Exhibit 10.1

EXECUTION COPY

 

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$180,000,000

CREDIT AGREEMENT

among

ROTECH HEALTHCARE INC.,

as Borrower,

The Several Lenders

from Time to Time Parties Hereto,

CREDIT SUISSE SECURITIES (USA) LLC,

as Sole Lead Arranger

and Sole Bookrunner,

CREDIT SUISSE,

as Administrative Agent and Collateral Agent

Dated as of March 30, 2007

 

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TABLE OF CONTENTS

 

          Page Section 1. DEFINITIONS    1

Section 1.01

   Defined Terms    1

Section 1.02

   Other Definitional Provisions    20 Section 2. AMOUNT AND TERMS OF
COMMITMENTS    20

Section 2.01

   Commitments    20

Section 2.02

   Procedure for Term Loan Borrowing    20

Section 2.03

   Repayment of Term Loans    21

Section 2.04

   Evidence of Debt    21

Section 2.05

   Optional Prepayments    21

Section 2.06

   Mandatory Prepayments    22

Section 2.07

   Conversion and Continuation Options    23

Section 2.08

   Interest Rates and Payment Dates    23

Section 2.09

   Computation of Interest and Fees    24

Section 2.10

   Inability to Determine Interest Rate    24

Section 2.11

   Pro Rata Treatment and Payments    25

Section 2.12

   Requirements of Law    27

Section 2.13

   Taxes    28

Section 2.14

   Indemnity    30

Section 2.15

   Illegality    30

Section 2.16

   Change of Lending Office    30 Section 3. RESERVED    31 Section 4.
REPRESENTATIONS AND WARRANTIES    31

Section 4.01

   Financial Condition    31

Section 4.02

   No Change    31

Section 4.03

   Corporate Existence; Compliance with Law    31

Section 4.04

   Corporate Power; Authorization; Enforceable Obligations    32

Section 4.05

   No Legal Bar    32

Section 4.06

   No Material Litigation    32

Section 4.07

   No Default    32

Section 4.08

   Ownership of Property; Liens    33

Section 4.09

   Intellectual Property    33

Section 4.10

   Taxes    33

Section 4.11

   Federal Regulations    33

Section 4.12

   Labor Matters    33

Section 4.13

   ERISA    33

Section 4.14

   Investment Company Act; Other Regulations    34

Section 4.15

   Subsidiaries    34

Section 4.16

   Use of Proceeds    35

Section 4.17

   Environmental Matters    35

Section 4.18

   Accuracy of Information, etc.    36

 

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Section 4.19

   Security Documents    36

Section 4.20

   Solvency    36

Section 4.21

   Senior Indebtedness    37

Section 4.22

   Compounding    37

Section 4.23

   Location of Material Inventory, Equipment and Other Property    37

Section 4.24

   Sanctioned Persons    37 Section 5. CONDITIONS PRECEDENT    37

Section 5.01

   Conditions to Extension of Credit on the Closing Date    37 Section 6.
AFFIRMATIVE COVENANTS    40

Section 6.01

   Financial Statements    40

Section 6.02

   Certificates; Other Information    41

Section 6.03

   Collateral Reports    42

Section 6.04

   Payment of Obligations    43

Section 6.05

   Conduct of Business and Maintenance of Existence, etc.    43

Section 6.06

   Maintenance of Property; Insurance    43

Section 6.07

   Inspection of Property; Books and Records: Discussions    43

Section 6.08

   Notices    44

Section 6.09

   Environmental Laws    44

Section 6.10

   Additional Collateral, etc.    45

Section 6.11

   Unrestricted Subsidiaries    46

Section 6.12

   Further Assurances    47

Section 6.13

   Use of Proceeds    47 Section 7. NEGATIVE COVENANTS    47

Section 7.01

   Consolidated EBITDA    47

Section 7.02

   Indebtedness    47

Section 7.03

   Liens    49

Section 7.04

   Fundamental Changes    51

Section 7.05

   Disposition of Property    51

Section 7.06

   Restricted Payments    52

Section 7.07

   Capital Expenditures    52

Section 7.08

   Investments    53

Section 7.09

   Optional Payments and Modifications of Certain Debt Instruments    55

Section 7.10

   Transactions with Affiliates    55

Section 7.11

   Changes in Fiscal Periods    55

Section 7.12

   Negative Pledge Clauses    55

Section 7.13

   Clauses Restricting Subsidiary Distributions    56

Section 7.14

   Lines of Business    57

Section 7.15

   Designation of Unrestricted Subsidiaries    57 Section 8. EVENTS OF DEFAULT
   58 Section 9. THE AGENTS    61

Section 9.01

   Appointment    61

Section 9.02

   Delegation of Duties    61

 

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Section 9.03

   Exculpatory Provisions    61

Section 9.04

   Reliance by Agents    61

Section 9.05

   Notice of Default    62

Section 9.06

   Non-Reliance on Agents and Other Lenders    62

Section 9.07

   Indemnification    63

Section 9.08

   Agent in Its Individual Capacity    63

Section 9.09

   Successor Agents    63

Section 9.10

   Authorization to Release Liens and Guarantees    64

Section 9.11

   The Arranger    64

Section 10. MISCELLANEOUS

   64

Section 10.01

   Amendments and Waivers    64

Section 10.02

   Notices    66

Section 10.03

   No Waiver; Cumulative Remedies    67

Section 10.04

   Survival of Representations and Warranties    67

Section 10.05

   Payment of Expenses    67

Section 10.06

   Successors and Assigns; Participations and Assignments    69

Section 10.07

   Adjustments; Setoff    72

Section 10.08

   Counterparts    73

Section 10.09

   Severability    73

Section 10.10

   Integration    73

Section 10.11

   GOVERNING LAW    73

Section 10.12

   Submission To Jurisdiction; Waivers    73

Section 10.13

   Acknowledgments    74

Section 10.14

   Confidentiality    75

Section 10.15

   Platform; Borrower Materials    75

Section 10.16

   Release of Collateral and Guarantee Obligations    76

Section 10.17

   WAIVERS OF JURY TRIAL    76

Section 10.18

   Repricing of Stock Options    76

 

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SCHEDULES:

 

l.lA    Commitments 4.15    Subsidiaries 4.19    UCC Filing Jurisdictions 4.23
   Locations of Material Inventory 7.2(d)    Existing Indebtedness 7.02(o)   
Letters of Credit 7.3(f)    Existing Liens 7.8(j)    Existing Investments 7.10
   Affiliate Transactions

EXHIBITS:

 

A    Form of Guarantee and Collateral Agreement B    Form of Compliance
Certificate C-1    Form of Secretary’s Certificate C-2    Form of Officer’s
Certificate D    Form of Assignment and Acceptance E-1    Form of Legal Opinion
of Kirkland & Ellis LLP E-2    Form of Legal Opinion of Greenberg Traurig, LLP F
   Form of Term Note G    Form of Exemption Certificate H    Form of Borrowing
Notice I    Form of Landlord Agreement J    Form of Bailee Letter K    Form of
Post-Closing Letter

 

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CREDIT AGREEMENT, dated as of March 30, 2007, among ROTECH HEALTHCARE INC., a
Delaware corporation (together with its successors, the “Borrower”), the several
banks and other financial institutions or entities from time to time parties to
this Agreement (the “Lenders”), CREDIT SUISSE SECURITIES (USA) LLC, as sole lead
arranger and sole bookrunner (in such capacity, the “Arranger”), CREDIT SUISSE,
as collateral agent (in such capacity, the “Collateral Agent”) and as
administrative agent (in such capacity, the “Administrative Agent”).

W I T N E S S E T H:

WHEREAS, the Borrower has requested that the Lenders make available term loans
in an aggregate initial principal amount of $180,000,000, the proceeds of which
will be used to refinance the Borrower’s indebtedness under the Existing Credit
Facility, to pay transaction costs, to cash collateralize the Borrower’s
existing letters of credit and for general working capital purposes; and

WHEREAS, the Lenders are willing to make such term loans available upon and
subject to the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the premises and the agreements hereinafter
set forth, the parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS

Section 1.01 Defined Terms. As used in this Agreement, the terms listed in this
Section 1.01 shall have the respective meanings set forth in this Section 1.01.

“Accounts”: all “accounts”, as such term is defined in the Uniform Commercial
Code as in effect on the date hereof in the State of New York, now owned or
hereafter acquired by any Loan Party, including (a) all accounts receivable,
other receivables, book debts and other forms of obligations (other than forms
of obligations evidenced by Chattel Paper, Documents or Instruments), whether
arising out of goods sold or services rendered by it or from any other
transaction (including any such obligations that may be characterized as an
account under the Uniform Commercial Code as in effect on the date hereof in the
State of New York), (b) all of each Loan Party’s rights in, to and under all
purchase orders or receipts for goods or services, (c) all of each Loan 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 monies due or to
become due to any Loan Party, under all purchase orders and contracts for the
sale of goods or the performance of services or both by such Loan Party or in
connection with any other transaction (whether or not yet earned by performance
on the part of such Loan Party), including the right to receive the proceeds of
said purchase orders and contracts, (e) all health care insurance receivables
and (f) all collateral security and guaranties of any kind, given by any Account
Debtor or any other Person with respect to any of the foregoing.

“Account Debtor”: any Person who may become obligated to any Loan Party under,
with respect to, or on account of, an Account.

 

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“Administrative Agent”: as defined in the preamble hereto.

“Affiliate”: as to any Person, any other Person that, directly or indirectly, is
in control of, is controlled by, or is under common control with, such Person.
For purposes of this definition, “control” of a Person means the power, directly
or indirectly, either to (a) vote 10% or more of the securities having ordinary
voting power for the election of directors (or persons performing similar
functions) of such Person or (b) direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.

“Agents”: the collective reference to the Collateral Agent and the
Administrative Agent.

“Aggregate Exposure”: with respect to any Lender at any time, an amount equal to
(a) until the initial funding on the Closing Date, the aggregate amount of such
Lender’s Commitments at such time and (b) thereafter, the aggregate then unpaid
principal amount of such Lender’s Term Loans.

“Aggregate Exposure Percentage”: with respect to any Lender at any time, the
ratio (expressed as a percentage) of such Lender’s Aggregate Exposure at such
time to the sum of the Aggregate Exposures of all Lenders at such time.

“Agreement”: this Credit Agreement, as amended, restated, supplemented or
otherwise modified from time to time.

“Applicable Margin”: with respect to Base Rate Loans means 5.00%, and with
respect to Eurodollar Loans means 6.00%.

“Applicable Prepayment Premium”: means a prepayment fee which shall be due and
payable to the Administrative Agent, for the pro rata benefit of the Lenders, at
the time of each prepayment or repayment of the Term Loans occurring prior to
the Maturity Date (subject to Section 2.06(b)), or acceleration of the Term
Loans upon the occurrence of an Event of Default pursuant to Section 8 of this
Agreement or otherwise, such prepayment fee to be in an amount equal to the
following: from (a) the Closing Date to the first anniversary of the Closing
Date, 4.00% of the aggregate principal amount of such prepayment, (b) the day
immediately preceding the first anniversary of the Closing Date to the second
anniversary of the Closing Date, 3.00% of the aggregate principal amount of such
prepayment, (c) the day immediately preceding the second anniversary of the
Closing Date to the third anniversary of the Closing Date, 2.00% of the
aggregate principal amount of such prepayment, (d) the day immediately preceding
the third anniversary of the Closing Date to the fourth anniversary of the
Closing Date, 1.00% of the aggregate principal amount of such prepayment and
(e) thereafter, a 0.00% prepayment premium.

“Arranger”: as defined in the preamble hereto.

“Asset Sale”: any Disposition of Property or series of related Dispositions of
Property (including the sale by any Subsidiary of its Capital Stock, but
excluding any such Disposition permitted by Section 7.05(a) or clause (i) of
Section 7.04(b).

“Assignee”: as defined in Section 10.06(c).

 

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“Assignor”: as defined in Section 10.06(c).

“Bailee Letter”: a bailee letter, substantially in the form of Exhibit J,
executed by a bailee holding Inventory owned by any Loan Party, delivered by
such Loan Party to the Collateral Agent.

“Bankruptcy Code”: The Bankruptcy Reform Act of 1978, as heretofore and
hereafter amended, and codified as 11 U.S.C. §§ 101 et seq.

“Base Rate”: for any day, a floating rate equal to the higher of (i) the rate of
interest per annum determined from time to time by Credit Suisse as its prime
rate in effect at its principle office in New York City, and (ii) the Federal
Funds Effective Rate plus 50 basis points per annum. Any change in such interest
rate designated by Credit Suisse shall take effect at the opening of business on
the day specified in the announcement of such change.

“Base Rate Loans”: Loans the rate of interest applicable to which is based upon
the Base Rate.

“Benefited Lender”: as defined in Section 10.07.

“Board”: the Board of Governors of the Federal Reserve System of the United
States (or any successor).

“Borrower”: as defined in the preamble hereto.

“Borrowing Notice”: a notice from the Borrower, substantially in the form of,
and containing the information prescribed by, Exhibit H, delivered to the
Administrative Agent.

“Business Day”: (a) for all purposes other than as covered by clause (b) below,
a day other than a Saturday, Sunday or other day on which commercial banks in
New York City are authorized or required by law to close and (b) with respect to
all notices and determinations in connection with, and payments of principal and
interest on, Eurodollar Loans, any day which is a Business Day described in
clause (a) and which is also a day for trading by and between banks in Dollar
deposits in the interbank Eurodollar market.

“Capital Expenditures”: for any period, with respect to any Person, the
aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition or leasing (pursuant to a capital lease) of fixed or capital assets
or additions to equipment (including replacements, capitalized repairs and
improvements during such period) that are required to be capitalized in
accordance with GAAP on a consolidated balance sheet of such Person and its
Subsidiaries.

“Capital Lease Obligations”: as to any Person, the obligations of such Person to
pay rent or other amounts under any lease of (or other arrangement conveying the
right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person in accordance with GAAP and, for the purposes of
this Agreement, the amount of such obligations at any time shall be the
capitalized amount thereof at such time determined in accordance with GAAP.

 

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“Capital Stock”: any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants, rights or options to purchase any of the foregoing.

“Cash Equivalents”: (a) Dollars held in demand deposits with banks,
(b) marketable direct obligations issued by, or unconditionally guaranteed by,
the United States government or issued by any agency thereof and backed by the
full faith and credit of the United States, in each case maturing within one
year from the date of acquisition; (c) certificates of deposit, time deposits,
Eurodollar time deposits, term deposit accounts, money market deposit accounts,
bankers’ acceptances or overnight bank deposits having maturities of six months
or less from the date of acquisition issued by any Lender or by any commercial
bank organized under the laws of the United States or any state thereof having
combined capital and surplus of not less than $500,000,000; (d) commercial paper
of an issuer rated at least “A-1” by Standard & Poor’s Ratings Services (“S&P”)
or “P-1” by Moody’s Investors Service, Inc. (“Moody’s”), or carrying an
equivalent rating by a nationally recognized rating agency, if both of the two
named rating agencies cease publishing ratings of commercial paper issuers
generally, and maturing within six months from the date of acquisition;
(e) repurchase obligations of any Lender or of any commercial bank satisfying
the requirements of clause (c) of this definition, having a term of not more
than 30 days, with respect to securities issued or fully guaranteed or insured
by the United States government; (f) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least “A” by S&P or “A” by Moody’s; (g) securities with maturities of
six months or less from the date of acquisition backed by standby letters of
credit issued by any Lender or any commercial bank satisfying the requirements
of clause (c) of this definition; or (h) shares of money market, mutual or
similar funds which invest at least 95% of its funds in assets satisfying the
requirements of clauses (a) through (g) of this definition.

“CERCLA”: the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time.

“CHAMPUS”: collectively, the Civilian Health and Medical Program of the
Uniformed Services, a program of medical benefits covering former and active
members of the uniformed services and certain of their dependents, which is now
known as TRICARE, financed and administered by the United States Departments of
Defense, Health and Human Services and Transportation, and all laws, rules,
regulations, manuals, orders, guidelines or requirements pertaining to such
program including (a) all federal statutes (whether set forth in 10 U.S.C.
§§1071-1107 or elsewhere) affecting such program; and (b) all rules, regulations
(including 32 C.F.R. §§199.1-199.22), manuals, orders and administrative
guidelines of all Governmental Authorities promulgated pursuant to or 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.

“CHAMPUS Receivable”: an Account payable pursuant to CHAMPUS.

 

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“CHAMPVA”: 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
(a) all federal statutes (whether set forth in 38 U.S.C. §1713 or elsewhere)
affecting such program; (b) to the extent applicable to CHAMPVA, the CHAMPUS
regulations; and (c) all rules, regulations (including 38 C.F.R.
§§17.270-17.278), manuals, orders and administrative guidelines of all
Governmental Authorities promulgated pursuant to or 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 Receivable”: an Account payable pursuant to CHAMPVA.

“Change of Control”: the occurrence of any of the following events: (a) any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) shall become,
or obtain rights (whether by means of warrants or options or other similar
instruments) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and
13(d)-5 under the Exchange Act), directly or indirectly, of more than 40% of the
outstanding common stock of the Borrower; (b) the board of directors of the
Borrower shall cease to consist of a majority of Continuing Directors; or (c) a
Specified Change of Control.

“Chattel Paper”: all “chattel paper”, as such term is defined in the Uniform
Commercial Code as in effect on the date hereof in the State of New York, now
owned or hereafter acquired by any Loan Party.

“CLO” shall mean any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or an Affiliate of such
Lender.

“Closing Date”: the date on which the conditions precedent set forth in
Section 5.01 shall have been satisfied and the initial Loans are made.

“Code”: the Internal Revenue Code of 1986, as amended from time to time.

“Collateral”: all Property of the Loan Parties, now owned or hereafter acquired,
upon which a Lien is purported to be created by any Security Document.

“Collateral Agent”: Credit Suisse, in its capacity as collateral agent for the
Lenders hereunder or such successor Collateral Agent as may be appointed
pursuant to Section 9.09 hereof.

“Commitment”: as to any Lender, the obligation of such Lender, if any, to make a
Term Loan to the Borrower hereunder in a principal amount not to exceed the
amount set forth under the heading “Commitment” opposite such Lender’s name on
Schedule 1.1A, or, as the case may be, in the Assignment and Acceptance pursuant
to which such Lender became a party hereto, as the same may be changed from time
to time pursuant to the terms hereof. The aggregate amount of the Commitments on
the Closing Date is $180,000,000.

 

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“Commonly Controlled Entity”: an entity, whether or not incorporated, that is
under common control with the Borrower within the meaning of Section 4001 of
ERISA or is part of a group that includes the Borrower and that is treated as a
single employer under Section 414 of the Code.

“Compliance Certificate”: a certificate duly executed by a Responsible Officer,
substantially in the form of Exhibit B.

“Consolidated EBITDA”: for any period, Consolidated Net Income for such period
plus without duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period, the sum of (a) income
tax expense, (b) interest expense, amortization or writeoff of debt discount and
debt issuance costs and commissions, discounts and other fees and charges
associated with Indebtedness (including the Loans), (c) depreciation and
amortization expense, (d) amortization of intangibles (including, but not
limited to, goodwill and any related impairment charges) and organization costs,
and (e) any extraordinary, unusual or non-recurring expenses or losses
(including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, losses on sales of
assets outside of the ordinary course of business and non-cash charges relating
to the repricing of any and all of the Borrower’s outstanding stock options on
or before September 15, 2007, whether such repricing is effected by exchange,
replacement, amendment or otherwise). For the purposes of calculating
Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a
“Reference Period”) pursuant to any determination of the Consolidated Senior
Leverage Ratio or the minimum required Consolidated EBITDA, (i) if at any time
during such Reference Period the Borrower or any Subsidiary shall have made any
Asset Sale, the Consolidated EBITDA for such Reference Period shall be reduced
by an amount equal to the Consolidated EBITDA (if positive) attributable to the
property that is the subject of such Asset Sale for such Reference Period or
increased by an amount equal to the Consolidated EBITDA (if negative)
attributable thereto for such Reference Period and (ii) if during such Reference
Period the Borrower or any Subsidiary shall have made a Material Acquisition,
Consolidated EBITDA for such Reference Period shall be calculated after giving
pro forma effect thereto as if such Material Acquisition occurred on the first
day of such Reference Period.

“Consolidated Net Income”: for any period, the consolidated net income (or loss)
of the Borrower and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP; provided that there shall be excluded (a) the income (or
deficit) of any Person accrued prior to the date it becomes a Subsidiary of the
Borrower or is merged into or consolidated with the Borrower or any of its
Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary
of the Borrower) in which the Borrower or any of its Subsidiaries has an
ownership interest, except to the extent that any such income is actually
received by the Borrower or such Subsidiary in the form of dividends or similar
distributions and (c) the undistributed earnings of any Subsidiary of the
Borrower 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 (other than under any Loan Document) or Requirement
of Law applicable to such Subsidiary.

 

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“Consolidated Senior Debt”: at any date, the aggregate principal amount of all
senior Indebtedness of the Borrower and its Subsidiaries at such date,
determined on a consolidated basis in accordance with GAAP.

“Consolidated Senior Leverage Ratio”: as at the last day of any period of four
consecutive fiscal quarters, the ratio of (a) Consolidated Senior Debt on such
day to (b) Consolidated EBITDA for such period.

“Continuing Directors”: the directors of the Borrower on the Closing Date and
each other director of the Borrower, if, in each case, such other director’s
nomination for election to the board of directors of the Borrower is recommended
by at least a majority of the directors of the Borrower then still in office who
were either directors on the Closing Date or whose nomination for election was
previously so approved.

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

“Control Investment Affiliate”: as to any Person, any other Person that
(a) directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person and (b) is organized by such Person primarily
for the purpose of making equity or debt investments in one or more companies.
For purposes of this definition, “control” of a Person means the power, directly
or indirectly, to direct or cause the direction of the management and policies
of such Person, whether by contract or otherwise.

“Default”: any of the events specified in Section 8, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.

“Disposition”: with respect to any property, any sale, lease, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof. The
terms “Dispose” and “Disposed of” shall have correlative meanings.

“Documents”: all “documents”, as such term is defined in the Uniform Commercial
Code as in effect on the date hereof in the State of New York, now owned or
hereafter acquired by any Loan Party.

“Dollars” and “$”: lawful currency of the United States.

“Domestic Subsidiary”: any Subsidiary of the Borrower organized under the laws
of any jurisdiction within the United States.

“Environmental Laws”: any and all laws, rules, orders, regulations, statutes,
ordinances, guidelines, codes, decrees, or other legally enforceable
requirements (including common law) of any international authority, foreign
government, the United States, or any state, local, municipal or other
governmental authority, regulating, relating to or imposing liability or
standards of conduct concerning protection of the environment or of human
health, as has been, is now, or may at any time hereafter be, in effect.

 

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“Environmental Permits”: any and all permits, licenses, approvals,
registrations, notifications, exemptions and other authorizations required under
any Environmental Law.

“Equipment”: as to any Person, all “equipment”, as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of
New York, now owned or hereafter acquired by such Person, wherever located and,
in any event, including all such Person’s machinery and equipment, including
processing equipment, conveyors, machine tools, data processing and computer
equipment with software and peripheral equipment (other than software
constituting part of the Accounts), 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, all whether now owned or hereafter acquired, and wherever
situated, 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.

“ERISA”: the Employee Retirement Income Security Act of 1974, as amended from
time to time.

“ERISA Reorganization”: with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.

“Eurocurrency Reserve Requirements”: for any day as applied to a Eurodollar
Loan, the aggregate (without duplication) of the maximum rates (expressed as a
decimal fraction) of reserve requirements in effect on such day (including
basic, supplemental, marginal and emergency reserves) under any regulations of
the Board or other Governmental Authority having jurisdiction with respect
thereto dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of the
Board) maintained by a member bank of the Federal Reserve System.

“Eurodollar Base Rate”: with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, the rate per annum determined by the
Administrative Agent at approximately 11:00 a.m. (London time) on the date that
is two Business Days prior to the commencement of such Interest Period by
reference to the British Bankers’ Association Interest Settlement Rates for
deposits in Dollars (as set forth by any service selected by the Administrative
Agent that has been nominated by the British Bankers’ Association as an
authorized information vendor for the purpose of displaying such rates) for a
period equal to such Interest Period; provided that, to the extent that an
interest rate is not ascertainable pursuant to the foregoing provisions of this
definition, the “Eurodollar Base Rate” shall be the interest rate per annum
determined by the Administrative Agent to be the average of the rates per annum
at which deposits in dollars are offered for such relevant Interest Period to
major banks in the London interbank market in London, England by the
Administrative Agent at approximately 11:00 a.m. (London time) on the date that
is two Business Days prior to the beginning of such Interest Period.

 

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“Eurodollar Loans”: Loans the rate of interest applicable to which is based upon
the Eurodollar Rate.

“Eurodollar Rate”: with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward to the nearest l/100th of
1%):

                             Eurodollar Base Rate                            

1.00 – Eurocurrency Reserve Requirements

“Event of Default”: any of the events specified in Section 8, provided that any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.

“Excluded Foreign Subsidiaries”: any Foreign Subsidiary which is a “controlled
foreign corporation” under Section 957 of the Code.

“Existing Credit Facility”: that certain Credit Agreement dated as of
September 15, 2006 by and among the Borrower, the several banks and other
financial institutions or entities from time to time parties thereto, Highland
Financial Corp. as lead arranger and sole bookrunner, and NexBank, SSB, as
administrative agent and collateral agent, as the same has been modified,
amended and supplemented from time to time.

“Facility”: each of the Commitments and the Term Loans made hereunder.

“Fair Market Value” means, with respect to any asset or property, the price
which could be negotiated in an arm’s-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. The Fair Market Value
of property other than cash shall be determined in good faith by the Borrower
and (a) in the event of property with a Fair Market Value of less than
$10,000,000, shall be set forth in an Officer’s Certificate and (b) in the event
of property with a Fair Market Value equal to or in excess of $10,000,000, shall
be set forth in an opinion of an Independent Qualified Party.

“Federal Funds Effective Rate”: the rate per annum equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate (rounded upward, if necessary,
to a whole multiple of 1/100 of 1%) charged to Credit Suisse on such day on such
transactions as determined by the Administrative Agent.

“Fee Letter”: the fee letter dated March 26, 2007, among the Administrative
Agent, the Arranger and the Borrower.

 

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“Foreign Subsidiary”: any Subsidiary of the Borrower that is not a Domestic
Subsidiary.

“Funding Office”: the office specified from time to time by the Administrative
Agent as its funding office by notice to the Borrower and the Lenders.

“GAAP”: generally accepted accounting principles in the United States as in
effect as of the date of this Agreement.

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

“Government Receivables”: means, collectively, any and all Accounts which are
(a) Medicare Receivables, (b) Medicaid Receivables, (c) TRICARE Receivables,
(d) CHAMPUS Receivables, (e) CHAMPVA Receivables, (f) payable by the Veterans
Administration, and (g) any other Accounts payable by any Governmental
Authority.

“Guarantee and Collateral Agreement”: the Guarantee and Collateral Agreement to
be executed and delivered by the Borrower and each Restricted Subsidiary,
substantially in the form of Exhibit A, as the same may be amended, supplemented
or otherwise modified from time to time.

“Guarantee Letter”: the guarantee letter dated March 26, 2007, among the
Administrative Agent, the Arranger and the Subsidiary Guarantors party thereto.

“Guarantee Obligation”: as to any Person (the “guaranteeing person”), any
obligation (without duplication) of (a) the guaranteeing person or (b) another
Person (including any bank under any letter of credit) to induce the creation of
which the guaranteeing person has issued a reimbursement, counterindemnity or
similar obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the “primary obligations”)
of any other third Person (the “primary obligor”) in any manner, whether
directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
Property constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
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 or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of

 

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such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in good
faith.

“Guarantor”: each guarantor party to the Guarantee and Collateral Agreement.

“Hedge Agreements”: all interest rate swaps, caps or collar agreements or
similar arrangements dealing with interest rates or currency exchange rates or
the exchange of nominal interest obligations, either generally or under specific
contingencies.

“Inactive Subsidiary”: means any Restricted Subsidiary of the Borrower
designated as an “Inactive Subsidiary” on Schedule 4.15, and which has no
continuing business operations or Contractual Obligations (other than those
arising under the Loan Documents) and has less than $50,000 of assets (valued at
fair market value) or liabilities.

“Indebtedness”: of any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of Property or services (other than trade
payables incurred in the ordinary course of such Person’s business), (c) all
obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to Property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such Property), (e) all Capital Lease Obligations of such Person,
(f) all obligations of such Person, contingent or otherwise, as an account party
or applicant under or in respect of acceptances, letters of credit, surety bonds
or similar arrangements, (g) the liquidation value of all redeemable preferred
Capital Stock of such Person that is mandatorily redeemable on or prior to any
date that is earlier than one year following the Maturity Date, (h) all
Guarantee Obligations of such Person in respect of obligations of the kind
referred to in clauses (a) through (g) above, (i) all obligations of the kind
referred to in clauses (a) through (h) above secured by (or for which the holder
of such obligation has an existing right, contingent or otherwise, to be secured
by) any Lien on Property (including accounts and contract rights) owned by such
Person, whether or not such Person has assumed or become liable for the payment
of such obligation to the extent of the value of the Property subject to such
Lien, and (j) for the purposes of Sections 7.02 and 8(e) only, all obligations
of such Person in respect of Hedge Agreements. The Indebtedness of any Person
shall include the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness expressly provide that such Person is not liable therefor.

“Indemnified Liabilities”: as defined in Section 10.05.

“Indemnitee”: as defined in Section 10.05.

“Independent Qualified Party” means an investment banking firm, accounting firm
or appraisal firm of national standing; provided, however, that such firm is not
an Affiliate of the Borrower.

 

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“Information Certificate”: the Information Certificate dated as of March 30,
2007, executed by Borrower and furnished to the Administrative Agent and the
Collateral Agent in connection with this Agreement.

“Insolvency”: with respect to any Multiemployer Plan, the condition that such
Plan is insolvent within the meaning of Section 4245 of ERISA.

“Insolvent”: pertaining to a condition of Insolvency.

“Instruments”: all “instruments”, as such term is defined in the Uniform
Commercial Code as in effect on the date hereof in the State of New York, now
owned or hereafter acquired by any Loan Party.

“Intellectual Property”: the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including copyrights,
copyright licenses, patents, patent licenses, trademarks, trademark licenses,
technology, know-how and processes, and all rights to sue at law or in equity
for any infringement or other impairment thereof, including the right to receive
all proceeds and damages therefrom.

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

“Interest Period”: as to any Eurodollar Loan, (a) initially, the period
commencing on the borrowing or conversion date, as the case may be, with respect
to such Eurodollar Loan and ending one, two, three or six months thereafter, as
specified by the Borrower in its notice of borrowing or notice of conversion, as
the case may be, given with respect thereto; and (b) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to
such Eurodollar Loan and ending one, two, three or six months thereafter, as
specified by the Borrower by irrevocable notice to the Administrative Agent not
less than three Business Days prior to the last day of the then current Interest
Period with respect thereto; provided that all of the foregoing provisions
relating to Interest Periods are subject to the following:

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

(2) any Interest Period that would otherwise extend beyond the Maturity Date
shall end on such due date; and

 

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

“Investments”: as defined in Section 7.08.

“Inventory”: all “inventory,” as such term is defined in the Uniform Commercial
Code as in effect on the date hereof in the State of New York, now owned or
hereafter acquired by any Loan Party, wherever located, and in any event
including inventory, merchandise, goods and other personal property that are
held by or on behalf of any Loan 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 consumed or to be used or consumed in such
Loan Party’s business or in the processing, production, packaging, promotion,
delivery or shipping of the same, including all supplies and embedded software.

“Landlord Agreement”: a landlord agreement, substantially in the form of
Exhibit I, executed by a landlord of a location leased by any Person at which
Inventory of any Loan Party is held or stored, delivered by such Loan Party to
the Collateral Agent.

“Lenders”: as defined in the preamble hereto.

“Lien”: any mortgage, pledge, hypothecation, collateral assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing); provided that, in no event shall
an operating lease that is not a Capital Lease Obligation be deemed to
constitute a Lien.

“Loan”: any loan made by any Lender hereunder pursuant to Section 2.01;
provided, however, that other than as set forth in Section 2.01(a), any
references to “Loan” shall mean 100% of the principal amount at maturity of the
Commitments outstanding at such time; provided, further, that any references to
“Loan” shall also include any increases in principal amount of loans as a result
of a payment of interest by capitalizing such interest pursuant to Section 2.08.

“Loan Documents”: this Agreement, the Security Documents and the Notes.

“Loan Parties”: the Borrower and each Restricted Subsidiary of the Borrower.

“Material Acquisition”: any acquisition of property or series of related
acquisition of property that (a) constitutes assets comprising all or
substantially all of an operating unit of a business or constitutes all or
substantially all of the common stock of a Person and (b) involves the payment
of consideration by the Borrower and its Subsidiaries in excess of $2,000,000.

“Material Adverse Effect”: a material adverse effect on (a) the business,
assets, liabilities, operations, condition (financial or otherwise) or operating
results of the Borrower and

 

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its Subsidiaries, taken as a whole, (b) the prospects of the Borrower and its
Subsidiaries taken as a whole, or (c) the validity or enforceability of this
Agreement or any other Loan Documents or the rights or remedies of the
Administrative Agent or the Lenders hereunder or thereunder; provided that
solely for purposes of Section 4.02, clauses (b) and (c) of this definition
shall not be applicable.

“Materials of Environmental Concern”: any gasoline or petroleum (including crude
oil or any fraction thereof) or petroleum products, polychlorinated biphenyls,
urea-formaldehyde insulation, asbestos, pollutants, contaminants, radioactivity,
and any other substances or forces of any kind, whether or not any such
substance or force is defined as hazardous or toxic under any Environmental Law,
that is regulated pursuant to or could give rise to liability under any
Environmental Law.

“Maturity Date”: September 26, 2011.

“Medicaid”: collectively, the healthcare assistance program established by
Title XIX of the Social Security Act (42 U.S.C. §§1396 et seq.), as amended, and
all laws, rules, regulations, manuals, orders, guidelines or requirements
pertaining to such program including (a) all federal statutes (whether set forth
in Title XIX of the Social Security Act or elsewhere) affecting such program and
all federal rules and regulations promulgated in connection with such program;
(b) all state statutes and regulations promulgated thereunder in connection with
individual state programs, as well as state plans submitted to and approved by
the Centers for Medicare and Medicaid Services; and (c) all federal and state
manuals, orders and administrative guidelines and requirements issued in
connection with Medicaid programs (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.

“Medicaid Receivable”: an Account payable pursuant to a claim filed under a
valid Medicaid provider or supplier number.

“Medicare”: collectively, the health insurance program for the qualified aged,
disabled, and persons with end stage renal disease established by Title XVIII of
the Social Security Act (42 U.S.C. §§1395 et seq.), as amended, and all laws,
rules, regulations, manuals, orders or guidelines pertaining to such program
including (a) all federal statutes (whether set forth in Title XVIII of the
Social Security Act or elsewhere) affecting such program; and (b) all applicable
provisions of all rules, regulations, manuals, orders and administrative
guidelines and requirements issued in connected 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.

“Medicare Receivable”: an Account payable pursuant to a claim filed under a
valid Medicare provider or supplier number.

“Mortgaged Properties”: the real properties which the Collateral Agent for the
benefit of the Lenders shall be granted a Lien pursuant to one or more
Mortgages.

“Mortgages”: each of the mortgages and deeds of trust made by any Loan Party in
favor of, or for the benefit of, the Administrative Agent for the benefit of the
Lenders, in form and substance reasonably satisfactory to the Collateral Agent.

 

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“Multiemployer Plan”: a Plan that is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.

“Net Cash Proceeds”: (a) in connection with any Asset Sale or any Recovery
Event, the proceeds thereof in the form of cash and Cash Equivalents (including
any such proceeds received by way of deferred payment of principal pursuant to a
note or installment receivable or purchase price adjustment receivable or
otherwise, but only as and when received) of such Asset Sale or Recovery Event,
net of reasonable and customary attorneys’ fees, accountants’ fees, investment
banking fees, brokers’ fees, amounts required to be applied to the repayment of
Indebtedness secured by a Lien expressly permitted hereunder on any asset that
is the subject of such Asset Sale or Recovery Event (other than any Lien
pursuant to a Security Document) and other customary fees and expenses actually
incurred in connection therewith and net of taxes paid or reasonably estimated
to be payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements) and (b) in connection
with any issuance or sale of Capital Stock or any incurrence of Indebtedness,
the cash proceeds received from such issuance or incurrence, net of reasonable
and customary attorneys’ fees, investment banking fees, accountants’ fees,
underwriting discounts and commissions and other customary fees and expenses
actually incurred in connection therewith.

“Non-Excluded Taxes”: as defined in Section 2.13(a).

“Non-U.S. Lender”: as defined in Section 2.13(d).

“Notes”: the collective reference to all promissory notes evidencing Loans.

“Obligations”: the unpaid principal of and interest on (including interest
accruing after the maturity of the Loans and interest accruing after the filing
of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
and any Applicable Prepayment Premium due on the Loans and all other obligations
and liabilities of the Borrower to the Administrative Agent or to any Lender,
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, this Agreement, any other Loan Document or any other document made,
delivered or given in connection herewith or therewith, whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including all fees, charges and disbursements of counsel to the
Administrative Agent or to any Lender that are required to be paid by the
Borrower pursuant hereto) or otherwise.

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

“Participant”: as defined in Section 10.06(b).

“Patient List Acquisition”: with respect to the Borrower or any Restricted
Subsidiary, any transaction or series of related transactions that result in the
Borrower or a Restricted Subsidiary acquiring, directly or indirectly, a list of
patients with whom it has the right to

 

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conduct or solicit business, together with all ancillary prescriptions,
agreements and such other forms or documents related thereto, but that does not
result in the acquisition of a material amount of other tangible assets or in
the assumption of any material liabilities.

“Patient Receivables”: with respect to any Subsidiary, the patient accounts of
such Subsidiary existing or hereinafter created, any and all rights to receive
payments due on such accounts from any obligor or other third-party payor under
or in respect of such accounts (including all insurance companies, Blue
Cross/Blue Shield, Medicare, Medicaid and health maintenance organizations), and
all proceeds of, or in any way derived, whether directly or indirectly, from any
of the foregoing (including all interest, finance charges and other amounts
payable by an obligor in respect thereof).

“PATRIOT Act”: the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001).

“Payment Office”: the office specified from time to time by the Administrative
Agent as its payment office by notice to the Borrower and the Lenders.

“PBGC”: the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA (or any successor).

“Person”: an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.

“Plan”: at a particular time, any employee benefit plan that is covered by ERISA
and in respect of which the Borrower or a Commonly Controlled Entity is (or, if
such plan were terminated at such time, would under Section 4069 of ERISA be
deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Plan of Reorganization”: the Plan of Reorganization as defined in the Existing
Credit Facility.

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

“Projections”: as defined in Section 6.02(c).

“Property”: any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible, including
Capital Stock.

“Recovery Event”: any settlement of or payment in respect of any property or
casualty insurance claim or any condemnation proceeding relating to any asset of
the Borrower or any of its Restricted Subsidiaries that yields gross proceeds to
the Borrower or any of its Restricted Subsidiaries in excess of $1,000,000.

“Register”: as defined in Section 10.06(d).

 

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“Regulation U”: Regulation U of the Board as in effect from time to time.

“Related Fund”: with respect to any Lender, any fund that (a) invests in
commercial loans and (b) is managed or advised by the same investment advisor as
such Lender, by such Lender or an Affiliate of such Lender or such investment
advisor, including any CLO.

“Reportable Event”: any of the events set forth in Section 4043(c) of ERISA,
other than those events as to which the thirty day notice period is waived under
subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. §4043.

“Required Lenders”: at any time, the holders of more than 50% of (a) until the
Closing Date, the Commitments and (b) thereafter, the sum of the aggregate
unpaid principal amount of the Term Loans then outstanding.

“Requirement of Law”: as to any Person, the Certificate of Incorporation and
By-Laws or other organizational or governing documents of such Person, and any
law, treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its Property or to which such Person or any of its Property is
subject.

“Responsible Officer”: the chief executive officer, president, the chief legal
officer, the chief operating officer or chief financial officer of the Borrower,
but in any event, with respect to financial matters, the chief financial officer
of the Borrower.

“Restricted Payments”: as defined in Section 7.06.

“Restricted Subsidiary”: (a) any Subsidiary other than an Unrestricted
Subsidiary and (b) each Subsidiary guaranteeing the Senior Subordinated Notes.

“Retained Rights”: with respect to any Patient Receivable owing from any
Governmental Authority, the right of any Subsidiary, to the extent mandated by
applicable law, to have unfettered control over such Patient Receivable,
including the collection thereof and discretion over the transfer thereof to any
party (including the Collateral Agent) and to enforce the claim giving rise to
such Patient Receivable against such Governmental Authority, in the absence of a
court order in the manner expressly contemplated under 42 U.S.C. §1395 and
applicable state law.

“Sale and Leaseback Transaction”: any arrangement with any Person providing for
the leasing by the Borrower or any of its Restricted Subsidiaries of real or
personal property that has been or is to be sold or transferred by the Borrower
or such Restricted Subsidiaries to such Person or to any other Person to whom
funds have been or are to be advanced by such Person on the security of such
property or rental obligations of the Borrower or such Restricted Subsidiaries.

“SEC”: the Securities and Exchange Commission (or successors thereto or an
analogous Governmental Authority).

 

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“Security Documents”: the collective reference to the Guarantee and Collateral
Agreement, the Mortgages and all other security documents hereafter delivered to
the Collateral Agent granting a Lien on any Property of any Person to secure the
obligations and liabilities of any Loan Party under any Loan Document.

“Senior Subordinated Note Indenture”: the Indenture, dated as of March 26, 2002,
entered into by the Borrower and certain of its Subsidiaries with The Bank of
New York, as trustee, in connection with the issuance of the Senior Subordinated
Notes, together with all instruments and other agreements entered into by the
Borrower or such Subsidiaries in connection therewith, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
Section 7.09.

“Senior Subordinated Notes”: the senior subordinated notes of the Borrower, in
the aggregate outstanding principal amount of $287,000,000, issued pursuant to
the Senior Subordinated Note Indenture and any exchange notes issued in respect
thereof.

“Series A Convertible Preferred Stock”: the Series A Convertible Preferred Stock
of the Borrower, par value $.000l per share, issued pursuant to the Plan of
Reorganization and in accordance with the terms of the Borrower’s Certificate of
Incorporation and distributed to the New Rotech Profit Sharing Plan (as defined
in the Plan of Reorganization).

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

“Solvent”: with respect to any Person, as of any date of determination, (a) the
amount of the “present fair saleable value” of the assets of such Person will,
as of such date, exceed the amount of all “liabilities of such Person,
contingent or otherwise”, as of such date, as such quoted terms are determined
in accordance with applicable federal and state laws governing determinations of
the insolvency of debtors, (b) the present fair saleable value of the assets of
such Person will, as of such date, be greater than the amount that will be
required to pay the liability of such Person on its debts as such debts become
absolute and matured, (c) such Person will not have, as of such date, an
unreasonably small amount of capital with which to conduct its business, and
(d) such Person will be able to pay its debts as they mature. For purposes of
this definition, (i) “debt” means liability on a “claim”, and (ii) “claim” means
any (x) right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured or (y) 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 or unmatured, disputed, undisputed, secured
or unsecured.

“Specified Change of Control”: a “Change of Control”, or like event, as defined
in the Senior Subordinated Note Indenture.

“Subsidiary”: as to any Person, a corporation, partnership, limited liability
company or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of

 

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such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower.

“Term Loan Lender”: each Lender that has a Term Loan Commitment or is the holder
of a Term Loan.

“Term Loan Percentage”: as to any Term Loan Lender at any time, the percentage
which such Lender’s Commitment then constitutes of the aggregate Commitments
(or, at any time after the Closing Date, the percentage which the aggregate
principal amount of such Lender’s Term Loan then outstanding constitutes of the
aggregate principal amount of the Term Loans then outstanding).

“Term Loans”: as defined in Section 2.01.

“Term Note”: as defined in Section 2.04.

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

“Transferee”: as defined in Section 10.14.

“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
CHAMPUS, and all laws, rules, regulations, manuals, orders and administrative
guidelines of all Governmental Authorities promulgated pursuant to or 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 Receivable”: an Account payable pursuant to TRICARE.

“Type”: as to any Loan, its nature as a Base Rate Loan or a Eurodollar Loan.

“United States”: the United States of America.

“Unrestricted Subsidiary”: each of (a) any Subsidiary designated as an
Unrestricted Subsidiary by the Borrower by written notice to the Administrative
Agent so long as such designation does not violate Section 7.15, (b) any
Subsidiary of an Unrestricted Subsidiary and (c) the Wind Down Subsidiaries.

“Wind Down Subsidiaries”: Best Care Medical Supply, Inc., Premier Medical, Inc.
and Signature Home Care of Kansas, Inc., which entities shall be deemed third
parties for purposes of Section 7.

 

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Section 1.02 Other Definitional Provisions.

(a) Unless otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in the other Loan Documents or any
certificate or other document made or delivered pursuant hereto or thereto.

(b) As used herein and in the other Loan Documents, and any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms relating
to the Borrower and its Subsidiaries not defined in Section 1.01 and accounting
terms partly defined in Section 1.01, to the extent not defined, shall have the
respective meanings given to them under GAAP.

(c) The words “hereof”, “herein” and “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Section, Schedule and Exhibit
references are to this Agreement unless otherwise specified.

(d) Any references to “principal” in this Agreement shall also include any
interest capitalized and added to the principal of the Loans pursuant to
Section 2.08(d). Any references to amounts “due” or “payable” under this
Agreement shall also include the Applicable Prepayment Premium on such amounts,
if any.

(e) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.

(f) The words “including”, “include” and “includes” means including, include and
includes in each case without limitation.

SECTION 2. AMOUNT AND TERMS OF COMMITMENTS

Section 2.01 Commitments. Subject to the terms and conditions hereof, the Term
Loan Lenders severally agree to make term loans (each, a “Term Loan”) to the
Borrower on the Closing Date in an amount for each Term Loan Lender equal to the
amount of the Commitment of such Lender; provided that such Loan shall result in
aggregate proceeds to the Borrower equal to 99.00% of such Term Loan Lender’s
Commitment. The Term Loans may from time to time be Eurodollar Loans or Base
Rate Loans, as determined by the Borrower and notified to the Administrative
Agent in accordance with this Section 2.

Section 2.02 Procedure for Term Loan Borrowing. The Borrower shall deliver to
the Administrative Agent a Borrowing Notice (which Borrowing Notice must be
received by the Administrative Agent prior to 10:00 A.M., New York City time,
one Business Day prior to the anticipated Closing Date) requesting that the Term
Loan Lenders make the Term Loans on the Closing Date. The Term Loans made on the
Closing Date will be Eurodollar Loans with an initial Interest Period of one
month. Upon receipt of such Borrowing Notice the Administrative Agent shall
promptly notify each Term Loan Lender thereof. Not later than 12:00 noon, New
York City time, on the Closing Date each Term Loan Lender shall make available
to the Administrative Agent at the Funding Office an amount in immediately
available funds equal to the Term Loan to be made by such Lender. The
Administrative Agent shall make available to

 

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the Borrower the aggregate of the amounts made available to the Administrative
Agent by the Term Loan Lenders, in like funds as received by the Administrative
Agent.

Section 2.03 Repayment of Term Loans. The Borrower shall repay to the
Administrative Agent for the ratable account of the Term Loan Lenders on the
Maturity Date, the aggregate principal amount of all Term Loans outstanding on
such date.

Section 2.04 Evidence of Debt.

(a) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing indebtedness of the Borrower to such Lender resulting
from each Loan of such Lender, including the amounts of principal and interest
payable and paid to such Lender from time to time under this Agreement.

(b) The Administrative Agent, on behalf of the Borrower, shall maintain the
Register pursuant to Section 10.06(d), and a subaccount therein for each Lender,
in which shall be recorded (i) the amount of each Loan made hereunder and any
Note evidencing such Loan, the Type of such Loan and each Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Lender hereunder and
(iii) both the amount of any sum received by the Administrative Agent hereunder
from the Borrower and each Lender’s share thereof.

(c) The entries made in the Register and the accounts of each Lender maintained
pursuant to Section 2.04(b) shall, to the extent permitted by applicable law, be
prima facie evidence of the existence and amounts of the obligations of the
Borrower therein recorded; provided, however, that the failure of any Lender or
the Administrative Agent to maintain the Register or any such account, or any
error therein, shall not in any manner affect the obligation of the Borrower to
repay (with applicable interest) the Loans made to the Borrower by such Lender
in accordance with the terms of this Agreement.

(d) The Borrower agrees that, upon the request to the Administrative Agent by
any Lender, the Borrower will promptly execute and deliver to such Lender a
promissory note of the Borrower evidencing any Term Loan of such Lender,
substantially in the form of Exhibit F (a “Term Note”), with appropriate
insertions as to date and principal amount; provided that delivery of Notes
shall not be a condition precedent to the occurrence of the Closing Date or the
making of the Loans on the Closing Date.

Section 2.05 Optional Prepayments. Subject to this Section 2.05, the Borrower
may, upon notice to the Administrative Agent, at any time after the six-month
anniversary of the Closing Date voluntarily prepay Loans in whole or in part;
provided that (1) such notice must be received by the Administrative Agent not
later than 12:00 p.m. (New York City time) (A) three (3) Business Days prior to
any date of prepayment of Eurodollar Loans and (B) on the date of prepayment of
Base Rate Loans; and (2) any prepayment of Eurodollar Loans shall be in a
principal amount of (x) $1,000,000 or a whole multiple of $1,000,000 in excess
thereof or, if less, the entire principal amount thereof then outstanding. Each
such notice shall specify the date and amount of such prepayment, the amount of
the Applicable Prepayment Premium due thereon (provided that if a Eurodollar
Loan is prepaid on any day other than the last day of the Interest

 

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Period applicable thereto, the Borrower shall also pay any amounts owing
pursuant to Section 2.14) and the Type(s) of Loans to be prepaid. The
Administrative Agent will promptly notify each Lender of its receipt of each
such notice, and of the amount of such Lender’s pro rata share of such
prepayment. If such notice is given by the Borrower, it shall be irrevocable,
the Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein, together with the
Applicable Prepayment Premium and accrued interest to such date on the amount
prepaid. Any prepayment of a Eurocurrency Rate Loan shall be accompanied by any
additional amounts required pursuant to Section 2.14. Each prepayment of the
Loans pursuant to this Section 2.05(a) shall be paid to the Lenders in
accordance with their respective pro rata shares.

Optional prepayments of Loans made pursuant to this Section 2.05 shall be
accompanied by payment of the Applicable Prepayment Premium and all accrued
interest on such Loans.

Section 2.06 Mandatory Prepayments.

(a) If any Capital Stock shall be issued by the Borrower or any of its
Restricted Subsidiaries (other than in the case of any Restricted Subsidiary, an
issuance to the Borrower or any other Restricted Subsidiary), (i) if the
Borrower’s Consolidated Senior Leverage ratio is equal to or greater than 1.50
to 1.00 on the date of such issuance, 100% of the Net Cash Proceeds of such
issuance shall be applied on the date of such issuance to the prepayment of the
Loans, and (ii) if the Borrower’s Consolidated Senior Leverage Ratio is less
than 1.50 to 1.00 on the date of such issuance, 50% of the Net Cash Proceeds of
such issuance shall be applied on the date of such issuance to the prepayment of
the Loans.

(b) If on any date the Borrower or any of its Restricted Subsidiaries shall
receive Net Cash Proceeds from any Asset Sale or Recovery Event then, within 180
days of such date of receipt of such Net Cash Proceeds, an amount equal to 100%
of such Net Cash Proceeds shall be applied at the Borrower’s option to any one
or more of the following: (i) the prepayment of the Loans, or (ii) to purchase
assets or property constituting Collateral. The provisions of this
Section 2.06(b) do not constitute a consent to an Asset Sale not otherwise
permitted under this Agreement.

(c) In the event that any Loan Party shall receive Net Cash Proceeds from the
issuance, incurrence or placement of Indebtedness of any Loan Party, the
Borrower shall on such date, apply an amount equal to 100% of such Net Cash
Proceeds to prepay outstanding Loans.

(d) All prepayments of Loans made pursuant to this Section 2.06 shall be
accompanied by payment of the Applicable Prepayment Premium and all accrued
interest on such Loans.

(e) Prior to the date that is 181 days after the Closing Date, each Lender shall
have ten days to accept or reject its pro rata share of any mandatory
prepayments described in this Section 2.06. In the event any Lender does not
accept its pro rata share within such ten day period, the amounts so rejected
shall be offered to each non-rejecting

 

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Lender thereunder. Any mandatory prepayments remaining after being reoffered to
such non-rejecting Lenders shall be returned by the Administrative Agent to the
Borrower and used for general working capital purposes, including voluntary
prepayments of the Loans.

Section 2.07 Conversion and Continuation Options.

(a) The Borrower may elect from time to time to convert Base Rate Loans to
Eurodollar Loans by giving the Administrative Agent at least three Business
Days’ prior irrevocable notice of such election (which notice shall specify the
length of the initial Interest Period therefor), provided that no Base Rate Loan
may be converted into a Eurodollar Loan (i) when any Event of Default has
occurred and is continuing and the Administrative Agent has, or the Required
Lenders have, determined in its or their sole discretion not to permit such
conversions or (ii) after the date that is one month prior to the Maturity Date.
Upon receipt of any such notice the Administrative Agent shall promptly notify
each Lender thereof.

(b) The Borrower may elect to continue any Eurodollar Loan as such upon the
expiration of the then current Interest Period with respect thereto by giving
irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term “Interest Period” set forth in Section 1.01,
of the length of the next Interest Period to be applicable to such Loans,
provided that no Eurodollar Loan may be continued as such (i) when any Event of
Default has occurred and is continuing and the Administrative Agent has, or the
Required Lenders have, determined in its or their sole discretion not to permit
such continuations or (ii) after the date that is one month prior to the
Maturity Date, and provided, further, that if the Borrower shall fail to give
any required notice as described above in this paragraph or if such continuation
is not permitted pursuant to the preceding proviso, such Loans shall be
converted automatically to Base Rate Loans on the last day of such then expiring
Interest Period. Upon receipt of any such notice the Administrative Agent shall
promptly notify each relevant Lender thereof.

Section 2.08 Interest Rates and Payment Dates.

(a) Each Eurodollar Loan shall bear interest for each day during each Interest
Period with respect thereto at a rate per annum equal to the Eurodollar Rate
determined for such Interest Period plus the Applicable Margin. For avoidance of
doubt, it is understood that interest payable on a Eurodollar Loan for any
Interest Period shall accrue from and including the first day of such Interest
Period to but excluding the last day of such Interest Period.

(b) Each Base Rate Loan shall bear interest for each day on which it is
outstanding at a rate per annum equal to the Base Rate in effect for such day
plus the Applicable Margin.

(c) Upon the occurrence and during the continuance of an Event of Default
described in Section 8(a), at the election of either the Administrative Agent or
the Required Lenders, all amounts payable under this Agreement (to the extent
legally permitted) shall bear interest at a rate per annum that is equal to the
rate that would otherwise be applicable thereto pursuant to the foregoing
provisions of this Section 2.08 plus 2.00%.

 

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(d) Accrued interest on each Loan shall be capitalized as of and added to
principal of the Loans on each Interest Payment Date; provided that the Borrower
may, at its election, pay any such accrued interest in cash on such date;
provided, however, that such interest payment is made either entirely in cash or
50% in cash. The Borrower may make such election five Business Days prior to the
beginning of the Interest Period and shall deliver to the Administrative Agent
at least five Business Days prior to the beginning of the Interest Period, a
written notice setting forth the portion of such interest payment to be made in
the form of cash. Interest accruing pursuant to paragraph (c) of this Section
shall be payable from time to time on demand and capitalized as of and added to
the principal of the Loans on each Interest Payment Date.

Section 2.09 Computation of Interest and Fees.

(a) Interest, fees and commissions payable pursuant hereto shall be calculated
on the basis of a 360-day year (or 365 or 366 days, as the case may be, in the
case of Base Rate Loans that are based on Credit Suisse’s prime rate). The
Administrative Agent shall as soon as practicable notify the Borrower and the
Lenders of each determination of a Eurodollar Rate. Any change in the interest
rate on a Loan resulting from a change in the Base Rate or the Eurocurrency
Reserve Requirements shall become effective as of the opening of business on the
day on which such change becomes effective. The Administrative Agent shall as
soon as practicable notify the Borrower and the Lenders of the effective date
and the amount of each such change in interest rate.

(b) Each determination of an interest rate by the Administrative Agent pursuant
to any provision of this Agreement shall be conclusive and binding on the
Borrower and the Lenders in the absence of manifest error. The Administrative
Agent shall, at the request of the Borrower, deliver to the Borrower a statement
showing the quotations used by the Administrative Agent in determining any
interest rate.

Section 2.10 Inability to Determine Interest Rate. If prior to the first day of
any Interest Period:

(a) the Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, or

(b) the Administrative Agent shall have received notice from the Required
Lenders that the Eurodollar Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to such Lenders
(as conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period, the Administrative Agent shall give
telecopy or telephonic notice thereof to the Borrower and the relevant Lenders
as soon as practicable thereafter. If such notice is given (x) any Eurodollar
Loans requested to be made on the first day of such Interest

 

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Period shall be made as Base Rate Loans, (y) any Loans that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as Base Rate Loans and (z) any outstanding Eurodollar Loans shall be
converted, on the last day of the then current Interest Period with respect
thereto, to Base Rate Loans. Until such notice has been withdrawn by the
Administrative Agent, no further Eurodollar Loans shall be made or continued as
such, nor shall the Borrower have the right to convert Loans to Eurodollar
Loans.

Section 2.11 Pro Rata Treatment and Payments.

(a) Each payment (including each prepayment) of the Term Loans shall be
allocated among the Term Loan Lenders holding such Term Loans pro rata based on
the principal amount of such Term Loans held by such Term Loan Lenders. Amounts
prepaid on account of the Term Loans may not be reborrowed.

(b) The application of any payment of Loans (including optional and mandatory
prepayments) shall be made, first, to Base Rate Loans and second to Eurodollar
Loans. Each payment of the Loans shall be accompanied by accrued interest to the
date of such payment on the amount paid. Except as otherwise expressly provided
in this Agreement:

(i) Upon the occurrence and during the continuance of an Event of Default,
Borrower irrevocably waives the right to direct the application of any and all
payments at any time or times received by Administrative Agent from or on behalf
of Borrower or any Loan Party of all or any part of the Obligations in
accordance to Section 2.11(d)(iii) below, and the Administrative Agent shall
have the continuing and exclusive right to apply and to reapply any and all such
payments received at any time or times against the Obligations in such manner as
the Administrative Agent may deem advisable notwithstanding any previous
application by the Administrative Agent or the Lenders;

(ii) so long as no Event of Default exists, subject to Section 2.06, the
proceeds of any sale of, or other realization upon, all or any part of the
Collateral and all payments and distributions made by any Loan Party with
respect to the Obligations, shall be applied: first, to all fees, costs,
indemnities and expenses incurred by or owing to Administrative Agent, with
respect to this Agreement, the other Loan Documents or the Collateral; second,
to all fees, costs, indemnities and expenses incurred by or owing to any Lender
with respect to this Agreement, the other Loan Documents, or the Collateral;
third, to accrued and unpaid interest on the Term Loans; fourth, to the
outstanding principal amount of the Term Loans; and fifth, to any other
indebtedness or obligations of Borrower or other Loan Party owing to
Administrative Agent or any Lender, including fees, costs, indemnities and
expenses thereunder; and

(iii) following the occurrence and during the continuance of an Event of
Default, all payments and proceeds of Collateral shall be applied: first, to all
fees, costs, indemnities and expenses incurred by or owing to Administrative

 

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Agent, with respect to this Agreement, the other Loan Documents or the
Collateral; second, to all fees, costs, indemnities and expenses incurred by or
owing to any Lender with respect to this Agreement, the other Loan Documents, or
the Collateral; third, to accrued and unpaid interest on the Term Loans; fourth,
to the outstanding principal amount of the Term Loans; and fifth, to any other
indebtedness or obligations of Borrower or other Loan Party owing to
Administrative Agent or any Lender, including fees, costs, indemnities and
expenses thereunder. Any balance remaining shall be delivered to whomever may be
lawfully entitled to receive such balance or as a court of competent
jurisdiction may direct.

(d) All payments (including prepayments) to be made by the Borrower hereunder,
whether on account of principal, interest, fees or otherwise, shall be made
without setoff or counterclaim and shall be made prior to 2:00 P.M., New York
City time, on the due date thereof to the Administrative Agent, for the account
of the relevant Lenders, at the Payment Office, in Dollars and in immediately
available funds. Any payment made by the Borrower after 2:00 P.M., New York City
time, on any Business Day shall be deemed to have been on the next following
Business Day. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day. In the case of
any extension of any payment of principal pursuant to the preceding two
sentences, interest thereon shall be payable at the then applicable rate during
such extension.

(e) Unless the Administrative Agent shall have been notified in writing by any
Lender prior to the Closing Date that such Lender will not make the amount that
would constitute its share of such borrowing available to the Administrative
Agent, the Administrative Agent may assume that such Lender is making such
amount available to the Administrative Agent, and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is not made available to the Administrative Agent by the
required time on the Closing Date therefor, such Lender shall pay to the
Administrative Agent, on demand, such amount with interest thereon at a rate
equal to the daily average Federal Funds Effective Rate for the period until
such Lender makes such amount immediately available to the Administrative Agent.
A certificate of the Administrative Agent submitted to any Lender with respect
to any amounts owing under this paragraph shall be conclusive in the absence of
manifest error. With respect to $20,000,000 of Loans, if such Lender’s share of
such borrowing is not made available to the Administrative Agent by such Lender
within three Business Days after such Closing Date, the Administrative Agent
shall also be entitled to recover such amount with interest thereon at the rate
per annum applicable to Base Rate Loans, on demand in cash, from the Borrower.

 

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(f) Unless the Administrative Agent shall have been notified in writing by the
Borrower prior to the date of any payment due to be made by the Borrower
hereunder (other than capitalized interest pursuant to Section 2.08(d)), that
the Borrower will not make such payment to the Administrative Agent, the
Administrative Agent may assume that the Borrower is making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the Lenders their respective pro rata shares
of a corresponding amount. If such payment is not made to the Administrative
Agent by the Borrower within three Business Days after such due date, the
Administrative Agent shall be entitled to recover, on demand, from each Lender
to which any amount which was made available pursuant to the preceding sentence,
such amount with interest thereon at the rate per annum equal to the daily
average Federal Funds Effective Rate. Nothing herein shall be deemed to limit
the rights of the Administrative Agent or any Lender against the Borrower.

Section 2.12 Requirements of Law.

(a) If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof:

(i) shall subject any Lender to any tax of any kind whatsoever with respect to
this Agreement or any Eurodollar Loan made by it, or change the basis of
taxation of payments to such Lender in respect thereof (except for Non-Excluded
Taxes covered by Section 2.13 and changes in the rate of tax on the overall net
income of such Lender);

(ii) shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans or other extensions of
credit by, or any other acquisition of funds by, any office of such Lender that
is not otherwise included in the determination of the Eurodollar Rate hereunder;
or

(iii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender reasonably deems to be material, of making,
converting into, continuing or maintaining Eurodollar Loans, or to reduce any
amount receivable hereunder in respect thereof, then, in any such case, the
Borrower shall promptly pay such Lender upon its demand, any additional amounts
necessary to compensate such Lender for such increased cost or reduced amount
receivable. If any Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify the Borrower (with a copy to
the Administrative Agent) of the event by reason of which it has become so
entitled.

 

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(b) If any Lender shall have determined that the adoption of or any change in
any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any corporation controlling
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority made subsequent to
the date hereof shall have the effect of reducing the rate of return on such
Lender’s or such corporation’s capital as a consequence of its obligations
hereunder to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender’s or such corporation’s policies with respect to capital adequacy)
by an amount reasonably deemed by such Lender to be material, then from time to
time, after submission by such Lender to the Borrower (with a copy to the
Administrative Agent) of a written request therefor, the Borrower shall pay to
such Lender such additional amount or amounts as will compensate such Lender or
such corporation for such reduction, provided that the Borrower shall not be
required to compensate a Lender pursuant to this paragraph for any amounts
incurred more than three months prior to the date that such Lender notifies the
Borrower of such Lender’s intention to claim compensation therefor; and provided
further that, if the circumstances giving rise to such claim have a retroactive
effect, then such three-month period shall be extended to include the period of
such retroactive effect.

(c) A certificate as to any additional amounts payable pursuant to this Section
submitted by any Lender to the Borrower (with a copy to the Administrative
Agent) shall be conclusive in the absence of manifest error. The obligations of
the Borrower pursuant to this Section shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

Section 2.13 Taxes.

(a) All payments made by the Borrower under this Agreement shall be made free
and clear of, and without deduction or withholding for or on account of, any
present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding net
income taxes and franchise taxes (imposed in lieu of net income taxes) imposed
on any Agent or any Lender as a result of a present or former connection between
such Agent or such Lender and the jurisdiction of the Governmental Authority
imposing such tax or any political subdivision or taxing authority thereof or
therein (other than any such connection arising solely from such Agent’s or such
Lender’s having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or any other Loan Document). If any
such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings (“Non-Excluded Taxes”) or any Other Taxes are required to be
withheld from any amounts payable to any Agent or any Lender hereunder, the
amounts so payable to such Agent or such Lender shall be increased to the extent
necessary to yield to such Agent or such Lender (after payment of all
Non-Excluded Taxes and Other Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement; provided,
however, that the Borrower shall not be required to increase any such amounts
payable to any Lender with respect to any

 

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Non-Excluded Taxes (i) that are attributable to such Lender’s failure to comply
with the requirements of paragraph (d) or (e) of this Section or (ii) that are
United States withholding taxes imposed on amounts payable to such Lender at the
time such Lender becomes a party to this Agreement, except to the extent that
such Lender’s assignor (if any) was entitled, at the time of assignment, to
receive additional amounts from the Borrower with respect to such Non-Excluded
Taxes pursuant to this paragraph (a).

(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower,
as promptly as possible thereafter the Borrower shall send to the Administrative
Agent for the account of the relevant Agent or Lender, as the case may be, a
certified copy of an original official receipt received by the Borrower showing
payment thereof. If the Borrower fails to pay any Non-Excluded Taxes or Other
Taxes when due to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts or other required documentary
evidence, the Borrower shall indemnify the Agents and the Lenders for any
incremental taxes, interest or penalties that may become payable by any Agent or
any Lender as a result of any such failure. The agreements in this Section shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.

(d) Each Lender (or Transferee) that is not a citizen or resident of the United
States of America, a corporation, partnership or other entity created or
organized in or under the laws of the United States (or any jurisdiction
thereof), or any estate or trust that is subject to federal income taxation
regardless of the source of its income (a “Non-U.S. Lender”) shall deliver to
the Borrower and the Administrative Agent (or, in the case of a Participant, to
the Lender from which the related participation shall have been purchased) two
copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or,
in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 88l(c) of the Code with respect to
payments of “portfolio interest”, as defined by the Code, a statement
substantially in the form of Exhibit G and a Form W-8BEN, or any subsequent
versions thereof or successors thereto properly completed and duly executed by
such Non-U.S. Lender claiming complete exemption from, or a reduced rate of,
U.S. federal withholding tax on all payments by the Borrower under this
Agreement and the other Loan Documents. Such forms shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to this Agreement (or,
in the case of any Participant, on or before the date such Participant purchases
the related participation). In addition, each Non-U.S. Lender shall deliver such
forms promptly upon the obsolescence or invalidity of any form previously
delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify
the Borrower at any time it determines that it is no longer in a position to
provide any previously delivered certificate to the Borrower (or any other form
of certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall
not be required to deliver any form pursuant to this paragraph that such
Non-U.S. Lender is not legally able to deliver.

 

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(e) A Lender that is entitled to an exemption from or reduction of non-U.S.
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
legally entitled to complete, execute and deliver such documentation and in such
Lender’s reasonable judgment such completion, execution or submission would not
materially prejudice the legal position of such Lender.

Section 2.14 Indemnity. The Borrower agrees to indemnify each Lender for, and to
hold each Lender harmless from, any loss or expense (but without duplication of
any amounts payable as default interest) that such Lender may sustain or incur
as a consequence of (a) default by the Borrower in making a borrowing of,
conversion into or continuation of Eurodollar Loans after the Borrower has given
a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment of Eurodollar
Loans after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (c) the making of a prepayment or conversion of
Eurodollar Loans on a day that is not the last day of an Interest Period with
respect thereto. Such indemnification may include an amount equal to the excess,
if any, of (i) the amount of interest that would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or continue to the
last day of such Interest Period (or, in the case of a failure to borrow,
convert or continue, the Interest Period that would have commenced on the date
of such failure) in each case at the applicable rate of interest for such Loans
provided for herein (excluding, however, the Applicable Margin included therein,
if any) over (ii) the amount of interest (as reasonably determined by such
Lender) that would have accrued to such Lender on such amount by placing such
amount on deposit for a comparable period with leading banks in the interbank
Eurodollar market. A certificate as to any amounts payable pursuant to this
Section submitted to the Borrower by any Lender shall be conclusive in the
absence of manifest error. This covenant shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

Section 2.15 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be canceled and
(b) such Lender’s Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to Section 2.14.

Section 2.16 Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.12, 2.13(a) or
2.15 with respect

 

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to such Lender, it will, if requested by the Borrower, use reasonable efforts
(subject to overall policy considerations of such Lender) to designate another
lending office for any Loans affected by such event with the object of avoiding
the consequences of such event; provided that such designation is made on terms
that, in the sole judgment of such Lender, cause such Lender and its lending
office(s) to suffer no economic, legal or regulatory disadvantage, and provided,
further, that nothing in this Section shall affect or postpone any of the
obligations of any Borrower or the rights of any Lender pursuant to
Section 2.12, 2.13(a) or 2.15.

SECTION 3. RESERVED

SECTION 4. REPRESENTATIONS AND WARRANTIES

To induce the Agents and the Lenders to enter into this Agreement and to make
the Loans, the Borrower hereby represents and warrants to each Agent and each
Lender that:

Section 4.01 Financial Condition.

The audited consolidated balance sheets of Borrower and its Subsidiaries as at
December 31, 2004, December 31, 2005 and December 31, 2006 and the related
consolidated statements of income and of cash flows for the fiscal years ended
on such dates, reported on by and accompanied by an unqualified report from
Deloitte & Touche, LLP, present fairly in all material respects the consolidated
financial condition of Borrower and its Subsidiaries as at such date, and the
consolidated results of its operations and its consolidated cash flows for the
respective fiscal years then ended. All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved. The Borrower and its
Subsidiaries do not have any material Guarantee Obligations, contingent
liabilities and liabilities for taxes, or any long-term leases or unusual
forward or long-term commitments, including any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, that are not reflected in the most recent financial statements
referred to in this paragraph. During the period from December 31, 2006 to and
including the date hereof there has been no Disposition by the Borrower and its
Subsidiaries of any material part of its business or Property other than as
permitted by Section 7.05.

Section 4.02 No Change. Except as described in the Borrower’s filings with the
Securities and Exchange Commission (excluding any disclosure in any “Risk
Factor”, “Forward-Looking Statement” or similar section) from December 31, 2006
through the Closing Date, since December 31, 2006 there has been no development
or event that has had or would reasonably be expected to have a Material Adverse
Effect. From December 31, 2006 through the Closing Date, there has been no
development or event that has had or would reasonably be expected to have a
material adverse effect on the prospects of the Borrower and its Subsidiaries,
taken as a whole.

Section 4.03 Corporate Existence; Compliance with Law. Each of the Borrower and
its Restricted Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
corporate power and authority, and the legal right, to own and operate its
Property, to lease the Property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign

 

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corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of Property or the conduct of its business
requires such qualification, except where the failure to be so qualified would
not have a Material Adverse Effect, and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.

Section 4.04 Corporate Power; Authorization; Enforceable Obligations. Each Loan
Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case
of the Borrower, to borrow hereunder. Each Loan Party has taken all necessary
corporate or other action to authorize the execution, delivery and performance
of the Loan Documents to which it is a party and, in the case of the Borrower,
to authorize the borrowings on the terms and conditions of this Agreement. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or the execution, delivery,
performance, validity or enforceability of this Agreement or any of the other
Loan Documents, except (i) consents, authorizations, filings and notices that
have been obtained or made and are in full force and effect and (ii) the
filings, if any, referred to in Section 4.19. Each Loan Document has been duly
executed and delivered on behalf of each Loan Party that is a party thereto.
This Agreement constitutes, and each other Loan Document upon execution will
constitute, a legal, valid and binding obligation of each Loan Party that is a
party thereto, enforceable against each such Loan Party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

Section 4.05 No Legal Bar. The execution, delivery and performance of this
Agreement and the other Loan Documents, the borrowings hereunder and the use of
the proceeds thereof will not violate any Requirement of Law or any material
Contractual Obligation of the Borrower or any of its Restricted Subsidiaries and
will not result in, or require, the creation or imposition of any Lien on any of
their respective properties or revenues pursuant to any Requirement of Law or
any such Contractual Obligation (other than the Liens created by the Security
Documents).

Section 4.06 No Material Litigation. The Borrower has disclosed to the
Administrative Agent and the Lenders that certain litigation, investigations and
proceedings exist and are ongoing as more particularly described in the
Borrower’s filings with the Securities and Exchange Commission (excluding any
disclosure in any “Risk Factor”, “Forward-Looking Statement” or similar section)
from December 31, 2006 through the Closing Date. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower, threatened by or against the Borrower or any
of its Subsidiaries or against any of their respective properties or revenues
(a) with respect to any of the Loan Documents or any of the transactions
contemplated hereby or thereby or (b) that could reasonably be expected to have
a Material Adverse Effect.

Section 4.07 No Default. Neither the Borrower nor any of its Subsidiaries is in
default under or with respect to any of its Contractual Obligations in any
respect that could, individually

 

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or in the aggregate for all such defaults, reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.

Section 4.08 Ownership of Property; Liens. Each of the Borrower and its
Restricted Subsidiaries has title in fee simple to, or a valid leasehold
interest in, all its material real property, and good title to, or a valid
leasehold interest in, all its other material Property, and none of such
Property is subject to any Lien except as permitted by Section 7.03.

Section 4.09 Intellectual Property. The Borrower and each of its Restricted
Subsidiaries owns, or is licensed to use, all Intellectual Property necessary
for the conduct of its business as currently conducted. No material claim has
been asserted and is pending by any Person challenging or questioning the use of
any such Intellectual Property or the validity or effectiveness of any such
Intellectual Property that could reasonably be expected to have a Material
Adverse Effect, nor does the Borrower know of any valid basis for any such
claim. To the best knowledge of the Borrower, the use of such Intellectual
Property by the Borrower and its Restricted Subsidiaries does not infringe on
the rights of any Person in a manner that could reasonably be expected to have a
Material Adverse Effect.

Section 4.10 Taxes. Each of the Borrower and each of its Restricted Subsidiaries
has filed or caused to be filed all Federal, state and other material tax
returns that are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
Property and all other taxes, fees or other charges imposed on it or any of its
Property by any Governmental Authority (other than any the amount or validity of
which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be); and no tax Lien
has been filed, and, to the knowledge of the Borrower, no claim is being
asserted, with respect to any such tax, fee or other charge.

Section 4.11 Federal Regulations. No part of the proceeds of any Loans will be
used for “purchasing” or “carrying” any “margin stock” within the respective
meanings of each of the quoted terms under Regulation U as now and from time to
time hereafter in effect or for any purpose that violates the provisions of the
Regulations of the Board.

Section 4.12 Labor Matters. There are no strikes or other labor disputes against
the Borrower or any of its Subsidiaries pending or, to the knowledge of the
Borrower, threatened that (individually or in the aggregate) could reasonably be
expected to have a Material Adverse Effect. Hours worked by and payment made to
employees of the Borrower and its Subsidiaries have not been in violation of the
Fair Labor Standards Act or any other applicable Requirement of Law dealing with
such matters that (individually or in the aggregate) could reasonably be
expected to have a Material Adverse Effect. All payments due from the Borrower
or any of its Subsidiaries on account of employee health and welfare insurance
that (individually or in the aggregate) could reasonably be expected to have a
Material Adverse Effect if not paid have been paid or accrued as a liability on
the books of the Borrower or the relevant Subsidiary.

Section 4.13 ERISA. Neither a Reportable Event (other than a Reportable Event
that is waived by regulation) nor an “accumulated funding deficiency” (within
the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred
during the five-year period prior

 

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to the date on which this representation is made or deemed made with respect to
any Plan, and each Plan has complied in all material respects with the
applicable provisions of ERISA and the Code. No termination of a Single Employer
Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen, during
such five-year period. The present value of all accrued benefits under each
Single Employer Plan (based on those assumptions used to fund such Plans) did
not, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
Plan allocable to such accrued benefits by a material amount. Neither the
Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan that has resulted or could reasonably be
expected to result in a material liability under ERISA, and neither the Borrower
nor any Commonly Controlled Entity would become subject to any material
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. To the knowledge of the Borrower and any Commonly Controlled
Entity, no such Multiemployer Plan is in ERISA Reorganization or Insolvent.

Section 4.14 Investment Company Act; Other Regulations. No Loan Party is an
“investment company”, or a company “controlled” by an “investment company”,
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) which limits its ability to incur Indebtedness of the
type it will incur hereunder and under the other Loan Documents.

Section 4.15 Subsidiaries.

(a) The Subsidiaries listed on Schedule 4.15 constitute all the Subsidiaries of
the Borrower at the date hereof. Schedule 4.15 sets forth as of the Closing Date
the name and jurisdiction of incorporation of each Subsidiary and, as to each
Subsidiary, the percentage of each class of Capital Stock owned by each Loan
Party and whether such Subsidiary is a Restricted Subsidiary or an Unrestricted
Subsidiary.

(b) There are no outstanding subscriptions, options, warrants, calls, rights or
other agreements or commitments (other than stock options granted to employees
or directors and directors’ qualifying shares) of any nature relating to any
Capital Stock of any Restricted Subsidiary (other than any Restricted Subsidiary
which is a joint venture and for which the Borrower has delivered notice to the
Administrative Agent of any outstanding subscriptions, options, warrants, calls,
rights or other agreements or commitments with respect to the Capital Stock of
such joint venture).

 

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Section 4.16 Use of Proceeds. The proceeds of the Term Loans shall be used to
satisfy the indebtedness and other obligations of the Borrower and certain of
its Subsidiaries under the Existing Credit Facility, to pay transaction costs,
to cash collateralize or otherwise support the Borrower’s obligations in respect
of its existing letters of credit and for general working capital purposes.

Section 4.17 Environmental Matters. Other than exceptions to any of the
following that could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect:

(a) The Borrower and its Subsidiaries: (i) are, and within the period of all
applicable statutes of limitation have been, in compliance with all applicable
Environmental Laws; (ii) hold all Environmental Permits (each of which is in
full force and effect) required for any of their current or intended operations
or for any property owned, leased, or otherwise operated by any of them;
(iii) are, and within the period of all applicable statutes of limitation have
been, in compliance with all of their Environmental Permits; and (iv) reasonably
believe that: each of their Environmental Permits will be timely renewed and
complied with, without material expense; any additional Environmental Permits
that may be required of any of them will be timely obtained and complied with,
without material expense; and compliance with any Environmental Law that is or
is expected to become applicable to any of them will be timely attained and
maintained, without material expense.

(b) Materials of Environmental Concern are not present at, on, under, in, or
about any real property now or formerly owned, leased or operated by the
Borrower or any of its Subsidiaries, or at any other location (including any
location to which Materials of Environmental Concern have been sent for re-use
or recycling or for treatment, storage, or disposal) which could reasonably be
expected to (i) give rise to liability of the Borrower or any of its
Subsidiaries under any applicable Environmental Law or otherwise result in costs
to the Borrower or any of its Subsidiaries, or (ii) interfere with the
Borrower’s or any of its Subsidiaries’ continued operations, or (iii) impair the
fair saleable value of any real property owned or leased by the Borrower or any
of its Subsidiaries.

(c) There is no judicial, administrative, or arbitral proceeding (including any
notice of violation or alleged violation) under or relating to any Environmental
Law to which the Borrower or any of its Subsidiaries is, or to the knowledge of
the Borrower or any of its Subsidiaries will be, named as a party that is
pending or, to the knowledge of the Borrower or any of its Subsidiaries,
threatened.

(d) Neither the Borrower nor any of its Subsidiaries has received any written
request for information, or been notified that it is a potentially responsible
party under or relating to CERCLA or any similar Environmental Law, or with
respect to any Materials of Environmental Concern.

(e) Neither the Borrower nor any of its Subsidiaries has entered into or agreed
to any consent decree, order, or settlement or other agreement, or is subject to
any

 

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judgment, decree, or order or other agreement, in any judicial, administrative,
arbitral, or other forum for dispute resolution, relating to compliance with or
liability under any Environmental Law.

(f) Neither the Borrower nor any of its Subsidiaries has assumed or retained, by
contract or operation of law, any liabilities of any kind, fixed or contingent,
known or unknown, under any Environmental Law or with respect to any Material of
Environmental Concern.

Section 4.18 Accuracy of Information, etc. No statement or information contained
in this Agreement, any other Loan Document, the Information Certificate or any
other document, certificate or statement furnished to the Agents or the Lenders
or any of them, by or on behalf of any Loan Party for use in connection with the
transactions contemplated by this Agreement or the other Loan Documents,
contained as of the date such statement, information, document or certificate
was so furnished, any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. The projections and pro forma financial information
contained in the materials referenced above are based upon good faith estimates
and assumptions believed by management of the Borrower to be reasonable at the
time made, it being recognized by the Lenders that such financial information as
it relates to future events is not to be viewed as fact and that actual results
during the period or periods covered by such financial information may differ
from the projected results set forth therein by a material amount. There is no
fact known to any Loan Party that could reasonably be expected to have a
Material Adverse Effect that has not been expressly disclosed herein, in the
other Loan Documents, the Information Certificate, or in any other documents,
certificates and statements furnished to the Agents and the Lenders for use in
connection with the transactions contemplated hereby and by the other Loan
Documents.

Section 4.19 Security Documents. The Guarantee and Collateral Agreement is
effective to create in favor of the Collateral Agent, for the benefit of the
Lenders, a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof. In the case of the Pledged Stock
described in the Guarantee and Collateral Agreement, when any stock certificates
representing such Pledged Stock are delivered to the Collateral Agent, and in
the case of the other Collateral described in the Guarantee and Collateral
Agreement, when financing statements in appropriate form are filed in the
offices specified on Schedule 4.19 (which financing statements have been duly
completed and delivered to the Collateral Agent) and such other filings as are
specified on Schedule 3 to the Guarantee and Collateral Agreement have been
completed, the Guarantee and Collateral Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the Loan Parties in such Collateral and the proceeds thereof, as security for
the Obligations (as defined in the Guarantee and Collateral Agreement), in each
case prior and superior in right to any other Person (except, in the case of
Collateral other than Pledged Stock, Liens permitted by Section 7.03).

Section 4.20 Solvency. Each Loan Party is, and after giving effect to the
incurrence of all Indebtedness and obligations being incurred in connection
herewith and therewith, after taking into account the use of proceeds on the
Closing Date, will be and will continue to be, Solvent.

 

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Section 4.21 Senior Indebtedness. The Obligations constitute “Senior Debt” of
the Borrower under and as defined in the Senior Subordinated Note Indenture. The
obligations of each Restricted Subsidiary under the Guarantee and Collateral
Agreement constitute “Senior Debt” of such Restricted Subsidiary under and as
defined in the Senior Subordinated Note Indenture.

Section 4.22 Compounding. Since May 1, 2006, the Borrower and its Subsidiaries
have not engaged in compounding of products or other Inventory (other than
Supplies or Budesonide) with an aggregate fair market value in excess of $50,000
during any calendar year.

Section 4.23 Location of Material Inventory, Equipment and Other Property.
Schedule 4.23 sets forth all locations in the United States where the aggregate
value of Inventory, Equipment or other tangible Property owned by the Loan
Parties exceeds $250,000.

Section 4.24 Sanctioned Persons. Neither the Borrower nor any Subsidiary nor, to
the knowledge of the Borrower, any director, officer, agent, employee or
Affiliate of the Borrower or any Subsidiary is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and the Borrower will not directly or indirectly
use the proceeds of the Loans or otherwise make available such proceeds to any
person, for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.

SECTION 5. CONDITIONS PRECEDENT

Section 5.01 Conditions to Extension of Credit on the Closing Date. The
agreement of each Lender to make the initial extension of credit requested to be
made by it hereunder is subject to the satisfaction, prior to or concurrently
with the making of such extension of credit on the Closing Date, of the
following conditions precedent on or prior to March 30, 2007:

(a) Loan Documents. The Administrative Agent shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of the Borrower,
(ii) the Guarantee and Collateral Agreement, executed and delivered by a duly
authorized officer of the Borrower and each Restricted Subsidiary and (iii) an
Acknowledgement and Consent in the form attached to the Guarantee and Collateral
Agreement, executed and delivered by each Issuer (as defined therein), if any,
that is not a Loan Party.

(b) Termination of Borrower’s Obligations under the Existing Credit Facility.
The Agents shall have received reasonably satisfactory evidence that the
Borrower’s obligations with respect to the Existing Credit Facility have been
terminated and released (other than those obligations which expressly survive
termination of the Existing Credit Facility) and arrangements satisfactory to
the Administrative Agent and the Collateral Agent shall have been made for the
termination of all guarantees, Liens and security interests granted in
connection therewith.

(c) Financial Statements. The Agent shall have received (a) U.S. GAAP audited
consolidated balance sheets and related statements of income, stockholders’
equity and cash flows of the Borrower for the 2004, 2005 and 2006 fiscal years
and (b) U.S. GAAP unaudited consolidated balance sheets and related statements
of income, stockholders’ equity and cash flows of the Borrower for each
subsequent fiscal quarter ended 40 days before the Closing Date.

 

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(d) Approvals. All governmental and third party approvals (including landlords’
and other consents) necessary or reasonably advisable in connection with the
continuing operations of the Borrower and its Restricted Subsidiaries and the
transactions contemplated hereby shall have been obtained and 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 which would
restrain, prevent or otherwise impose adverse conditions on the financing
contemplated hereby.

(e) Related Agreements. The Administrative Agent shall have received (in a form
reasonably satisfactory to the Administrative Agent), true and correct copies,
certified as to authenticity by the Borrower, of (i) the Senior Subordinated
Note Indenture and (ii) such other documents or instruments as may be reasonably
requested by the Administrative Agent, including a copy of any debt instrument,
security agreement or other material contract to which the Loan Parties may be a
party.

(f) Fees. The Lenders, the Administrative Agent, the Collateral Agent and the
Arranger shall have received all fees required to be paid, and all expenses for
which invoices have been presented (including reasonable fees, disbursements and
other charges of counsel to the Agents), on or before the Closing Date. To the
extent that any such amounts will be paid with proceeds of Loans made on the
Closing Date, such amounts will be reflected in the funding instructions given
by the Borrower to the Administrative Agent on or before the Closing Date.

(g) Closing Certificates. The Administrative Agent shall have received
certificates of each Loan Party, dated the Closing Date, substantially in the
form of Exhibits C-1 and C-2, with appropriate insertions and attachments.

(h) Legal Opinions. The Administrative Agent and the Collateral Agent shall have
received the following executed legal opinions:

(i) the legal opinion of Kirkland & Ellis LLP, counsel to the Borrower and its
Subsidiaries, substantially in the form of Exhibit E-1; and

(ii) the legal opinion of Greenberg Traurig, LLP, substantially in the form of
Exhibit E-2.

Such legal opinions shall cover such other matters incident to the transactions
contemplated by this Agreement as the Administrative Agent and the Collateral
Agent may reasonably require.

(i) Pledged Stock; Stock Powers; Acknowledgment and Consent; Pledged Notes. The
Collateral Agent shall have received (i) the certificates representing the
shares of Capital Stock pledged pursuant to the Guarantee and Collateral
Agreement, together with an undated stock power for each such certificate
executed in blank by a duly authorized officer of the pledgor thereof, (ii) an
Acknowledgment and Consent,

 

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substantially in the form of Annex II to the Guarantee and Collateral Agreement,
duly executed by any issuer of Capital Stock pledged pursuant to the Guarantee
and Collateral Agreement that is not itself a party to the Guarantee and
Collateral Agreement and (iii) each promissory note pledged pursuant to the
Guarantee and Collateral Agreement endorsed (without recourse) in blank (or
accompanied by an executed transfer form in blank reasonably satisfactory to the
Collateral Agent) by the pledgor thereof.

(j) Filings, Registrations and Recordings. Each document (including any Uniform
Commercial Code financing statement) required by the Security Documents or under
law or reasonably requested by the Collateral Agent to be filed, registered or
recorded in order to create in favor of the Collateral Agent, for the benefit of
the Lenders, a perfected Lien on the Collateral described therein, prior and
superior in right to any other Person (other than with respect to Liens
expressly permitted by Section 7.03), shall have been filed, registered or
recorded or shall have been delivered to the Collateral Agent in proper form for
filing, registration or recordation.

(k) Insurance. The Administrative Agent shall have received insurance
certificates satisfying the requirements of Section 5.3 of the Guarantee and
Collateral Agreement.

(l) Representations and Warranties. Each of the representations and warranties
made by any Loan Party in or pursuant to the Loan Documents shall be true and
correct on and as of such date as if made on and as of such date (except that
any representation or warranty which by its terms is made as of another specific
date shall be true and correct in all material respects as of such date).

(m) No Default. No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the extensions of credit
requested to be made on such date.

(n) Borrowing Notice. Borrower shall have furnished to Administrative Agent a
duly completed Borrowing Notice with respect to such extension of credit.

(o) Solvency Certificate. The Agent shall have received a certificate from the
chief financial officer of the Borrower certifying that the Borrower and its
Subsidiaries, on a consolidated basis after giving effect to the transactions
contemplated hereby, after taking into account the use of proceeds on the
Closing Date, are Solvent.

(p) PATRIOT Act Compliance. The Lenders shall have received at least five
business days prior to the Closing Date, all documentation and other information
required by applicable regulatory authorities under applicable “know your
customer” and anti-money laundering rules and regulations, including the PATRIOT
Act.

(q) Post-Closing Letter. The Lenders shall have received a letter, substantially
in the form of Exhibit K concerning certain obligations to be fulfilled by the
Borrower promptly following the Closing Date.

 

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SECTION 6. AFFIRMATIVE COVENANTS

The Borrower hereby agrees that, so long as the Commitments remain in effect or
any Loan or other amount is owing to any Lender or any Agent hereunder, the
Borrower shall and shall cause each of its Restricted Subsidiaries to:

Section 6.01 Financial Statements.

Provide the Administrative Agent:

(a) as soon as available, but in any event within the earlier of (i) 90 days
after the end of each fiscal year of the Borrower and (ii) the date such
financial information would be required to be contained in a filing with the SEC
on Form 10-K if the Borrower were required to file such form, a copy of the
audited consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such year and the related audited consolidated
statements of income and of cash flows for such year, setting forth in each case
in comparative form the figures as of the end of and for the previous year,
reported on without a “going concern” or like qualification or exception, or
qualification arising out of the scope of the audit, by Deloitte & Touche, LLP
or other independent certified public accountants of nationally recognized
standing; and

(b) as soon as available, but in any event not later than the earlier of (i) 45
days after the end of each of the first three quarterly periods of each fiscal
year of the Borrower and (ii) the date such financial information would be
required to be contained in a filing with the SEC on Form 10-Q if the Borrower
were required to file such form, the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter and the
related unaudited consolidated statements of income and of cash flows for such
quarter and the portion of the fiscal year through the end of such quarter,
setting forth in each case in comparative form the figures as of the end of and
for the corresponding period in the previous year, certified by a Responsible
Officer as being fairly stated in all material respects (subject to normal
year-end audit adjustments and the absence of footnotes);

(c) promptly after the occurrence of an event required to be therein reported
(and in any event within the time period specified in the SEC’s rules and
regulations), the information that would be required to be included in a report
on Form 8-K (or any successor or comparable form);

(d) all such financial statements and reports to be complete and correct in all
material respects and such financial statements to be prepared in reasonable
detail and in accordance with GAAP applied consistently throughout the periods
reflected therein and with prior periods (except as approved by such accountants
or officer, as the case may be, and disclosed therein).

 

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Section 6.02 Certificates; Other Information. Furnish to the Administrative
Agent or, in the case of clause (g), to the relevant Lender:

(a) concurrently with the delivery of the financial statements referred to in
Section 6.01(a), a certificate of the independent certified public accountants
reporting on such financial statements stating that in making the examination
necessary therefor no knowledge was obtained of any Default or Event of Default,
except as specified in such certificate (it being understood that such
certificate shall be limited to the items that independent certified public
accountants are permitted to cover in such certificates pursuant to their
professional standards and customs of the profession);

(b) concurrently with the delivery of any financial statements pursuant to
Section 6.01, (i) a certificate of a Responsible Officer stating that, to the
best of such Responsible Officer’s knowledge, each Loan Party during such period
has observed or performed all of its covenants and other agreements, and
satisfied every condition, contained in this Agreement and the other Loan
Documents to which it is a party to be observed, performed or satisfied by it,
and that such Responsible Officer has obtained no knowledge of any Default or
Event of Default except as specified in such certificate and (ii) in the case of
quarterly or annual financial statements, (x) a Compliance Certificate
containing all information and calculations necessary for determining compliance
by the Borrower and its Subsidiaries with the provisions of this Agreement
referred to therein as of the last day of the fiscal quarter or fiscal year of
the Borrower, as the case may be, (y) to the extent not previously disclosed to
the Administrative Agent, a listing of any county or state within the United
States where any Loan Party keeps inventory or equipment and of any Intellectual
Property acquired by any Loan Party since the date of the most recent list
delivered pursuant to this clause (y) (or, in the case of the first such list so
delivered, since the Closing Date) and (z) any UCC financing statements or other
filings specified in such Compliance Certificate as being required to be
delivered therewith;

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

(d) copies of any amendment, supplement, waiver or other modification with
respect to the Senior Subordinated Note Indenture;

(e) within five days after the same are sent, copies of all financial statements
and reports that the Borrower sends generally to the holders of any class of its
debt securities or public equity securities and, within five days after the same
are filed, copies of all financial statements and reports that the Borrower may
make to, or file with, the SEC;

 

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(f) promptly, such additional financial and other information as any Lender may
from time to time reasonably request; and

(g) promptly after the request by any Lender, all documentation and other
information that such Lender reasonably requests in order to comply with its
ongoing obligations under applicable “know your customer” and anti-money
laundering rules and regulations, including the PATRIOT Act.

Section 6.03 Collateral Reports. The Borrower shall deliver or cause to be
delivered (at the expense of the Borrower) to the Collateral Agent and the
Administrative Agent the following:

(a) upon request by the Collateral Agent, and in no event less frequently than
30 days after the end of each fiscal quarter, (i) a trial balance as of the last
day of such fiscal quarter showing Accounts outstanding aged from statement date
as follows: 1 to 30 days, 31 to 60 days, 61 to 90 days and 91 days or more,
accompanied by such supporting detail and documentation as shall be requested by
the Collateral Agent in its reasonable discretion, (ii) a list of locations
where any license related to any Government Receivable has been revoked since
the date of the prior such report; and (iii) a summary of Inventory, Equipment
and other tangible Property of the Loan Parties by location and type as of the
last day of such fiscal quarter, accompanied by such supporting detail and
documentation as shall be requested by the Collateral Agent in its reasonable
discretion;

(b) at the time of delivery of each of the financial statements delivered
pursuant to Sections 6.01(a) and (b):

(i) a reconciliation of the Accounts trial balance and quarter-end Inventory and
Equipment reports of the Loan Parties to the general ledger of the Loan Parties,
in each case, accompanied by such supporting detail and documentation as shall
be requested by the Collateral Agent in its reasonable discretion,

(ii) a general description of assets owned by the Loan Parties which have been
Disposed during the most recent period covered by the associated financial
statements and the aggregate book value thereof, and

(iii) a list of any applications 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 which any Loan Party
thereof has filed in the prior fiscal quarter; and

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

 

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The delivery of each certificate and report or any other information delivered
pursuant to this Section 6.03 shall constitute a representation and warranty by
the Borrower that the statements and information contained therein are true and
correct in all material respects on and as of such date.

Section 6.04 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature (other than Indebtedness), including all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits in respect of its property, except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Borrower or its Subsidiaries, as the case may be or
to the extent the failure to discharge or satisfy such obligations could not, in
the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 6.05 Conduct of Business and Maintenance of Existence, etc. (a)
(i) Preserve, renew and keep in full force and effect its corporate or other
existence and (ii) take all reasonable action to maintain all rights, privileges
and franchises necessary or desirable in the normal conduct of its business,
except, in each case, as otherwise permitted by Section 7.04 and except, in the
case of clause (ii) above, to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect; and (b) comply with
all Contractual Obligations and Requirements of Law, except to the extent that
failure to comply therewith could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.

Section 6.06 Maintenance of Property; Insurance. (a) Keep all Property and
systems useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted, except to the extent that failure to
comply with this clause (a) could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect, (b) maintain with financially sound and
reputable insurance companies insurance on all its Property in at least such
amounts and against at least such risks (but including in any event public
liability, product liability and business interruption) as are usually insured
against in the same general area by companies engaged in the same or a similar
business and (c) within 30 days after the Closing Date, deliver to the
Collateral Agent a loss payee endorsement in form and substance reasonably
satisfactory to the Collateral Agent.

Section 6.07 Inspection of Property; Books and Records: Discussions. (a) Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities and (b) permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Borrower and its
Subsidiaries with officers and employees of the Borrower and its Subsidiaries
and with its independent certified public accountants; provided that, any
meetings or discussions with any such public accountants shall be scheduled
through the Borrower and a Responsible Officer of the Borrower shall have the
right to be present at any such meeting or during such discussion.

 

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Section 6.08 Notices. Promptly give notice to the Administrative Agent, the
Collateral Agent and each Lender of:

(a) the occurrence of any Default or Event of Default;

(b) any (i) default or event of default under any Contractual Obligation of the
Borrower or any of its Restricted Subsidiaries or (ii) litigation, investigation
or proceeding which may exist at any time between the Borrower or any of its
Restricted Subsidiaries and any Governmental Authority, that in either case, if
not cured or if adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;

(c) any litigation or proceeding affecting the Borrower or any of its Restricted
Subsidiaries in which the amount involved is $1,000,000 or more and not covered
by insurance or in which injunctive or similar relief is sought;

(d) the following events, as soon as possible and in any event within 30 days
after the Borrower knows or has reason to know thereof (i) the occurrence of any
Reportable Event with respect to any Plan (except for Reportable Events for
which notice requirements were waived by regulation), a failure to make any
required contribution to a Plan (unless such contribution has been made in
full), the creation of any Lien in favor of the PBGC or a Plan or any withdrawal
from, or the termination, ERISA Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of proceedings or the taking of any
other action by the PBGC or the Borrower or any Commonly Controlled Entity or
any Multiemployer Plan with respect to the withdrawal from, or the termination,
ERISA Reorganization or Insolvency of, any Plan; and

(e) any development or event that has had or could reasonably be expected to
have a Material Adverse Effect.

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower or the relevant Subsidiary proposes to take
with respect thereto.

Section 6.09 Environmental Laws.

(a) Comply in all material respects with, and ensure compliance in all material
respects by all tenants and subtenants, if any, with, all applicable
Environmental Laws, and obtain and comply in all material respects with and
maintain, and ensure that all tenants and subtenants obtain and comply in all
material respects with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws, in each case, unless the failure to do so would not reasonably be expected
to have a Material Adverse Effect.

(b) Conduct and complete all investigations, studies, sampling and testing, and
all remedial, removal and other actions required under Environmental Laws and
promptly comply in all material respects with all lawful orders and directives
of all

 

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Governmental Authorities regarding Environmental Laws, in each case, unless the
failure to do so would not reasonably be expected to have a Material Adverse
Effect.

Section 6.10 Additional Collateral, etc.

(a) With respect to any Property acquired after the Closing Date by the Borrower
or any of its Restricted Subsidiaries (other than (x) any Property described in
paragraph (b) or paragraph (c) of this Section, (y) any Property subject to a
Lien expressly permitted by Section 7.03(g) and (z) Property acquired by an
Excluded Foreign Subsidiary) as to which the Collateral Agent, for the benefit
of the Lenders, does not have a perfected Lien, promptly (i) execute and deliver
to the Collateral Agent such amendments to the Guarantee and Collateral
Agreement or such other documents as the Collateral Agent reasonably deems
necessary or advisable to grant to the Collateral Agent, for the benefit of the
Lenders, a security interest in such Property and (ii) take all actions
necessary or advisable to grant to the Collateral Agent, for the benefit of the
Lenders, a perfected first priority security interest in such Property,
including the filing of Uniform Commercial Code financing statements in such
jurisdictions as may be required by the Guarantee and Collateral Agreement or by
law or as may be requested by the Collateral Agent.

(b) With respect to any fee interest in any real property having a value
(together with improvements thereof) of at least $500,000 acquired after the
Closing Date by the Borrower or any of its Restricted Subsidiaries (other than
any such real property owned by an Excluded Foreign Subsidiary or subject to a
Lien expressly permitted by Section 7.03(g)), promptly (i) execute and deliver a
first priority Mortgage in favor of the Collateral Agent, for the benefit of the
Lenders, covering such real property, (ii) if requested by the Collateral Agent,
provide the Lenders with (x) title and extended coverage insurance covering such
real property in an amount at least equal to the purchase price of such real
property (or such other amount as shall be reasonably specified by the
Collateral Agent) as well as a current ALTA survey thereof, together with a
surveyor’s certificate and (y) any consents or estoppels reasonably deemed
necessary or advisable by the Collateral Agent in connection with such Mortgage,
each of the foregoing in form and substance reasonably satisfactory to the
Administrative Agent and (iii) if requested by the Collateral Agent, deliver to
the Collateral Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Collateral Agent.

(c) With respect to any new Restricted Subsidiary (other than an Excluded
Foreign Subsidiary) created or acquired after the Closing Date (which, for the
purposes of this paragraph, shall include any existing Subsidiary that ceases to
be an Excluded Foreign Subsidiary and any Unrestricted Subsidiary that is
redesignated as a Restricted Subsidiary pursuant to Section 6.11(l)), by the
Borrower or any of its Restricted Subsidiaries, promptly (i) execute and deliver
to the Collateral Agent such amendments to the Guarantee and Collateral
Agreement as the Collateral Agent reasonably deems necessary or advisable to
grant to the Collateral Agent, for the benefit of the Lenders, a perfected first
priority security interest in the Capital Stock of such new Restricted
Subsidiary that is owned by the Borrower or any of its Restricted Subsidiaries,
(ii) deliver

 

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to the Collateral Agent the certificates representing such Capital Stock,
together with undated stock powers, in blank, executed and delivered by a duly
authorized officer of the Borrower or such Subsidiary, as the case may be,
(iii) cause such new Restricted Subsidiary (A) to become a party to the
Guarantee and Collateral Agreement and (B) to take such actions necessary or
advisable to grant to the Collateral Agent for the benefit of the Lenders a
perfected first priority security interest in the Collateral described in the
Guarantee and Collateral Agreement (subject to Liens permitted by Section 7.02)
with respect to such new Restricted Subsidiary, including the filing of Uniform
Commercial Code financing statements in such jurisdictions as may be required by
the Guarantee and Collateral Agreement or by law or as may be reasonably
requested by the Collateral Agent, and (iv) if requested by the Collateral
Agent, deliver to the Collateral Agent legal opinions relating to the matters
described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Collateral Agent.

(d) With respect to any new Excluded Foreign Subsidiary created or acquired
after the Closing Date by the Borrower or any of its Restricted Subsidiaries
(other than any Excluded Foreign Subsidiaries), promptly (i) execute and deliver
to the Collateral Agent such amendments to the Guarantee and Collateral
Agreement or such other documents as the Collateral Agent reasonably deems
necessary or advisable in order to grant to the Collateral Agent, for the
benefit of the Lenders, a perfected first priority security interest in the
Capital Stock of such new Restricted Subsidiary that is owned by the Borrower or
any of its Subsidiaries (other than any Excluded Foreign Subsidiaries),
(provided that in no event shall more than 65% of the total outstanding Capital
Stock of any such new Excluded Foreign Subsidiary be required to be so pledged),
(ii) deliver to the Collateral Agent the certificates representing such Capital
Stock, together with undated stock powers, in blank, executed and delivered by a
duly authorized officer of the Borrower or such Restricted Subsidiary, as the
case may be, and take such other action as may be necessary or, in the
reasonable opinion of the Collateral Agent, desirable to perfect the Lien of the
Collateral Agent thereon, and (iii) if requested by the Collateral Agent,
deliver to the Collateral Agent legal opinions relating to the matters described
above, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Collateral Agent.

(e) Promptly upon the request of the Collateral Agent, Borrower shall establish
a cash management system subject to a depositary agreement satisfactory to the
Collateral Agent whereby lock boxes, lock box accounts, and concentration
accounts are established and maintained under the sole dominion and control of
the Collateral Agent, into which all payments on and proceeds of (i) Private
Accounts, and (ii) to the extent permitted and in a manner consistent with all
applicable laws and regulations, Government Receivables, shall be deposited and
from which all collected funds will be transferred.

Section 6.11 Unrestricted Subsidiaries. At the time of delivery of each of the
financial statements delivered pursuant to Section 6.01(a) and (b), in the event
that either (i) the Consolidated EBITDA of all Unrestricted Subsidiaries for the
period of four consecutive fiscal quarters then ending is greater than 5% of the
Consolidated EBITDA of the Borrower and its Subsidiaries for such period or
(ii) the aggregate consolidated assets of all Unrestricted Subsidiaries as at
the last day of the fiscal quarter then ending would constitute more than 5% of
the consolidated assets of the Borrower and its

 

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Subsidiaries as at the last date of such fiscal quarter, the Borrower shall
re-designate sufficient Unrestricted Subsidiaries as Restricted Subsidiaries,
and cause such Restricted Subsidiary to comply with Section 6.10(c), in order to
be in compliance with each of clauses (i) and (ii) above and such re-designation
shall be effective beginning on the date after the date of such designation.

Section 6.12 Further Assurances. From time to time execute and deliver, or cause
to be executed and delivered, such additional instruments, certificates or
documents, and take such actions, as the Collateral Agent may reasonably request
for the purposes of implementing or effectuating the provisions of this
Agreement and the other Loan Documents, or of more fully perfecting or renewing
the rights of the Collateral Agent and the Lenders with respect to the
Collateral (or with respect to any additions thereto or replacements or proceeds
thereof or with respect to any other property or assets hereafter acquired by
the Borrower or any Restricted Subsidiary which may be deemed to be part of the
Collateral) pursuant hereto or thereto. Upon the exercise by the Collateral
Agent or any Lender of any power, right, privilege or remedy pursuant to this
Agreement or the other Loan Documents which requires any consent, approval,
recording, qualification or authorization of any Governmental Authority, the
Borrower will execute and deliver, or will cause the execution and delivery of,
all applications, certifications, instruments and other documents and papers
that the Collateral Agent or such Lender may be required to obtain from the
Borrower or any of its Restricted Subsidiaries for such governmental consent,
approval, recording, qualification or authorization.

Section 6.13 Use of Proceeds. The Borrower shall use the proceeds of the Loans
as described in Section 4.16.

Section 6.14 Wind Down Subsidiaries. The Borrower shall not permit the Wind Down
Subsidiaries to conduct any business or operations, own any assets or incur any
liabilities.

SECTION 7. NEGATIVE COVENANTS

The Borrower hereby agrees that, so long as any Loan or other amount is owing to
any Lender or the Administrative Agent hereunder, the Borrower shall not, and
shall not permit any of its Restricted Subsidiaries to, directly or indirectly:

Section 7.01 Consolidated EBITDA. Permit the Consolidated EBITDA of the Borrower
for any period of four consecutive fiscal quarters beginning with the four
fiscal quarter period ending March 31, 2007, to be less than $40,000,000.

Section 7.02 Indebtedness. Create, issue, incur, assume, become liable in
respect of or suffer to exist any Indebtedness, except:

(a) Indebtedness of any Loan Party pursuant to any Loan Document;

(b) Indebtedness of the Borrower to any Restricted Subsidiary that is a
Guarantor and of any Restricted Subsidiary to the Borrower or any other
Restricted Subsidiary;

 

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(c) Guarantee Obligations incurred by the Borrower or any of its Restricted
Subsidiaries that are Guarantors of obligations of any Restricted Subsidiary
that is a Guarantor otherwise permitted hereunder;

(d) Indebtedness outstanding on the date hereof and listed on Schedule 7.2(d)
and any refinancings, refundings, renewals or extensions thereof (without
increasing, or shortening the maturity of, the principal amount thereof plus
premiums, accrued interest and costs of refinancing);

(e) Indebtedness, including Capital Lease Obligations or purchase money
obligations, in any case secured by Liens permitted by Section 7.03(g), in an
aggregate principal amount not to exceed $3,000,000 during the term of this
Agreement;

(f)(i) Indebtedness of the Borrower in respect of the Senior Subordinated Notes
in an aggregate principal amount not to exceed $287,000,000 and (ii) Guarantee
Obligations of any Restricted Subsidiary that is a Guarantor in respect of such
Indebtedness, provided that such Guarantee Obligations are subordinated to the
same extent as the obligations of the Borrower in respect of the Senior
Subordinated Notes;

(g) Hedge Agreements in respect of Indebtedness otherwise permitted hereby, so
long as such agreements are not entered into for speculative purposes;

(h) Indebtedness of the Borrower in respect of the Series A Convertible
Preferred Stock of the Borrower;

(i) Indebtedness consisting of the accrual of interest, the accretion or
amortization of original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same terms, and the
payment of dividends on redeemable preferred Capital Stock in the form of
additional shares of the same class of Capital Stock;

(j) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except in the
case of daylight overdrafts) drawn against insufficient funds in the ordinary
course of business; provided, however, that such Indebtedness is extinguished
within five business days of incurrence;

(k) Indebtedness consisting of surety and performance bonds and similar
obligations arising in the ordinary course of business that are reasonably
required to comply either with applicable federal and state laws and regulations
or with Contractual Obligations;

(l) Indebtedness of the Borrower (i) in the amount of $1,600,000 in connection
with the acquisition in December, 2006 of certain computer equipment from
International Business Machines Corp, (ii) evidenced by a $1,200,000 promissory
note, dated June 16, 2005, made by Rotech Healthcare Inc., in favor of Florida
Medical Equipment Services LLC, and (iii) consisting of the financing of
insurance premiums in the ordinary course of business;

 

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(m) additional Indebtedness of the Borrower or any of its Restricted
Subsidiaries in an aggregate principal amount (for the Borrower and all
Subsidiaries) not to exceed $1,000,000 at any one time outstanding during the
term of this Agreement;

(n) Indebtedness of the Borrower in the form of letters of credit in an
aggregate amount that, when taken together with all other Indebtedness
constituting letters of credit issued after the date of this Agreement (other
than pursuant to clause (o)), does not exceed $7,000,000 in the aggregate during
the term of this Agreement; and

(o) Indebtedness of the Borrower in the form of letters of credit existing on
the date of this Agreement and set forth on Schedule 7.02(o) in an aggregate
amount that does not exceed $13,000,000 at any time outstanding (determined by
reference to the face amount of such letters of credit), as replaced from time
to time.

Section 7.03 Liens. Create, incur, assume or suffer to exist any Lien upon any
of its property, whether now owned or hereafter acquired, except:

(a) Liens for taxes, assessments or governmental charges or claims not yet due
or that are being contested in good faith by appropriate proceedings, provided
that adequate reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in accordance with GAAP;

(b) carriers’, warehousemen’s, landlord’s (whether statutory or otherwise),
mechanics’, materialmen’s, supplier’s, repairmen’s or other like Liens arising
in the ordinary course of business in respect of obligations that are not
overdue for a period of more than 45 days or that are being contested in good
faith by appropriate proceedings;

(c) pledges or deposits in connection with workers’ compensation, unemployment
insurance and other social security legislation;

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

(e) easements, rights-of-way, restrictions, covenants, licenses and other
similar encumbrances incurred in the ordinary course of business that do not
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the Borrower and its
Subsidiaries, taken as a whole;

(f) Liens in existence on the date hereof listed on Schedule 7.3(f), securing
Indebtedness permitted by Section 7.02(d), provided that no such Lien is
extended to cover any additional property after the Closing Date and that the
amount of Indebtedness secured thereby is not increased (except as permitted by
Section 7.02(d));

(g) Liens securing Indebtedness of the Borrower or any Restricted Subsidiary
incurred pursuant to Section 7.02(e) to finance the acquisition of fixed or
capital assets, provided that (i) such Liens shall be created substantially
simultaneously with the acquisition of such fixed or capital assets, (ii) such
Liens do not at any time encumber

 

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any property other than the property financed by such Indebtedness and (iii) the
amount of Indebtedness secured thereby is not increased (except in connection
with refinancing premiums and related costs);

(h) Liens created pursuant to the Security Documents;

(i) any interest or title of a lessor under, and Liens arising from Uniform
Commercial Code financing statements relating to, any lease (other than a
capital lease or a financing lease) entered into by the Borrower or any other
Subsidiary in the ordinary course of its business and covering only the assets
so leased;

(j) Liens incurred to secure Indebtedness permitted to be incurred (and so
incurred) pursuant to Section 7.02(l)(i) and (iii); provided that such liens do
not at any time encumber any property or assets other than the property or
assets financed by such Indebtedness;

(k) judgment Liens not giving rise to an Event of Default;

(1) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of customs duties in connection with the importation of goods;

(m) rights of setoff imposed by law upon deposit of cash in favor of banks or
other depository institutions incurred in the ordinary course of business in
deposit accounts maintained with such bank and Cash Equivalents in such account;

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

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

(p) Liens deemed to exist in connection with Investments in repurchase
agreements permitted under Section 7.08;

(q) Liens in favor of any Loan Party to secure intercompany Indebtedness and
Guaranty Obligations permitted under Section 7.08;

(r) Liens on property of a Person existing at the time such Person is merged
with or into or consolidated with the Borrower or any such Restricted Subsidiary
of the Borrower; provided that such Liens were not incurred in connection with
or in contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Borrower or such Restricted Subsidiary;

 

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(s) Liens on property existing at the time of acquisition of the property by the
Borrower or any such Restricted Subsidiary of the Borrower, provided that such
Liens were not incurred in connection with or in contemplation of such
acquisition;

(t) Retained Rights; and

(u) Liens on cash collateral of up to 105% of the face amount of letters of
credit constituting Indebtedness permitted to be incurred (and so incurred)
pursuant to Sections 7.02(n) and (o) pledged to secure the Borrower’s or its
Restricted Subsidiaries’ obligations under such letters of credit.

Section 7.04 Fundamental Changes. Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of all or substantially all of its
property or business, except that:

(a) any Restricted Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or with or into any other Restricted Subsidiary;

(b) any Restricted Subsidiary of the Borrower may Dispose of any or all of its
assets (i) to the Borrower or any Restricted Subsidiary (upon voluntary
liquidation or otherwise) or (ii) pursuant to a Disposition permitted by
Section 7.05 (other than Section 7.05(a)(iii));

(c) any Investment expressly permitted by Section 7.08 may be structured as a
merger, consolidation or amalgamation into the Borrower (provided that the
Borrower shall be the continuing or surviving corporation) or any Subsidiary;
and

(d) any Unrestricted Subsidiary, Wind Down Subsidiary or any Inactive Subsidiary
of the Borrower may be dissolved or liquidated.

Section 7.05 Disposition of Property. (a) Dispose of any of its property,
whether now owned or hereafter acquired, and, in the case of any Restricted
Subsidiary, issue or sell any shares of such Restricted Subsidiary’s Capital
Stock to any Person, except:

(i) the Disposition of obsolete or worn out property in the ordinary course of
business and Dispositions of Equipment required to comply with applicable laws;

(ii) the Disposition of Inventory or Equipment held for sale or lease in the
ordinary course of business consistent with past practices;

(iii) Dispositions permitted by clause (i) of Section 7.04(b);

(iv) the sale or issuance of any Subsidiary’s Capital Stock to the Borrower or
any wholly-owned Restricted Subsidiary;

(v) Dispositions set forth on Schedule 7.05(a)(v);

 

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(vi) the sale, leasing or licensing of computer software or other Intellectual
Property developed by the Borrower or any of its Subsidiaries related to the
health care industry to third parties for fair value in the ordinary course of
business consistent with past practices; and

(vii) the Disposition of other property not otherwise permitted by this Section
having a fair market value not to exceed $3,000,000 in the aggregate.

(b) Section 7.05(a) shall not prohibit any Disposition of any property of the
Borrower or any Restricted Subsidiary (including in the case of any Restricted
Subsidiary, the issuance or sale of shares of such Restricted Subsidiaries’
Capital Stock to any Person); provided, however, that (i) the Borrower or such
Restricted Subsidiary receives consideration at the time of such Disposition at
least equal to the Fair Market Value of the assets or property Disposed of,
(ii) at least 85% of the consideration therefor received by the Borrower or such
Restricted Subsidiary, as the case may be, is in the form of Cash Equivalents
and (iii) the Disposition is not prohibited by Section 7.04 (other than
Section 7.04(b)(ii)).

Section 7.06 Restricted Payments. Declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any Capital Stock of the Borrower or any of its Subsidiaries,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of the Borrower or any of its Subsidiaries (collectively,
“Restricted Payments”), except that (a) any Subsidiary may make Restricted
Payments to the Borrower or any wholly-owned Restricted Subsidiary or, in the
case of a Subsidiary which is not wholly-owned, to all holders of Capital Stock
of such Subsidiary on a pro rata basis, and (b) the Borrower may pay dividends
on its Series A Convertible Preferred Stock in an aggregate amount not to exceed
$500,000 during any Fiscal Year.

Section 7.07 Capital Expenditures. Make or commit to make any Capital
Expenditure, except Capital Expenditures of the Borrower and its Restricted
Subsidiaries in the ordinary course of business not exceeding (a) $15,000,000
during any fiscal quarter ending on or before December 31, 2008 and
(b) $16,000,000 during any fiscal quarter ending after December 31, 2008;
provided that (i) up to $5,000,000 of any such amount referred to above, if not
so expended in the fiscal year for which it is permitted, may be carried over
for expenditure in the next succeeding fiscal year and (ii) Capital Expenditures
made pursuant to this Section during any fiscal year shall be deemed made,
first, in respect of amounts permitted for such fiscal year as provided above
and, second, in respect of amounts carried over from the prior fiscal year
pursuant to clause (i) above. During the period of four fiscal quarters ending
on or before December 31, 2007, the Borrower may make or commit to make Capital
Expenditures in addition to those set forth in clause (a) above in an aggregate
amount of up to $5,000,000, provided that such additional amount shall not be
considered for purposes of the proviso to the first sentence of this
Section 7.07.

 

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Section 7.08 Investments. Make any advance, loan, extension of credit (by way of
guaranty or otherwise) or capital contribution to, or purchase any Capital
Stock, bonds, notes, debentures or other debt securities of, or any assets
constituting a business unit of, or make any other investment in, any Person
(all of the foregoing, “Investments”), except:

(a) extensions of trade credit in the ordinary course of business;

(b) investments in Cash Equivalents;

(c) Guarantee Obligations permitted by Section 7.02;

(d) loans and advances to employees of the Borrower or any of its Subsidiaries
in the ordinary course of business (including for travel, entertainment and
relocation expenses) in an aggregate amount for the Borrower and its
Subsidiaries not to exceed $500,000 at any one time outstanding;

(e) Investments by the Borrower or any of its Restricted Subsidiaries in the
Borrower or any Person that, prior to such investment, is a wholly owned
Restricted Subsidiary that is a Guarantor;

(f) the Borrower or any Restricted Subsidiary may acquire all or substantially
all the assets of a person or line of business of such person, or not less than
100% of the Capital Stock (other than directors’ qualifying shares) of a person
(referred to herein as the “Acquired Entity”); provided that (i) no Default or
Event of Default shall have occurred and be continuing on the date of any such
Investment or after giving effect to such Investment, (ii) such acquisition was
not preceded by an unsolicited tender offer for such Capital Stock by, or proxy
contest initiated by the Borrower or any Subsidiary; (iii) the Acquired Entity
shall be in a similar line of business as that of the Borrower and the
Subsidiaries as conducted during the current and most recent calendar year; and
(iv) at the time of such transaction (A) the Borrower would be in compliance
with the covenants set forth in Section 7.01 as of the most recently completed
period of four consecutive fiscal quarters ending prior to such transaction for
which the financial statements and certificates required by Section 6.01(a) or
6.01(b), as the case may be, and 6.02 have been delivered or for which
comparable financial statements have been filed with the SEC, after giving pro
forma effect to such transaction and to any other event occurring after such
period as to which pro forma recalculation is appropriate (including any other
transaction described in this Section occurring after such period) as if such
transaction had occurred as of the first day of such period; (B) the total
consideration paid in connection with such acquisition and any other
acquisitions pursuant to this Section 7.08(f) (including any Indebtedness of the
Acquired Entity that is assumed by the Borrower or any Restricted Subsidiary
following such acquisition and any payments following such acquisition pursuant
to earn-out provisions or similar obligations) shall not in the aggregate exceed
$5,000,000 in any fiscal year; (C) the Borrower shall have delivered a
certificate of a Responsible Officer, certifying as to the foregoing and
containing reasonably detailed calculations in support thereof, in form and
substance satisfactory to the Administrative Agent and (D) the Borrower shall
comply, and shall cause the Acquired Entity to comply, with the applicable
provisions of Section 6.12 and

 

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the Security Documents; provided that (1) up to $1,000,000 of any such amount
referred to in (B) above, if not so invested in the fiscal year for which it is
permitted, may be carried over for Investments in the next succeeding fiscal
year and (2) Investments made pursuant to this paragraph (f) during any fiscal
year shall be deemed made, first in respect of amounts permitted for such fiscal
year as provided above and, second, in respect of amounts carried over from the
prior fiscal year pursuant to the immediately preceding clause (1) above;

(g) Investments consisting of accounts receivable created or made by the
Borrower or any Restricted Subsidiary in the ordinary course of business;

(h) Investments consisting of Capital Stock, obligations, securities or other
property received by the Borrower or any Subsidiary in settlement in the
ordinary course of business of doubtful accounts receivable;

(i) Investments made prior to and existing as of the Closing Date described on
Schedule 7.8(j);

(j) any Investments received in compromise of obligations of trade creditors or
customers that were incurred in the ordinary course of business, including
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of any trade creditor or customer;

(k) Investments in prepaid expenses, negotiable instruments held for collection
and lease, utility and workers compensation, performance and similar deposits
entered into as a result of the operations of the business in the ordinary
course of business;

(l) Investments consisting of Capital Expenditures permitted under Section 7.07
of this Agreement;

(m) Notwithstanding the limitation of Section 7.08(f), Investments (in addition
to those permitted by Section 7.08(f)), involving aggregate consideration
(including assumed Indebtedness) of less than $2,000,000 per annum for the
direct or indirect (a) acquisition of all or substantially all of the property
of any other Person, or of any business or division of any other Person
(b) acquisition of in excess of 50% of the equity interests of any other Person,
or otherwise causing any other Person to become a Subsidiary of such Person or
(c) merger or consolidation or any other combination with any other Person; and

(n) in addition to Investments otherwise expressly permitted by this Section,
Investments by the Borrower or any of its Subsidiaries in an aggregate amount
(valued at cost) not to exceed $1,000,000 during the term of this Agreement.

Notwithstanding anything in this Section 7.08 to the contrary, the Borrower and
its Restricted Subsidiaries shall not make any Investments pursuant to
Section 7.08(f) unless and until the Borrower has delivered a Compliance
Certificate pursuant to Section 6.02(b) that reflects compliance with each of
the covenants set forth in Section 7.01 as of the end of the relevant fiscal
period.

 

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Section 7.09 Optional Payments and Modifications of Certain Debt Instruments (a)
Make or offer to make any optional or voluntary payment, prepayment, repurchase
or redemption of or otherwise optionally or voluntarily defease or segregate
funds with respect to the Senior Subordinated Notes; (b) amend, modify, waive or
otherwise change, or consent or agree to any amendment, modification, waiver or
other change to, any of the terms of the Senior Subordinated Notes or the Senior
Subordinated Note Indenture (other than any such amendment, modification, waiver
or other change that (i) (x) would extend the maturity or reduce the amount of
any payment of principal thereof, reduce the rate or extend any date for payment
of interest thereon or to add a subsidiary guarantor, provided that such
subsidiary guarantor shall simultaneously become a Guarantor hereunder and
(y) does not involve the payment of a consent fee and (ii) does not involve the
consent of any of the holders of the Senior Subordinated Notes); (c) amend,
modify, waive or otherwise change, or consent or agree to any amendment,
modification, waiver or other change to, any of the terms of the Borrower’s
preferred stock (other than any such amendment, modification, waiver or other
change that (i) would extend the scheduled redemption date or reduce the amount
of any scheduled redemption payment or reduce the rate or extend any date for
payment of dividends thereon and (ii) does not involve the payment of a consent
fee); or (d) designate any Indebtedness (other than obligations of the Loan
Parties pursuant to the Loan Documents) as “Designated Senior Indebtedness” (or
any other defined term having a similar purpose) for the purposes of the Senior
Subordinated Note Indenture.

Section 7.10 Transactions with Affiliates. Except as set forth on Schedule 7.10
(and any renewals or replacements thereof on terms and conditions, in each case,
taken as a whole, not more disadvantageous to the Borrower or the relevant
Restricted Subsidiary) enter into any transaction, including any purchase, sale,
lease or exchange of property, the rendering of any service or the payment of
any management, advisory or similar fees, with any Affiliate (other than the
Borrower or any Restricted Subsidiary that is Guarantor) unless such transaction
is (a) otherwise permitted under this Agreement, and (b) upon fair and
reasonable terms no less favorable to the Borrower or any of its Subsidiaries
than it would obtain in a comparable arm’s length transaction with a Person that
is not an Affiliate. With respect to any Person who is an Affiliate pursuant to
clause (b) of the definition thereof in Section 1.01, the Borrower may
compensate (and adjust such compensation) such Person for his services to the
Borrower on such terms as are approved in the ordinary course of business by the
Borrower’s board of directors or the duly appointed and acting Compensation
Committee thereof.

Section 7.11 Changes in Fiscal Periods. Permit the fiscal year of the Borrower
to end on a day other than December 31 or change the Borrower’s method of
determining fiscal quarters.

Section 7.12 Negative Pledge Clauses. Enter into or suffer to exist or become
effective any agreement that prohibits or limits the ability of the Borrower or
any of its Restricted Subsidiaries to create, incur, assume or suffer to exist
any Lien upon any of its property or revenues, whether now owned or hereafter
acquired, to secure its obligations under the Loan Documents to which it is a
party other than:

(a) this Agreement and the other Loan Documents;

 

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(b) any agreements governing any purchase money Liens or Capital Lease
Obligations otherwise permitted hereby (in which case, any prohibition or
limitation shall only be effective against the assets financed thereby);

(c) in connection with any Lien permitted under Section 7.03 or any document or
instrument governing any such Lien, provided that such prohibition or limitation
shall only be effective against the assets subject to such Lien;

(d) pursuant to customary restrictions and conditions contained in any agreement
related to the sale of any property permitted under Section 7.05, pending the
consummation of such sale, provided that such prohibition or limitation shall
only be effective against the assets to be sold;

(e) customary non-assignment provisions in leases, licenses or other contracts
entered into in the ordinary course of business, provided that such prohibition
or limitation shall only be effective against the property which is the subject
of such lease, license or other contract;

(f) in connection with any Indebtedness outstanding on the date of acquisition
of a Subsidiary by the Borrower or any of its Restricted Subsidiaries, so long
as such agreement was not entered into in contemplation of such Subsidiary being
acquired and solely to the extent such prohibition or limitation relates to the
assets of such Subsidiary being acquired; and

(g) pursuant to any joint venture agreements, limited liability company
operating agreements, partnership agreements or stockholders agreements to the
extent that the Borrower or any of its Restricted Subsidiary was permitted by
the Loan Documents to enter into such agreement and solely to the extent of the
assets held in the joint venture or other entity that is the subject of such
agreement.

Section 7.13 Clauses Restricting Subsidiary Distributions. Enter into or suffer
to exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary of the Borrower to (a) make Restricted
Payments in respect of any Capital Stock of such Restricted Subsidiary held by,
or pay any Indebtedness owed to, the Borrower or any other Subsidiary of the
Borrower, (b) make loans or advances to, or other Investments in, the Borrower
or any other Restricted Subsidiary of the Borrower or (c) transfer any of its
assets to the Borrower or any other Restricted Subsidiary of the Borrower,
except for such encumbrances or restrictions existing under or by reason of

(i) any restrictions existing under the Loan Documents;

(ii) any restrictions with respect to a Subsidiary imposed pursuant to an
agreement that has been entered into in connection with the Disposition of all
or substantially all of the Capital Stock or assets of such Restricted
Subsidiary otherwise permitted hereunder;

 

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(iii) agreements governing Indebtedness outstanding on the date hereof and
listed on Schedule 7.2(d) and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings of
those agreements, provided that the amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacement or refinancings are no
more restrictive, taken as a whole, with respect to such dividend and other
payment restrictions than those contained in such agreements on the date hereof;

(iv) the Senior Subordinated Note Indenture, the Senior Subordinated Notes and
the Guarantee Obligations relating thereto;

(v) purchase money obligations for property acquired in the ordinary course of
business that impose restrictions on that property of the nature described in
clause (c) above;

(vi) Liens securing Indebtedness otherwise permitted to be incurred under
Section 7.03 that limit the right of the Borrower or any of its Subsidiaries to
dispose of the assets subject to such Liens;

(vii) provisions with respect to the disposition or distribution of assets or
property in joint venture agreements, limited liability company operating
agreements, partnership agreements, stockholders agreements, assets sale
agreements, stock sale agreements and other similar agreements entered into in
the ordinary course of business, provided that such encumbrance or restriction
shall only be effective against the assets or property to be sold; and

(viii) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Borrower or any of its Restricted Subsidiaries as in effect at
the time of such acquisition, which encumbrance or restriction is not applicable
to any Person, or the properties or assets of any Person, other than the Person,
or the properties or assets of such Person, so acquired.

Section 7.14 Lines of Business. Enter into any business, either directly or
through any Subsidiary, except for those businesses in which the Borrower and
its Restricted Subsidiaries are engaged on the date of this Agreement and
businesses that, in the good faith judgment of the board of directors of the
Borrower, are reasonably related thereto.

Section 7.15 Designation of Unrestricted Subsidiaries. Designate any Subsidiary
as an Unrestricted Subsidiary on any date if after giving pro forma effect to
such designation as if it had occurred on the first day of the period of four
fiscal quarters most recently ended prior to such date, (a) the aggregate
Consolidated EBITDA of all Unrestricted Subsidiaries of the Borrower for the
period of four consecutive fiscal quarters most recently ended prior to such
date would constitute more than 5% of the Consolidated EBITDA of the Borrower
and its Subsidiaries for such period or (b) the aggregate consolidated assets of
all Unrestricted Subsidiaries as at the last day of the fiscal quarter most
recently ended prior to such date would constitute more than 5% of the
consolidated assets of the Borrower and its Subsidiaries as at the last day of
such fiscal quarter.

 

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SECTION 8. EVENTS OF DEFAULT

If any of the following events shall occur and be continuing:

(a) The Borrower shall fail to pay any principal or premium of any Loan when due
in accordance with the terms hereof; or the Borrower shall fail to pay any
interest on any Loan, or any other amount payable hereunder or under any other
Loan Document, within three days after any such interest or other amount becomes
due in accordance with the terms hereof or thereof; or

(b) Any representation or warranty made or deemed made by any Loan Party herein
or in any other Loan Document or that is contained in any certificate, document
or financial or other statement furnished by it at any time under or in
connection with this Agreement or any such other Loan Document shall prove to
have been inaccurate in any material respect on or as of the date made or deemed
made or furnished; or

(c)(i) Any Loan Party shall default in the observance or performance of any
agreement contained in clause (i) or (ii) of Section 6.05(a) (with respect to
the Borrower only), Section 6.08(a) or Section 7, or in Section 5 of the
Guarantee and Collateral Agreement or (ii) an “Event of Default” under and as
defined in any Mortgage shall have occurred and be continuing; or

(d) Any Loan Party shall default in the observance or performance of any other
agreement contained in this Agreement or any other Loan Document (other than as
provided in paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of 30 days; or

(e) The Borrower or any of its Restricted Subsidiaries shall (i) default in
making any payment of any principal of any Indebtedness (including any Guarantee
Obligation, but excluding the Loans) on the scheduled or original due date with
respect thereto; or (ii) default in making any payment of any interest on any
such Indebtedness beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created; or (iii) default in the
observance or performance of any other agreement or condition relating to any
such Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause, or to
permit the holder or beneficiary of such Indebtedness (or a trustee or agent on
behalf of such holder or beneficiary) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity or to
become subject to a mandatory offer to purchase by the obligor thereunder or (in
the case of any such Indebtedness constituting a Guarantee Obligation) to become
payable; provided that a default, event or condition described in clause (i),
(ii) or (iii) of this subsection (e) shall not at any time constitute an Event
of Default unless, at such time, one or more defaults, events or conditions of
the type described in clauses (i), (ii) and (iii) of this subsection (e) shall
have occurred and be continuing with respect to Indebtedness the outstanding
principal amount of which exceeds in the aggregate $2,000,000; or

 

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(f)(i) The Borrower or any of its Restricted Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or
(B) seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or the
Borrower or any of its Restricted Subsidiaries shall make a general assignment
for the benefit of its creditors; or (ii) there shall be commenced against the
Borrower or any of its Restricted Subsidiaries any case, proceeding or other
action of a nature referred to in clause (i) above that (A) results in the entry
of an order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii) there
shall be commenced against the Borrower or any of its Restricted Subsidiaries
any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets that results in the entry of an order for any
such relief that shall not have been vacated, discharged, or stayed or bonded
pending appeal within 30 days from the entry thereof; or (iv) the Borrower or
any of its Restricted Subsidiaries shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any of its
Restricted Subsidiaries shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due; or

(g)(i) Any Person shall engage in any “prohibited transaction” (as defined in
Section 406 of ERISA or Section 4975 of the Code) 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 shall arise on the assets of the Borrower or any Commonly
Controlled Entity, (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, which
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) the
Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion
of the Required Lenders shall be likely to, incur any liability in connection
with a withdrawal from, or the Insolvency or ERISA Reorganization of, a
Multiemployer Plan or (vi) any other 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, in the sole judgment of the Required Lenders, reasonably be expected to
have a Material Adverse Effect; or

(h) One or more judgments or decrees shall be entered against the Borrower or
any of its Restricted Subsidiaries involving for the Borrower and its Restricted
Subsidiaries taken as a whole a liability (not paid or fully covered by
insurance) of

 

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$2,000,000 or more, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 30 days from the
entry thereof; or

(i) Any of the Loan Documents shall cease, for any reason (other than by reason
of the express release thereof pursuant to Section 10.15), to be in full force
and effect, or any Loan Party or any Affiliate of any Loan Party shall so
assert, or any Lien created by any of the Loan Documents shall cease to be
enforceable and of the same effect and priority purported to be created thereby;
or

(j) The guarantee contained in Section 2 of the Guarantee and Collateral
Agreement shall cease, for any reason (other than by reason of the express
release thereof pursuant to Section 10.15), to be in full force and effect or
any Loan Party or any Affiliate of any Loan Party shall so assert; or

(k) Any Change of Control shall occur; or

(l) The Senior Subordinated Notes or the guarantees thereof shall cease, for any
reason, to be validly subordinated to the Obligations or the obligations of the
Restricted Subsidiaries under the Guarantee and Collateral Agreement, as the
case may be, as provided in the Senior Subordinated Note Indenture, or any Loan
Party or any Affiliate of any Loan Party shall so assert;

then, and in any such event, (A) if such event is an Event of Default specified
in subsection (k) or in clause (i) or (ii) of subsection (f) above with respect
to the Borrower, automatically the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the other Loan
Documents shall immediately become due and payable, (B) if such event is an
Event of Default specified in subsection (c)(i) (solely with respect to a
default under Section 7.01) any of the following actions may be taken: (i) the
Administrative Agent may by notice to the Borrower, declare the Loans hereunder
(with accrued interest thereon) and all other amounts owing under this Agreement
and the other Loan Documents to be due and payable forthwith, whereupon the same
shall immediately become due and payable or (iii) with the consent of the
Required Lenders, the Administrative Agent and/or the Collateral Agent may
exercise any rights and remedies provided to the Administrative Agent and the
Collateral Agent, respectively, under the Loan Documents or at law or in equity,
including all remedies provided under the Uniform Commercial Code, and (C) if
such event is any other Event of Default, any of the following actions may be
taken: (i) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to the Borrower, declare the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement and the other
Loan Documents to be due and payable forthwith, whereupon the same shall
immediately become due and payable or (ii) with the consent of the Required
Lenders, the Administrative Agent and/or the Collateral Agent may exercise any
rights and remedies provided to the Administrative Agent and the Collateral
Agent, respectively, under the Loan Documents or at law or in equity, including
all remedies provided under the Uniform Commercial Code.

 

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SECTION 9. THE AGENTS

Section 9.01 Appointment. Each Lender hereby irrevocably designates and appoints
the Agents as the agents of such Lender under this Agreement and the other Loan
Documents, and each Lender irrevocably authorizes each Agent, in such capacity,
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 such Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. Without limiting the generality of the foregoing, the Agents are hereby
expressly authorized to execute any and all documents (including releases) with
respect to the Collateral and the rights of the Lenders with respect thereto, as
contemplated by and in accordance with the provisions of this Agreement and the
Security Documents. Notwithstanding any provision to the contrary elsewhere in
this Agreement, no Agent shall have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against any Agent.

Section 9.02 Delegation of Duties. Each 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. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.

Section 9.03 Exculpatory Provisions. Neither any Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except to the extent that any of the foregoing are found by a final decision of
a court of competent jurisdiction to have resulted from its or such Person’s own
gross negligence or willful misconduct) or (ii) responsible in any manner to any
of the Lenders for any recitals, statements, representations or warranties made
by any Loan Party or any officer thereof contained in this Agreement or any
other Loan Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agents under or in connection
with, this Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document or for any failure of any Loan Party to perform its
obligations hereunder or thereunder. The Agents shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party.

Section 9.04 Reliance by Agents. Each Agent shall be entitled to rely, and shall
be fully protected in relying, upon any instrument, writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including counsel to
the Loan Parties), independent accountants and other experts selected by such
Agent. The

 

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Agents may deem and treat the payee of any Note as the owner thereof for all
purposes unless such Note shall have been transferred in accordance with
Section 10.06 and all actions required by such Section in connection with such
transfer shall have been taken. Each Agent shall be fully justified in failing
or refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Required Lenders
(or, if so specified by this Agreement, all Lenders or any other instructing
group of Lenders specified by this Agreement) as it deems appropriate or it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. Each Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other Loan Documents in accordance with a request of the Required Lenders (or,
if so specified by this Agreement, all Lenders or any other instructing group of
Lenders specified by 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 Loans.

Section 9.05 Notice of Default. No Agent shall be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless
such Agent shall have received notice from a Lender or the Borrower 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 Administrative Agent
shall receive such a notice, the Administrative Agent shall give notice thereof
to the Collateral Agent and Lenders. Each Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders (or, if so specified by this Agreement, all Lenders or any
other instructing group of Lenders specified by this Agreement); provided that
unless and until such Agent shall have received such directions, such 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 Lenders.

Section 9.06 Non-Reliance on Agents and Other Lenders. Each Lender expressly
acknowledges that neither any of the Agents nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates have
made any representations or warranties to it and that no act by any Agent
hereafter taken, including any review of the affairs of a Loan Party or any
affiliate of a Loan Party, shall be deemed to constitute any representation or
warranty by any Agent to any Lender. Each Lender represents to the Agents that
it has, independently and without reliance upon any Agent or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon any 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 analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, no Agent shall have any duty or responsibility
to provide any Lender with any credit or other information

 

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concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party that may come into the possession of such Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.

Section 9.07 Indemnification. The Lenders agree to indemnify each Agent in its
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Aggregate Exposure Percentages in effect on the date on which
indemnification is sought under this Section (or, if indemnification is sought
after the date upon which the Commitments shall have terminated and the Loans
shall have been paid in full, ratably in accordance with such Aggregate Exposure
Percentages immediately prior to such date), for, and to save each Agent
harmless from and against, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever that may at any time (including at any time following the
payment of the Loans) be imposed on, incurred by or asserted against such Agent
in any way relating to or arising out of, the Commitments, this Agreement, any
of the other Loan Documents or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by such Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements that are found by a final
decision of a court of competent jurisdiction to have resulted from such Agent’s
gross negligence or willful misconduct. The agreements in this Section shall
survive the payment of the Loans and all other amounts payable hereunder.

Section 9.08 Agent in Its Individual Capacity. Each Agent and its affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with any Loan Party as though such Agent were not an Agent. With respect to its
Loans each Agent shall have the same rights and powers under this Agreement and
the other Loan Documents as any Lender and may exercise the same as though it
were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent
in its individual capacity.

Section 9.09 Successor Agents. The Administrative Agent or the Collateral Agent
may resign upon 60 days’ notice to the Lenders and the Borrower. If the
Administrative Agent or the Collateral Agent shall resign under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from among
the Lenders a successor agent for the Lenders, which successor agent shall
(unless an Event of Default under Section 8(a) or Section 8(f) with respect to
the Borrower shall have occurred and be continuing) be subject to approval by
the Borrower (which approval shall not be unreasonably withheld or delayed),
whereupon such successor agent shall succeed to the rights, powers and duties of
the Administrative Agent or the Collateral Agent, as the case may be, and the
term “Administrative Agent” or “Collateral Agent,” as applicable, shall mean
such successor agent effective upon such appointment and approval, and the
former Administrative Agent’s or the former Collateral Agent’s, as applicable,
rights, powers and duties as Administrative Agent or Collateral Agent, as the
case may be, shall be terminated, without any other or further act or deed on
the part of such former Administrative Agent or former Collateral Agent or any
of the parties to this Agreement or any holders of the Loans. If no successor
agent has accepted appointment as Administrative Agent by the date that

 

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is 60 days following a retiring Administrative Agent’s notice of resignation,
the retiring Administrative Agent’s resignation shall nevertheless thereupon
become effective, and the Lenders shall assume and perform all of the duties of
the Administrative Agent hereunder until such time, if any, as the Required
Lenders appoint a successor agent as provided for above. If no successor agent
has accepted appointment as Collateral Agent by the date that is 60 days
following a retiring Collateral Agent’s notice of resignation, the retiring
Collateral Agent’s resignation shall nevertheless thereupon become effective,
and the Administrative Agent shall assume and perform all of the duties of the
Collateral Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above. In any event the retiring
Collateral Agent shall transfer all its rights as Collateral Agent in respect of
the Loan Documents and the Collateral to its successor. After any retiring
Agent’s resignation as Agent, the provisions of this Section 9 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement and the other Loan Documents.

Section 9.10 Authorization to Release Liens and Guarantees. The Administrative
Agent and the Collateral Agent are hereby irrevocably authorized by each of the
Lenders to effect any release of Liens or guarantee obligations contemplated by
Section 10.15.

Section 9.11 The Arranger. The Arranger, in its capacity as such, shall have no
duties or responsibilities, and shall incur no liability, under this Agreement
and the other Loan Documents.

SECTION 10. MISCELLANEOUS

Section 10.01 Amendments and Waivers. (a) Neither this Agreement or any other
Loan Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.01.

(b) The Borrower and the Administrative Agent may amend this Agreement without
notice to or consent of any Lender:

(i) to cure any ambiguity, omission, defect or inconsistency;

(ii) to add guarantees and Collateral with respect to the Loans or to secure the
Loans;

(iii) to add to the covenants of the Borrower for the benefit of the Lenders or
to surrender any right or power herein conferred upon the Borrower; or

(iv) to make any change that does not adversely affect the rights of any Lender.

Each Lender hereunder (x) consents to the amendment of this Agreement in the
manner and for the purposes set forth in this Section 10.01(b), (y) agrees that
it will be bound by and will take no actions contrary to the provisions of any
amendment to this Agreement pursuant to Section 10.01(b) and (z) authorizes and
instructs the Administrative Agent to enter into any amendment to this Agreement
pursuant to this Section 10.01(b) on behalf of such Lender. After an amendment
under this Section 10.01(b) becomes effective, the Borrower shall provide the

 

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Administrative Agent with, who shall promptly notify the Lenders of, a brief
description of such amendment. The failure to give such notice to the
Administrative Agent, or any defect therein, shall not impair or affect the
validity of an amendment under this Section 10.01(b).

(c) The Required Lenders and each Loan Party party to the relevant Loan Document
may, or (with the written consent of the Required Lenders) the Administrative
Agent and each Loan Party party to the relevant Loan Document may, from time to
time, (a) enter into written amendments, supplements or modifications hereto and
to the other Loan Documents (including amendments and restatements hereof or
thereof) for the purpose of adding any provisions to this Agreement or the other
Loan Documents or changing in any manner the rights of the Lenders or of the
Loan Parties hereunder or thereunder or (b) waive, on such terms and conditions
as may be specified in the instrument of waiver, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall:

(i) forgive the principal amount or extend the final scheduled date of maturity
of any Loan, reduce the stated rate of any interest, premium or fee payable
hereunder or extend the scheduled date of any payment thereof, increase the
amount or extend the expiration date of any Commitment of any Lender, in each
case without the consent of each Lender directly affected thereby;

(ii) amend, modify or waive any provision of this Section or reduce any
percentage specified in the definition of Required Lenders, consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement and the other Loan Documents, release all or substantially
all of the Collateral or release all or substantially all of the Restricted
Subsidiaries from their guarantee obligations under the Guarantee and Collateral
Agreement, in each case without the consent of all Lenders;

(iii) reduce the percentage specified in the definition of Required Lenders
without the written consent of all Lenders;

(iv) amend, modify or waive any provision of Section 9 without the consent of
any Agent directly affected thereby; or

(vi) amend, modify or waive any provision of Section 2.11 without the consent of
each Lender directly affected thereby.

Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Loan Parties, the
Lenders, the Agents and all future holders of the Loans. In the case of any
waiver, the Loan Parties, the Lenders and the Agents shall be restored to their
former position and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon. Any such waiver,
amendment, supplement or modification shall be effected by a written instrument
signed by the parties required to sign pursuant to the foregoing provisions of
this Section; provided that delivery of an executed

 

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signature page of any such instrument by facsimile transmission or by electronic
mail in portable document format (.pdf) shall be effective as delivery of a
manually executed counterpart thereof.

(d) If, in connection with any proposed amendment, supplement, modification or
waiver to any of the provisions of this Agreement as contemplated by clause (ii)
of the proviso to paragraph (c) above, the consent of the Required Lenders is
obtained but the consent of one or more of such other Lenders whose consent is
required is not obtained, then the Borrower shall have the right, following the
date that is 181 days after the Closing Date, so long as all non-consenting
Lenders whose individual consent is required are treated as described in either
clauses (x) or (y) below, to either (x) replace each such non-consenting Lender
or Lenders with one or more replacement Lenders (each a “Replacement Lender”) so
long as at the time of such replacement, (i) each such Replacement Lender
consents to the proposed amendment, supplement, modification or waiver, (ii) no
Event of Default shall have occurred and be continuing at the time of such
replacement, (iii) the Replacement Lenders as a group shall purchase, at par,
all Loans and other amounts owing to such replaced Lenders as a group on or
prior to the date of replacement, (iv) the Replacement Lender, if not already a
Lender, shall be reasonably satisfactory to the Administrative Agent, (v) the
replaced Lender shall be obligated to make such replacement in accordance with
Section 10.06 (provided that the Borrower shall be obligated to pay the
registration and processing fee referred to therein) and (vi) any such
replacement shall not be deemed a waiver of any rights that the Borrower, the
Administrative Agent, the Collateral Agent or any other Lender shall have
against the replaced Lender, or (y) repay any such non-consenting Lender’s Term
Loans, provided that, unless such non-consenting Lender’s Commitments terminated
and Loans repaid pursuant to the preceding clause (x) are immediately replaced
in full at such time through the addition of Replacement Lenders or the increase
of Commitments and/or outstanding Loans of the remaining Lenders (in each case,
which must specifically consent thereto), then in the case of any action
pursuant to the preceding clause (x), the Required Lenders (as determined prior
to giving effect to the proposed action) shall specifically consent thereto,
provided further, that in any event, the Borrower shall not have the right to
replace a Lender or repay its Loans solely as a result of the exercise of such
Lender’s rights (and the withholding of any required consent by such Lender)
pursuant to any clause (other than clause (ii)) of the proviso to subsection (c)
above. All prepayments of Loans made pursuant to this Section 10.01(d) shall be
accompanied by payment of the Applicable Prepayment Premium and all accrued
interest on such Loans.

Section 10.02 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be given by
overnight delivery service, by telecopy, by hand or by certified mail, return
receipt requested, and shall be effective upon receipt or refusal of such notice
and shall be sent addressed (a) in the case of the Borrower and the Agents, as
follows and (b) in the case of the Lenders, as set forth in an administrative
questionnaire delivered to the Administrative Agent or, in the case of a Lender
which becomes a party to this Agreement pursuant to an Assignment and
Acceptance, in such Assignment and Acceptance or (c) in the case of any party,
to such other address as such party may hereafter notify to the other parties
hereto:

 

The Borrower:    Rotech Healthcare Inc.    2600 Technology Drive    Suite 300   
Orlando, Florida 32804    Attention: Chief Financial Officer    Telecopy:
(407) 297-1906    Telephone: (407) 822-4600

 

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With a copy to:    Rotech Healthcare Inc.    2600 Technology Drive    Suite 300
   Orlando, Florida 32804    Attention: Chief Legal Officer

 

The Administrative Agent    Credit Suisse or Collateral Agent:    Americas
Operations Loans Service    7200 Kit Creek Road - Bldg 11    PO Box 110047   
Raleigh/RTP, NC 27709    Attention: Matthew Carter    Telecopy: 212-743-1842   
Telephone: 919-994-5751

provided that any notice, request or demand to or upon the any Agent, or any
Lender shall not be effective until received.

Section 10.03 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of any Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.

Section 10.04 Survival of Representations and Warranties. All representations
and warranties made herein, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.

Section 10.05 Payment of Expenses. The Borrower agrees (a) to pay or reimburse
the Arranger and the Agents for all their reasonable documented out-of-pocket
costs and expenses incurred in connection with the syndication of the Facilities
(other than fees payable to syndicate members) and the development, preparation
and execution of, and any amendment, supplement or modification to, this
Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including the reasonable
documented fees and disbursements and other charges of counsel to the
Administrative Agent and the charges of Syndtrak, following the presentation of
a summary statement, (b) to pay or reimburse each Lender and the Agents for all
their costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any other documents prepared in connection herewith or therewith, including the
fees and disbursements of counsel (including the allocated fees and

 

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disbursements and other charges of in-house counsel) to each Lender and of
counsel to the Agents, (c) to pay, indemnify, or reimburse each Lender and the
Agents for, and hold each Lender and the Agents harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other taxes, if any, which
may be payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents, and (d) to pay, indemnify or reimburse each Lender,
each Agent, the Arranger, their respective affiliates, and their respective
officers, directors, trustees, employees, advisors, agents, controlling persons
and members of each of the foregoing (each, an “Indemnitee”) for, and hold each
Indemnitee harmless from and against any and all other liabilities, obligations,
losses, damages, penalties, claims, actions, judgments, suits, costs, expenses
(including reasonable fees, disbursements and other charges of a single counsel
and, to the extent reasonably necessary, a single local counsel in each
applicable jurisdiction and single specialty counsel) or disbursements of any
kind or nature whatsoever arising out of or relating to any claim or any
litigation or other proceeding (regardless of whether such Indemnitee is a party
thereto and regardless of whether such matter is initiated by a third party or
by the Borrower or its subsidiaries or any of their respective shareholders)
that relates to the transactions contemplated hereby or the execution, delivery,
enforcement, performance and administration of this Agreement, the other Loan
Documents and any such other documents, including any of the foregoing relating
to the use of proceeds of the Loans or the violation of, noncompliance with or
liability under, any Environmental Law applicable to the operations of the
Borrower, any of its Subsidiaries or any of the Properties, (all the foregoing
in this clause (d), collectively, the “Indemnified Liabilities”), provided that
the Borrower shall have no obligation hereunder to any Indemnitee with respect
to Indemnified Liabilities (i) to the extent such Indemnified Liabilities are
found by a final judgment of a court of competent jurisdiction to have resulted
primarily from the gross negligence or willful misconduct of such Indemnitee,
(ii) any claim by an Indemnitee against another Indemnitee that (x) did not
arise out of any action or inaction on the part of the Borrower or any of its
Affiliates and (y) do not involve an Agent or Arranger or any of its affiliates
acting in its capacity as Agent or Arranger (or in any similar capacity), or
(iii) material breach of this Agreement by an Indemnitee. No Indemnitee shall be
liable for any damages arising from the use by unauthorized persons of
Information or other materials sent through electronic, telecommunications or
other information transmission systems that are intercepted by such persons or
for any special, indirect, consequential or punitive damages in connection with
the Facilities. Without limiting the foregoing, and to the extent permitted by
applicable law, the Borrower agrees not to assert and to cause its Subsidiaries
not to assert, and hereby waives and agrees to cause its Subsidiaries so to
waive, all rights for contribution or any other rights of recovery with respect
to all claims, demands, penalties, fines, liabilities, settlements, damages,
costs and expenses of whatever kind or nature, under or related to Environmental
Laws, including CERCLA or similar state law that any of them might have by
statute or otherwise

 

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against any Indemnitee. All amounts due under this Section shall be payable not
later than 10 days after written demand therefor. Statements payable by the
Borrower pursuant to this Section shall be submitted to the Chief Financial
Officer (Telephone No. (407) 822-4600) (Fax No. (407) 297- 1906), at the address
of the Borrower set forth in Section 10.02, or to such other Person or address
as may be hereafter designated by the Borrower in a notice to the Administrative
Agent. The agreements in this Section shall survive repayment of the Loans and
all other amounts payable hereunder.

Section 10.06 Successors and Assigns; Participations and Assignments.

(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Agents, all future holders of the Loans and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Agents and each Lender.

(b) Any Lender may, without the consent of the Borrower or the Administrative
Agent, in accordance with applicable law, at any time sell to one or more banks,
financial institutions or other entities (each, a “Participant”) participating
interests in any Loan owing to such Lender, any Commitment of such Lender or any
other interest of such Lender hereunder and under the other Loan Documents. In
the event of any such sale by a Lender of a participating interest to a
Participant, such Lender’s obligations under this Agreement to the other parties
to this Agreement shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the holder of
any such Loan for all purposes under this Agreement and the other Loan
Documents, and the Borrower and the Agents shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement and the other Loan Documents. In no event shall
any Participant under any such participation have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by any Loan Party therefrom, except to the extent that such amendment,
waiver or consent would require the consent of all Lenders pursuant to
Section 10.01. The Borrower agrees that if amounts outstanding under this
Agreement and the Loans are due or unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 10.07(a) as fully as if such Participant
were a Lender hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of Sections 2.12, 2.13 and 2.14 with respect to its
participation in the Commitments and the Loans outstanding from time to time as
if such Participant were a Lender; provided that, in the case of Section 2.13,
such Participant shall have complied with the requirements of said Section, and
provided, further, that no Participant shall be entitled to receive any greater
amount pursuant to any such Section than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred by
such transferor Lender to such Participant had no such transfer occurred.

 

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(c) Any Lender (an “Assignor”) may, in accordance with applicable law and upon
written notice to the Administrative Agent, at any time and from time to time
assign to any Lender or any Affiliate, Related Fund or Control Investment
Affiliate thereof or with the consent of the Borrower (which consent (1) shall
not be unreasonably withheld or delayed and (2) shall be deemed given in the
event the Borrower does not respond to a request for such consent within five
business days) and the Administrative Agent (provided (x) that no such consent
need be obtained by any Agent and (y) the consent of the Borrower need not be
obtained upon the occurrence and during the continuation of a Default or an
Event of Default), to an additional bank, financial institution or other entity
(an “Assignee”) all or any part of its rights and obligations under this
Agreement pursuant to an Assignment and Acceptance, substantially in the form of
Exhibit D, executed by such Assignee and such Assignor (and, where the consent
of the Borrower or the Administrative Agent is required pursuant to the
foregoing provisions, by the Borrower and such other Persons) and delivered to
the Administrative Agent for its acceptance and recording in the Register;
provided that no such assignment to an Assignee (other than any Lender or any
Affiliate, Related Fund or Control Investment Affiliate thereof) shall be in an
aggregate principal amount of less than $1,000,000 (other than in the case of an
assignment of all of a Lender’s interests under this Agreement), unless
otherwise agreed by the Borrower and the Administrative Agent. An Assignor shall
use commercially reasonable efforts to assure that any Assignee to which it
assigns its Commitments and/or Loans that is a Non-U.S. Lender shall be able to
deliver the applicable forms and certificates required under Section 2.13(d)
claiming full exemption from U.S. federal withholding taxes as of the date of
such assignment. Upon such execution, delivery, acceptance and recording, from
and after the effective date determined pursuant to such Assignment and
Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the
extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder with Commitments and/or Loans as set forth
therein, and (y) the Assignor thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of an Assignor’s
rights and obligations under this Agreement, such Assignor shall cease to be a
party hereto, except as to Section 2.12, 2.13 and 10.05 in respect of the period
prior to such effective date). Notwithstanding any provision of this Section,
the consent of the Borrower shall not be required for any assignment that occurs
at any time when any Event of Default shall have occurred and be continuing. For
purposes of the minimum assignment amounts set forth in this paragraph, multiple
assignments by two or more Related Funds shall be aggregated.

(d) The Administrative Agent shall, on behalf of the Borrower, maintain at its
address referred to in Section 10.02 a copy of each Assignment and Acceptance
delivered to it and a register (the “Register”) for the recordation of the names
and addresses of the Lenders and the Commitment of, and principal amount of the
Loans owing to, each Lender from time to time. The entries in the Register shall
be conclusive, in the absence of manifest error, and the Borrower, each Agent
and the Lenders shall treat each Person

 

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whose name is recorded in the Register as the owner of the Loans and any Notes
evidencing such Loans recorded therein for all purposes of this Agreement. Any
assignment of any Loan, whether or not evidenced by a Note, shall be effective
only upon appropriate entries with respect thereto being made in the Register
(and each Note shall expressly so provide). Any assignment or transfer of all or
part of a Loan evidenced by a Note shall be registered on the Register only upon
surrender for registration of assignment or transfer of the Note evidencing such
Loan, accompanied by a duly executed Assignment and Acceptance; thereupon one or
more new Notes in the same aggregate principal amount shall be issued to the
designated Assignee, and the old Notes shall be returned by the Administrative
Agent to the Borrower marked “canceled”. The Register shall be available for
inspection by the Borrower or any Lender (with respect to any entry relating to
such Lender’s Loans) at any reasonable time and from time to time upon
reasonable prior notice.

(e) Upon its receipt of an Assignment and Acceptance executed by an Assignor and
an Assignee (and, in any case where the consent of any other Person is required
by Section 10.06(c), by each such other Person) together with payment to the
Administrative Agent of a registration and processing fee of $3,500 (treating
multiple, simultaneous assignments by or to two or more Related Funds as a
single assignment) (except that no such registration and processing fee shall be
payable (y) in connection with an assignment by or to any Agent or (z) in the
case of an Assignee which is already a Lender or is an affiliate or Related Fund
or Control Investment Affiliate of a Lender or a Person under common management
with a Lender), the Administrative Agent shall (i) promptly accept such
Assignment and Acceptance and (ii) on the effective date determined pursuant
thereto record the information contained therein in the Register and give notice
of such acceptance and recordation to the Borrower. On or prior to such
effective date, the Borrower, at its own expense, upon request, shall execute
and deliver to the Administrative Agent (in exchange for the Term Note of the
assigning Lender, if such Lender has received a Term Note) a new Term Note to
the order of such Assignee in an amount equal to the Term Loan assumed or
acquired by it pursuant to such Assignment and Acceptance and, if the Assignor
has retained a Term Loan upon request, a new Term Note to the order of the
Assignor in an amount equal to the Term Loan retained by it hereunder. Such new
Note or Notes, if any, shall be dated the Closing Date and shall otherwise be in
the form of the Note or Notes replaced thereby.

(f) For avoidance of doubt, the parties to this Agreement acknowledge that the
provisions of this Section concerning assignments of Loans and Notes relate only
to absolute assignments and that such provisions do not prohibit assignments
creating security interests in Loans and Notes, including any pledge or
assignment by a Lender of any Loan or Note to any Federal Reserve Bank in
accordance with applicable law; provided that, the Borrower may replace any
assignee or pledgee that becomes a Lender pursuant to an assignment or pledge
permitted by this Section 10.06(f) in accordance with clause (x) or (y) of
Section 10.01(b).

(g) Notwithstanding anything to the contrary contained herein, any Lender (a
“Granting Lender”) may grant to a special purpose funding vehicle (an “SPC”),
identified as such in writing from time to time by the Granting Lender to the

 

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Administrative Agent and the Borrower, the option to provide to the Borrower all
or any part of any Loan that such Granting Lender would otherwise be obligated
to make to the Borrower pursuant to this Agreement; provided that (i) nothing
herein shall constitute a commitment by any SPC to make any Loan and (ii) if an
SPC elects not to exercise such option or otherwise fails to provide all or any
part of such Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall
utilize the Commitment of the Granting Lender to the same extent, and as if,
such Loan were made by such Granting Lender. Each party hereto hereby agrees
that no SPC shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Lender). In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper or other indebtedness of any SPC, it will not institute
against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the United States or any state thereof. In addition,
notwithstanding anything to the contrary in this Section 10.06(g), any SPC may
(A) with notice to, but without the prior written consent of, the Borrower and
the Administrative Agent and without paying any processing fee therefor, assign
all or a portion of its interests in any Loans to the Granting Lender, or with
the prior written consent of the Borrower and the Administrative Agent (which
consent shall not be unreasonably withheld) to any financial institutions
providing liquidity and/or credit support to or for the account of such SPC to
support the funding or maintenance of Loans, and (B) disclose on a confidential
basis any non-public information relating to its Loans to any rating agency,
commercial paper dealer or provider of any surety, guarantee or credit or
liquidity enhancement to such SPC; provided that non-public information with
respect to the Borrower may be disclosed only with the Borrower’s consent which
will not be unreasonably withheld. This paragraph (g) may not be amended without
the written consent of any SPC with Loans outstanding at the time of such
proposed amendment.

Section 10.07 Adjustments; Setoff.

(a) Except to the extent that this Agreement provides for payments to be
allocated to a particular Lender, if any Lender (a “Benefited Lender”) shall at
any time receive any payment of all or part of the Obligations owing to it, or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, pursuant to events or proceedings of the nature referred to in
Section 8(f), 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 Obligations, such Benefited Lender shall purchase for cash from the
other Lenders a participating interest in such portion of each such other
Lender’s Obligations, or shall provide such other Lenders with the benefits of
any such collateral, as shall be necessary to cause such Benefited Lender to
share the excess payment or benefits of such collateral ratably with each of the
Lenders; provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such Benefited Lender, such purchase shall
be rescinded, and the purchase price and benefits returned, to the extent of
such recovery, but without interest.

 

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(b) In addition to any rights and remedies of the Lenders provided by law, each
Lender shall have the right, without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise), to set
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such setoff and application made
by such Lender, provided that the failure to give such notice shall not affect
the validity of such setoff and application.

Section 10.08 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission or by electronic mail in portable document format (.pdf)
shall be effective as delivery of a manually executed counterpart hereof. A set
of the copies of this Agreement signed by all the parties shall be lodged with
the Borrower and the Administrative Agent.

Section 10.09 Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

Section 10.10 Integration. This Agreement, the Fee Letter, the Guarantee Letter
and the other Loan Documents represent the entire agreement of the Borrower, the
Agents, the Arranger and the Lenders with respect to the subject matter hereof
and thereof, and there are no promises, undertakings, representations or
warranties by the Arranger, any Agent or any Lender relative to subject matter
hereof not expressly set forth or referred to herein, in the Fee Letter, the
Guarantee Letter or the other Loan Documents.

Section 10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

Section 10.12 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:

(a) submits for itself and its Property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive

 

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general jurisdiction of the courts of the State of New York, the courts of the
United States for the Southern District of New York, and appellate courts from
any thereof;

(b) consents that any such action or proceeding may be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same;

(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in Section 10.02 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;

(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and

(e) waives, to the maximum extent not prohibited by law, any right it may have
to claim or recover in any legal action or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.

Section 10.13 Acknowledgments. The Borrower hereby acknowledges that:

(a) it has been advised by counsel in the negotiation, execution and delivery of
this Agreement and the other Loan Documents;

(b)(i) no fiduciary, advisory or agency relationship between it and any
Arranger, Agent or Lender is intended to be or has been created in respect of
this Agreement or any of the other Loan Documents or the transactions
contemplated hereby or thereby, irrespective of whether such Arranger, Agent or
Lender is advising the Borrower on other matters, (ii) such parties, on the one
hand, and the Borrower, on the other hand, have an arms’ length business
relationship that does not directly or indirectly give rise to, nor does the
Borrower rely on, any fiduciary duty on the part of such parties, (iii) the
Borrower is capable of evaluating and understanding, and understands and
accepts, the terms, risks and conditions of the transactions contemplated by
this Agreement, (iv) the Borrower has been advised that such parties are engaged
in a broad range of transactions that may involve interests that differ from the
Borrower’s interests and that such parties have no obligation to disclose such
interests and transactions to the Borrower by virtue of any fiduciary, advisory
or agency relationship, and (v) the Borrower waives, to the fullest extent
permitted by law, any claims it may have against such parties for breach of
fiduciary duty or alleged breach of fiduciary duty and agrees that such parties
shall have no liability (whether direct or indirect) to the Borrower in respect
of such a fiduciary duty claim or to any person asserting a fiduciary duty claim
on behalf of or in right of the Borrower, including the Borrower’s stockholders,
employees or creditors;

 

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(c) None of the Arranger, Agent or Lenders is advising the Borrower as to any
legal, tax, investment, accounting or regulatory matters in any jurisdiction.
The Borrower has consulted with its own advisors concerning such matters and is
responsible for making its own independent investigation and appraisal of the
transactions contemplated by this Agreement, and such parties shall have no
responsibility or liability to the Borrower with respect thereto. Any review by
such parties of the transactions contemplated by this Agreement or other matters
relating to such transactions will be performed solely for the benefit of such
parties and shall not be on behalf of the Borrower or any of its Affiliates; and

(d) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Arranger, the Agents and the Lenders or among the Borrower and the Lenders.

Section 10.14 Confidentiality. Each of the Agents and the Lenders agrees to keep
confidential in accordance with its customary procedures all non-public
information provided to it by any Loan Party pursuant to this Agreement that is
designated by such Loan Party as confidential; provided that nothing herein
shall prevent any Agent or any Lender from disclosing any such information
(a) to the Arranger, any Agent, any other Lender or any affiliate of any thereof
who have been advised of or understand the confidential nature of the
information, (b) subject to an agreement containing provisions substantially the
same as those of this Section 10.14, to any actual or prospective Participant or
Assignee, (c) to any of its employees, directors, agents, attorneys,
accountants, investment advisors and other professional advisors who have been
advised of or understand the confidential nature of the information, (d) to any
financial institution that is a direct or indirect contractual counterparty in
swap agreements or such contractual counterparty’s professional advisor (so long
as such contractual counterparty or professional advisor to such contractual
counterparty agrees to be bound by the provisions of this Section), (e) upon the
request or demand of any Governmental Authority having jurisdiction over it,
(f) in response to any order of any court or other Governmental Authority or as
may otherwise be required pursuant to any Requirement of Law, (g) in connection
with any litigation or similar proceeding to which it is a party relating to the
transactions contemplated by the Loan Documents, (h) that has been publicly
disclosed other than in breach of this Section, (i) to the National Association
of Insurance Commissioners or any similar organization or any nationally
recognized rating agency that requires access to information about a Lender’s
investment portfolio in connection with ratings issued with respect to such
Lender or (j) in connection with the exercise of any remedy hereunder or under
any other Loan Document.

Section 10.15 Platform; Borrower Materials. The Borrower hereby acknowledges
that (a) the Administrative Agent and/or the Arranger will make available to the
Lenders materials and/or information provided by or on behalf of the Borrower
hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials
on IntraLinks or another similar electronic system (the “Platform”), and
(b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do
not wish to receive material non-public information with respect to the Borrower
or its securities) (each, a “Public Lender”). The Borrower hereby agrees that it
will use commercially reasonable efforts to identify that portion of the
Borrower Material that may be distributed to the Public Lenders and that (i) all
such Borrower Materials shall be clearly and conspicuously marked “PUBLIC”
which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently
on the first page thereof, (ii) by marking Borrower Materials

 

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“PUBLIC,” the Borrower shall be deemed to have authorized the Administrative
Agent, the Arranger and the Lenders to treat such Borrower Materials as either
publicly available information or not material information (although it may be
sensitive and proprietary) with respect to the Borrower or its securities for
purposes of United States Federal and state securities laws, (iii) all Borrower
Materials marked “PUBLIC” are permitted to be made available through a portion
of the Platform designated “Public Investor” and (iv) the Administrative Agent
and the Joint Lead Arrangers shall be entitled to treat any Borrower Materials
that are not marked “PUBLIC” as being suitable only for posting on a portion of
the Platform not designated “Public Investor”.

Section 10.16 Release of Collateral and Guarantee Obligations. (a)
Notwithstanding anything to the contrary contained herein or in any other Loan
Document, upon request of the Borrower in connection with any Disposition of
Property permitted by the Loan Documents, the Collateral Agent shall take such
actions as shall be required to release its security interest in any Collateral
being Disposed of in such Disposition, and to release any guarantee obligations
under any Loan Document of any Person being Disposed of in such Disposition, to
the extent necessary to permit consummation of such Disposition in accordance
with the Loan Documents.

(b) Notwithstanding anything to the contrary contained herein or any other Loan
Document, when all Obligations have been paid in full and all Commitments have
terminated or expired, upon request of the Borrower, the Collateral Agent shall
take such actions as shall be required to release its security interest in all
Collateral, and to release all guarantee obligations under any Loan Document.
Any such release of guarantee obligations shall be deemed subject to the
provision that such guarantee obligations shall be reinstated if after such
release any portion of any payment in respect of the Obligations guaranteed
thereby shall be rescinded or must otherwise be restored or returned upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or any Restricted Subsidiary, or upon or as a result of the appointment
of a receiver, intervenor or conservator of, or trustee or similar officer for,
the Borrower or any Restricted Subsidiary or any substantial part of its
property, or otherwise, all as though such payment had not been made.

Section 10.17 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.

Section 10.18 Repricing of Stock Options. Nothing contained in this Agreement
shall limit or restrict the Borrower from exchanging, replacing and/or amending
the terms and provisions of any and all options currently outstanding pursuant
to the Rotech Healthcare Inc. Common Stock Option Plan in order to effect a
repricing of such options.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.

 

ROTECH HEALTHCARE INC. By:        Name:   Title:

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CREDIT SUISSE SECURITIES (USA) LLC, as Sole Lead Arranger and Sole Bookrunner
By:        Name:   Title:

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CREDIT SUISSE, CAYMAN ISLANDS BRANCH, individually and as Administrative Agent,
Collateral Agent and as a Lender By:        Name:   Title: By:        Name:  
Title: