio
Secretary of State issued April 13, 2004, a Certificate of Good Standing
concerning CCS from the Pennsylvania Department of State issued April 19, 2004,
a Certificate of Good Standing concerning CCS from the Rhode Island Secretary of
State issued April 13, 2004, a Certificate of Good Standing concerning CCS from
the Texas Secretary of State issued April 13, 2004, a Certificate of Good
Standing concerning CCS from the Alabama Secretary of State issued April 13,
2004, and a Certificate of Existence concerning CCS from the Utah Department of
Commerce issued April 13, 2004;

 

(xxiii)                                             a Certificate of Good
Standing concerning eBioCare from the Delaware Secretary of State issued
April 16, 2004, and a Certificate of Status—Foreign Corporation concerning
eBioCare from the California Secretary of State issued April 9, 2004; a
Certificate of Good Standing concerning eBioCare from the Maryland Department of
Assessments and Taxation issued April 20, 2004; a Certificate of Good Standing
concerning eBioCare from the Minnesota Secretary of State issued April 20, 2004;

 

(xxiv)                                            a Certificate of Existence
concerning Access from the Tennessee Secretary of State issued April 16, 2004, a
Certificate of Authorization concerning Access from the Florida Department of
State issued April 20, 2004, a Certificate of Authorization concerning Access
from the Indiana Secretary of State issued April 20, 2004, a Certificate of
Authority concerning Access from the

 

6

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Michigan Department of Consumer and Industry Services issued April 20, 2004, and
a Certificate of Good Standing concerning Access from the Minnesota Secretary of
State issued April 20, 2004;

 

(xxv)                                               a Certificate of Good
Standing concerning Infinity from the Delaware Secretary of State issued
April 16, 2004 and a Certificate of Authority concerning Infinity from the Texas
Secretary of State issued April 5, 2004;

 

(xxvi)                                            a Certificate of Good Standing
concerning Infinity II from the Delaware Secretary of State issued April 23,
2004, a Certificate of Authority concerning Infinity II from the Texas Secretary
of State issued April 16, 2004 and a Certificate of Account Status concerning
Infinity II from the Texas Comptroller of Public Accounts issued April 5, 2004;

 

(xxvii)                                         a Certificate of Authority
concerning Infinity Infusion from the Texas Secretary of State issued April 5,
2004;

 

(xxviii)                                      a Certificate of Good Standing
concerning MedCare from the Delaware Secretary of State issued April 16, 2004, a
Qualification Disclosure concerning MedCare from the Alabama Secretary of State
issued April 5, 2004, a Certificate of Authority/Qualification concerning
MedCare from the Florida Secretary of State issued April 5, 2004, a Certificate
of Authority/Qualification concerning MedCare from the Maryland Department of
Assessment and Taxation issued April 20, 2004, a Certificate of
Existence/Authority concerning MedCare from the Mississippi Secretary of State
issued April 5, 2004; a Certificate of Authority/Qualification concerning
MedCare from the Washington Secretary of State issued April 20, 2004, and a
Certificate of Authority/Qualification concerning MedCare from the West Virginia
Secretary of State issued April 5, 2004,

 

(xxix)                                              a Certificate of Existence
concerning Optimal from the Delaware Secretary of State issued April 16, 2004, a
Good Standing Certificate concerning Optimal from the Virginia Secretary of
State issued April 5, 2004; a Certificate of Authority/Qualification concerning
MedCare from the Maryland Department of Assessment and Taxation issued April 20,
2004,

 

(xxx)                                                 a Certificate of Good
Standing concerning CHSIII from the Minnesota Secretary of State issued April 16
2004;

 

(xxxi)                                              a certificate of an officer
of Curative certifying as to a copy of resolutions of the Board of Directors of
Curative adopted May 21, 2004, incumbency with

 

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respect to officers of Curative, a copy of Curative’s articles of incorporation,
no changes since May 21, 2004, to Curative’s articles of incorporation, and a
copy of the amended and restated bylaws of Curative;

 

(xxxii)                                           a certificate of an officer of
CHSC certifying as to a copy of resolutions of the Board of Directors of CHSC
adopted April 13, 2004, incumbency with respect to officers of CHSC, a copy of
CHSC’s articles of incorporation, no changes since April 16, 2004, to CHSC’s
articles of incorporation, and a copy of the amended and restated bylaws of
CHSC;

 

(xxxiii)                                        a certificate of an officer of
eBioCare certifying as to a copy of the written action of eBioCare adopted
April 13, 2004, incumbency with respect to officers of eBioCare, a copy of
eBioCare’s certificate of incorporation, no changes since April 16, 2004, to
eBioCare’s certificate of incorporation, and a copy of the bylaws of eBioCare;

 

(xxxiv)                                       a certificate of an officer of
Access certifying as to a copy of the written action of Access adopted April 13,
2004, incumbency with respect to officers of Access, a copy of Access’ charter,
no changes since April 16, 2004, to Access’ charter, and a copy of the bylaws of
Access;

 

(xxxv)                                          a certificate of an officer of
Apex certifying as to a copy of the written action of Apex adopted April 13,
2004, incumbency with respect to officers of Apex, a copy of Apex’s articles of
incorporation, no changes since April 19, 2004, to Apex’s articles of
incorporation, and a copy of the bylaws of Apex;

 

(xxxvi)                                       a certificate of an officer of CHS
certifying as to a copy of the written action of CHS adopted April 13, 2004,
incumbency with respect to officers of CHS, a copy of CHS’ certificate of
incorporation, no changes since April 16, 2004, to CHS’ certificate of
incorporation, and a copy of the bylaws of CHS;

 

(xxxvii)                                    a certificate of an officer of CNY
certifying as to a copy of the written action of CNY adopted April 13, 2004,
incumbency with respect to officers of CNY, a copy of CNY’s certificate of
incorporation, no changes since April 19, 2004, to CNY’s certificate of
incorporation, and a copy of the bylaws of CNY;

 

(xxxviii)                                 a certificate of an officer of CCS
certifying as to a copy of the written action of CCS adopted April 13, 2004,
incumbency with respect to officers of CCS,  a copy of CCS’s certificate of
incorporation, no changes since April 16, 2004, to CCS’s certificate of
incorporation, and a copy of the bylaws of CCS;

 

8

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(xxxix)                                         a certificate of an officer of
Optimal certifying as to a copy of the written action of Optimal adopted
April 13, 2004, incumbency with respect to officers of Optimal, a copy of
Optimal’s certificate of incorporation, no changes since April 16, 2004, to
Optimal’s certificate of incorporation, and a copy of the bylaws of Optimal;

 

(xl)                                                        a certificate of a
manager of Infinity certifying as to a copy of the resolutions of Infinity
adopted April 13, 2004, incumbency with respect to officers of Infinity, a copy
of Infinity’s certificate of formation, no changes since April 16, 2004, to
Infinity’s certificate of formation, and a copy of the limited liability company
agreement of Infinity;

 

(xli)                                                     a certificate of a
manager of Infinity II certifying as to a copy of the resolutions of Infinity II
adopted April 13, 2004, incumbency with respect to officers of Infinity II, a
copy of Infinity II’s certificate of formation, no changes since April 16, 2004,
to Infinity II’s certificate of formation, and a copy of the limited liability
company agreement of Infinity II;

 

(xlii)                                                  a certificate of an
officer of Infinity Infusion certifying as to a copy of the written action of
Infinity Infusion adopted April 13, 2004, incumbency with respect to officers of
Infinity Infusion, a copy of Infinity Infusion’s articles of conversion, no
changes since April 16, 2004, to Infinity Infusion’s articles of conversion, and
a copy of the agreement of limited partnership of Infinity Infusion;

 

(xliii)                                               a certificate of an
officer of MedCare certifying as to a copy of the written action of MedCare
adopted April 13, 2004, incumbency with respect to officers of MedCare, a copy
of MedCare’s certificate of incorporation, no changes since April 16, 2004, to
MedCare’s certificate of incorporation,, and a copy of the bylaws of MedCare;

 

(xliv)                                              a certificate of an officer
of CPS certifying as to a copy of the written action of CPS adopted April 13,
2004, incumbency with respect to officers of CPS, a copy of CPS’ certificate of
incorporation, no changes since April 16, 2004, to CPS’ certificate of
incorporation,, and a copy of the bylaws of CPS;

 

(xlv)                                                 a certificate of an
officer of CHSIII certifying as to a copy of resolutions of the Board of
Directors of CHSIII adopted April 13, 2004, incumbency with respect to officers
of CHSIII, a copy of CHSIII’s articles of incorporation, no changes since
April 16, 2004, to CHSIII’s articles of incorporation, and a copy of the amended
and restated bylaws of CHSIII; and

 

9

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(xlvi)                                              an Officer’s Certificate for
Curative of even date with the Credit Agreement, executed by Thomas Axmacher,
the Chief Financial Officer of Curative, CHSC, CHSIII, CCS, Apex and Infinity
Infusion, the Treasurer of eBioCare, CHS, CNY, Infinity, Infinity II, MedCare,
Optimal and CPS, and Nancy F. Lanis, the Secretary and Treasurer of Access.]

 

In addition, as to questions of fact material to the opinions hereinafter
expressed, we have, when relevant facts were not independently established by
us, relied upon certificates and opinions of the Credit Parties, their attorneys
and their officers, and of public officials.  We have not independently examined
the records of any court or public office in any jurisdiction, and our opinion
is subject to matters which examination of such records would reveal.  Without
limiting the generality of the foregoing, we have relied upon certificates of
officers of the Credit Parties referenced in items (xxix) to (xliii), above, and
the representations contained therein with respect to factual matters, and we
have assumed that all such representations are true and correct as of the date
of this opinion.

 

Our opinions expressed below as to certain factual matters are qualified as
being limited “to our actual knowledge” or by other words to the same or similar
effect.  Such words, as used herein, mean that prior to or during the course of
this firm’s representation of the Credit Parties in connection with the specific
transactions contemplated by the Loan Documents, no contrary information came to
the attention of L. Joseph Genereux, Timothy S. Hearn, or Andrew R. Toftey, the
attorneys in our firm who have principally represented the Credit Parties in
connection with the transactions contemplated by the Loan Documents and the
preparation of this opinion.  In rendering such opinions, we have not conducted
any independent investigation of the Credit Parties or consulted with other
attorneys in our firm with respect to the matters covered thereby.  No inference
as to our knowledge with respect to the factual matters upon which we have so
qualified our opinions should be drawn from the fact of our representation of
the Credit Parties.

 

In rendering the opinions expressed below, we have assumed, with the Agent’s and
the Lenders’ permission and without verification:

 

(a)                                  the authenticity of all documents submitted
to us as originals,

 

(b)                                 the genuineness of all signatures, other
than those of officers of the Credit Parties, which we have determined to be
genuine solely on the basis of the certificates described in paragraphs (xxxi)
to (xlvi), above,

 

(c)                                  the legal capacity of natural persons,

 

10

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(d)                                 the conformity to originals of all documents
submitted to us as copies and the authenticity of the originals of such copies,

 

(e)                                  that all conditions precedent to the
effectiveness of the Loan Documents have been satisfied or waived,

 

(f)                                    that the Financing Statements contain the
current address of the Agent from which information concerning the Agent’s
security interest in the Collateral, as such term is defined in the Security
Agreement (hereinafter, the “Collateral”) can be obtained,

 

(g)                                 that each Credit Party has rights in the
Collateral in which it is granting a security interest,

 

(h)                                 solely with respect to our opinion in
paragraph 8, below, that Curative is engaged in the business of being a holding
company; that CHSC is engaged in the business of being a holding company and in
the business of providing wound care services; that eBioCare is engaged in the
business of providing specialty pharmacy services; that Access is engaged in the
business of providing specialty pharmacy services; that Apex is engaged in the
business of providing specialty pharmacy products and services; that Infinity
Infusion is engaged in the business of distributing specialty pharmaceutical
products and providing infusion therapy services; that CNY is engaged in the
business of providing specialty pharmacy and home infusion products and
services; that CCS is engaged in the business of providing infusion therapy
services; that Infinity I and Infinity II are engaged in the business of holding
the partnership interests of Infinity Infusion Care, Ltd., a Texas limited
partnership; that Optimal is engaged in the business of providing specialty
pharmacy services; that MedCare is engaged in the business of providing
specialty pharmacy services; that CPS is engaged in the business of providing
specialty pharmacy services; that CHS is engaged in the business of owning and
licensing intellectual property; that CHSIII is engaged in the permitted
business of consummating the Permitted Restructuring, as such term is defined in
the Credit Agreement, and

 

(i)                                     that the Loan Documents constitute the
valid, binding and enforceable obligations of the parties thereto other than the
Credit Parties.

 

Based upon the foregoing and upon such investigation as we have deemed
necessary, and subject to the qualifications set forth below, we are of the
opinion that:

 

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1.               Curative is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Minnesota.  CHSC is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Minnesota, and is in good standing as a foreign corporation
under the laws of the States of California and New York.  eBioCare is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and is in good standing as a foreign corporation
under the laws of the State of California.  Access is a corporation validly
existing and in good standing under the laws of the State of Tennessee.  Apex is
a corporation validly existing and in good standing under the laws of the State
of California, and is in good standing as a foreign corporation under the laws
of the State of Louisiana.  CHS is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.  CNY is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of New York.  CCS is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.  Optimal
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware, and is in good standing as a foreign
corporation under the laws of the State of Virginia.  Infinity is a limited
liability company duly formed, validly existing and in good standing under the
laws of the State of Delaware, and is in good standing as a foreign company
under the laws of the State of Texas.  Infinity II is a limited liability
company duly formed, validly existing and in good standing under the laws of the
State of Delaware, and is in good standing as a foreign company under the laws
of the State of Texas.  Infinity Infusion is a limited partnership validly
existing and in good standing under the laws of the State of Texas.  MedCare is
a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and is in good standing as a foreign corporation
under the laws of the States of Alabama, Florida and Mississippi.  CPS is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware.  CHSIII is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Minnesota.

 

2.               Each of Curative, eBioCare, CHS, CNY, Optimal, MedCare, CPS and
CHSIII has the corporate power to own its property, to carry on its business as
now conducted and to execute, deliver and perform each of the Loan Documents to
which it is a party, and has taken all requisite corporate action to authorize
the execution, delivery and performance of the Loan Documents to which it is a
party.

 

3.               Each of Infinity and Infinity II has the company power to own
its property, to carry on its business as now conducted and to execute, deliver
and perform the Loan Documents to which it is a party, and has taken all
requisite company action to authorize the execution, delivery and performance of
the Loan Documents to which it is a party.

 

4.               Access has taken all requisite corporate action to authorize
the execution, delivery and performance of the Loan Documents to which it is a
party.

 

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5.               Infinity Infusion has taken all requisite partnership action to
authorize the execution, delivery and performance of the Loan Documents to which
it is a party.

 

6.               Assuming (i) Apex has the requisite corporate power and
authority to engage in any lawful act or activity for which a corporation may be
organized under the General Corporation Law of California, (ii) such acts and
activities do not include the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code, and (iii) the execution and delivery of each of the Loan
Documents to which Apex is a party have been duly authorized by all necessary
corporate action on the part of Apex, Apex has the requisite corporate power to
perform, and has authorized the performance of, its obligations under the Loan
Documents to which it is a party.

 

7.               CCS has the requisite corporate power to perform, and has
authorized the performance of, its obligations under the Loan Documents to which
it is a party.

 

8.               The execution and delivery of the Loan Documents executed by
the Credit Parties and the borrowing and repayment of debt and providing of
security for such borrowing pursuant to the Loan Documents (i) will not violate
or cause a breach of any statute of the United States, the State of New York,
the State of Minnesota, the Delaware General Corporation Law or the Delaware
Limited Liability Company Act, or any rule or regulation of any governmental
authority or regulatory body of the United States, the State of New York or the
State of Minnesota, or any judgment, order or decree known to us and applicable
to the Credit Parties of any court, governmental authority or arbitrator, (ii)
will not violate or cause a breach of any provision of the respective
certificates or articles of incorporation, bylaws, limited liability company
agreements or partnership agreements of the Credit Parties, or (iii) will not
violate or cause a breach of the agreements and instruments of the Credit
Parties set forth on Exhibit C hereto (other than violations of any financial
test or covenant contained in the agreements and instruments of the Credit
Parties set forth on Exhibit C hereto as to which we render no opinion) except
that the execution, delivery, and performance of the CCS Security Agreement may
violate provisions of the Agreements identified in Items 2, 4, 9, 10, 11, 14,
and 16 set forth on Exhibit C hereto.

 

9.               No consent, approval, authorization of, or registration or
filing with, any New York, Minnesota or federal governmental authority, or under
the Delaware General Corporation Law or the Delaware Limited Liability Company
Act, is required to be obtained or made by any Credit Party in connection with
the due execution, delivery and performance of any Loan Document, except such as
have been obtained or made, and except for each filing and recordation required
to perfect the Agent’s security interest in the Collateral and other property of
the Credit Parties securing the Credit Parties’ obligations to the Agent and the
Lenders.

 

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10.         To our actual knowledge, except as disclosed in Disclosure
Schedule 4.7 to the Credit Agreement, there are no judgments outstanding against
any Credit Party.  We have not been retained to represent any Credit Party with
respect to any pending or threatened litigation, other than certain of the
matters disclosed in Disclosure Schedule 4.7 to the Credit Agreement.

 

11.         Each of the Loan Documents to which a Credit Party is a party
constitutes the valid and binding obligations of such Credit Party, enforceable
against it in accordance with its terms.

 

12.         The Curative Security Agreement creates a valid security interest in
the Collateral granted by Curative in favor of the Agent to secure the
Obligations, as such term is defined in the Credit Agreement (the
“Obligations”).  Under Article 9 of the Uniform Commercial Code as enacted in
the State of New York, N.Y. U.C.C. Law § 9-101 et seq. (2001) (the “New York
UCC”), the State of Minnesota is the proper jurisdiction in which to file a
financing statement to perfect the Agent’s security interest in the Collateral
in which a security interest is granted by Curative to the Agent.  The Financing
Statement which designates Curative as debtor is sufficient in form for filing
with the Minnesota Secretary of State and, upon such filing, will perfect the
Agent’s security interest in the Collateral in which a security interest is
granted by Curative to the Agent to the extent a security interest in such
Collateral may be perfected under Article 9 of the Uniform Commercial Code as
enacted in the State of Minnesota, Minn. Stat. §§ 336.9-101, et seq. (2001) (the
“Minnesota UCC”) by filing financing statements in the State of Minnesota.

 

13.         The CCS Security Agreement creates a valid security interest in the
Collateral granted by CCS in favor of the Agent to secure the Obligations. 
Under Article 9 of the New York UCC, the State of Delaware is the proper
jurisdiction in which to file a financing statement to perfect the Agent’s
security interest in the Collateral in which a security interest is granted by
CCS to the Agent. .  The Financing Statement which designates CCS as debtor is
sufficient in form for filing with the Delaware Secretary of State and, upon
such filing, will perfect the Agent’s security interest in the Collateral in
which CCS has granted a security interest to the Agent to the extent a security
interest in such Collateral may be perfected under the Uniform Commercial Code
as enacted in the State of Delaware, Del. Code Ann. tit. 6, § 9-101 et seq.
(2001), as set forth in 2 Secured Transactions Guide (CCH) the (“2 CCH Secured
Transactions Guide”) at ¶ 13,579 et seq. (2001) (the “Delaware UCC”) by filing
financing statements in the State of Delaware.  The CCS Intellectual Property
Security Agreement is sufficient to grant to the Agent a security interest in
those registered trademarks, patents and registered copyrights of CCS covered
thereby.

 

14.         Under Article 9 of the New York UCC, the State of Delaware is the
proper jurisdiction in which to file a financing statement to perfect the
Agent’s security interest in the Collateral in which eBioCare has granted a
security interest to the Agent.  The Financing Statement which designates 
eBioCare as debtor is sufficient in form for filing with the Delaware

 

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Secretary of State and, upon such filing, will perfect the Agent’s security
interest in the Collateral in which eBioCare has granted a security interest to
the Agent to the extent a security interest in such Collateral may be perfected
under the Delaware UCC by filing financing statements in the State of Delaware.

 

15.         Under Article 9 of the New York UCC, the State of Tennessee is the
proper jurisdiction in which to file a financing statement to perfect the
Agent’s security interest in the Collateral in which Access has granted a
security interest to the Agent.  The Financing Statement which designates Access
as debtor is sufficient in form for filing with the Tennessee Secretary of State
and, upon such filing, will perfect the Agent’s security interest in the
Collateral in which Access has granted a security interest to the Agent to the
extent a security interest in such Collateral may be perfected under the Uniform
Commercial Code as enacted in the State of Tennessee, Tenn. Code Ann.,
§ 47-9-101 et seq. (2001), as set forth in 6 Secured Transactions Guide (CCH)
(the “6 CCH Secured Transactions Guide”) at ¶ 49,591 et seq. (2001) (the
“Tennessee UCC”) by filing financing statements in the State of Tennessee.

 

16.         Under Article 9 of the New York UCC, the State of California is the
proper jurisdiction in which to file a financing statement to perfect the
Agent’s security interest in the Collateral in which Apex has granted a security
interest to the Agent.  The Financing Statement which designates Apex as debtor
is sufficient in form for filing with the California Secretary of State and,
upon such filing, will perfect the Agent’s security interest in the Collateral
in which Apex has granted a security interest to the Agent to the extent a
security interest in such Collateral may be perfected under the Uniform
Commercial Code as enacted in the State of California, Cal. Com. Code Ann.,
§ 9101 et seq. (2001), as set forth in 2 Secured Transactions Guide (CCH) (the
“2 CCH Secured Transactions Guide”) at ¶ 10,591 et seq. (2001) (the “California
UCC”) by filing financing statements in the State of California.

 

17.         Under Article 9 of the New York UCC, the State of Delaware is the
proper jurisdiction in which to file a financing statement to perfect the
Agent’s security interest in the Collateral in which CHS has granted a security
interest to the Agent.  The Financing Statement which designates CHS as debtor
is sufficient in form for filing with the Delaware Secretary of State and, upon
such filing, will perfect the Agent’s security interest in the Collateral in
which CHS has granted a security interest to the Agent to the extent a security
interest in such Collateral may be perfected under the Delaware UCC by filing
financing statements in the State of Delaware.

 

18.         Under Article 9 of the New York UCC, the State of New York is the
proper jurisdiction in which to file a financing statement to perfect the
Agent’s security interest in the Collateral in which CNY has granted a security
interest to the Agent.  The Financing Statement which designates CNY as debtor
is sufficient in form for filing with the New York Secretary of State and, upon
such filing, will perfect the Agent’s security interest in the Collateral in
which

 

15

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CNY has granted a security interest to the Agent to the extent a security
interest in such Collateral may be perfected under the New York UCC.

 

19.         Under Article 9 of the New York UCC, the State of Delaware is the
proper jurisdiction in which to file a financing statement to perfect the
Agent’s security interest in the Collateral of Optimal.  The Financing Statement
which designates Optimal as debtor is sufficient in form for filing with the
Delaware Secretary of State and, upon such filing, will perfect the Agent’s
security interest in the Collateral in which Optimal has granted a security
interest to the Agent to the extent a security interest in such Collateral may
be perfected under the Delaware UCC by filing financing statements in the State
of Delaware.

 

20.         Under Article 9 of the New York UCC, the State of Delaware is the
proper jurisdiction in which to file a financing statement to perfect the
Agent’s security interest in the Collateral in which Infinity has granted a
security interest to the Agent.  The Financing Statement which designates
Infinity as debtor is sufficient in form for filing with the Delaware Secretary
of State and, upon such filing, will perfect the Agent’s security interest in
the Collateral in which Infinity has granted a security interest to the Agent to
the extent a security interest in such Collateral may be perfected under  the
Delaware UCC by filing financing statements in the State of Delaware.

 

21.         Under Article 9 of the New York UCC, the State of Delaware is the
proper jurisdiction in which to file a financing statement to perfect the
Agent’s security interest in the Collateral in which Infinity II has granted a
security interest to the Agent.  The Financing Statement which designates
Infinity II as debtor is sufficient in form for filing with the Delaware
Secretary of State and, upon such filing, will perfect the Agent’s security
interest in the Collateral in which Infinity II has granted a security interest
to the Agent to the extent a security interest in such Collateral may be
perfected under the Delaware UCC by filing financing statements in the State of
Delaware.

 

22.         Under Article 9 of the New York UCC, the State of Texas is the
proper jurisdiction in which to file a financing statement to perfect the
Agent’s security interest in the Collateral in which Infinity Infusion has
granted a security interest to the Agent .  The Financing Statement which
designates Infinity Infusion as debtor is sufficient in form for filing with the
Texas Secretary of State and, upon such filing, will perfect the Agent’s
security interest in the Collateral in which Infinity Infusion has granted a
security interest to the Agent to the extent a security interest in such
Collateral may be perfected under the Uniform Commercial Code as enacted in the
State of Texas, Tex. Bus. & Comm. Code Ann. § 9.101 et seq. (2001), as set forth
in 6 Secured Transactions Guide (CCH) (the “6 CCH Secured Transactions Guide”)
at ¶ 50,531 et seq. (2001) (the “Texas UCC”) by filing financing statements in
the State of Texas.

 

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23.         Under Article 9 of the New York UCC, the State of Delaware is the
proper jurisdiction in which to file a financing statement to perfect the
Agent’s security interest in the Collateral in which MedCare has granted a
security interest to the Agent.  The Financing Statement which designates
MedCare as debtor is sufficient in form for filing with the Delaware Secretary
of State and, upon such filing, will perfect the Agent’s security interest in
the Collateral in which MedCare has granted a security interest to the Agent to
the extent a security interest in such Collateral may be perfected under the
Delaware UCC by filing financing statements in the State of Delaware.

 

24.         Under Article 9 of the New York UCC, the State of Delaware is the
proper jurisdiction in which to file a financing statement to perfect the
Agent’s security interest in the Collateral in which CPS has granted a security
interest to the Agent.  The Financing Statement which designates CPS as debtor
is sufficient in form for filing with the Delaware Secretary of State and, upon
such filing, will perfect the Agent’s security interest in the Collateral in
which CPS has granted a security interest to the Agent to the extent a security
interest in such Collateral may be perfected under the Delaware UCC by filing
financing statements in the State of Delaware.

 

25.         Under Article 9 of the New York UCC, the State of Minnesota is the
proper jurisdiction in which to file a financing statement to perfect the
Agent’s security interest in the Collateral in which a security interest is
granted by CHSIII to the Agent.  The Financing Statement which designates CHSIII
as debtor is sufficient in form for filing with the Minnesota Secretary of State
and, upon such filing, will perfect the Agent’s security interest in the
Collateral in which a security interest is granted by CHSIII to the Agent to the
extent a security interest in such Collateral may be perfected under the
“Minnesota UCC” by filing financing statements in the State of Minnesota.

 

26.         The Curative Pledge Agreement creates a valid security interest in
the shares of stock of CNY, CCS, and CHSC described in the Pledge Agreement (the
“Curative Pledged Assets”) in favor of the Agent to secure the Obligations. 
Under Article 9 of the New York UCC, assuming the Agent is not acting as an
agent for any Credit Party, the Agent has taken and is retaining possession of
the certificates evidencing the Curative Pledged Assets, together with properly
completed powers endorsing or transferring the Pledged Assets and executed by
the Credit Party which owns such certificates and respective Curative Pledged
Assets, and that the Agent has taken the Curative Pledged Assets in good faith
without notice of any adverse claim within the meaning of the New York UCC,
there has been created under the Curative Pledge Agreement, and there has been
granted to the Agent a valid and perfected security interest in the Curative
Pledged Assets, with the consequence of perfection by control accorded by the
New York UCC.

 

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27.         None of the Credit Parties is a “holding company” or a “subsidiary
company” of a “holding company” or an “affiliate” of a “holding company” within
the meaning of the Public Utility Holding Company Act of 1935, as amended.

 

28.         None of the Credit Parties is an “investment company” or a company
controlled by an “investment company” within the meaning of the Investment
Company Act of 1940.

 

29.         The payment by the Credit Parties and receipt by the Agent for the
account of the Lenders entitled thereto of all principal and interest required
to be paid pursuant to the terms of the Notes and the other Loan Documents
(including without limitation the provisions for interest after default and late
charges) will not violate the usury laws of the State of New York.

 

SCOPE OF OPINION

 

Our opinions set forth above are further subject to the following additional
qualifications:

 

(A)                                  OUR OPINIONS EXPRESSED ABOVE ARE LIMITED TO
THE LAW OF THE STATES OF MINNESOTA AND NEW YORK, THE DELAWARE GENERAL
CORPORATION LAW, THE DELAWARE LIMITED LIABILITY COMPANY ACT AND THE FEDERAL LAWS
OF THE UNITED STATES OF AMERICA.  SOLELY WITH RESPECT TO CERTAIN OF THE OPINIONS
SET FORTH IN PARAGRAPHS 13, 14, 17, 19, 20, 21, 23 AND 24 ABOVE, OUR OPINION IS
ALSO BASED ON THE DELAWARE UCC, AS COMPILED IN THE 2 CCH SECURED TRANSACTIONS
GUIDE AS UPDATED IN OUR RECORDS THROUGH APRIL 22, 2004.  NO OPINION SET FORTH IN
PARAGRAPHS 13, 14, 17, 19, 20, 21, 23 AND 24, ABOVE, IS GIVEN WITH RESPECT TO
THE CONSTITUTION OR STATUTES OF DELAWARE, OTHER THAN THE DELAWARE UCC, WITH
RESPECT TO CASES DECIDED UNDER THE DELAWARE UCC OR OTHER LAWS OF THE STATE OF
DELAWARE, OR WITH RESPECT TO ANY PROVISION OF THE DELAWARE UCC THAT HAS BEEN
AMENDED SUBSEQUENT TO, OR DIFFERS FROM, THE COMPILATIONS THEREOF IN THE 2 CCH
SECURED TRANSACTIONS GUIDE AS UPDATED IN OUR RECORDS THROUGH APRIL 22, 2004. 
SOLELY WITH RESPECT TO CERTAIN OF THE OPINIONS SET FORTH IN PARAGRAPH 15, ABOVE,
OUR OPINION IS ALSO BASED ON THE TENNESSEE UCC, AS COMPILED IN THE 6 CCH SECURED
TRANSACTIONS GUIDE AS UPDATED IN OUR RECORDS THROUGH APRIL 22, 2004.  NO OPINION
SET FORTH IN PARAGRAPH 15, ABOVE, IS GIVEN WITH RESPECT TO THE CONSTITUTION OR
STATUTES OF TENNESSEE, OTHER THAN THE TENNESSEE UCC, WITH RESPECT TO CASES
DECIDED UNDER THE TENNESSEE UCC OR OTHER LAWS OF THE STATE OF TENNESSEE, OR WITH
RESPECT TO ANY PROVISION OF THE TENNESSEE UCC THAT HAS BEEN AMENDED SUBSEQUENT
TO, OR DIFFERS FROM, THE COMPILATIONS THEREOF IN THE 6 CCH SECURED TRANSACTIONS
GUIDE AS UPDATED IN OUR RECORDS THROUGH APRIL 22, 2004.  SOLELY WITH RESPECT TO
CERTAIN OF THE OPINIONS SET FORTH IN PARAGRAPH 16, ABOVE, OUR OPINION IS ALSO
BASED ON THE CALIFORNIA UCC, AS COMPILED IN THE 2 CCH SECURED TRANSACTIONS GUIDE
AS UPDATED IN OUR RECORDS THROUGH APRIL 22, 2004.  NO OPINION SET FORTH IN
PARAGRAPH 16, ABOVE, IS GIVEN WITH RESPECT TO THE CONSTITUTION OR STATUTES OF
CALIFORNIA, OTHER THAN THE CALIFORNIA UCC, WITH RESPECT TO CASES DECIDED UNDER
THE CALIFORNIA UCC OR OTHER LAWS OF THE STATE OF CALIFORNIA, OR WITH RESPECT TO
ANY PROVISION OF THE CALIFORNIA UCC THAT HAS BEEN AMENDED SUBSEQUENT TO, OR
DIFFERS FROM, THE COMPILATIONS THEREOF IN THE 2 CCH SECURED

 

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Transactions Guide as updated in our records through April 22, 2004.  Solely
with respect to certain of the opinions set forth in paragraph 22, above, our
opinion is also based on the Texas UCC, as compiled in the 6 CCH Secured
Transactions Guide as updated in our records through April 22, 2004.  No opinion
set forth in paragraph 22 , above, is given with respect to the constitution or
statutes of Texas, other than the Texas UCC, with respect to cases decided under
the Texas UCC or other laws of the State of Texas, or with respect to any
provision of the Texas UCC that has been amended subsequent to, or differs from,
the compilations thereof in the 6 CCH Secured Transactions Guide as updated in
our records through April 22, 2004.

 

(B)                                 OUR OPINIONS ARE SUBJECT TO THE EFFECT OF
BANKRUPTCY, INSOLVENCY, REORGANIZATION, ARRANGEMENT, MORATORIUM, FRAUDULENT
TRANSFER, STATUTES OF LIMITATION, OR OTHER SIMILAR LAWS AND JUDICIAL DECISIONS
AFFECTING OR RELATING TO THE RIGHTS OF CREDITORS GENERALLY, AND ARE FURTHER
SUBJECT TO THE EFFECT OF GENERAL PRINCIPLES OF EQUITY, INCLUDING, WITHOUT
LIMITATION, CONCEPTS OF MATERIALITY, REASONABLENESS, GOOD FAITH AND FAIR
DEALING, ESTOPPEL, ELECTION OF REMEDIES AND OTHER SIMILAR DOCTRINES AFFECTING
THE ENFORCEMENT OF AGREEMENTS GENERALLY (REGARDLESS OF WHETHER ENFORCEMENT IS
CONSIDERED IN A PROCEEDING AT LAW OR IN EQUITY).  IN ADDITION, THE AVAILABILITY
OF SPECIFIC PERFORMANCE, INJUNCTIVE RELIEF, THE APPOINTMENT OF A RECEIVER OR
OTHER EQUITABLE REMEDIES IS SUBJECT TO THE DISCRETION OF THE TRIBUNAL BEFORE
WHICH ANY PROCEEDING THEREFOR MAY BE BROUGHT.

 

(C)                                  OUR OPINIONS EXPRESSED ABOVE ASSUME THAT
ALL OF THE LOAN DOCUMENTS ARE DATED APRIL 23, 2004, UNLESS OTHERWISE STATED ON
EXHIBIT A HERETO.

 

(D)                                 OUR OPINIONS ARE FURTHER SUBJECT TO OTHER
LAWS AND JUDICIAL DECISIONS AFFECTING THE RIGHTS OF CREDITORS AND SECURED
CREDITORS GENERALLY, INCLUDING, WITHOUT LIMITATION, THE FOLLOWING:

 

(I)                                     WE EXPRESS NO OPINION AS TO THE
ENFORCEABILITY OF PROVISIONS OF THE LOAN DOCUMENTS TO THE EXTENT THEY CONTAIN:

 

(A)                              FORUM SELECTION PROVISIONS,

 

(B)                                GRANTS TO THE AGENT OR ANY LENDER OF POWERS
OF ATTORNEY,

 

(C)                                CUMULATIVE REMEDIES TO THE EXTENT SUCH
CUMULATIVE REMEDIES PURPORT TO COMPENSATE, OR WOULD HAVE THE EFFECT OF
COMPENSATING, THE PARTY ENTITLED TO THE BENEFITS THEREOF IN AN AMOUNT IN EXCESS
OF THE ACTUAL LOSS SUFFERED BY SUCH PARTY,

 

(D)                               OBLIGATIONS OF A CREDIT PARTY TO PAY ANY
PREPAYMENT PREMIUM, DEFAULT INTEREST RATE, EARLY TERMINATION FEE OR OTHER FORM
OF LIQUIDATED DAMAGES, IF THE PAYMENT OF SUCH PREMIUM, INTEREST RATE, FEE OR
DAMAGES MAY BE CONSTRUED AS UNREASONABLE IN RELATION TO ACTUAL DAMAGES

 

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OR DISPROPORTIONATE TO ACTUAL DAMAGES SUFFERED BY THE AGENT OR ANY LENDER AS A
RESULT OF SUCH PREPAYMENT, DEFAULT OR TERMINATION,

 

(E)                                 TERMS WHICH EXCUSE ANY PERSON OR ENTITY FROM
LIABILITY FOR, OR REQUIRE A CREDIT PARTY TO INDEMNIFY SUCH PERSON OR ENTITY
AGAINST SUCH PERSON’S OR ENTITY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT,

 

(F)                                 TERMS PURPORTING TO ESTABLISH EVIDENTIARY
STANDARDS, OR

 

(G)                                TERMS TO THE EFFECT THAT PROVISIONS IN THE
LOAN DOCUMENTS MAY NOT BE WAIVED OR MODIFIED EXCEPT IN WRITING MAY BE LIMITED
UNDER CERTAIN CIRCUMSTANCES.

 

(II)                                  CERTAIN WAIVERS OF NOTICES AND OTHER
RIGHTS AND REMEDIAL PROVISIONS CONTAINED IN THE LOAN DOCUMENTS, INCLUDING
WAIVERS BY A CREDIT PARTY OF ANY STATUTORY OR CONSTITUTIONAL RIGHTS OR REMEDIES,
MAY BE UNENFORCEABLE UNDER APPLICABLE LAW, BUT THE LOAN DOCUMENTS CONTAIN
ADEQUATE OTHER PROVISIONS FOR ENFORCING PAYMENT OF THE OBLIGATIONS EVIDENCED,
GUARANTEED OR SECURED THEREBY AND FOR THE PRACTICAL REALIZATION OF THE SECURITY
AND OTHER RIGHTS AND REMEDIES AFFORDED THEREBY, AND THE INCLUSION OF SUCH
WAIVERS, RIGHTS AND REMEDIAL PROVISIONS IN THE LOAN DOCUMENTS DOES NOT AFFECT
THE LEGALITY, VALIDITY OR BINDING EFFECT OF SUCH LOAN DOCUMENTS OR AFFECT THE
ENFORCEABILITY OF THE OTHER PROVISIONS OF THE LOAN DOCUMENTS.

 

(III)                               THE ENFORCEABILITY OF THE REMEDIES,
COVENANTS OR OTHER PROVISIONS OF THE LOAN DOCUMENTS AND THE AVAILABILITY OF
EQUITABLE REMEDIES MAY BE LIMITED WHERE:

 

(A)                              THE ENFORCEMENT OF SUCH REMEDIES, COVENANTS OR
PROVISIONS UNDER THE CIRCUMSTANCES, OR THE MANNER OF SUCH ENFORCEMENT, WOULD
VIOLATE THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING OF THE LENDER UNDER
THE FINANCING DOCUMENTS OR WOULD BE COMMERCIALLY UNREASONABLE;

 

(B)                                A COURT HAVING COMPETENT PERSONAL AND SUBJECT
MATTER JURISDICTION FINDS THAT SUCH REMEDIES, COVENANTS OR PROVISIONS WERE AT
THE TIME MADE, OR ARE IN APPLICATION, UNCONSCIONABLE AS A MATTER OF LAW OR
PUBLIC POLICY;  OR

 

(C)                                THE ENFORCEMENT OF SPECIFIC RIGHTS UNDER THE
LOAN DOCUMENTS MAY REQUIRE A JUDGMENT OR DECREE OF A COURT OF COMPETENT
JURISDICTION AFTER PRIOR NOTICE TO THE CREDIT PARTIES, AND AN OPPORTUNITY FOR
THE CREDIT PARTIES TO BE HEARD BY AN APPROPRIATE TRIBUNAL.

 

(IV)                              THE GRANT OF A SECURITY INTEREST IN COLLATERAL
UNDER THE LOAN DOCUMENTS, OR THE TRANSFER OF RIGHTS IN SUCH SECURITY INTEREST OR
COLLATERAL MAY, IN SOME INSTANCES, REQUIRE

 

20

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OR BE CONDITIONED UPON RECEIPT OF CONSENT OF THIRD PARTIES, BUT SUCH
REQUIREMENTS OR CONDITIONS MAY NOT BE EFFECTIVE AS TO ASSIGNMENTS OR GRANTS OF
SECURITY INTERESTS IN CERTAIN TYPES OF COLLATERAL, INCLUDING ACCOUNTS, CHATTEL
PAPER, CERTAIN GENERAL INTANGIBLES, HEALTH-CARE INSURANCE RECEIVABLES, PAYMENT
INTANGIBLES, PROMISSORY NOTES, LEASEHOLD OR LANDLORD’S RESIDUAL INTERESTS AND
LETTER OF CREDIT RIGHTS, AS PROVIDED IN SECTIONS 9-404 THROUGH 9-409 OF THE NEW
YORK UCC;

 

(V)                                 RESTRICTIONS IN THE LOAN DOCUMENTS ON THE
VOLUNTARY OR INVOLUNTARY TRANSFER OF A PERSON’S RIGHTS IN SUCH PERSON’S ASSETS
MAY BE LIMITED AS PROVIDED IN SECTION 9-401 OF THE NEW YORK UCC;

 

(VI)                              THE RIGHTS OF DEBTORS, GUARANTORS AND OTHER
SECURED PARTIES TO RECEIVE NOTICES UNDER SECTION 9-611 OF THE NEW YORK UCC AND
CERTAIN OTHER RIGHTS OF THE DEBTOR AS SPECIFIED IN SECTION 9-602 OF THE NEW YORK
UCC MAY NOT BE VARIED OR WAIVED, SUBJECT TO SECTION 9-624 OF THE NEW YORK UCC;
AND

 

(VII)                           WE EXPRESS NO OPINION AS TO WHETHER THE CHOICE
OF LAW PROVISIONS OF THE LOAN DOCUMENTS WOULD BE ENFORCED BY ANY COURT OTHER
THAN A COURT OF THE STATE OF NEW YORK; AND

 

(VIII)                        NOTWITHSTANDING ANY LANGUAGE OF THE LOAN DOCUMENTS
TO THE CONTRARY, THE AGENT AND LENDERS MAY BE LIMITED TO RECOVERY OF ONLY
REASONABLE EXPENSES, INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES
AND LEGAL EXPENSES, WITH RESPECT TO THE RETAKING, HOLDING, PREPARING FOR SALE,
SELLING, PLEDGING, HYPOTHECATING OR OTHERWISE TRANSFERRING COLLATERAL.

 

(E)                                  OUR OPINIONS IN PARAGRAPH 10, ABOVE,
INSOFAR AS THEY RELATE TO THE ENFORCEABILITY OF INDEMNIFICATION PROVISIONS SET
FORTH IN THE LOAN DOCUMENTS, ARE SUBJECT TO THE EFFECT OF FEDERAL AND STATE
SECURITIES LAWS AND PUBLIC POLICY RELATING THERETO.  IN ADDITION, CERTAIN CASES
IN THE FEDERAL DISTRICT COURTS HAVE CALLED INTO QUESTION THE ENFORCEABILITY OF
PRIVATE CONTRACTUAL AGREEMENTS ALLOCATING FINANCIAL RESPONSIBILITY UNDER THE
COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980
(“CERCLA”) AS BETWEEN PARTIES WHO ARE POTENTIALLY RESPONSIBLE PARTIES UNDER
CERCLA, AND THE REASONING IN SUCH CASES COULD BE UTILIZED BY PARTIES ATTEMPTING
TO AVOID INDEMNITY LIABILITY UNDER BOTH CERCLA AND STATE ENVIRONMENTAL STATUTES
WHICH MAY CONTAIN SIMILAR LANGUAGE RESPECTING INDEMNITY AGREEMENTS.

 

(F)                                    OUR OPINIONS IN PARAGRAPHS 12-26, ABOVE,
AS TO PERFECTION OF THE SECURITY INTEREST OF THE AGENT IN THE COLLATERAL AND THE
CURATIVE PLEDGED ASSETS (COLLECTIVELY, THE “PLEDGED COLLATERAL”) ARE FURTHER
SUBJECT TO THE FOLLOWING ADDITIONAL QUALIFICATIONS:

 

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(I)                                     WE EXPRESS NO OPINION AS TO PLEDGED
COLLATERAL WHICH CONSISTS OF OR WILL CONSIST OF CONSUMER GOODS OR ACCOUNTS
RESULTING FROM THE SALE THEREOF, BENEFICIAL INTERESTS IN A TRUST OR DECEDENT’S
ESTATE, DEPOSIT ACCOUNTS, COMMERCIAL TORT CLAIMS, LETTERS OF CREDIT OR LETTER OF
CREDIT RIGHTS, GOODS SUBJECT TO CERTIFICATES OF TITLE (INCLUDING, WITHOUT
LIMITATION, MOTOR VEHICLES), FIXTURES, EQUIPMENT TO BE USED IN FARMING
OPERATIONS, FARM PRODUCTS, AGRICULTURAL OR FARM PROPERTY, ACCOUNTS OR GENERAL
INTANGIBLES ARISING FROM OR RELATING TO THE SALE OF FARM PRODUCTS, CROPS,
TIMBER, MINERALS, OIL, GAS OR THE LIKE, OR ITEMS WHICH ARE SUBJECT TO A STATUTE
OR TREATY OF THE UNITED STATES WHICH PROVIDES FOR A NATIONAL OR INTERNATIONAL
CERTIFICATE OF TITLE FOR THE PERFECTION OF A SECURITY INTEREST THEREIN OR WHICH
SPECIFIES A PLACE OF FILING DIFFERENT FROM THAT SPECIFIED IN THE NEW YORK UCC,
THE MINNESOTA UCC, THE DELAWARE UCC, THE TENNESSEE UCC, THE CALIFORNIA UCC OR
THE TEXAS UCC FOR FILING TO PERFECT SUCH SECURITY INTEREST, OR IN THE CASE OF
THE SALE OF ANY OF THE FOREGOING, ACCOUNTS, PROMISSORY NOTES OR GENERAL
INTANGIBLES ARISING WITH RESPECT THERETO;

 

(II)                                  WE EXPRESS NO OPINION AS TO MATTERS
EXCLUDED FROM ARTICLE 9 OF THE NEW YORK UCC BY SECTION 9-109 OF THE NEW YORK
UCC, ARTICLE 9 OF THE MINNESOTA UCC BY SECTION 336.9-109 OF THE MINNESOTA UCC,
ARTICLE 9 OF THE DELAWARE UCC BY SECTION 9-109 OF THE DELAWARE UCC, ARTICLE 9 OF
THE TENNESSEE UCC BY SECTION 47-9-109 OF THE TENNESSEE UCC, DIVISION 9 OF THE
CALIFORNIA UCC BY SECTION 9109 OF THE CALIFORNIA UCC OR ARTICLE 9 OF THE TEXAS
UCC BY SECTION 9.109 OF THE TEXAS UCC;

 

(III)                               THE EFFECT OF SECTION 9-315 OF THE NEW YORK
UCC, SECTION 336.9-315 OF THE MINNESOTA UCC, SECTION 9-315 OF THE DELAWARE UCC,
SECTION 47-9-315 OF THE TENNESSEE UCC, SECTION 9315 OF THE CALIFORNIA UCC OR
SECTION 9.315 OF THE TEXAS UCC AS TO PROCEEDS OF PLEDGED COLLATERAL, AND
SECTIONS 9-320 AND 9-330 OF THE NEW YORK UCC, SECTIONS 336.9-320 AND 336.9-330
OF THE MINNESOTA UCC, SECTIONS 9-320 AND 9-330 OF THE DELAWARE UCC, SECTIONS
47-9-320 AND 47-9-330 OF THE TENNESSEE UCC, SECTIONS 9320 AND 9330 OF THE
CALIFORNIA UCC, OR SECTIONS 9.320 AND 9.330 OF THE TEXAS UCC AS TO BUYERS AND
PURCHASERS OF PLEDGED COLLATERAL IN CERTAIN CIRCUMSTANCES;

 

(IV)                              THE REQUIREMENT THAT CONTINUATION STATEMENTS
WITH RESPECT TO THE FINANCING STATEMENTS BE FILED WITHIN SIX MONTHS PRIOR TO THE
FIFTH, TENTH, FIFTEENTH, ETC. ANNIVERSARIES OF THE ORIGINAL FILING OF THE
FINANCING STATEMENTS;

 

(V)                                 THE SECURITY INTEREST OF THE AGENT AND THE
LENDERS IN THE PLEDGED COLLATERAL IN WHICH A CREDIT PARTY HAS GRANTED A SECURITY
INTEREST TO THE AGENT MAY BECOME UNPERFECTED IF SUCH CREDIT PARTY CHANGES ITS
NAME, JURISDICTION OF FORMATION OR ITS STATUS THEREIN, OR IDENTITY OR ENTITY
STRUCTURE;

 

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(VI)                              WE EXPRESS NO OPINION AS TO THE VALIDITY OR
PERFECTION OF ANY SECURITY INTEREST PURPORTED TO BE ASSUMED OR GRANTED IN THAT
PORTION OF PLEDGED COLLATERAL THAT CONSTITUTES AN INTEREST OR CLAIM IN OR UNDER
A POLICY OF INSURANCE (EXCEPT WITH RESPECT TO HEALTH-CARE-INSURANCE RECEIVABLES
AND WITH RESPECT TO PROCEEDS THEREOF AS PROVIDED IN SECTION 9-315 OF THE NEW
YORK UCC, SECTION 336.9-315 OF THE MINNESOTA UCC, SECTION 9-315 OF THE DELAWARE
UCC, SECTION 47-9-315 OF THE TENNESSEE UCC, SECTION 9315 OF THE CALIFORNIA UCC
OR SECTION 9.315 OF THE TEXAS UCC), A RIGHT REPRESENTED BY A JUDGMENT, A RIGHT
OF SETOFF, A CLAIM ARISING OUT OF TORT OR AN INTEREST IN ANY DEPOSIT ACCOUNT
(EXCEPT WITH RESPECT TO PROCEEDS THEREOF AS PROVIDED IN SECTION 9-315 OF THE NEW
YORK UCC, SECTION 336.9-315 OF THE MINNESOTA UCC, SECTION 9-315 OF THE DELAWARE
UCC, SECTION 47-9-315 OF THE TENNESSEE UCC, SECTION 9315 OF THE CALIFORNIA UCC
OR SECTION 9.315 OF THE TEXAS UCC);

 

(VII)                           IN THE CASE OF PLEDGED COLLATERAL CONSISTING OF
MONEY (AS SUCH TERM IS DEFINED IN THE NEW YORK UCC) NOT CONSTITUTING PART OF A
CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE NEW YORK UCC), THE SECURITY
INTEREST GRANTED PURSUANT TO THE SECURITY AGREEMENT CANNOT BE PERFECTED BY
FILING THE FINANCING STATEMENTS BUT CAN ONLY BE PERFECTED IF POSSESSION THEREOF
IS OBTAINED;

 

(VIII)                        WE EXPRESS NO OPINION WITH RESPECT TO THE
PERFECTION OF THE AGENT’S SECURITY INTEREST IN ANY PATENTS, PATENT APPLICATIONS,
PATENTS PENDING, COPYRIGHTS, TRADEMARKS, TRADE NAMES, TRADEMARK REGISTRATIONS OR
OTHER INTERESTS SUBJECT TO FEDERAL PATENT, TRADEMARK OR COPYRIGHT LAWS; AND

 

(IX)                                EXCEPT FOR THE OPINIONS EXPRESSED IN
PARAGRAPH 26, ABOVE, AS TO PERFECTION BY CONTROL OF THE CURATIVE PLEDGED ASSETS,
WE EXPRESS NO OPINION WITH RESPECT TO THE PERFECTION OF THE AGENT’S SECURITY
INTEREST IN ANY PLEDGED COLLATERAL WHICH MAY ONLY BE PERFECTED BY “CONTROL”
WITHIN THE MEANING GIVEN TO SUCH TERM IN THE MINNESOTA UCC, DELAWARE UCC,
TENNESSEE UCC, NEW YORK UCC, CALIFORNIA UCC OR TEXAS UCC.

 

(G)                                 WE EXPRESS NO OPINION CONCERNING ANY CREDIT
PARTY’S RIGHTS IN OR TITLE TO, OR THE PRIORITY OF ANY SECURITY INTEREST, PLEDGE,
LIEN, OR OTHER SIMILAR INTEREST IN, ANY PERSONAL PROPERTY, OR THE CREATION,
PERFECTION OR PRIORITY OF ANY LIEN, MORTGAGE OR OTHER SIMILAR INTEREST IN ANY
REAL PROPERTY.

 

(H)                                 WE EXPRESS NO OPINION AS TO COMPLIANCE OR
THE EFFECT OF NONCOMPLIANCE BY THE AGENT OR ANY LENDER WITH ANY STATE OR FEDERAL
LAWS OR REGULATIONS APPLICABLE TO THE AGENT OR ANY LENDER IN CONNECTION WITH THE
TRANSACTIONS DESCRIBED IN THE LOAN DOCUMENTS.

 

23

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

 

(I)                                     OUR OPINIONS IN PARAGRAPH 11, ABOVE, ARE
SUBJECT TO THE DEFENSES AVAILABLE TO A CO-BORROWER OR GUARANTOR UNDER APPLICABLE
LAW, BUT THE WAIVERS OF SUCH DEFENSES SET FORTH IN THE LOAN DOCUMENTS ARE
ENFORCEABLE, SUBJECT TO THE OTHER EXCEPTIONS SET FORTH HEREIN.

 

(J)                                     OUR OPINIONS WITH RESPECT TO ACCESS’
VALID EXISTENCE AS A CORPORATION AND ITS GOOD STANDING IN PARAGRAPH 1, ABOVE,
ARE BASED SOLELY ON THE CERTIFICATE OF GOOD STANDING AND THE CERTIFICATE OF
EXISTENCE REFERENCED IN ITEMS (IV) AND (XXIV) AT PAGES 2-4, ABOVE.  OUR OPINIONS
WITH RESPECT TO APEX’S VALID EXISTENCE AS A CORPORATION AND ITS GOOD STANDING IN
PARAGRAPH 1, ABOVE, ARE BASED SOLELY ON THE CERTIFICATES OF GOOD STANDING AND
THE CERTIFICATE OF INCORPORATION REFERENCED IN ITEMS (V) AND (XVII) AT PAGES
2-4, ABOVE.  OUR OPINIONS WITH RESPECT TO CCS’S VALID EXISTENCE AS A CORPORATION
AND ITS GOOD STANDING IN PARAGRAPH 1, ABOVE, ARE BASED SOLELY ON THE
CERTIFICATES OF GOOD STANDING AND THE CERTIFICATE OF INCORPORATION REFERENCED IN
ITEMS (VIII) AND (XXII) AT PAGES 2-4, ABOVE.  OUR OPINIONS WITH RESPECT TO
INFINITY INFUSION’S VALID EXISTENCE AS A LIMITED PARTNERSHIP AND ITS GOOD
STANDING IN PARAGRAPH 1, ABOVE, ARE BASED SOLELY ON THE CERTIFICATE OF AUTHORITY
AND THE ARTICLES OF CONVERSION REFERENCED IN ITEMS (XII) AND (XXVII) AT PAGES
3-4, ABOVE.

 

(K)                                  OUR OPINIONS ASSUME THAT EACH OF ACCESS,
APEX, CCS AND INFINITY INFUSION IS DULY INCORPORATED OR ORGANIZED UNDER THE LAWS
OF THE STATE OF ITS ORGANIZATION AND HAS SUFFICIENT CORPORATE OR PARTNERSHIP
POWER TO CONDUCT ANY LAWFUL BUSINESS ACTIVITY, INCLUDING ENTERING INTO THE LOAN
DOCUMENTS TO WHICH IT IS A PARTY.

 

This opinion is in addition to our opinions to the Agent dated June 9, 2003 and
July 30, 2003 (collectively, the “Existing Opinions”) which remain in full force
and effect, subject to the assumptions, qualifications, and limitations set
forth therein, provided that we advise you that our opinion as to the
enforceability of the “Loan Documents”, as such term is defined in each of the
Existing Opinions, shall be deemed to include the enforceability of such Loan
Documents as modified as of the date of this opinion by the applicable terms of
the Reaffirmation Agreement, subject to the assumptions, qualifications, and
limitations with respect to enforceability set forth in the Existing Opinions.

 

The opinions expressed herein are based on an analysis of existing laws and
court decisions and cover certain matters not directly addressed by such
authorities.  This opinion is solely for the benefit of the addressees hereof in
connection with the transaction described in the first paragraph of this letter,
may not be relied upon by the addressee hereof for any other purpose, and may
not be relied upon or used by, circulated, quoted, or referred to, nor may
copies hereof be delivered to, another person, other than the Agent and Lenders’
participants and assigns permitted under the Credit Agreement, for any purpose
without our prior written approval.  We disclaim any obligation to update this
opinion letter for events occurring or coming to our attention, or any changes
in the law taking effect, after the date hereof.

 

24

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

 

Very truly yours,

 

 

LJG/TSH

 

25

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

 

EXHIBIT A
Opinion of Dorsey & Whitney LLP
April 23, 2004

 

LOAN DOCUMENTS

 

Unless otherwise stated, the following instruments and agreements are dated
April 23, 2004:

 

1.                                       Reaffirmation Agreement by and between
Curative, eBioCare, Access, Apex, CHS, CNY, Optimal, Infinity, Infinity II,
Infinity Infusion, MedCare, CPS, CHSC, CHSIII and the Agent (the “Reaffirmation
Agreement”)

 

2.                                       $40,000,000 Revolving Note by the
Credit Parties payable to the Agent.

 

3.                                       $5,000,000 Swingline Note by Credit
Parties payable to the Agent.

 

4.                                       Amended and Restated Security Agreement
by and between Curative and Agent (the “Security Agreement”).

 

5.                                       Security Agreement by and between CCS
and Agent (the “CCS Security Agreement”).

 

6.                                       Intellectual Property Security
Agreement by CCS in favor of the Agent (the “CCS Intellectual Property Security
Agreement”).

 

7.                                       Amended and Restated Pledge Agreement
by Curative in favor of Agent. (the “Pledge Agreement”)

 

8.                                       Master Agreement for Standby Letters of
Credit, by and between Curative and the Agent.

 

9.                                       Master Agreement for Documentary
Letters of Credit, by and between Curative and the Agent.

 

10.                                 Post Closing Letter Agreement by and between
the Curative and the Agent.

 

11.                                 Assignment of Representations, Warranties,
Covenants and Indemnities by and between Curative and the Agent.

 

12.                                 Business Associate Agreement by and between
CCS and the Agent.

 

The documents described in items 2 and 3, above, are referred to herein
collectively as the “Notes.”

 

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

 

EXHIBIT B
Opinion of Dorsey & Whitney LLP
April 23, 2004

 

UCC FINANCING STATEMENTS

 

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

 

EXHIBIT C
Opinion of Dorsey & Whitney LLP
April 23, 2004

 

SPECIFIC AGREEMENTS AND INSTRUMENTS

 

1.               The Agreements and Instruments listed as exhibits to, or
incorporated by reference in, the Form 10-K filed by Curative for the year ended
December 31, 2003, and any filing by Curative under the Securities Exchange Act
after such Form 10-K was so filed, which additional filing was made prior to
April 23, 2004.

 

2.               Lease Agreement, dated August 4, 1996, First Amendment to Lease
Agreement dated June 4, 2001, Second Amendment to Lease Agreement (undated), and
Third Amendment to Lease Agreement dated November 7, 2003, between K/B
Opportunity Fund L.L.P. and Critical Care Systems, Inc.

 

3.               Lease Agreement, dated October 1, 2003, between Hampstead
Associates, LLC and Critical Care Services, Inc.

 

4.               Lease Agreement, dated May 5, 1992, between Ticonderoga Company
and Critical Care Services, Inc.

 

5.               Lease Agreement, dated November 1, 1991, between CSL Birmingham
Associates and CCS, First Amendment to Lease Agreement dated June 9, 1997
between CSL Colonnade Associates as successor to CSL Birmingham Associates, and
Critical Care Systems, Inc., and Second Amendment to Lease Agreement dated
November 21, 2002 between The Stewart Organization, Inc., as successor to CSL
Colonnade Associates, and Critical Care Systems, Inc.

 

6.               Lease Agreement, with start date of July 10, 2000, between
Apparel Realty Trust and Critical Care Systems, Inc.

 

7.               Lease Agreement, dated January 8, 2004, between MIE Properties,
Inc. and Critical Care Systems, Inc.

 

8.               Lease Agreement, dated April 24, 2002, between Johnny Ribeiro
and Critical Care Systems, Inc.

 

9.               Lease Agreement, dated May 10, 2002, First Amendment to Lease
Agreement dated June 20, 2002, and Second Amendment to Lease Agreement dated
February 12, 2003, between Carleton Investors, L.L.C. and Critical Care Systems,
Inc.

 

10.         Lease Agreement, dated July 31, 2000, between Riggs & Company as
Trustee of the Multi-Employer Property Trust and Critical Care Systems, Inc.

 

11.         Lease Agreement, dated June 1, 2003, between Lemar Crossing Limited
and Critical Care Systems, Inc.

 

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

 

12.         Lease Agreement, dated November 30, 2000, between Slough Estates USA
Inc., and Infusion Care Systems, Inc.

 

13.         Lease Agreement, dated October 31, 2000, between Columbia Properties
LLC, and Infusion Care Systems, Inc.

 

14.         Lease Agreement, dated November 2000, between G.R.O. Management
L.L.C., and Infusion Care Systems, Inc.

 

15.         Lease Agreement, dated November 8, 2000, between Westwood Business
Park, Ltd., and Infusion Care Systems, Inc.

 

16.         Lease Agreement, dated October 23, 2000, between AMB Property II,
L.P., and Infusion Care Systems, Inc.

 

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

 

 

Schedule 3

 

List of Required UCC-3 Terminations, Partial Releases and other Lien Releases*

 

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

*Authorization to release Harris Bank UCC financing statements will be contained
in the payoff letter from Harris Bank.

 

Debtor Name

 

Secured Party

 

Jurisdiction

 

Collateral

 

File #

 

File Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

EXHIBIT J

to

CREDIT AGREEMENT

 

AUTHORIZED SIGNATORY LETTER

                 , 20  

General Electric Capital Corporation, as Agent

2 Bethesda Metro Center

Suite 600

Bethesda, MD 20814

Ladies and Gentlemen:

Reference is made to that certain Amended and Restated Credit Agreement, dated
as of April 23, 2004 (the “Credit Agreement”), among Curative Health Services,
Inc., a Minnesota corporation formerly known as Curative Holding Co. (“Borrower
Representative”), eBioCare.com, Inc., Hemophilia Access, Inc., Apex Therapeutic
Care, Inc., CHS Services, Inc., Curative Health Services of New York, Inc.,
Optimal Care Plus, Inc., Infinity Infusion, LLC, Infinity Infusion II, LLC,
Infinity Infusion Care, Ltd., MedCare, Inc., Curative Pharmacy Services, Inc.,
Curative Health Services Co., a Minnesota corporation formerly known as Curative
Health Services, Inc., Critical Care Systems, Inc. (each a “Borrower”, and
collectively with Borrower Representative, the “Borrowers”), the other Credit
Parties signatory thereto, General Electric Capital Corporation (“GE Capital”),
individually and in its capacity as Agent for Lenders (in such capacity, the
“Agent”), and the Persons designated as Lenders in the Credit Agreement. 
Capitalized terms used herein, but not otherwise defined herein, shall have the
meanings ascribed to such terms in the Credit Agreement. 

 

Each of the undersigned hereby designate the following individuals as
“Authorized Signatories” of Borrower Representative for the purpose of giving
Notices of Borrowing and Notices of Swingline Borrowing under the Credit
Agreement:

 

Name:

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Without limiting its rights and protections afforded to Agent under the Credit
Agreement, Agent shall be entitled to rely on such designation until it receives
written notice from Borrower Representative of any change in such designation. 

 

(Remainder of page left intentionally blank; signature pages follow)

 

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

 

IN WITNESS WHEREOF, each of the undersigned has executed and delivered this
Authorized Signatory Letter by its duly authorized officer as of the date first
set forth above.

 

 

CURATIVE HEALTH SERVICES, INC.,

 

a Minnesota corporation formerly known as Curative Holding Co.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

EBIOCARE.COM, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

HEMOPHILIA ACCESS, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

APEX THERAPEUTIC CARE, INC. 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

CHS SERVICES, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

[Signature page to Authorized Signatory Letter]

 

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

 

 

CURATIVE HEALTH SERVICES OF NEW YORK, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

OPTIMAL CARE PLUS, INC. 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

INFINITY INFUSION, LLC

 

 

 

By: Curative Health Services Co., its Sole Member

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

INFINITY INFUSION II, LLC

 

 

 

By: Curative Health Services Co., its Sole Member

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

[Signature page to Authorized Signatory Letter]

 

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

 

 

INFINITY INFUSION CARE, LTD.

 

 

 

By: Infinity Infusion  II, LLC, its Sole General Partner

 

 

 

By: Curative Health Services Co., the Sole Member of Infinity Infusion II, LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

MEDCARE, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

CURATIVE PHARMACY SERVICES, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

CURATIVE HEALTH SERVICES CO.,

 

a Minnesota corporation formerly known as Curative Health Services, Inc.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

CRITICAL CARE SYSTEMS, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

[Signature page to Authorized Signatory Letter]

 

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

 

EXHIBIT K

to

CREDIT AGREEMENT

 

CLOSING CHECKLIST

 

GENERAL ELECTRIC CAPITAL CORPORATION

 

AMENDED AND RESTATED CREDIT AGREEMENT FOR

CURATIVE HEALTH SERVICES, INC.

AND CERTAIN OF ITS SUBSIDIARIES AS CO-BORROWERS

 

Expected Closing Date:  April 23, 2004

Location of Closing:  New York, New York

 

Parties and Counsel

 

Agent:

 

-

 

General Electric Capital Corporation (“GE Capital”)

 

 

 

 

 

Lead Arranger:

 

-

 

GE Capital Markets Group, Inc. (“GECMG”)

 

 

 

 

 

Holdings:

 

-

 

Curative Health Services, Inc., a Minnesota corporation formerly named Curative
Holding Co.

Co-Borrowers:

 

-

 

Certain direct and indirect subsidiaries of Holdings as follows (collectively,
with Holdings, “Borrowers”):

 

 

 

 

 

 

 

 

 

1.

eBioCare.com, Inc.

 

 

 

 

2.

Hemophilia Access, Inc.

 

 

 

 

3.

Apex Therapeutic Care, Inc.

 

 

 

 

4.

Curative Health Services of New York, Inc.

 

 

 

 

5.

CHS Services, Inc.

 

 

 

 

6.

Curative Pharmacy Services, Inc.

 

 

 

 

7.

Infinity Infusion, LLC

 

 

 

 

8.

Infinity Infusion II, LLC

 

 

 

 

9.

Optimal Care Plus, Inc.

 

 

 

 

10.

Infinity Infusion Care, Ltd.

 

 

 

 

11.

MedCare, Inc.

 

 

 

 

12.

Curative Health Services Co., a Minnesota corporation formerly named Curative
Health Services, Inc.

 

 

 

 

13.

Target

 

 

 

 

 

Target:

 

-

 

Critical Care Systems, Inc.

 

 

 

 

 

Guarantors:

 

-

 

Curative Health Services III Co.

 

 

 

 

 

Credit Parties

 

-

 

Borrowers and Guarantors

 

 

 

 

 

Agent’s Counsel:

 

-

 

Kilpatrick Stockton LLP  (“KS”)

 

 

 

 

 

Borrowers’ Counsel

 

-

 

Dorsey & Whitney LLP (“D&W”)

 

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

 

Action/Document

 

Responsible Party

 

Status

1.               Amended and Restated Credit Agreement (“Credit Agreement”),
executed by Borrowers, Agent and Lenders

 

KS

 

 

 

 

 

 

 

2.               Exhibits to Credit Agreement

 

KS

 

 

 

 

 

 

 

A                   -                             Revolving Note

 

 

 

 

B                     -                             [RESERVED]

 

 

 

 

C                     -                             Swingline Note

 

 

 

 

D-1          -                             Notice of Borrowing

 

 

 

 

D-2          -                             Notice of Swingline Borrowing

 

 

 

 

E                      -                             Borrower Security Agreement

 

 

 

 

F                      -                             Borrower Pledge Agreement

 

 

 

 

G                     -                             Subsidiary Guaranty
Agreement

 

 

 

 

H                    -                             Guarantor Security Agreement

 

 

 

 

I                         -                            Opinion of Counsel to the
Borrowers

 

 

 

 

J                        -                             Authorized Signatory
Letter

 

 

 

 

K                    -                             Closing Checklist

 

 

 

 

L                      -                             Assignment Agreement

 

 

 

 

M                 -                             HIPPA Business Associate
Agreement

 

 

 

 

N                    -                             Form of Seller Subordination
Agreement

 

 

 

 

O                    -                             Form of Borrowing Base
Certificate

 

 

 

 

5.1(a)                    -  Compliance Certificate (Quarterly)

 

 

 

 

5.1(b)                   -  Compliance Certificate (Annual)

 

 

 

 

 

2

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

 

Action/Document

 

Responsible Party

 

Status

 

 

 

 

 

3.               Updated Disclosure Schedules to Credit Agreement 

 

Borrowers

 

 

 

 

 

 

 

1.1                                        -            Permitted Restructuring

 

 

 

 

3.1                                        -            Closing Date Litigation

 

 

 

 

4.5(a)                          -            Financial Statements

 

 

 

 

4.5(b)                         -            Borrowers’ Financial Projections

 

 

 

 

4.7                                        -            Litigation

 

 

 

 

4.13                                  -            Subsidiaries, Other
EquityInvestments

 

 

 

 

4.19                                  -            Insurance Policies

 

 

 

 

6.15                                  -            Compliance Program

 

 

 

 

6.16(a)                    -            Government Receivables Deposit Accounts
and Concentration Account

 

 

 

 

6.16(c)                    -            Blocked Accounts

 

 

 

 

7.1                                        -            Indebtedness

 

 

 

 

7.2                                        -            Closing Date Liens

 

 

 

 

7.4                                        -            Capital Structure

 

 

 

 

7.9                                        -            Existing Investments

 

 

 

 

7.10(b)                   -                           Loans to Officers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.               Reaffirmation Agreement, executed by each Credit Party and
Agent

 

KS

 

 

 

 

 

 

 

5.               Amended and Restated Revolving Note, executed by Borrowers

 

KS

 

 

 

 

 

 

 

6.Amended and Restated Swingline Note, executed by Borrowers

 

KS

 

 

 

 

 

 

 

7.               Amended and Restated Security Agreement, executed by Holdings
and Agent

 

KS

 

 

 

 

 

 

 

8.               Security Agreement, executed by Target and Agent

 

Form KS/ Final D&W

 

 

 

 

 

 

 

9.               Power of Attorney by Target

 

D&W

 

 

 

3

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

 

Action/Document

 

Responsible Party

 

Status

10.         Intellectual Property Security Agreement, executed by Target

 

Form KS/ Final D&W

 

 

 

 

 

 

 

Schedule identifying registered patents and trademarks

 

D&W

 

 

 

 

 

 

 

11.         Amended and Restated Pledge Agreement, executed by Holdings

 

Form KS/ Final D&W  D&W

 

 

 

 

 

 

 

Schedule I – Pledged Securities

 

 

 

 

Schedule II – Pledge Amendment

 

 

 

 

Schedule III – Related Control Agreement executed by Target

 

 

 

 

 

 

 

 

 

12.         Stock Certificate(s) of Target to be pledged

 

D&W

 

 

 

 

 

 

 

13.         Stock Power(s) dated in blank and endorsed in blank relating to
pledges stock certificate(s) of Target

 

D&W

 

 

 

 

 

 

 

14.         Master Agreement for Standby Letters of Credit, executed by Holdings
and Agent

 

Form KS/ Final Borrowers

 

 

 

 

 

 

 

15.         Master Agreement for Documentary Letters of Credit, executed by
Holdings and Agent

 

Form KS/ Final Borrowers

 

 

 

 

 

 

 

16.         Intercreditor Agreement between UBS AG and Agent

 

KS

 

 

 

 

 

 

 

17.         Certified copies of Subject Swap Documents

 

D&W

 

 

 

 

 

 

 

18.         Legal Opinion from D&W, as counsel to Credit Parties

 

D&W

 

 

 

 

 

 

 

19.         Legal Opinion from counsel to Target or Reliance Letters in favor of
Agent and Lenders

 

D&W

 

 

 

 

 

 

 

20.         Curative Health Services, Inc. Closing Certificate

 

D&W

 

 

 

 

 

 

 

21.         Good Standing Certificates for Credit Parties

 

Borrowers

 

 

 

 

 

 

 

22.         Secretary Certificates for Credit Parties, together with following
attachments:

 

D&W

 

 

 

4

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

 

Action/Document

 

Responsible Party

 

Status

a)              Certificate of Incorporation/Formation, certified by applicable
Secretary of State;

 

 

 

 

 

 

 

 

 

b)             Bylaws/Operating Agreement;

 

D&W

 

 

 

 

 

 

 

c)              Resolutions of Board/Managers/Members, as applicable

 

D&W

 

 

 

 

 

 

 

 

 

 

 

 

23.         Solvency Certificate and certification as to the pro forma covenant
compliance of all Credit Parties, executed by Chief Financial Officer of
Holdings

 

D&W

 

 

 

 

 

 

 

24.         Certificate of Secretary of Borrowers, attaching and certifying as
to true, correct and complete copies of the Senior Unsecured High Yield Note
Documents and CCS Purchase Agreement and all other related Acquisition documents

 

D&W

 

 

 

 

 

 

 

25.         Post-Closing Letter Agreement

 

KS

 

 

 

 

 

 

 

26.         UCC, tax, lien and judgment bring down searches for Credit Parties
in the jurisdictions specified in Schedule 1 attached hereto

 

KS

 

 

 

 

 

 

 

27.         UCC-1 Financing Statements for Credit Parties, to be filed in the
jurisdictions specified in Schedule 2 attached hereto

 

KS

 

 

 

 

 

 

 

28.         Tennessee Affidavit of Value, regarding Hemophilia Access UCC
Financing Statement

 

D&W

 

 

 

 

 

 

 

29.         UCC-3 Termination Statements as set forth on Schedule 3 attached
hereto and related filing authorization letter from each secured party

 

D&W (KS to file)

 

 

 

 

 

 

 

30.         Harris Bank Pay-off Letter

 

D&W

 

 

 

 

 

 

 

31.         Assignment of Representations, Warranties and Indemnities (regarding
representations, warranties and indemnities made by Target Sellers to applicable
Credit Parties)

 

D&W

 

 

 

 

 

 

 

32.         HIPAA Business Associate Agreement between Target and Agent

 

D&W

 

 

 

5

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

 

Action/Document

 

Responsible Party

 

Status

33.         Insurance Certificates for Credit Parties in form and substance
satisfactory to Agent

 

Borrowers/ D&W

 

 

 

 

 

 

 

34.         Borrowing Base Certificate dated closing date duly executed by
Holdings as Borrower Representative

 

Form GE Capital/ Final Borrowers

 

 

 

 

 

 

 

35.         Approval by Board of Target for Subject Acquisition, along with
evidence satisfactory to Agent that Subject Acquisition has been consummated and
necessary government and third party approvals have been obtained

 

D&W

 

 

 

 

 

 

 

36.         Responses to Legal Due Diligence Request :

 

Borrowers

 

 

 

 

 

 

 

37.         Pay Proceeds Letter

 

D&W

 

 

 

 

 

 

 

38.         Statement of Sources and Uses relating to proceeds of Senior
Unsecured High Yield Notes and the Loans made on the Restatement Effective Date

 

D&W

 

 

 

 

 

 

 

39.         2003 Audited Financial Statements for Target and the financial
statements as required under Section 3.1(w) of the Credit Agreement

 

Borrowers

 

 

 

 

 

 

 

40.Payment of fees and expenses as required under GE Capital Fee Letter

 

Borrowers

 

 

 

 

 

 

 

41.         Payment of fees and expenses of Kilpatrick Stockton LLP

 

Borrowers

 

 

 

POST CLOSING ITEMS

 

1.               Blocked Account Agreements, executed by Agent, depository bank
and Target

 

Form KS/ Final D&W

 

 

 

 

 

 

 

2.               Government Receivables Deposit Account Agreements, executed by
Agent, depository bank and Target

 

Form KS/ Final D&W

 

 

 

 

 

 

 

3.               Landlord Waiver Agreements identified on Schedule 1 to
Post-Closing Letter Agreement

 

D&W

 

 

 

 

 

 

 

4.               Post-Closing UCC lien searches

 

KS

 

 

 

6

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

 

Schedule 1

 

UCC, Tax, Lien and Judgment Searches

Note: 5-Part Lien Searches (UCC, Fixture/Real Estate, Federal Tax, State Tax,
Judgment), are needed from the state and county levels specified below, if
available.

 

 

Name (Including All Corporate Endings)

 

Jurisdiction

 

Search Type

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Schedule 2

 

UCC-1 Financing Statements

 

Name of Debtor

 

Filing Office

 

Curative Health Services, Inc.

 

Minnesota SOS

 

 

 

 

 

eBioCare.com, Inc.

 

Delaware SOS

 

 

 

 

 

Hemophilia Access, Inc.

 

Tennessee SOS

 

 

 

 

 

Apex Therapeutic Care, Inc.

 

California SOS

 

 

 

 

 

CHS Services, Inc.

 

Delaware SOS

 

 

 

 

 

Curative Health Services of New York, Inc.

 

New York SOS

 

 

 

 

 

Infinity Infusion, LLC

 

Delaware SOS

 

 

 

 

 

Infinity Infusion II, LLC

 

Delaware SOS

 

 

 

 

 

Optimal Care Plus, Inc.

 

Delaware SOS

 

 

 

 

 

Infinity Infusion Care, Ltd.

 

Texas SOS

 

 

 

 

 

MedCare, Inc.

 

Delaware SOS

 

 

 

 

 

Curative Pharmacy Services, Inc.

 

Delaware SOS

 

 

 

 

 

Curative Health Services Co.

 

Minnesota SOS

 

 

 

 

 

Curative Health Services III Co.

 

Minnesota SOS

 

 

 

 

 

Critical Care Systems, Inc.

 

Delaware SOS

 

 

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

 

Schedule 3

List of Required UCC-3 Terminations, Partial Releases and other Lien Releases*

*Authorization to release Harris Bank UCC financing statements will be contained
in the payoff letter from Harris Bank.

Debtor Name

Secured Party

Jurisdiction

Collateral

File #

File Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

EXHIBIT L

to

CREDIT AGREEMENT

 

FORM OF ASSIGNMENT AGREEMENT

 

This Assignment Agreement (this “Agreement”) is made as of
                      ,       by and between
                                                    (“Assignor Lender”)
and                                     (“Assignee Lender”) and acknowledged and
consented to by GENERAL ELECTRIC CAPITAL CORPORATION, in its capacity as Agent
for Lenders (“Agent”).  All capitalized terms used in this Agreement and not
otherwise defined herein will have the respective meanings set forth in the
Credit Agreement as hereinafter defined.

 

RECITALS:

 

WHEREAS, Curative Health Services, Inc., eBioCare.com, Inc., Hemophilia Access,
Inc., Apex Therapeutic Care, Inc., CHS Services, Inc., Curative Health Services
of New York, Inc., Optimal Care Plus, Inc., Infinity Infusion, LLC, Infinity
Infusion II, LLC, Infinity Infusion Care, Ltd., MedCare, Inc., Curative Pharmacy
Services, Inc., Curative Health Services Co., Critical Care Systems, Inc. (each
a “Borrower”, and collectively, the “Borrowers”), the other Credit Parties
signatory thereto, Agent and the Persons designated as Lenders in the Credit
Agreement (the “Lenders”) have entered into that certain Amended and Restated
Credit Agreement, dated as of April 23, 2004 (as amended, restated, supplemented
or otherwise modified from time to time, the “Credit Agreement”), pursuant to
which Assignor Lender has agreed to make certain Loans to, and incur certain L/C
Obligations for, Borrowers;

 

WHEREAS, Assignor Lender desires to assign to Assignee Lender [all/a portion] of
its interest in the Loans (as described below), the L/C Obligations and the
Collateral and to delegate to Assignee Lender [all/a portion] of its Commitments
and other duties with respect to such Loans, L/C Obligations and Collateral;

 

WHEREAS, Assignee Lender desires to become a Lender under the Credit Agreement
and to accept such assignment and delegation from Assignor Lender; and

 

WHEREAS, Assignee Lender desires to appoint Agent to serve as agent for Assignee
Lender under the Credit Agreement.

 

NOW, THEREFORE, in consideration of the premises and the agreements, provisions,
and covenants herein contained, Assignor Lender and Assignee Lender agree as
follows:

 

1.                                       ASSIGNMENT, DELEGATION, AND ACCEPTANCE

 

1.1.                              ASSIGNMENT.  ASSIGNOR LENDER HEREBY TRANSFERS
AND ASSIGNS TO ASSIGNEE LENDER, WITHOUT RECOURSE AND WITHOUT REPRESENTATIONS OR
WARRANTIES OF ANY KIND (EXCEPT AS SET FORTH IN SECTION 3.2 BELOW), [ALL/SUCH
PERCENTAGE] OF ASSIGNOR LENDER’S RIGHT, TITLE, AND INTEREST IN

 

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

 

[the Revolving Loan ], [the Term Loan], [the Loans], [L/C Obligations], Loan
Documents and Collateral as will result in Assignee Lender having as of the
Effective Date (as hereinafter defined) a Lender’s Percentage thereof, as
follows:

 

Assignee Lender’s Loans

 

Principal Amount

 

Lender’s Percentage

 

 

 

 

 

 

 

Revolving Loan

 

$

 

 

 

%

 

 

 

 

 

 

 

Term Loan

 

$

 

 

 

%

 

1.2.                              DELEGATION.  ASSIGNOR LENDER HEREBY
IRREVOCABLY ASSIGNS AND DELEGATES TO ASSIGNEE LENDER [ALL/A PORTION] OF ITS
COMMITMENTS AND ITS OTHER DUTIES AND OBLIGATIONS AS A LENDER UNDER THE LOAN
DOCUMENTS EQUIVALENT TO [100%/      %] OF ASSIGNOR LENDER’S REVOLVING CREDIT
COMMITMENT (SUCH PERCENTAGE REPRESENTING A COMMITMENT OF $
                      ), AND [100%/      %] OF ASSIGNOR LENDER’S TERM LOAN
COMMITMENT (SUCH PERCENTAGE REPRESENTING A COMMITMENT OF $             ).

 

1.3.                              ACCEPTANCE BY ASSIGNEE LENDER.  BY ITS
EXECUTION OF THIS AGREEMENT, ASSIGNEE LENDER IRREVOCABLY PURCHASES, ASSUMES AND
ACCEPTS SUCH ASSIGNMENT AND DELEGATION AND AGREES TO BE A LENDER WITH RESPECT TO
THE DELEGATED INTEREST UNDER THE LOAN DOCUMENTS AND TO BE BOUND BY THE TERMS AND
CONDITIONS THEREOF.  BY ITS EXECUTION OF THIS AGREEMENT, ASSIGNOR LENDER AGREES,
TO THE EXTENT PROVIDED HEREIN, TO RELINQUISH ITS RIGHTS AND BE RELEASED FROM ITS
OBLIGATIONS AND DUTIES UNDER THE CREDIT AGREEMENT.

 

1.4.                              EFFECTIVE DATE.  SUCH ASSIGNMENT AND
DELEGATION BY ASSIGNOR LENDER AND ACCEPTANCE BY ASSIGNEE LENDER WILL BE
EFFECTIVE AND ASSIGNEE LENDER WILL BECOME A LENDER UNDER THE LOAN DOCUMENTS AS
OF                                        [THE DATE OF THIS AGREEMENT]
(“EFFECTIVE DATE”) AND UPON PAYMENT OF THE ASSIGNED AMOUNT AND THE ASSIGNMENT
FEE (AS EACH TERM IS DEFINED BELOW).  INTEREST AND FEES ACCRUED PRIOR TO THE
EFFECTIVE DATE ARE FOR THE ACCOUNT OF ASSIGNOR LENDER, AND INTEREST AND FEES
ACCRUED FROM AND AFTER THE EFFECTIVE DATE ARE FOR THE ACCOUNT OF ASSIGNEE
LENDER.

 

2.                                       INITIAL PAYMENT AND DELIVERY OF NOTES

 

2.1.                              PAYMENT OF THE ASSIGNED AMOUNT.  ASSIGNEE
LENDER WILL PAY TO ASSIGNOR LENDER, IN IMMEDIATELY AVAILABLE FUNDS, NOT LATER
THAN 12:00 NOON (NEW YORK TIME) ON THE EFFECTIVE DATE, AN AMOUNT EQUAL TO ITS
LENDER’S PERCENTAGE OF THE THEN OUTSTANDING PRINCIPAL AMOUNT OF THE LOANS AS SET
FORTH ABOVE IN SECTION 1.1 [TOGETHER WITH ACCRUED INTEREST, FEES AND OTHER
AMOUNTS AS SET FORTH ON SCHEDULE 2.1] (THE “ASSIGNED AMOUNT”).

 

2.2.                              PAYMENT OF ASSIGNMENT FEE.  [ASSIGNOR LENDER
AND/OR ASSIGNEE LENDER] WILL PAY TO AGENT, FOR ITS OWN ACCOUNT IN IMMEDIATELY
AVAILABLE FUNDS, NOT LATER THAN 12:00 NOON

 

2

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

 

(New York time) on the Effective Date, the assignment fee in the amount of
$[3500] (the “Assignment Fee”) as required pursuant to Section 11.6(b) of the
Credit Agreement.

 

2.3.                              EXECUTION AND DELIVERY OF NOTES.  FOLLOWING
PAYMENT OF THE ASSIGNED AMOUNT AND THE ASSIGNMENT FEE, ASSIGNOR LENDER WILL
DELIVER TO AGENT THE NOTES PREVIOUSLY DELIVERED TO ASSIGNOR LENDER FOR
REDELIVERY TO BORROWERS AND AGENT WILL OBTAIN FROM BORROWERS FOR DELIVERY TO
[ASSIGNOR LENDER AND] ASSIGNEE LENDER, NEW EXECUTED NOTES EVIDENCING ASSIGNEE
LENDER’S [AND ASSIGNOR LENDER’S RESPECTIVE] LENDER’S PERCENTAGE[S] IN THE LOANS
AFTER GIVING EFFECT TO THE ASSIGNMENT DESCRIBED IN SECTION 1 ABOVE.  EACH NEW
NOTE WILL BE ISSUED IN THE AGGREGATE MAXIMUM PRINCIPAL AMOUNT OF THE
[APPLICABLE] COMMITMENT [OF THE LENDER TO WHOM SUCH NOTE IS ISSUED] OR [THE
ASSIGNEE LENDER].

 

3.                                       REPRESENTATIONS, WARRANTIES AND
COVENANTS

 

3.1.                              ASSIGNEE LENDER’S REPRESENTATIONS, WARRANTIES
AND COVENANTS.  ASSIGNEE LENDER HEREBY REPRESENTS, WARRANTS, AND COVENANTS THE
FOLLOWING TO ASSIGNOR LENDER AND AGENT:

 

(A)                                  THIS AGREEMENT IS A LEGAL, VALID, AND
BINDING AGREEMENT OF ASSIGNEE LENDER, ENFORCEABLE ACCORDING TO ITS TERMS;

 

(B)                                 THE EXECUTION AND PERFORMANCE BY ASSIGNEE
LENDER OF ITS DUTIES AND OBLIGATIONS UNDER THIS AGREEMENT AND THE LOAN DOCUMENTS
WILL NOT REQUIRE ANY REGISTRATION WITH, NOTICE TO, OR CONSENT OR APPROVAL BY ANY
GOVERNMENTAL AUTHORITY;

 

(C)                                  ASSIGNEE LENDER IS FAMILIAR WITH
TRANSACTIONS OF THE KIND AND SCOPE REFLECTED IN THE LOAN DOCUMENTS AND IN THIS
AGREEMENT;

 

(D)                                 ASSIGNEE LENDER HAS MADE ITS OWN INDEPENDENT
INVESTIGATION AND APPRAISAL OF THE FINANCIAL CONDITION AND AFFAIRS OF EACH
CREDIT PARTY, HAS CONDUCTED ITS OWN EVALUATION OF THE LOANS AND L/C OBLIGATIONS,
THE LOAN DOCUMENTS AND EACH CREDIT PARTY’S CREDITWORTHINESS, HAS MADE ITS
DECISION TO BECOME A LENDER TO BORROWERS UNDER THE CREDIT AGREEMENT
INDEPENDENTLY AND WITHOUT RELIANCE UPON ASSIGNOR LENDER OR AGENT, AND WILL
CONTINUE TO DO SO;

 

(E)                                  ASSIGNEE LENDER IS ENTERING INTO THIS
AGREEMENT IN THE ORDINARY COURSE OF ITS BUSINESS, AND IS ACQUIRING ITS INTEREST
IN THE LOANS AND L/C OBLIGATIONS FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO OR
FOR SALE IN CONNECTION WITH ANY SUBSEQUENT DISTRIBUTION; PROVIDED, HOWEVER, THAT
AT ALL TIMES THE DISTRIBUTION OF ASSIGNEE LENDER’S PROPERTY SHALL, SUBJECT TO
THE TERMS OF THE CREDIT AGREEMENT, BE AND REMAIN WITHIN ITS CONTROL;

 

(F)                                    NO FUTURE ASSIGNMENT OR PARTICIPATION
GRANTED BY ASSIGNEE LENDER PURSUANT TO SECTION 11.6 OF THE CREDIT AGREEMENT WILL
REQUIRE ASSIGNOR LENDER,

 

3

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

 

AGENT, OR BORROWERS TO FILE ANY REGISTRATION STATEMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION OR TO APPLY TO QUALIFY UNDER THE BLUE SKY LAWS OF ANY STATE;

 

(G)                                 ASSIGNEE LENDER HAS NO LOANS TO, WRITTEN OR
ORAL AGREEMENTS WITH, OR EQUITY OR OTHER OWNERSHIP INTEREST IN ANY CREDIT PARTY;

 

(H)                                 ASSIGNEE LENDER WILL NOT ENTER INTO ANY
WRITTEN OR ORAL AGREEMENT WITH, OR ACQUIRE ANY EQUITY OR OTHER OWNERSHIP
INTEREST IN, ANY CREDIT PARTY WITHOUT THE PRIOR WRITTEN CONSENT OF AGENT; AND

 

(I)                                     AS OF THE EFFECTIVE DATE, ASSIGNEE
LENDER (I) IS ENTITLED TO RECEIVE PAYMENTS OF PRINCIPAL AND INTEREST IN RESPECT
OF THE OBLIGATIONS WITHOUT DEDUCTION FOR OR ON ACCOUNT OF ANY TAXES IMPOSED BY
THE UNITED STATES OF AMERICA OR ANY POLITICAL SUBDIVISION THEREOF [, (II) IS NOT
SUBJECT TO CAPITAL ADEQUACY OR SIMILAR REQUIREMENTS UNDER SECTION 9.4 OF THE
CREDIT AGREEMENT, (III) DOES NOT REQUIRE THE PAYMENT OF ANY INCREASED COSTS
UNDER SECTION 9.4 OF THE CREDIT AGREEMENT, AND (IV) IS NOT UNABLE TO FUND LIBOR
LOANS UNDER SECTION 9.4 OF THE CREDIT AGREEMENT, ] AND ASSIGNEE LENDER WILL
INDEMNIFY AGENT FROM AND AGAINST ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, OR EXPENSES THAT RESULT FROM
ASSIGNEE LENDER’S FAILURE TO FULFILL ITS OBLIGATIONS UNDER THE TERMS OF
SECTION 9.4 OF THE CREDIT AGREEMENT [OR FROM ANY OTHER INACCURACY IN THE
FOREGOING].

 

3.2.                              ASSIGNOR LENDER’S REPRESENTATIONS, WARRANTIES
AND COVENANTS.  ASSIGNOR LENDER HEREBY REPRESENTS, WARRANTS AND COVENANTS THE
FOLLOWING TO ASSIGNEE LENDER:

 

(A)                                  ASSIGNOR LENDER IS THE LEGAL AND BENEFICIAL
OWNER OF THE ASSIGNED AMOUNT;

 

(B)                                 THIS AGREEMENT IS A LEGAL, VALID AND BINDING
AGREEMENT OF ASSIGNOR LENDER, ENFORCEABLE ACCORDING TO ITS TERMS;

 

(C)                                  THE EXECUTION AND PERFORMANCE BY ASSIGNOR
LENDER OF ITS DUTIES AND OBLIGATIONS UNDER THIS AGREEMENT AND THE LOAN DOCUMENTS
WILL NOT REQUIRE ANY REGISTRATION WITH, NOTICE TO OR CONSENT OR APPROVAL BY ANY
GOVERNMENTAL AUTHORITY;

 

(D)                                 ASSIGNOR LENDER HAS FULL POWER AND
AUTHORITY, AND HAS TAKEN ALL ACTION NECESSARY TO EXECUTE AND DELIVER THIS
AGREEMENT AND TO FULFILL THE OBLIGATIONS HEREUNDER AND TO CONSUMMATE THE
TRANSACTIONS CONTEMPLATED HEREBY;

 

(E)                                  ASSIGNOR LENDER IS THE LEGAL AND BENEFICIAL
OWNER OF THE INTERESTS BEING ASSIGNED HEREBY, FREE AND CLEAR OF ANY ADVERSE
CLAIM, LIEN, ENCUMBRANCE, SECURITY INTEREST, RESTRICTION ON TRANSFER, PURCHASE
OPTION, CALL OR SIMILAR RIGHT OF A THIRD PARTY; AND

 

4

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

 

(F)                                    THIS ASSIGNMENT BY ASSIGNOR LENDER TO
ASSIGNEE LENDER COMPLIES, IN ALL MATERIAL RESPECTS, WITH THE TERMS OF THE LOAN
DOCUMENTS.

 

4.                                       LIMITATIONS OF LIABILITY

 

Neither Assignor Lender (except as provided in Section 3.2 above) nor Agent
makes any representations or warranties of any kind, nor assumes any
responsibility or liability whatsoever, with regard to (a) the Loan Documents or
any other document or instrument furnished pursuant thereto or the Loans, L/C
Obligations or other Obligations, (b) the creation, validity, genuineness,
enforceability, sufficiency, value or collectibility of any of them, (c) the
amount, value or existence of the Collateral,  (d) the perfection or priority of
any Lien upon the Collateral, or (e) the financial condition of any Credit Party
or other obligor or the performance or observance by any Credit Party of its
obligations under any of the Loan Documents.  Neither Assignor Lender nor Agent
has or will have any duty, either initially or on a continuing basis, to make
any investigation, evaluation, appraisal of, or any responsibility or liability
with respect to the accuracy or completeness of, any information provided to
Assignee Lender which has been provided to Assignor Lender or Agent by any
Credit Party.  Nothing in this Agreement or in the Loan Documents shall impose
upon the Assignor Lender or Agent any fiduciary relationship in respect of the
Assignee Lender.

 

5.                                       FAILURE TO ENFORCE

 

No failure or delay on the part of Agent or Assignor Lender in the exercise of
any power, right, or privilege hereunder or under any Loan Document will impair
such power, right, or privilege or be construed to be a waiver of any default or
acquiescence therein.  No single or partial exercise of any such power, right,
or privilege will preclude further exercise thereof or of any other right,
power, or privilege.  All rights and remedies existing under this Agreement are
cumulative with, and not exclusive of, any rights or remedies otherwise
available.

 

6.                                       NOTICES

 

Unless otherwise specifically provided herein, any notice or other communication
required or permitted to be given will be in writing and addressed to the
respective party as set forth below its signature hereunder, or to such other
address as the party may designate in writing to the other.

 

7.                                       AMENDMENTS AND WAIVERS

 

No amendment, modification, termination, or waiver of any provision of this
Agreement will be effective without the written concurrence of Assignor Lender,
Agent and Assignee Lender.

 

8.                                       SEVERABILITY

 

Whenever possible, each provision of this Agreement will be interpreted in such
manner as to be effective and valid under applicable law.  In the event any
provision of this

 

5

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

 

Agreement is or is held to be invalid, illegal, or unenforceable under
applicable law, such provision will be ineffective only to the extent of such
invalidity, illegality, or unenforceability, without invalidating the remainder
of such provision or the remaining provisions of the Agreement.  In addition, in
the event any provision of or obligation under this Agreement is or is held to
be invalid, illegal, or unenforceable in any jurisdiction, the validity,
legality, and enforceability of the remaining provisions or obligations in any
other jurisdictions will not in any way be affected or impaired thereby.

 

9.                                       SECTION TITLES

 

Section and Subsection titles in this Agreement are included for convenience of
reference only, do not constitute a part of this Agreement for any other
purpose, and have no substantive effect.

 

10.                                 SUCCESSORS AND ASSIGNS

 

This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.

 

11.                                 APPLICABLE LAW

 

THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE.

 

12.                                 COUNTERPARTS

 

This Agreement and any amendments, waivers, consents, or supplements may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which, when so executed and delivered, will be
deemed an original and all of which shall together constitute one and the same
instrument.

 

[signature page follows]

 

6

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

 

IN WITNESS WHEREOF, this Assignment Agreement has been duly executed as of the
date first written above.

 

 

ASSIGNEE LENDER: 

 

ASSIGNOR LENDER:  By:  Title:

 

 

 

 

 

 

By:

 

 

By:

 

Title:

 

 

Title:

 

 

 

 

Notice Address:

 

Notice Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACKNOWLEDGED AND CONSENTED TO:

 

GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent

 

By:

 

 

 

Title:

 

 

 

Its Duly Authorized Signatory

 

 

 

 

 

 

 

CURATIVE HEALTH SERVICES, INC.,
as Borrower Representative

 

By:

 

 

 

Name:

 

 

 

Title:

 

](1)

 

Its Duly Authorized Signatory

 

 

 

 

 

 

 

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

(1) Note: Borrower consent is not required during the occurrence and continuance
of an Event of Default.

 

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

 

SCHEDULE 2.1

 

Assignor Lender’s Loans

 

Principal Amount

 

 

 

 

 

 

 

Revolving Loan

 

$

 

 

 

 

 

 

Term Loan

 

$

 

 

 

 

 

 

Subtotal

 

$

 

 

 

 

 

 

Accrued Interest

 

$

 

 

 

 

 

 

Unused Line Fee

 

$

 

 

 

 

 

 

Other + or -

 

$

 

 

 

 

 

 

Total

 

$

 

 

 

All determined as of the Effective Date.

 

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

 

EXHIBIT M

to

CREDIT AGREEMENT

 

BUSINESS ASSOCIATE AGREEMENT

 

AND

 

GENERAL ELECTRIC CAPITAL CORPORATION

 

This Business Associate Agreement (“B.A. Agreement”), effective
                             , 20      (“Effective Date”), is entered into
between General Electric Capital Corporation (“GECC”) and
                         , a                  corporation (“Covered Entity”).

 

1.              BACKGROUND AND PURPOSE.  Covered Entity and GECC are considering
entering into a transaction pursuant to which GECC may provide working capital,
acquisition and/or other financing to Covered Entity and/or certain of its
subsidiaries or affiliates, as the case may be (the “Proposed Transaction”),
which Proposed Transaction, if and to the extent consummated, will be documented
in one or more related agreements (collectively, the “Underlying Contracts”). 
The Parties acknowledge that both (i) the pre-closing origination and
underwriting and other related activities in respect of the Proposed
Transaction, and (ii) the performance and/or enforcement of the Underlying
Contracts, if any, may involve the access, use and/or disclosure by GECC of
Protected Health Information (as defined in 45 C.F.R. §164.501 and limited for
purposes of this B.A. Agreement solely to the information (x) received by GECC
from Covered Entity or (y) created or received by GECC on behalf of Covered
Entity, in each case with respect to the origination or underwriting of the
transaction and/or the Underlying Contract, in accordance with the terms of this
B.A. Agreement) (the “PHI”) that is subject to the federal privacy regulations
issued pursuant to the Health Insurance Portability and Accountability Act
(“HIPAA”) and codified at 45 C.F.R. parts 160 and 164 (the “Privacy Rule”).  The
purpose of this B.A. Agreement is to allow for Covered Entity’s compliance with
the Privacy Rule with respect to GECC’s access to and/or use or disclosure of
the PHI with respect to the Proposed Transaction and/or the Underlying
Contracts, if any.  It is the intent of the Parties that, in the event and to
the extent any Underlying Contracts are executed between them, this B.A.
Agreement will be specifically incorporated into and made a part of such
Underlying Contracts.

 

2.              DEFINITIONS.  Unless otherwise defined in this B.A. Agreement,
all capitalized terms used in this B.A. Agreement shall have the meanings
ascribed in HIPAA and/or the Privacy Rule, as applicable.

 

3.              OBLIGATIONS OF THE PARTIES WITH RESPECT TO PHI.

 

3.1              Uses and Disclosures of PHI by GECC.  Except as otherwise
specified in this B.A. Agreement, GECC may make any and all uses and disclosures
of PHI necessary to originate, underwrite, audit, perform and/or enforce the
Underlying Contracts.  In addition, unless otherwise limited in this B.A.
Agreement, GECC may (a) use the PHI in its possession for its proper management
and administration and to carry out the legal responsibilities of GECC, (b)
disclose the PHI in its possession

 

1

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

 

to a third party for the purpose of GECC’s proper management and administration
or to carry out the legal responsibilities of GECC, provided that such
disclosure is required by law or GECC obtains reasonable assurances from the
third party that the PHI will be held confidentially and used or disclosed only
as required by law or for the purpose for which it was disclosed to such third
party and in accordance with the Privacy Rule, and the third party is obligated
to notify GECC of any instances of which the third party is aware in which the
confidentiality of the PHI has been breached, (c) provide Data Aggregation
services relating to the health care operations of the Covered Entity, and (d)
de-identify any and all PHI obtained by GECC under this B.A. Agreement, and use
such de-identified data, all in accordance with the de-identification
requirements of the Privacy Rule.

 

3.2                                       Obligations of GECC.  With regard to
its use and/or disclosure of PHI, GECC agrees to:

 

a.               not use or further disclose the PHI other than as permitted or
required by this B.A. Agreement or as required by law;

 

b.              use appropriate safeguards to prevent use or disclosure of the
PHI other than as permitted in Section 3.2(a);

 

c.               report to Covered Entity in writing within fourteen (14) days
any use or disclosure of the PHI other than as permitted in Section 3.2(a) of
which GECC’s management becomes aware;

 

d.              ensure that any agents and subcontractors to which GECC provides
PHI agree to the same restrictions and conditions that apply to GECC with
respect to such PHI;

 

e.               within twenty (20) days, make available the PHI necessary for
Covered Entity to respond to individuals’ requests for access to PHI about them
in the event that the PHI in GECC’s possession constitutes a Designated Record
Set;

 

f.                 within forty-five (45) days, make available the PHI for
amendment and incorporate any amendments to the PHI in accordance with the
Privacy Rule in the event that the PHI in GECC’s possession constitutes a
Designated Record Set;

 

g.              Within forty-five (45) days of a request from the Covered
Entity, make available the information required for the Covered Entity to
provide an accounting of disclosures in accordance with the Privacy Rule;

 

h.              make its internal practices, books and records relating to the
use and disclosure of PHI available to the Secretary of HHS for purposes of
determining Covered Entity’s compliance with the Privacy Rule; and

 

i.                  return to Covered Entity or destroy, within ninety (90) days
of the termination of this B.A. Agreement with respect to the Underlying
Contract, the PHI in its possession as a result of the Underlying Contract and
retain no copies, if it is feasible to do so.  If GECC in its discretion
determines that return or destruction is infeasible, GECC agrees to extend all
protections contained in this B.A. Agreement to GECC’s use and/or disclosure of
any retained PHI, and to limit any further uses and/or disclosures to the
purposes that make the return or destruction of the PHI infeasible.

 

3.3                                       Obligations of Covered Entity. 
Covered Entity agrees to timely notify GECC in writing of any arrangements
between Covered Entity and the individual that is the subject of any PHI that
may impact in any manner the use and/or disclosure of that PHI by GECC under
this B.A. Agreement.

 

3.4                                       Effect of Changes to the Privacy
Rule.  To the extent that any relevant provision of the Privacy Rule is
materially amended in a manner that changes the obligations of Business
Associates or Covered

 

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Entities that are embodied in the terms of this B.A. Agreement, the Parties
agree to negotiate in good faith appropriate amendment(s) to this B.A. Agreement
to give effect to these revised obligations.

 

4.              TERMINATION BY COVERED ENTITY.  With respect to any Underlying
Contract, upon Covered Entity’s knowledge of a material breach of the terms of
this B.A. Agreement by GECC, Covered Entity shall provide GECC written notice of
that breach in sufficient detail to enable GECC to understand the specific
nature of that breach and afford GECC an opportunity to cure the breach.  If
GECC fails to cure the breach within a reasonable time specified by Covered
Entity (but in any event not less than thirty (30) days), Covered Entity may
terminate this B.A. Agreement as well as terminate those portions, but only
those portions, of the Underlying Contract that, by their express terms, require
or permit GECC to access and/or use or disclose the PHI and only to the extent
of that requirement or permission.  In such instance, the remaining provisions
of the Underlying Contract that do not, by their express terms, require or
permit GECC to access and/or use or disclose the PHI shall remain in full force
and effect, including without limitation any and all of Covered Entity’s payment
and performance obligations (to the extent any such performance obligations do
not require GECC to access and/or use or disclose the PHI); provided that,
notwithstanding the foregoing, Covered Entity shall be entitled to terminate the
Underlying Contract in its entirety if and to the extent that the overall intent
and purpose of the Underlying Contract (a) is directly and materially related to
and dependent upon GECC having the ability to access and/or use or disclose the
PHI, and (b) would be frustrated if Covered Entity were not permitted to
terminate the Underlying Contract.  In addition, if GECC, in its sole
discretion, can perform and/or enforce the Underlying Contract with information
that has been de-identified under the Privacy Rule, the Underlying Contract will
remain in full force and effect, except with respect to, and only with respect
to, those provisions that require or permit GECC to access and/or use or
disclose the PHI, which provisions shall be deemed modified to provide GECC to
access and/or use or disclose the PHI that has been de-identified under the
Privacy Rule.

 

5.              MISCELLANEOUS.

 

5.1                                 Conflict with Underlying Contract.  The
terms of this B.A. Agreement shall prevail in the case of any conflict with the
terms of the Underlying Contract to the extent and only to the extent necessary
to allow Covered Entity to comply with the Privacy Rule.

 

5.2                                 Survival.  Sections 1, 2, 3.2, 3.3, 4 and 5
of this B.A. Agreement shall survive termination of this B.A. Agreement and
continue indefinitely solely with respect to PHI GECC retains in accordance with
Section 3.2.i.

 

5.3                                 LIMITATION OF LIABILITY.  NO PARTY SHALL BE
LIABLE TO ANY OTHER PARTY FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR
PUNITIVE DAMAGES OF ANY KIND OR NATURE RELATING TO OR ARISING FROM THE
PERFORMANCE OR BREACH OF OBLIGATIONS SET FORTH IN THIS B.A. AGREEMENT, WHETHER
SUCH LIABILITY IS ASSERTED ON THE BASIS OF CONTRACT, TORT (INCLUDING NEGLIGENCE
OR STRICT LIABILITY), OR OTHERWISE, EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH LOSS OR DAMAGES, PROVIDED THAT THIS PROVISION SHALL NOT
PRECLUDE ANY PARTY FROM SEEKING ACTUAL DAMAGES ARISING FROM ANOTHER PARTY’S
PERFORMANCE OR BREACH OF SUCH OBLIGATIONS.   

 

5.4                                 Entire Agreement; Amendments.  This B.A.
Agreement constitutes the full and entire understanding and agreement among the
Parties with regard to its subject matter and supersedes all prior written or
oral agreements, understandings, representations and warranties made with
respect to that subject matter.  No amendment, supplement or modification of
this B.A. Agreement nor any waiver of any of its provisions shall be made except
in writing executed by each of the Parties. 

 

5.5                                 No Waiver; Cumulative Rights.  No waiver by
any Party to this B.A. Agreement of any one or more defaults by any other Party
in the performance of any of the provisions of this B.A. Agreement shall

 

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operate or be construed as a waiver of any future default or defaults, whether
of a like or different nature.  No failure or delay on the part of any Party in
exercising any right, power or remedy under this B.A. Agreement, nor acceptance
of partial performance or partial payment, shall operate as a waiver of such
right, power or remedy nor shall any single or partial exercise of any such
right, power or remedy preclude any other or further exercise of such right,
power or remedy or the exercise of any other right, power or remedy.  The
remedies provided for in this B.A. Agreement are cumulative and are not
exclusive of any remedies that may be available to any Party to this B.A.
Agreement at law, in equity or otherwise.

 

5.6                                 Notices.  Any notice or other communication
required or permitted under this B.A. Agreement shall be in writing and
personally delivered, mailed by registered or certified mail (return receipt
requested and postage prepaid), sent by telecopier (with a confirming copy sent
by regular mail), or sent by prepaid overnight courier service, and addressed to
the relevant Party at its address set forth below, or at such other address as
such Party may, by written notice, designate as its address for purposes of
notice under this B.A. Agreement:

 

a.

 

If to GECC, at:

 

 

 

 

 

General Electric Capital Corporation

 

 

2 Bethesda Metro Center, Suite 600

 

 

Bethesda, Maryland  20814

 

 

Attention:  Legal Department

 

 

Telephone:  (301) 961-1640

 

 

Telecopier:  (301) 664-9866

 

 

 

b.

 

If to Covered Entity, at:

 

 

 

 

 

 

 

 

 

 

c/o Curative Health Services, Inc.

 

 

150 Motor Parkway

 

 

Hauppauge, New York 11788

 

 

Attention:  Nancy Lanis, General Counsel

 

 

 

 

 

With a copy to:

 

 

 

 

 

Curative Health Services, Inc.

 

 

150 Motor Parkway

 

 

Hauppauge, New York 11788

 

 

Attention:  Thomas Axmacher, CFO

 

If mailed, notice shall be deemed to be given five (5) days after being sent,
and if sent by personal delivery, telecopier or prepaid courier, notice shall be
deemed to be given when delivered.

 

5.7                                 Severability.  If any term, covenant or
condition of this B.A. Agreement, or the application of such term, covenant or
condition to any Party or circumstance shall be found by a court of competent
jurisdiction to be, to any extent, invalid or unenforceable, the remainder of
this B.A. Agreement and the application of such term, covenant, or condition to
Parties or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term, covenant or
condition shall be valid and enforced to the fullest extent permitted by law. 
Upon determination that any such term is invalid, illegal or unenforceable, GECC
may, but is not obligated to, advance funds to Covered Entity under the
Underlying Contract until the Parties to this B.A. Agreement amend this B.A.
Agreement so as to effect the original intent of the Parties as closely as
possible in a valid and enforceable manner.

 

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5.8                                 Successors and Assigns.  This B.A. Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective successors and assigns and shall bind all persons who become bound as
a debtor to the Underlying Contract. Notwithstanding the foregoing, Covered
Entity may not assign any of its rights or delegate any of its obligations under
this B.A. Agreement without the prior written consent of GECC, which may be
withheld in its sole discretion.  GECC may sell, assign, transfer, or
participate any or all of its rights or obligations under this B.A. Agreement
without notice to or consent of Covered Entity.

 

5.9                                 Counterparts.  This B.A. Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute but one instrument.

 

5.10                           Interpretation.  No provision of this Agreement
shall be interpreted or construed against any Party because that Party or its
legal representative drafted that provision.  The titles of the paragraphs of
this B.A. Agreement are for convenience of reference only and are not to be
considered in construing this B.A. Agreement.  Any pronoun used in this B.A.
Agreement shall be deemed to include singular and plural and masculine, feminine
and neuter gender as the case may be.  The words “herein,” “hereof,” and
“hereunder” shall be deemed to refer to this entire B.A. Agreement, except as
the context otherwise requires.

 

5.11                           No Third Parties Beneficiaries.  Nothing in this
B.A. Agreement shall confer upon any person other than the Parties and their
respective successors or permitted assigns any rights, remedies, obligations or
liabilities whatsoever.

 

[Remainder of page left intentionally blank; signature page follows]

 

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IN WITNESS WHEREOF, each of the undersigned has caused this B.A. Agreement to be
duly executed in its name and on its behalf.

 

GECC:

COVERED ENTITY:

 

 

GENERAL ELECTRIC CAPITAL CORPORATION

 

 

 

By:

 

 

By:

 

 

 

 

Name:

 

 

Print Name:

 

 

 

 

  Its Duly Authorized Signatory

Print Title:

 

 

 

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EXHIBIT N

to

CREDIT AGREEMENT

 

SUBORDINATION AGREEMENT

 

THIS AGREEMENT, dated as of                        ,                 , is made
and entered into by and among                        ,
a                       corporation (together with its successors in interest
and assigns, the “Subordinated Creditor”),                     , a
                 corporation (the “Debtor”), and General Electric Capital
Corporation, a Delaware corporation (“GE Capital”).

 

Background Statement

 

A.                                   In connection with the Debtor’s acquisition
of                          , the Debtor issued to the Subordinated Creditor a
Promissory Note dated                , in the original principal amount of
                    (the “Promissory Note”);

 

B.                                     The Promissory Note provides that the
agreement, and Debtor’s obligations thereunder, are expressly subordinated to
any senior secured debt facility that Debtor may enter into;

 

C.                                     The Promissory Note provides that the
Subordinated Creditor will enter into such future agreements or instruments as
may be requested by the lender or lenders under such facility in order to
further evidence such subordination; and

 

D.                                    Curative Health Services, Inc., a
Minnesota corporation formerly known as Curative Holding Co., and GE Capital are
parties to the Amended and Restated Credit Agreement, dated as of April 23,
2004, with the Persons signatory thereto as Credit Parties (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), pursuant to which GE Capital will provide senior secured loans and
other extensions of credit to Debtor and its affiliates.

 

Agreement

 

In consideration of the loans and other extensions of credit made and to be made
under the Credit Agreement, and for other good and valuable consideration, the
parties hereby agree as follows:

 

1.                                                              Definitions. 
When used herein, the following terms shall have the following meanings (terms
defined in the singular to have the same meaning when used in the plural and
vice versa):

 

“Bankruptcy Code” shall mean 11 U. S. C. §§ 101-1330 and any amendment,
supplement or successor of such provision.

 

“Event of Default” shall have the meaning assigned to such term in the Credit
Agreement.

 

“Loan Documents” shall have the meaning assigned to such term in the Credit
Agreement.

 

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“Paid in full” shall mean, with respect to the Senior Debt, the indefeasible
payment in full in cash or cash equivalents of 100% of the principal, interest,
fees, expenses and other amounts due or to become due to GE Capital under the
Credit Agreement and the other Loan Documents in the manner provided under the
terms of such documents or in such other manner to which GE Capital shall have
consented in writing.

 

“Person” means an individual, corporation, partnership, limited liability
company, trust or unincorporated organization, a government or any agency or
political subdivision thereof, or any other entity.

 

“Senior Debt” shall mean any and all indebtedness, obligations or liabilities
that now or hereafter may be owing by the Debtor or any affiliate thereof to GE
Capital under the Credit Agreement or any of the other Loan Documents, whether
for principal, interest, fees or other amounts, and whether such indebtedness,
obligations or liabilities are from time to time reduced and thereafter
increased or entirely extinguished and thereafter reincurred, and whether such
indebtedness, obligations or liabilities are absolute, joint or several, or due
or to become due, as well as all indebtedness, obligations or liabilities of the
Debtor to GE Capital now or hereafter existing under this Agreement, and any
amendment, restatement, supplement, extension, renewal, refinancing,
modification or replacement of or for any of the foregoing (including any credit
agreement, loan agreement, or other agreement, document, or instrument replacing
the Credit Agreement or any other Loan Documents whether or not with the same
agent or lenders), and including without limitation any interest which, but for
the filing by or against the Debtor or any affiliate thereof, of a petition in
bankruptcy, would accrue on any of the foregoing indebtedness, obligations or
liabilities as well as any other indebtedness, obligations or liabilities of the
Debtor or any affiliate thereof to GE Capital which may be incurred in any
bankruptcy proceeding of the Debtor or any affiliate thereof whether or not
recoverable by GE Capital from the Debtor or any affiliate thereof or its estate
under 11 U.S.C. § 506.

 

“Subordinated Debt” shall mean the indebtedness evidenced by the Promissory
Note, and any amendment, restatement, supplement, extension, renewal,
refinancing, modification or replacement of or for the Promissory Note.

 

“Termination Date” shall mean the date on which (i) all Senior Debt has been
paid in full, and (ii) GE Capital is under no obligation to make any further
loans or extend any further credit to or for the benefit of the Debtor.

 

2.                                      Payment Subordination Provisions.

 

a)                                      No Payments.  From and after the date of
this Agreement and thereafter so long as this Agreement is in effect, and unless
GE Capital expressly consents in writing to the contrary, no payment on the
Subordinated Debt shall be made or given by or on behalf of the Debtor or any
affiliate thereof and no payment on account thereof shall be received, accepted
or retained by the Subordinated Creditor, nor shall the Subordinated Creditor
accelerate, make any demand for, or attempt to receive, collect or retain the
same, whether by collection, set-off, foreclosure, counterclaim or otherwise;
provided that, as long as no Event of Default shall have occurred and be
continuing or would

 

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result therefrom, the Debtor may make, and the Subordinated Creditor may receive
the scheduled principal and interest payments of the Subordinated Debt listed on
Schedule 1 hereto.

 

b)                                      Turnover of Payments.  Should any
payment or prepayment be received by the Subordinated Creditor in violation of
this Agreement, the Subordinated Creditor forthwith shall deliver the same to GE
Capital in precisely the form received (but with the endorsement of the
Subordinated Creditor where necessary for the collection thereof by GE Capital)
for application on the Senior Debt in accordance with the Credit Agreement, and
the Subordinated Creditor agrees that, until so delivered, the same shall be
deemed received by the Subordinated Creditor as agent for GE Capital and such
payment or prepayment shall be held in trust by the Subordinated Creditor as
property of GE Capital.

 

3.                                      Modification or Prepayment of
Subordinated Debt.  The payment terms of the Subordinated Debt shall not be
modified, nor shall any prepayment (in whole or in part) be made on the
Subordinated Debt, without the express prior written consent of GE Capital.

 

4.                                      Insolvency Proceedings.  GE Capital
shall have the right and is hereby empowered to vote the full amount of the
Subordinated Debt in any insolvency or receivership proceeding, any proceeding
under the Bankruptcy Code or any other proceeding under any bankruptcy or
insolvency law or laws relating to the relief of debtors, readjustment of
indebtedness, reorganizations, compositions or extensions which may be brought
by or against the Debtor or any affiliate thereof and at any meeting of
creditors of the Debtor or any affiliate thereof whether or not such meeting is
held in a proceeding under any insolvency, bankruptcy or similar laws.  In any
of the foregoing proceedings or at any of the foregoing meetings, GE Capital
shall be entitled to vote the Subordinated Debt as GE Capital in its sole good
faith discretion shall determine without regard to the interests of anyone other
than GE Capital.  In any of the foregoing proceedings, GE Capital shall be
entitled to collect and enforce the Subordinated Debt and to receive any
distributions, dividends or other payments upon the Subordinated Debt by filing
such claim, proof of debt or proof of claim as appropriate in the proceeding, in
GE Capital’s name or the Subordinated Creditor’s name.  GE Capital and any
officer or employee designated by GE Capital for such purpose is hereby
constituted and appointed attorney-in-fact for the Subordinated Creditor with
full power (which power, being coupled with an interest, shall be irrevocable so
long as this Agreement is in effect) to vote the Subordinated Debt in any of the
foregoing proceedings and at any meeting of the creditors of the Debtor or any
affiliate thereof and to file any claim, proof of debt or proof of claim in any
such proceeding, and to compromise, settle and to give releases for any of the
Subordinated Debt, and to endorse the Subordinated Creditor’s name upon any
instruments given as a payment on or distribution in connection with the
Subordinated Debt.

 

5.                                      Pledge or Transfer of Subordinated
Debt.  The Subordinated Creditor agrees not to assign, transfer, pledge, or
grant a security interest in all or any part of the Subordinated Debt unless (i)
such assignment, transfer, pledge or grant is made expressly subject to this
Agreement and (ii) the Subordinated Creditor’s assignee, transferee, pledgee or
grantee expressly agrees in writing to assume the Subordinated Creditor’s
obligations hereunder, and (iii) if requested by GE Capital, the Subordinated
Creditor places on any promissory notes, agreements or other instruments
evidencing the Subordinated Debt a legend, in form and substance satisfactory to

 

3

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GE Capital, stating that such notes, agreements or other instruments are
subordinated to the Senior Debt pursuant to this Agreement.

 

6.                                      Waivers.  The Subordinated Creditor
agrees and consents (a) to waive, and does hereby waive, any and all notice of
the creation, renewal, extension, modification, compromise or release of any of
the Senior Debt or any collateral therefor or guaranties thereof, in whole or in
part; (b) that without further notice to or further assent by the Subordinated
Creditor, the liability of the Debtor or any affiliate thereof or any other
party or parties for or upon any of the Senior Debt may, from time to time, in
whole or in part, be renewed, extended, modified, compromised or released by GE
Capital as it may deem advisable; and (c) that any collateral for or guaranties
of the Senior Debt, or any part of the Senior Debt, may, from time to time, in
whole or in part, be modified, released, collected, sold or otherwise disposed
of by GE Capital, as it may deem advisable, and that any balance of funds with
GE Capital at any time standing to the credit of the Debtor or any affiliate
thereof may, from time to time, in whole or in part, be surrendered or released
by GE Capital, as it may deem advisable.

 

7.                                      Collateral and Guaranty Subordination.

 

a)                                      The Subordinated Creditor hereby
subordinates and makes inferior any and all of its now existing or hereafter
acquired security interests in, security titles to, and other liens and
encumbrances on any of the present or future, real or personal, tangible or
intangible, property of the Debtor or any affiliate thereof (collectively, the
“Collateral”) to the security interests, security titles, and other liens and
encumbrances of GE Capital, whether now existing or hereafter acquired, in, to
and on the Collateral.  If the Debtor or any affiliate thereof shall default
under any Senior Debt secured by any of the Collateral, GE Capital may exercise
any or all of its rights and remedies with respect to such Collateral without
any obligation to give the Subordinated Creditor notice of such exercise and
without regard to any interest of the Subordinated Creditor in such Collateral. 
The Subordinated Creditor shall not contest the validity, perfection, priority
or enforceability of any Lien granted to GE Capital in any of the Collateral. 

 

b)                                      The Subordinated Creditor subordinates
and makes inferior any and all of its now existing or hereafter acquired
guaranties of the Subordinated Debt from whomever received and in whatever form
to the rights of GE Capital on the same terms and conditions as apply to the
subordination of the Subordinated Debt to the Senior Debt hereunder.

 

8.                                      Continuing Agreement and Termination.

                                               

a)                                      This is a continuing agreement, and this
Agreement and the subordination of indebtedness (the “Debt Subordination”) and
the subordination of security interests, security titles, liens and encumbrances
and guaranties (the “Security Interest Subordination”) provided for herein shall
remain in full force and effect until the Termination Date regardless of whether
the Senior Debt is from time to time reduced and thereafter increased or
entirely extinguished and thereafter reincurred or incurred anew.  This
Agreement, the Debt Subordination and the Security Interest Subordination shall
remain in full force and effect and shall be irrevocable until and shall
terminate on the Termination Date.  No notice purporting to terminate this
Agreement, the Debt

 

4

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Subordination or the Security Interest Subordination which is received by GE
Capital at any time prior to the Termination Date shall be effective, in any
manner or at any time whatsoever, to terminate this Agreement, the Debt
Subordination or the Security Interest Subordination.

 

b)                                      This Agreement, the Debt Subordination
and the Security Interest Subordination shall continue to be effective
regardless of the solvency or insolvency of the Debtor or any affiliate thereof
or the Subordinated Creditor; the liquidation or dissolution of the Debtor or
any affiliate thereof or the Subordinated Creditor; the institution by or
against the Debtor or any affiliate thereof or the Subordinated Creditor of any
proceeding under the Bankruptcy Code or any similar law; the appointment of a
receiver or trustee for the Debtor or any affiliate thereof or any of such
Person’s property or for the Subordinated Creditor or any of the Subordinated
Creditor’s property or for any guarantor or any guarantor’s property; any
reorganization, merger or consolidation of the Debtor or any affiliate thereof
or the Subordinated Creditor or any guarantor; or any other change in the
ownership, composition or nature of the Debtor or any affiliate thereof or the
Subordinated Creditor or any guarantor. This Agreement the Debt Subordination
and the Security Interest Subordination shall be reinstated in the event any
payment on the Senior Debt is rescinded, disgorged as a preference or otherwise
or must otherwise be returned by GE Capital. 

 

9.                                      Acknowledgments, Consents and
Agreements.

 

The Debtor does hereby acknowledge and consent to the execution, delivery and
performance of this Agreement by the Subordinated Creditor and GE Capital and
further agrees to be bound by the provisions of this Agreement as they relate to
the relative rights, remedies and priorities of the Subordinated Creditor and GE
Capital and the respective obligations of the Debtor or any affiliate thereof to
them; provided, however that nothing in this Agreement shall amend, modify,
change or supersede the respective terms of any of the Senior Debt or the
Subordinated Debt as between the Debtor or any affiliate thereof, on the one
hand, and GE Capital or the Subordinated Creditor, on the other hand, and in the
event of any conflict or inconsistency between the terms of this Agreement and
those of any agreement, note or other document evidencing or securing any of the
Senior Debt, the Subordinated Debt or the Collateral, the provisions of such
other agreement, instrument or document shall govern as between the Debtor or
any affiliate thereof, on the one hand, and GE Capital or the Subordinated
Creditor (as the case may be), on the other hand, and the Debtor further agrees
that this Agreement shall not give the Debtor any substantive rights relative to
GE Capital or the Subordinated Creditor and the Debtor shall not be entitled to
raise any actions or inactions on the part of GE Capital or the Subordinated
Creditor hereunder as a defense, counterclaim or other claim against such party.

 

10.                               Miscellaneous.

 

a)                                      Wherever possible, each provision of
this Agreement is to be interpreted in such manner as to be effective and valid
under applicable law, but if any provision hereof is prohibited or invalid under
such law, such provision is to be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.

 

5

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b)                                      This Agreement shall be binding upon the
Debtor, the Subordinated Creditor and their respective heirs, legal
representatives, successors and assigns, and shall inure to the benefit of GE
Capital and its successors and assigns.

 

c)                                      This Agreement constitutes the sole and
entire agreement between the Subordinated Creditor, on the one hand, and GE
Capital, on the other, with respect to the subject matter hereof and supersedes
and replaces any and all prior or concurrent agreements, understandings,
negotiations or correspondence between them with respect thereto.

 

d)                                      Time is of the essence of this
Agreement.

 

e)                                      No amendment or waiver of any provision
of this Agreement, nor consent to any departure therefrom, shall be effective or
binding upon GE Capital unless GE Capital shall first have given its written
consent thereto.

 

f)                                        This Agreement may be executed in one
or more counterparts and each such counterpart shall constitute an original and
all such counterparts together shall constitute one and the same instrument.

 

g)                                     All sections headings herein are for
convenience of reference only and shall not limit or otherwise affect the
meaning or interpretation of this Agreement.

 

h)                                     All notices, demands and other
communications hereunder to GE Capital or the Subordinated Creditor shall be
effective:

 

i)                                         if given by telecopy, when such
communication is transmitted to the telecopy number set forth beneath such
Person’s signature below (with such telecopy to be promptly confirmed by
delivery of a copy thereof by personal delivery or United States mail as
otherwise provided herein),

 

ii)                                      if given by mail, three business days
after such communication is deposited in the United States mail with first class
postage prepaid, return receipt requested, and addressed to such Person at its
address set forth beneath its signature below,

 

iii)                                   if sent for overnight delivery by Federal
Express, United Parcel Service or other reputable national overnight delivery
service, one business day after such communication is entrusted to such service
for overnight delivery and with recipient signature required, addressed as
aforesaid, or

 

iv)                                  if given by any other means, when delivered
at the address of such Person shown below.

 

GE Capital or the Subordinated Creditor may designate a different address or
telecopy number for its receipt of such notices or other communications but no
such change shall be effective unless and until the other party actually
receives such written notice.

 

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i)                                        This Agreement shall be governed by,
and construed and enforced in accordance with, the laws of the State of New York
applicable to contracts made and performed in such state.

 

11.                               Waiver of Certain Rights.  The Subordinated
Creditor expressly waives any and all rights of subrogation, reimbursement,
indemnity, exoneration or contribution or any other claim which the Subordinated
Creditor may now or hereafter have against the Debtor or any affiliate thereof
or against any property of the Debtor or any affiliate thereof arising from the
existence, performance or enforcement of the Subordinated Creditor’s obligations
and liabilities under this Agreement until such time as the Senior Debt shall
have been paid in full.

 

12.                               Jury Trial Waiver and Forum Consents.  EACH OF
THE SUBORDINATED CREDITOR, GE CAPITAL AND THE DEBTOR HEREBY WAIVES ANY RIGHT
SUCH PERSON MAY HAVE UNDER ANY APPLICABLE LAW TO A TRIAL BY JURY WITH RESPECT TO
ANY SUIT OR LEGAL ACTION WHICH MAY BE COMMENCED OR AGAINST SUCH PERSON
CONCERNING THE INTERPRETATION, CONSTRUCTION, VALIDITY, ENFORCEMENT OR
PERFORMANCE OF THIS AGREEMENT.  IN THE EVENT ANY SUCH SUIT OR LEGAL ACTION IS
COMMENCED BY GE CAPITAL, EACH OF THE SUBORDINATED CREDITOR AND THE DEBTOR HEREBY
EXPRESSLY AGREES, CONSENTS AND SUBMITS TO THE PERSONAL JURISDICTION OF ANY STATE
OR FEDERAL COURT SITTING IN THE CITY AND STATE OF NEW YORK, WITH RESPECT TO SUCH
SUIT OR LEGAL ACTION AND FURTHER EXPRESSLY CONSENTS AND SUBMITS TO AND AGREES
THAT VENUE IN ANY SUCH SUIT OR LEGAL ACTION IS PROPER IN SAID COURTS AND FURTHER
EXPRESSLY WAIVES ANY AND ALL PERSONAL RIGHTS UNDER APPLICABLE LAW OR IN EQUITY
TO OBJECT TO THE JURISDICTION AND VENUE OF SAID COURTS.  THE JURISDICTION AND
VENUE OF THE COURTS CONSENTED TO AND SUBMITTED TO AND AGREED UPON IN THIS
SECTION ARE NOT EXCLUSIVE BUT ARE CUMULATIVE AND IN ADDITION TO THE JURISDICTION
AND VENUE OF ANY OTHER COURT UNDER ANY APPLICABLE LAW OR IN EQUITY.

 

 

[Remainder of page intentionally blank; next page is signature page]

 

7

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

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly signed,
sealed and delivered, all as of the day and year first above written.

 

 

 

[SUBORDINATED CREDITOR]

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

(CORPORATE SEAL)

 

 

 

Address:

 

 

 

 

 

Attn:

 

 

 

Telecopy: (        )

 

 

 

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

 

 

GENERAL ELECTRIC CAPITAL CORPORATION

 

 

 

 

By:

 

 

 

 

Its Duly Authorized Signatory

 

 

 

 

 

 

 

 

(CORPORATE SEAL)

 

 

 

 

 

 

 

 

Address:

2 Bethesda Metro Center,

 

 

Suite 600, Bethesda, MD 20814

 

 

 

 

 

Attn:  Account Manager

 

 

Telecopy:

301-347-3175

 

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

 

 

[DEBTOR]                               , as Debtor

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

(CORPORATE SEAL)

 

 

 

Address:

 

 

 

 

 

Attn:

 

 

 

Telecopy: (        )

 

 

 

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

 

SCHEDULE 1

 

Scheduled Principal and Interest Payments:

 

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

EXHIBIT O

 

SCHEDULE I

 

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

 

Borrowing Base Certificate

 

General Electric Capital Corporation

2 Bethesda Metro Center, Suite 600

Bethesda, MD 20814

 

Borrowing Base Availability @ 12/31/03:

 

Pursuant to the Amended and Restated  Credit Agreement dated as of April 23,
2004 among the undersigned as Borrower Representative, the other persons
designated therein as Borrowers, the persons designated therein as Credit
Parties, the other persons designated therein as Lenders and GENERAL ELECTRIC
CAPITAL CORPORATION as Agent and Lender (the “Credit Agreement”), the
undersigned certifies that as of the close of business on the date set forth
below, the Borrowing Base is computed as set forth below.

 

(a)  The undersigned represents and warrants that this Borrowing Base
Certificate is a true and correct statement of, and that the information
contained herein is true and correct in all material respects regarding, the
status of Eligible Accounts and Eligible Inventory, and that the amounts
reflected herein are in compliance with the provisions of the Credit Agreement
and the Appendices thereto.  The undersigned further represents and warrants
that there is no Default or Event of Default and all representations and
warranties contained in the Credit Agreement and other Loan Documents are true
and correct in all material respects.  The undersigned understands that the
Lenders will extend loans in reliance upon the information contained herein.  In
the event of a conflict between the following summary of eligibility criteria
and the Credit Agreement, the eligibility criteria in the Credit Agreement shall
govern.  Capitalized terms used herein and not otherwise defined herein shall
have the meanings specified in the Credit Agreement.

 

 

 

SHS

 

eBioCare

 

Apex

 

Allcare

 

Prescription
City

 

Infinity

 

OptNY

 

OptVA

 

Medcare

 

CCS

 

Total

 

A/R Aging:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 - 60 Days

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

61 - 90 Days

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

91-120 Days

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

121-150 Days

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

151-180 Days

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total A/R Aging

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Ineligibles:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A/R over 150 Days

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cross-Aged Payors (<150)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private (<150)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Ineligible 3rd Party (< 150)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Balances (>150)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eligible Receivables

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liquidity Rates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Eligible Collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advance Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Availability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inventory per 12/31/03 Perpetual / Physical

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ineligibles:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Locations w/ Less than $100M in Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Locations w/o Landlord Waivers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Out on consignment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Work in Process Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excess / Obsolete Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Ineligible

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eligible Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advance Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subject Swap Reserve

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL AVAILABILITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OUTSTANDING BALANCE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rent Reserve

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Swap Reserve

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET AVAILABILITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MAXIMUM COMMITMENT AMOUNT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(b)                                 As of the date hereof, Borrowers are in
compliance with each of the terms, covenants, and conditions set forth in the
Credit Agreement.

 

(c)                                  Within the ninety (90) days preceding and
through the date hereof, no Borrower has received any notice from any state or
federal regulatory or law enforcement agency citing specific deficiencies that
(i) amount to a substandard quality of care; or (ii) would otherwise threaten
such Borrower’s continued participation in the Medicare, Medicaid, and/or any
other applicable government program.

 

(d)                                 Within the ninety (90) days preceding and
through the date hereof, no Borrower has been subject to any non-routine
investigatory visits by or received any correspondence from any state or federal
agency alleging possible improper billing or claims activity.

 

(e)                                  After the making of the advance requested
by this Certificate, the total aggregate principal amount outstanding under the
Credit Agreement will be approximately

$                         .

 

(f)                                    Borrower’s most recent Accounts
Receivable Aging Report, dated as of                            (including all
necessary and appropriate documentation required to interpret the Report and to
complete this Borrowing Base Certificate), is attached hereto and made a part
hereof. All Accounts included on such reports have been properly billed and
collections have been properly posted to the respective Accounts to reduce
Eligible Accounts accordingly.  All proceeds of Accounts that have not been
posted to the Accounts reported herein (including unbilled and/or estimated
Accounts) have been disclosed to Lender on line 32b herein.

 

(g)                                 As of the date hereof, Borrowers have paid
all State and Federal payroll withholding taxes immediately due and payable
through                  .

 

(h)                                 As of the date hereof, Borrowers have
directed all Account Debtors to deliver all payments on Accounts to the existing
Blocked Accounts or Concentration Account, in accordance with Section 6.18 in
the Credit Agreement, and as of the date hereof, Borrowers have not diverted or
permitted to be diverted any such payments on Accounts, whether such diversion
is for the benefit of Borrowers or any third party.

 

(i)                                     Borrowers are current on all real and
personal property lease and rent obligations through the date hereof.

 

 

 

CURATIVE HEALTH SERVICES, INC., a Minnesota corporation, individually and as
Borrower Representative

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

Title:

 

 

 

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

 

EXHIBIT 5.1(a)

 

[FORM OF COMPLIANCE CERTIFICATE (QUARTERLY)]

 

            , 20    

 

 

General Electric Capital Corporation, as Agent

2 Bethesda Metro Center, Suite 600

Bethesda, Maryland  20814

 

Re:                               Compliance Certificate (Quarterly)

 

Ladies and Gentlemen:

 

This certificate is given in accordance with that certain Amended and Restated
Credit Agreement, dated as of April 23, 2004 (as the same may be amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
by and among Curative Health Services, Inc., a Minnesota corporation formerly
known as Curative Holding Co. (“Borrower Representative”), eBioCare.com, Inc.,
Hemophilia Access, Inc., Apex Therapeutic Care, Inc., CHS Services, Inc.,
Curative Health Services of New York, Inc., Optimal Care Plus, Inc., Infinity
Infusion, LLC, Infinity Infusion II, LLC, Infinity Infusion Care, Ltd., MedCare,
Inc., Curative Pharmacy Services, Inc., Curative Health Services Co., a
Minnesota corporation formerly known as Curative Health Services, Inc., and
Critical Care Systems, Inc. (each a “Borrower” and collectively with Borrower
Representative, the “Borrowers”), any Additional Borrowers that become party
thereto, the Lenders listed on the signature pages thereof, and General Electric
Capital Corporation, as lender and agent. Capitalized terms used herein without
definition shall have the meanings assigned to such terms in the Credit
Agreement. I hereby certify that:

 

(a)                                  I am the Chief Financial Officer of
Borrower Representative;

 

(b)                                 The enclosed consolidated and consolidating
balance sheets, and related consolidated and consolidating statements of income
and cash flows fairly present the financial condition of Credit Parties as for
the Fiscal Quarter indicated, and I have reviewed such statements in preparing
this certificate;

 

(c)                                  I have reviewed the terms of the Credit
Agreement and have made, or caused to be made under my supervision, a review in
reasonable detail of the transactions and financial condition of Credit Parties
during the accounting period covered by the enclosed financial statements.

 

(d)                                 The examination in paragraph (c) did not
disclose and I have no knowledge of the existence of any condition or event that
constitutes a Default or an Event of Default as of the date of this certificate
except as set forth below.

 

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

 

Described below (or in a separate attachment hereto) are the exceptions, if any,
to paragraph (d), listing in detail the nature of the conditions or event, the
period during which it has existed and the action which Credit Parties have
taken, are taking or propose to take with respect to each such condition or
event.

 

(e)                                  Except as disclosed in paragraph (d) above,
Credit Parties are in compliance with the financial covenants contained in
Article 7 of the Credit Agreement, as detailed in the attached work sheet.

 

The foregoing certifications and the financial statements delivered with this
Compliance Certificate in support hereof are made and delivered
this            day of                      , 20          .

 

 

BORROWER REPRESENTATIVE:

 

 

 

 

CURATIVE HEALTH SERVICES, INC.,
a Minnesota corporation formerly known as Curative Holding Co., individually and
as Borrower Representative

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

Chief Financial Officer

 

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

 

Worksheet Regarding
Financial Covenant Compliance

 

 

[to be attached by Borrower Representative]

 

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

 

EXHIBIT 5.1(b)

 

[FORM OF COMPLIANCE CERTIFICATE (ANNUAL)]

 

              , 20         

 

 

General Electric Capital Corporation, as Agent

2 Bethesda Metro Center, Suite 600

Bethesda, Maryland  20814

 

Re:                               Compliance Certificate (Annual)

 

Ladies and Gentlemen:

 

This certificate is given in accordance with that certain Credit Agreement,
dated as of June 9, 2003 (as the same may be amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”), by and among Curative
Health Services, Inc., a Minnesota corporation formerly known as Curative
Holding Co. (“Borrower Representative”), eBioCare.com, Inc., Hemophilia Access,
Inc., Apex Therapeutic Care, Inc., CHS Services, Inc., Curative Health Services
of New York, Inc., Optimal Care Plus, Inc., Infinity Infusion, LLC, Infinity
Infusion II, LLC, Infinity Infusion Care, Ltd., MedCare, Inc., Curative Pharmacy
Services, Inc., Curative Health Services Co., a Minnesota corporation formerly
known as Curative Health Services, Inc., and Critical Care Systems, Inc. (each a
“Borrower” and collectively with Borrower Representative, the “Borrowers”), any
Additional Borrowers that become party thereto, the Lenders listed on the
signature pages thereof, and General Electric Capital Corporation, as lender and
agent.  Capitalized terms used herein without definition shall have the meanings
assigned to such terms in the Credit Agreement. I hereby certify that:

 

(a)                                  I am the Chief Financial Officer of
Borrower Representative;

 

(b)                                 The enclosed audited consolidated and
consolidating balance sheets, and related audited consolidated and consolidating
statements of income and cash flows fairly present the financial condition of
Credit Parties as for the Fiscal Year indicated, such statements have no “going
concern” or other qualification or exception by an accounting firm, and I have
reviewed such statements in preparing this certificate;

 

(c)                                  I have reviewed the terms of the Credit
Agreement and have made, or caused to be made under my supervision, a review in
reasonable detail of the transactions and financial condition of Credit Parties
during the accounting period covered by the enclosed financial statements.

 

(d)                                 The examination in paragraph (c) did not
disclose and I have no knowledge of the existence of any condition or event that
constitutes a Default or an Event of Default as of the date of this certificate
except as set forth below.

 

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

 

Described below (or in a separate attachment hereto) are the exceptions, if any,
to paragraph (d), listing in detail the nature of the conditions or event, the
period during which it has existed and the action which Credit Parties have
taken, are taking or propose to take with respect to each such condition or
event.

 

(e)                                  Except as disclosed in paragraph (d) above,
Credit Parties are in compliance with the financial covenants contained in
Article 7 of the Credit Agreement, as detailed in the attached work sheet.

 

The foregoing certifications and the financial statements delivered with this
Compliance Certificate in support hereof are made and delivered
this           day of            , 20      .

 

 

BORROWER REPRESENTATIVE:

 

 

 

 

CURATIVE HEALTH SERVICES, INC.,
a Minnesota corporation formerly known as Curative Holding Co., individually and
as Borrower Representative

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

Chief Financial Officer

 

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

 

Worksheet Regarding

Financial Covenant Compliance

 

 

[to be attached by Borrower Representative]

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