Exhibit 10.1

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$125,000,000

CREDIT AGREEMENT

among

BRADLEY PHARMACEUTICALS, INC.,
as Borrower,

and

CERTAIN SUBSIDIARIES OF THE BORROWER,
as Guarantors,

THE LENDERS PARTIES HERETO,

WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent,

GENERAL ELECTRIC CAPITAL CORPORATION
and
CITIBANK F.S.B.,
as Co-Syndication Agents,

and

PNC BANK, National Association
and
KEYBANK NATIONAL ASSOCIATION,
as Co-Documentation Agents

Dated as of September 28, 2004

WACHOVIA CAPITAL MARKETS, LLC,
as Sole Lead Arranger and Book Manager

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TABLE OF CONTENTS     Page

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ARTICLE I DEFINITIONS   1          Section 1.1 Defined Terms   1   Section 1.2
Other Definitional Provisions   27   Section 1.3 Accounting Terms   27   Section
1.4 Time References   28 ARTICLE II THE LOANS; AMOUNT AND TERMS   28   Section
2.1 Revolving Loans   28   Section 2.2 Term Loan   30   Section 2.3 Letter of
Credit Subfacility   32   Section 2.4 Swingline Loan Subfacility   35   Section
2.5 [Reserved]   37   Section 2.6 Fees   37   Section 2.7 Commitment Reductions
  38   Section 2.8 Prepayments   38   Section 2.9 Lending Offices   41   Section
2.10 Default Rate   41   Section 2.11 Conversion Options   41   Section 2.12
Computation of Interest and Fees   42   Section 2.13 Pro Rata Treatment and
Payments   43   Section 2.14 Non-Receipt of Funds by the Administrative Agent  
45   Section 2.15 Inability to Determine Interest Rate   46   Section 2.16
Illegality   46   Section 2.17 Requirements of Law   47   Section 2.18 Indemnity
  48   Section 2.19 Taxes   49   Section 2.20 Indemnification; Nature of Issuing
Lender's Duties   51 ARTICLE III REPRESENTATIONS AND WARRANTIES   52   Section
3.1 Financial Condition   52   Section 3.2 No Change   53   Section 3.3
Corporate Existence; Compliance with Law   53   Section 3.4 Corporate Power;
Authorization; Enforceable Obligations   54   Section 3.5 No Legal Bar; No
Default   54   Section 3.6 No Material Litigation   55   Section 3.7 Investment
Company Act   55   Section 3.8 Margin Regulations   55   Section 3.9 ERISA   55
  Section 3.10 Environmental Matters   56   Section 3.11 Use of Proceeds   57  
Section 3.12 Subsidiaries   57   Section 3.13 Ownership   57   Section 3.14
Indebtedness   57   Section 3.15 Taxes   58   Section 3.16 Intellectual Property
  58

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  Section 3.17 Solvency   59   Section 3.18 Investments   59   Section 3.19
Location of Collateral   59   Section 3.20 Brokers' Fees   59   Section 3.21
Labor Matters   59   Section 3.22 Security Documents   60   Section 3.23
Accuracy and Completeness of Information   60   Section 3.24 Fraud and Abuse  
60   Section 3.25 Licensing and Accreditation   61   Section 3.26 Other
Regulatory Protection   61   Section 3.27 Material Contracts   61   Section 3.28
Insurance   61   Section 3.29 Reimbursement from Third Party Payors   62  
Section 3.30 Other Agreements   62   Section 3.31 Classification as Senior
Indebtedness   62   Section 3.32 Foreign Assets Control Regulations, Etc   62
ARTICLE IV CONDITIONS PRECEDENT   63   Section 4.1 Conditions to Closing Date
and Initial Extensions of Credit   63   Section 4.2 Conditions to All Extensions
of Credit   68 ARTICLE V AFFIRMATIVE COVENANTS   69   Section 5.1 Financial
Statements   69   Section 5.2 Certificates; Other Information   70   Section 5.3
Payment of Obligations   71   Section 5.4 Conduct of Business and Maintenance of
Existence   71   Section 5.5 Maintenance of Property; Insurance   71   Section
5.6 Inspection of Property; Books and Records; Discussions   72   Section 5.7
Notices   72   Section 5.8 Environmental Laws   74   Section 5.9 Financial
Covenants   74   Section 5.10 Additional Guarantors   75   Section 5.11
Compliance with Law   75   Section 5.12 Pledged Assets   76   Section 5.13
Post-Closing Covenants   76 ARTICLE VI NEGATIVE COVENANTS   77   Section 6.1
Indebtedness   77   Section 6.2 Liens   78   Section 6.3 Nature of Business   78
  Section 6.4 Consolidation, Merger, Sale or Purchase of Assets, etc   78  
Section 6.5 Advances, Investments and Loans   79   Section 6.6 Transactions with
Affiliates   79   Section 6.7 Ownership of Subsidiaries; Restrictions   79  
Section 6.8 Fiscal Year; Organizational Documents; Material Contracts   80  
Section 6.9 Limitation on Restricted Actions   80   Section 6.10 Restricted
Payments   80   Section 6.11 Sale Leasebacks   81   Section 6.12 No Further
Negative Pledges   81

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  Section 6.13 Operating Lease Obligations   81 ARTICLE VII EVENTS OF DEFAULT  
82   Section 7.1 Events of Default   82   Section 7.2 Acceleration; Remedies  
85 ARTICLE VIII THE AGENT   85   Section 8.1 Appointment   85   Section 8.2
Delegation of Duties   86   Section 8.3 Exculpatory Provisions   .86   Section
8.4 Reliance by Administrative Agent   86   Section 8.5 Notice of Default   87  
Section 8.6 Non-Reliance on Administrative Agent and Other Lenders   87  
Section 8.7 Indemnification   88   Section 8.8 The Administrative Agent in Its
Individual Capacity   88   Section 8.9 Successor Administrative Agent   88  
Section 8.10 Other Agents   89 ARTICLE IX MISCELLANEOUS   89   Section 9.1
Amendments, Waivers and Release of Collateral       Section 9.2 Notices   92  
Section 9.3 No Waiver; Cumulative Remedies   93   Section 9.4 Survival of
Representations and Warranties   93   Section 9.5 Payment of Expenses and Taxes
  93   Section 9.6 Successors and Assigns; Participations; Purchasing Lenders  
94   Section 9.7 Adjustments; Set-off   97   Section 9.8 Table of Contents and
Section Headings   98   Section 9.9 Counterparts   98   Section 9.10
Effectiveness   98   Section 9.11 Severability   99   Section 9.12 Integration  
99   Section 9.13 Governing Law   99   Section 9.14 Consent to Jurisdiction and
Service of Process   99   Section 9.15 Arbitration   100   Section 9.16
Confidentiality   101   Section 9.17 Acknowledgments   102   Section 9.18
Waivers of Jury Trial; Waiver of Consequential Damages   102   Section 9.19
Patriot Act Notice   102 ARTICLE X GUARANTY   103   Section 10.1 The Guaranty  
103   Section 10.2 Bankruptcy   103   Section 10.3 Nature of Liability   104  
Section 10.4 Independent Obligation   104   Section 10.5 Authorization   104  
Section 10.6 Reliance   105   Section 10.7 Waiver   105   Section 10.8
Limitation on Enforcement   106   Section 10.9 Confirmation of Payment   106

 

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Schedules

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          Schedule 1.1-1 Account Designation Letter   Schedule 1.1-2 Permitted
Investments   Schedule 1.1-3 Permitted Liens   Schedule 1.1-4 Consolidated
EBITDA   Schedule 2.1(a) Schedule of Lenders and Commitments   Schedule
2.1(b)(i) Form of Notice of Borrowing   Schedule 2.1(e) Form of Revolving Note  
Schedule 2.2(d) Form of Term Note   Schedule 2.4(d) Form of Swingline Note  
Schedule 2.11 Form of Notice of Conversion/Extension   Schedule 2.19 Tax Exempt
Certificate   Schedule 3.12 Subsidiaries   Schedule 3.16 Intellectual Property  
Schedule 3.19(a) Location of Real Property   Schedule 3.19(b) Location of
Collateral   Schedule 3.19(c) Chief Executive Offices   Schedule 3.21 Labor
Matters   Schedule 3.27 Material Contracts   Schedule 3.28 Insurance   Schedule
4.1-1 Form of Secretary’s Certificate   Schedule 4.1-2 Litigation   Schedule
4.1-3 Form of Solvency Certificate   Schedule 4.1-4 Mortgaged Properties  
Schedule 5.10 Form of Joinder Agreement   Schedule 6.1(b) Indebtedness  
Schedule 9.2 Lenders’ Lending Offices   Schedule 9.6(c) Form of Commitment
Transfer Supplement  

 

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     CREDIT AGREEMENT, dated as of September 28, 2004, among BRADLEY
PHARMACEUTICALS, INC., a Delaware corporation (the “Borrower”), those Domestic
Subsidiaries of the Borrower identified as a “Guarantor” on the signature pages
hereto and such other Domestic Subsidiaries of the Borrower as may from time to
time become a party hereto (each a “Guarantor” and, collectively, the
“Guarantors”), the several banks and other financial institutions as are, or may
from time to time become parties to this Agreement (collectively, the “Lenders”;
and individually, a “Lender”), and WACHOVIA BANK, NATIONAL ASSOCIATION, a
national banking association, as administrative agent for the Lenders hereunder
(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 loans and other
financial accommodations to the Borrower in the amount of up to $125,000,000, as
more particularly described herein; and

     WHEREAS, the Lenders have agreed to make such loans and other financial
accommodations to the Borrower on the terms and conditions contained herein.

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

ARTICLE I

DEFINITIONS

     Section 1.1Defined Terms.

     As used in this Agreement, terms defined in the preamble to this Agreement
have the meanings therein indicated, and the following terms have the following
meanings:

     “ABR Default Rate” shall mean the Alternate Base Rate plus the Applicable
Percentage with respect to Alternate Base Rate Loans plus 2%.

     “Account Designation Letter” shall mean the Notice of Account Designation
Letter dated the Closing Date from the Borrower to the Administrative Agent
substantially in the form attached hereto as Schedule 1.1-1.

     “Additional Credit Party” shall mean each Person that becomes a Guarantor
by execution of a Joinder Agreement in accordance with Section 5.10.

     “Administrative Agent” shall have the meaning set forth in the first
paragraph of this Agreement and any successors in such capacity.

 

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     “Affiliate” shall mean as to any Person, any other Person (excluding any
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this definition, a
Person shall be deemed to be “controlled by” a Person if such Person possesses,
directly or indirectly, power either (a) to vote 10% or more of the securities
having ordinary voting power for the election of directors of such Person or (b)
to direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.

     “Agreement” or “Credit Agreement” shall mean this Credit Agreement, as
amended, modified or supplemented from time to time in accordance with its
terms.

     “Alternate Base Rate” shall mean, for any day, a rate per annum equal to
the greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof:
“Prime Rate” shall mean, at any time, the rate of interest per annum publicly
announced from time to time by Wachovia at its principal office in Charlotte,
North Carolina as its prime rate. Each change in the Prime Rate shall be
effective as of the opening of business on the day such change in the Prime Rate
occurs. The parties hereto acknowledge that the rate announced publicly by
Wachovia as its Prime Rate is an index or base rate and shall not necessarily be
its lowest or best rate charged to its customers or other banks; and “Federal
Funds Effective Rate” shall mean, for any day, the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published on the next succeeding Business Day, the average of the quotations for
the day of such transactions received by the Administrative Agent from three
federal funds brokers of recognized standing selected by it. If for any reason
the Administrative Agent shall have determined (which determination shall be
conclusive in the absence of manifest error) that it is unable to ascertain the
Federal Funds Effective Rate, for any reason, including the inability or failure
of the Administrative Agent to obtain sufficient quotations in accordance with
the terms thereof, the Alternate Base Rate shall be determined without regard to
clause (b) of the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective on the opening of business on the date of such
change.

     “Alternate Base Rate Loans” shall mean Loans that bear interest at an
interest rate based on the Alternate Base Rate.

     “Applicable Percentage” shall mean, for any day, the rate per annum set
forth below opposite the applicable Leverage Ratio, it being understood that the
Applicable Percentage for (i) Loans that are Alternate Base Rate Loans shall be
the percentage set forth under the column “Alternate Base Rate Margin”, (ii)
Loans that are LIBOR Rate Loans shall be the percentage set forth under the
column “LIBOR Rate Margin and Letter of Credit Fee”, (iii) the Letter of Credit
Fee shall be the percentage set forth under the column “LIBOR Rate Margin and
Letter of Credit Fee”, and (iv) the Commitment Fee shall be the percentage set
forth under the column “Commitment Fee”:

 

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   Level   Leverage
Ratio  Alternate
Base Rate
Margin LIBOR Rate
Margin and
Letter of Credit
Fee   Commitment
Fee

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I > 2.50 to 1.0 1.75% 2.75% 0.50%

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II > 2.00 to 1.0 but < 2.50 to 1.0 1.50% 2.50% 0.50%

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III > 1.50 to 1.0 but < 2.00 to 1.0 1.25% 2.25% 0.50%

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IV < 1.50 to 1.0 1.00% 2.00% 0.375%

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     The Applicable Percentage shall, in each case, be determined and adjusted
quarterly on the date five (5) Business Days after the date on which
Administrative Agent has received from the Borrower the quarterly financial
information and certifications required to be delivered to Administrative Agent
and Lenders in accordance with the provisions of Sections 5.1(a) and 5.1(b)
(each an “Interest Determination Date”). Subject to the last sentence of this
definition, such Applicable Percentage shall be effective from such Interest
Determination Date until the next such Interest Determination Date.
Notwithstanding the foregoing, the initial Applicable Percentages shall be set
at Level II until the first Interest Determination Date to occur after December
31, 2004. If Borrower shall fail to provide the quarterly financial information
and certifications in accordance with the provisions of Sections 5.1(a) and
5.1(b), the Applicable Percentage shall, on the date five (5) Business Days
after the date by which Borrower was so required to provide such financial
information and certifications to Administrative Agent and Lenders, be based on
Level I until such time as such information and certifications are provided,
whereupon the Level shall be determined by the then current Leverage Ratio.

     “Arranger” shall mean Wachovia Capital Markets, LLC, as Sole Lead Arranger
and Book Manager, together with its successors and/or assigns.

     “Asset Disposition” shall mean the disposition of any or all of the assets
(including, without limitation, the Capital Stock of a Subsidiary or any
ownership interest in a joint venture) of any Credit Party or any Subsidiary
whether by sale, lease, transfer or otherwise. The term “Asset Disposition”
shall not include (i) the sale, lease, transfer or other disposition of assets
permitted by Section 6.4(a)(i), (ii), (iii), (iv) or (v) hereof or (ii) any
Equity Issuance.

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

     “Bioglan” shall mean Bioglan Pharmaceuticals, Inc.

     “Borrower” shall have the meaning set forth in the first paragraph of this
Agreement.

     “Borrowing Date” shall mean, in respect of any Loan, the date such Loan is
made.

     “Business” shall have the meaning set forth in Section 3.10.

 

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     “Business Day” shall mean a day other than a Saturday, Sunday or other day
on which commercial banks in Charlotte, North Carolina or New York, New York are
authorized or required by law to close; provided, however, that when used in
connection with a rate determination, borrowing or payment in respect of a LIBOR
Rate Loan, the term “Business Day” shall also exclude any day on which banks in
London, England are not open for dealings in Dollar deposits in the London
interbank market.

     “Capital Lease” shall mean any lease of property, real or personal, the
obligations with respect to which are required to be capitalized on a balance
sheet of the lessee in accordance with GAAP.

     “Capital Lease Obligations” shall mean the capitalized lease obligations
relating to a Capital Lease determined in accordance with GAAP.

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

     “Cash Equivalents” shall mean (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than twelve months from the date of acquisition (“Government Obligations”), (ii)
U.S. dollar denominated (or foreign currency fully hedged) time deposits,
certificates of deposit, Eurodollar time deposits and Eurodollar certificates of
deposit of (y) any domestic commercial bank of recognized standing having
capital and surplus in excess of $250,000,000 or (z) any bank whose short-term
commercial paper rating from S&P is at least A-1 or the equivalent thereof or
from Moody’s is at least P-1 or the equivalent thereof (any such bank being an
“Approved Bank”), in each case with maturities of not more than 364 days from
the date of acquisition, (iii) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) or any variable
rate notes issued by, or guaranteed by any domestic corporation rated A-1 (or
the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or
better by Moody’s and maturing within six months of the date of acquisition,
(iv) repurchase agreements with a bank or trust company (including a Lender) or
a recognized securities dealer having capital and surplus in excess of
$500,000,000 for direct obligations issued by or fully guaranteed by the United
States of America, (v) obligations of any state of the United States or any
political subdivision thereof for the payment of the principal and redemption
price of and interest on which there shall have been irrevocably deposited
Government Obligations maturing as to principal and interest at times and in
amounts sufficient to provide such payment, and (vi) auction preferred stock
rated in the highest short-term credit rating category by S&P or Moody’s.

     “CHAMPUS” shall mean the United States Department of Defense Civilian
Health and Medical Program of the United States.

 

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     “Change of Control” shall mean the occurrence of any of the following: (a)
any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined
in Rule l3d-3 under the Securities Exchange Act of 1934) of more than 25% of
then outstanding Voting Stock of the Borrower, measured by voting power rather
than the number of shares, but shall not include any transfer of Voting Stock of
the Borrower by Daniel Glassman for estate planning purposes to any family
members of Daniel Glassman, or an entity controlled by any thereof or a trust
for the benefit of any thereof so long as Daniel Glassman remains chairman of
the board of directors and chief executive officer of the Borrower; (b)
Continuing Directors shall cease for any reason to constitute a majority of the
members of the board of directors of the Borrower then in office or (c) the
occurrence of a “Change of Control” (or any comparable term) under, and as
defined in, the documents evidencing or governing any Subordinated Indebtedness.

     “Closing Date” shall mean the date of this Agreement.

     “CMS” shall mean the Center for Medicare and Medicaid Services and any
successor thereto.

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

     “Collateral” shall mean a collective reference to the collateral which is
identified in, and at any time will be covered by, the Security Documents.

     “Commitment” shall mean the Revolving Commitment, the LOC Commitment, the
Term Loan Commitment and the Swingline Commitment, individually or collectively,
as appropriate.

     “Commitment Fee” shall have the meaning set forth in Section 2.6(a).

     “Commitment Percentage” shall mean the Revolving Commitment Percentage
and/or the Term Loan Commitment Percentage, as appropriate.

     “Commitment Period” shall mean (a) with respect to Revolving Loans, the
period from and including the Closing Date to but excluding the Maturity Date
and (b) with respect to Letters of Credit, the period from and including the
Closing Date to but excluding the date that is 30 days prior to the Maturity
Date.

     “Commitment Transfer Supplement” shall mean a Commitment Transfer
Supplement, substantially in the form of Schedule 9.6(c).

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

 

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     “Consolidated Capital Expenditures” shall mean, for any period, all capital
expenditures of the Borrower and its Subsidiaries on a consolidated basis for
such period, as determined in accordance with GAAP. Notwithstanding the
foregoing, for purposes of calculating Consolidated Capital Expenditures for the
fiscal quarters ending December 31, 2004, March 31, 2005, and June 30, 2005,
Consolidated Capital Expenditures shall be annualized during such fiscal
quarters such that (i) for the calculation of Consolidated Capital Expenditures
as of December 31, 2004, Consolidated Capital Expenditures for the fiscal
quarter then ending will be multiplied by four (4), (ii) for the calculation of
Consolidated Capital Expenditures as of March 31, 2005, Consolidated Capital
Expenditures for the two fiscal quarter period then ending will be multiplied by
two (2) and (iii) for the calculation of Consolidated Capital Expenditures as of
June 30, 2005, Consolidated Capital Expenditures for the three fiscal quarter
period then ending will be multiplied by one and one-third (1 1/3).

     “Consolidated EBITDA” shall mean, for any period, the sum of (i)
Consolidated Net Income for such period, plus (ii) an amount which, in the
determination of Consolidated Net Income for such period, has been deducted for
(A) Consolidated Interest Expense, (B) total federal, state, local and foreign
income, value added and similar taxes and (C) depreciation, amortization
expense, all as determined in accordance with GAAP. Notwithstanding the
foregoing, Consolidated EBITDA for the fiscal quarters ending December 31, 2003,
March 31, 2004, June 30, 2004 and September 30, 2004, Consolidated EBITDA shall
be as set forth on Schedule 1.1-4.

     “Consolidated Interest Expense” shall mean, for any period, all interest
expense of the Borrower and its Subsidiaries (including, without limitation, the
interest component under Capital Leases and any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet financing
product, but excluding interest income), as determined in accordance with GAAP.
Notwithstanding the foregoing, for purposes of calculating Consolidated Interest
Expense for the fiscal quarters ending December 31, 2004, March 31, 2005 and
June 30, 2005, Consolidated Interest Expense shall be annualized during such
fiscal quarters such that (i) for the calculation of Consolidated Interest
Expense as of December 31, 2004, Consolidated Interest Expense for the fiscal
quarter then ending will be multiplied by four (4), (ii) for the calculation of
Consolidated Interest Expense as of March 31, 2005, Consolidated Interest
Expense for the two fiscal quarter period then ending will be multiplied by two
(2) and (iii) for the calculation of Consolidated Interest Expense as of June
30, 2005, Consolidated Interest Expense for the three fiscal quarter period then
ending will be multiplied by one and one-third (1 1/3).

     “Consolidated Net Income” shall mean, for any period, net income (excluding
extraordinary losses up to $3,000,000 in any twelve month period and excluding
extraordinary gains) after taxes for such period of the Borrower and its
Subsidiaries on a consolidated basis, as determined in accordance with GAAP.

     “Consolidated Working Capital” shall mean, for any period, (i) all current
assets of the Borrower and its Subsidiaries on a consolidated basis minus (ii)
all current liabilities of the Borrower and its Subsidiaries on a consolidated
basis, as determined in accordance with GAAP.

 

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     “Continuing Directors” shall mean, during any period of up to 24
consecutive months commencing after the Closing Date, individuals who at the
beginning of such 24 month period were directors of the Borrower (together with
any new director whose election by the Borrower’s board of directors or whose
nomination for election by the Borrower’s shareholders was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved).

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

     “Convertible Bonds” shall mean the securities issued pursuant to the
following: (i) the Indenture, dated June 11, 2003, between the Borrower and
American Stock Transfer & Trust Company, (ii) the First Supplemental Indenture,
dated as of July 24, 2003, between the Borrower and American Stock Transfer &
Trust Company, (iii) the Registration Rights Agreement, dated as of June 11,
2003, between Borrower and UBS Securities LLC and Raymond James & Associates,
Inc. (for whom UBS Securities LLC is acting as representative), and (iv) the
Registration Rights Agreement, dated as of July 24, 2003, between Borrower and
UBS Securities LLC and Raymond James & Associates, Inc. (for whom UBS Securities
LLC is acting as representative).

     “Copyright Licenses” shall mean any written agreement naming any Obligor as
licensor and granting any right under any Copyright including, without
limitation, any thereof referred to in Schedule 3.16.

     “Copyrights” shall mean (a) all registered United States copyrights in all
Works, now existing or hereafter created or acquired, all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, registrations, recordings and applications in the United
States Copyright Office including, without limitation, any thereof referred to
in Schedule 3.16, and (b) all renewals thereof including, without limitation,
any thereof referred to in Schedule 3.16.

     “Credit Documents” shall mean this Agreement, each of the Notes, any
Joinder Agreement, the LOC Documents and the Security Documents.

     “Credit Party” shall mean any of the Borrower or the Guarantors.

     “Credit Party Obligations” shall mean, without duplication, (i) all of the
obligations of the Credit Parties to the Lenders (including the Issuing Lender)
and the Administrative Agent, whenever arising, under this Agreement, the Notes
or any of the other Credit Documents (including, but not limited to, any
interest accruing after the occurrence of a filing of a petition of bankruptcy
under the Bankruptcy Code with respect to any Credit Party, regardless of
whether such interest is an allowed claim under the Bankruptcy Code) and (ii)
solely for purposes of the Security Documents and the Guaranty, all liabilities
and obligations, whenever arising, owing

 

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from any Credit Party or any of their Subsidiaries to any Hedging Agreement
Provider arising under any Secured Hedging Agreement permitted pursuant to
Section 6.1(e).

     “Debt Issuance” shall mean the issuance of any Indebtedness for borrowed
money by any Credit Party or any of its Subsidiaries (excluding, for purposes
hereof, any Equity Issuance or any Indebtedness of any Credit Party and its
Subsidiaries permitted to be incurred pursuant to Section 6.1 hereof).

     “Default” shall mean any event which would constitute an Event of Default,
whether or not any requirement for the giving of notice or the lapse of time, or
both, or any other condition with respect to such Event of Default, has been
satisfied.

     “Defaulting Lender” shall mean, at any time, any Lender that, at such time
(a) has failed to make a Loan required pursuant to the term of this Credit
Agreement, including the funding of a Participation Interest in accordance with
the terms hereof, (b) has failed to pay to the Administrative Agent or any
Lender an amount owed by such Lender pursuant to the terms of this Credit
Agreement, or (c) has been deemed insolvent or has become subject to a
bankruptcy or insolvency proceeding or to a receiver, trustee or similar
official.

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

     “Domestic Lending Office” shall mean, initially, the office of each Lender
designated as such Lender’s Domestic Lending Office shown on Schedule 9.2; and
thereafter, such other office of such Lender as such Lender may from time to
time specify to the Administrative Agent and the Borrower as the office of such
Lender at which Alternate Base Rate Loans of such Lender are to be made.

     “Domestic Subsidiary” shall mean any Subsidiary that is organized and
existing under the laws of the United States or any state or commonwealth
thereof or under the laws of the District of Columbia.

     “Environmental Laws” shall mean any and all applicable foreign, Federal,
state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority or other
Requirement of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human health or the
environment, as now or may at any time be in effect during the term of this
Agreement.

     “Equity Issuance” shall mean any issuance by any Credit Party or any
Subsidiary to any Person which is not a Credit Party of (a) shares of its
Capital Stock, (b) any shares of its Capital Stock pursuant to the exercise of
options or warrants (including, without limitation, employee stock options), (c)
any shares of its Capital Stock pursuant to the conversion of any debt
securities to equity or (d) warrants or options which are exercisable for shares
of its Capital Stock. The term “Equity Issuance” shall not include any Asset
Disposition or Debt Issuance.

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

 

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     “Eurodollar Reserve Percentage” shall mean for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency reserves) in
respect of Eurocurrency liabilities, as defined in Regulation D of such Board as
in effect from time to time, or any similar category of liabilities for a member
bank of the Federal Reserve System in New York City.

     “Event of Default” shall mean any of the events specified in Section 7.1;
provided, however, with respect to any such event, that any requirement for the
giving of notice or the lapse of time, or both, or any other condition with
respect thereto, has been satisfied.

     “Excess Cash Flow” shall mean, with respect to any fiscal year of the
Borrower, for the Borrower and its Subsidiaries on a consolidated basis, an
amount equal to (a) Consolidated EBITDA for such period minus (b) Consolidated
Capital Expenditures for such period minus (c) Scheduled Funded Debt Payments
made during such period minus (d) Consolidated Interest Expense (excluding any
Consolidated Interest Expense associated with intercompany indebtedness) for
such period minus (e) amounts paid in cash in respect of federal, state, local
and foreign income taxes of the Borrower and its Subsidiaries with respect to
such period minus (f) increases in Consolidated Working Capital plus (g)
decreases in Consolidated Working Capital minus (h) optional prepayments of
Revolving Loans (to the extent accompanied by a corresponding reduction of the
Revolving Commitments).

     “Extension of Credit” shall mean, as to any Lender, the making of a Loan by
such Lender or the issuance of, or participation in, a Letter of Credit by such
Lender.

     “Federal Funds Effective Rate” shall have the meaning set forth in the
definition of “Alternate Base Rate”.

     “Fee Letter” shall mean the letter agreement dated July 7, 2004 addressed
to the Borrower from Wachovia and WCM, as amended, modified or otherwise
supplemented.

     “Fixed Charge Coverage Ratio” shall mean, with respect to the Borrower and
its Subsidiaries on a consolidated basis for the twelve-month period ending on
the last day of any fiscal quarter of the Borrower, the ratio of (i)
Consolidated EBITDA for such period minus Consolidated Capital Expenditures for
such period to (ii) the sum of Consolidated Interest Expense for such period
plus Scheduled Funded Debt Payments for such period plus cash taxes paid or
payable during such period plus Restricted Payments made during such period.
Notwithstanding the foregoing, for purposes of calculating the Fixed Charge
Coverage Ratio for the fiscal quarters ending December 31, 2004, March 31, 2005
and June 30, 2005, the Fixed Charge Coverage Ratio shall be determined by
annualizing the Scheduled Funded Debt Payments during such fiscal quarters such
that (i) for the calculation of the Fixed Charge Coverage Ratio as of December
31, 2004, the Scheduled Funded Debt Payments for the fiscal quarter ending
December 31, 2004 would be multiplied by four (4), (ii) for the calculation of
the Fixed Charge Coverage Ratio as of March 31, 2005, the Scheduled Funded Debt
Payments for

 

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the two fiscal quarter period then ending would be multiplied by two (2) and
(iii) for the calculation of the Fixed Charge Coverage Ratio as of June 30,
2005, the Scheduled Funded Debt Payments for the three fiscal quarter period
then ending would be multiplied by one and one-third (1 1/3).

     “Flood Hazard Property” shall have the meaning set forth in Section
4.1(f)(iv).

     “Foreign Subsidiary” shall mean any Subsidiary that is not a Domestic
Subsidiary.

     “Fronting Fee” shall have the meaning set forth in Section 2.6(b).

     “Funded Debt” shall mean, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations of such Person incurred, issued or
assumed as the deferred purchase price of property or services purchased by such
Person (other than trade debt incurred in the ordinary course of business and
due within six months of the incurrence thereof) which would appear as
liabilities on a balance sheet of such Person, (e) the principal portion of all
obligations of such Person under Capital Leases, (f) all obligations of such
Person under Hedging Agreements, excluding any portion thereof which would be
accounted for as interest expense under GAAP, (g) the maximum amount of all
letters of credit issued or bankers’ acceptances facilities created for the
account of such Person and, without duplication, all drafts drawn thereunder (to
the extent unreimbursed), (h) all preferred Capital Stock or other equity
interests issued by such Person and which by the terms thereof could be (at the
request of the holders thereof or otherwise) subject to mandatory sinking fund
payments, redemption or other acceleration, (i) the principal balance
outstanding under any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product, (j) all
Indebtedness of others of the type described in clauses (a) through (i) hereof
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or payable out of the
proceeds of production from, property owned or acquired by such Person, whether
or not the obligations secured thereby have been assumed, (k) all Guaranty
Obligations of such Person with respect to Indebtedness of another Person of the
type described in clauses (a) through (i) hereof, and (l) all Indebtedness of
the type described in clauses (a) through (i) hereof of any partnership or
unincorporated joint venture in which such Person is a general partner or a
joint venturer; provided, however, that with respect to Funded Debt of the
Borrower and its Subsidiaries, Funded Debt shall not include Subordinated
Indebtedness among the Borrower and the Guarantors to the extent such
Indebtedness would be eliminated on a consolidated basis.

     “GAAP” shall mean generally accepted accounting principles in effect in the
United States of America applied on a consistent basis, subject, however, in the
case of determination of compliance with the financial covenants set out in
Section 5.9 to the provisions of Section 1.3.

     “Government Acts” shall have the meaning set forth in Section 2.19.

 

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     “Governmental Authority” shall mean 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.

     “Guaranty Obligations” shall mean, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including without limitation any
obligation, whether or not contingent, (i) to purchase any such Indebtedness or
any property constituting security therefor, (ii) to advance or provide funds or
other support for the payment or purchase of any such Indebtedness or to
maintain working capital, solvency or other balance sheet condition of such
other Person (including without limitation keep well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements) for the
benefit of any holder of Indebtedness of such other Person, (iii) to lease or
purchase Property, securities or services primarily for the purpose of assuring
the holder of such Indebtedness, or (iv) to otherwise assure or hold harmless
the holder of such Indebtedness against loss in respect thereof. The amount of
any Guaranty Obligation hereunder shall (subject to any limitations set forth
therein) be deemed to be an amount equal to the outstanding principal amount (or
maximum principal amount, if larger) of the Indebtedness in respect of which
such Guaranty Obligation is made.

     “Guarantor” shall have the meaning set forth in the first paragraph of this
Agreement.

     “Guaranty” shall mean the guaranty of the Guarantors set forth in Article
X.

     “Hedging Agreement Provider” shall mean any Person that enters into a
Secured Hedging Agreement with a Credit Party or any of its Subsidiaries that is
permitted by Section 6.1(e) to the extent such Person is a Lender, an Affiliate
of a Lender or any other Person that was a Lender (or an Affiliate of a Lender)
at the time it entered into the Secured Hedging Agreement but has ceased to be a
Lender (or whose Affiliate has ceased to be a Lender) under the Credit
Agreement; provided, in the case of a Secured Hedging Agreement with a Person
who is no longer a Lender only through the stated maturity date (without
extension or renewal) of such Secured Hedging Agreement.

     “Hedging Agreements” shall mean, with respect to any Person, any agreement
entered into to protect such Person against fluctuations in interest rates, or
currency or raw materials values, including, without limitation, any interest
rate swap, cap or collar agreement or similar arrangement between such Person
and one or more counterparties, any foreign currency exchange agreement,
currency protection agreements, commodity purchase or option agreements or other
interest or exchange rate or commodity price hedging agreements.

     “Immaterial Subsidiary” shall mean any Subsidiary having (a) assets with a
book value of less than $100,000 and (b) EBITDA of less than $100,000 during the
immediately preceding four fiscal quarter period, as calculated in accordance
with GAAP.

 

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     “Indebtedness” shall mean, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations of such Person issued or assumed as the
deferred purchase price of property or services purchased by such Person (other
than trade debt incurred in the ordinary course of business and due within six
months of the incurrence thereof) which would appear as liabilities on a balance
sheet of such Person, (e) all obligations of such Person under take-or-pay or
similar arrangements or under commodities agreements, (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on, or payable out of
the proceeds of production from, property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (g) all
Guaranty Obligations of such Person with respect to Indebtedness of another
Person, (h) the principal portion of all obligations of such Person under
Capital Leases plus any accrued interest thereon, (i) all obligations of such
Person under Hedging Agreements, (j) the maximum amount of all letters of credit
issued or bankers’ acceptances facilities created for the account of such Person
and, without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (k) all preferred Capital Stock issued by such Person and which
by the terms thereof could be (at the request of the holders thereof or
otherwise) subject to mandatory sinking fund payments, redemption or other
acceleration, (l) the principal balance outstanding under any synthetic lease,
tax retention operating lease, off-balance sheet loan or similar off-balance
sheet financing product plus any accrued interest thereon, and (m) the
Indebtedness of any partnership or unincorporated joint venture in which such
Person is a general partner or a joint venturer.

     “Insolvency” shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of such term as used in
Section 4245 of ERISA.

     “Insolvent” shall mean being in a condition of Insolvency.

     “Intellectual Property” shall mean, collectively, all Copyrights, Copyright
Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses.

     “Interest Payment Date” shall mean (a) as to any Alternate Base Rate Loan
or Swingline Loan, the last Business Day of each March, June, September and
December during the term of this Agreement and on the Maturity Date, (b) as to
any LIBOR Rate Loan having an Interest Period of three months or less, the last
day of such Interest Period, (c) as to any LIBOR Rate Loan having an Interest
Period longer than three months, (i) each three month anniversary following the
first day of such Interest Period and (ii) the last day of such Interest Period
and (d) as to any Loan which is the subject of a mandatory prepayment required
pursuant to Section 2.7(b) hereof, the date of such prepayment.

 

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     “Interest Period” shall mean, with respect to any LIBOR Rate Loan, -

       (i) initially, the period commencing on the Borrowing Date or conversion
date, as the case may be, with respect to such LIBOR Rate Loan and ending one,
two, three or six months thereafter, as selected by the Borrower in the Notice
of Borrowing or Notice of Conversion/Extension given with respect thereto; and

       (ii) thereafter, each period commencing on the last day of the
immediately preceding Interest Period applicable to such LIBOR Rate Loan and
ending one, two, three or six months thereafter, as selected 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 the foregoing provisions are subject to the following:

       (A) if any Interest Period pertaining to a LIBOR Rate Loan 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;

       (B) any Interest Period pertaining to a LIBOR Rate Loan 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 relevant calendar month;

       (C) if the Borrower shall fail to give notice as provided above, the
Borrower shall be deemed to have selected an Alternate Base Rate Loan to replace
the affected LIBOR Rate Loan;

       (D) any Interest Period in respect of any Loan that would otherwise
extend beyond the Maturity Date shall end on the Maturity Date, and further with
regard to the Term Loan, no Interest Period shall extend beyond any principal
amortization payment date unless the portion of such Term Loan consisting of
Alternate Base Rate Loans together with the portion of such Term Loan consisting
of LIBOR Rate Loans with Interest Periods expiring prior to or concurrently with
the date such principal amortization payment date is due, is at least equal to
the amount of such principal amortization payment due on such date; and

       (E) no more than five LIBOR Rate Loans may be in effect at any time;
provided that, for purposes hereof, LIBOR Rate Loans with different Interest
Periods shall be considered as separate LIBOR Rate Loans, even if they shall
begin on the same date and have the same duration, although borrowings,
extensions and conversions may, in accordance with the provisions hereof, be

 

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 combined at the end of existing Interest Periods to constitute a new LIBOR Rate
Loan with a single Interest Period.

     “Investment” shall mean all investments made directly or indirectly in, to
or from any Person, whether in cash or by acquisition of shares of Capital
Stock, property, assets, indebtedness or other obligations or securities or by
loan advance, capital contribution or otherwise.

     “IP Collateral” means, collectively, the Collateral consisting of rights in
or to Intellectual Property under the Security Agreement.

     “Issuing Lender” shall mean Wachovia.

     “Issuing Lender Fees” shall have the meaning set forth in Section 2.6(c).

     “Joinder Agreement” shall mean a Joinder Agreement substantially in the
form of Schedule 5.10, executed and delivered by an Additional Credit Party in
accordance with the provisions of Section 5.10.

     “Lender” shall have the meaning set forth in the first paragraph of this
Agreement.

     “Letters of Credit” shall mean any letter of credit issued by the Issuing
Lender pursuant to the terms hereof, as such Letters of Credit may be amended,
modified, extended, renewed or replaced from time to time.

     “Letter of Credit Fee” shall have the meaning set forth in Section 2.6(b).

     “Leverage Ratio” shall mean, with respect to the Borrower and its
subsidiaries on a consolidated basis for the twelve-month period ending on the
last day of any fiscal quarter of the Borrower, the ratio of (a) Funded Debt of
the Borrower and its Subsidiaries on the last day of such period to (b)
Consolidated EBITDA for such period.

     “LIBOR” shall mean, for any LIBOR Rate Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term “LIBOR” shall mean, for any LIBOR Rate Loan for
any Interest Period therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, however, if more than
one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates (rounded upwards, if necessary, to the
nearest 1/100 of 1%). If, for any reason, neither of such rates is available,
then “LIBOR” shall mean the rate per annum at which, as determined by the
Administrative Agent, Dollars in an amount comparable to the Loans then
requested are being

 

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offered to leading banks at approximately 11:00 A.M. London time, two Business
Days prior to the commencement of the applicable Interest Period for settlement
in immediately available funds by leading banks in the London interbank market
for a period equal to the Interest Period selected.

     “LIBOR Lending Office” shall mean, initially, the office of each Lender
designated as such Lender’s LIBOR Lending Office shown on Schedule 9.2; and
thereafter, such other office of such Lender as such Lender may from time to
time specify to the Administrative Agent and the Borrower as the office of such
Lender at which the LIBOR Rate Loans of such Lender are to be made.

     “LIBOR Rate” shall mean a rate per annum (rounded upwards, if necessary, to
the next higher 1/100th of 1%) determined by the Administrative Agent pursuant
to the following formula:

LIBOR Rate = LIBOR

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

1.00 - Eurodollar Reserve Percentage  

     “LIBOR Rate Loan” shall mean Loans the rate of interest applicable to which
is based on the LIBOR Rate.

     “Lien” shall mean any mortgage, pledge, hypothecation, 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, without limitation, any
conditional sale or other title retention agreement and any Capital Lease having
substantially the same economic effect as any of the foregoing).

     “Loan” shall mean a Revolving Loan, the Term Loan, and/or a Swingline Loan,
as appropriate.

     “LOC Commitment” shall mean the commitment of the Issuing Lender to issue
Letters of Credit and with respect to each Lender, the commitment of such Lender
to purchase participation interests in the Letters of Credit up to such Lender’s
LOC Committed Amount as specified in Schedule 2.1(a), as such amount may be
reduced from time to time in accordance with the provisions hereof.

     “LOC Committed Amount” shall mean, collectively, the aggregate amount of
all of the LOC Commitments of the Lenders to issue and participate in Letters of
Credit as referenced in Section 2.2 and, individually, the amount of each
Lender’s LOC Commitment as specified in Schedule 2.1(a).

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

 

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

     “Mandatory LOC Borrowing” shall have the meaning set forth in Section
2.3(e).

     “Mandatory Swingline Borrowing” shall have the meaning set forth in Section
2.4(b)(ii).

     “Material Adverse Effect” shall mean a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of the Borrower or of the Credit Parties and their Subsidiaries taken as a
whole, (b) the ability of the Borrower or any Guarantor to perform its
obligations, when such obligations are required to be performed, under this
Agreement, any of the Notes or any other Credit Document or (c) the validity or
enforceability of this Agreement, any of the Notes or any of the other Credit
Documents or the rights or remedies of the Administrative Agent or the Lenders
hereunder or thereunder.

     “Material Contract” shall mean any contract or other arrangement, whether
written or oral, to which any Credit Party or any of its Subsidiaries is a party
as to which the breach, nonperformance, cancellation or failure to renew by any
party thereto could reasonably be expected to have a Material Adverse Effect.

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

     “Maturity Date” shall mean the earlier to occur of (i) September 28, 2009;
and (ii) May 15, 2008, if on a Pro Forma Basis after giving effect to the
redemption of the Convertible Notes on June 15, 2008 as calculated and set forth
on the officer’s certificate of the Borrower delivered to the Lenders pursuant
to Section 5.2(b) for the fiscal quarter ending March 31, 2008, (A) the Senior
Leverage Ratio shall be greater than the ratio that is 0.25 lower than the
Senior Leverage Ratio then applicable, (B) there shall be less than $10,000,000
of borrowing availability under Section 2.1 or (C) a Default or Event of Default
shall then exist or would exist after giving effect thereto.

     “Medicaid” shall mean that entitlement program under Title XIX of the
Social Security Act that provides federal grants to states for medical
assistance based on specific eligibility criteria.

     “Medicaid Certification” means certification by a state agency or other
such entity administering the Medicaid program that a health care provider or
supplier is in compliance with all the conditions of participation set forth in
the Medicaid Regulations.

 

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     “Medicaid Provider Agreement” means an agreement entered into between a
state agency or other such entity administering the Medicaid program and a
health care provider or supplier under which the health care provider or
supplier agrees to provide services for Medicaid patients in accordance with the
terms of the agreement and Medicaid Regulations.

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

     “Medical Reimbursement Programs” shall mean Medicare, Medicaid and CHAMPUS
programs and any other healthcare program operated by or financed in whole or in
part by any foreign, domestic, federal, state or local government and any other
non-government funded third party payor programs.

     “Medicare Certification” means certification by CMS or an entity under
contract with CMS that the health care provider or supplier is in compliance
with all of the conditions of participation set forth in the Medicare
Regulations.

     “Medicare Provider Agreement” means an agreement entered into between CMS
or other such entity administering the Medicare program on behalf of CMS, and a
health care provider or supplier under which the health care provider or
supplier agrees to provide services for Medicare patients in accordance with the
terms of the agreement and Medicare Regulations.

     “Medicare” shall mean that government-sponsored entitlement program under
Title XVIII of the Social Security Act that provides for a health insurance
system for eligible elderly and disabled individuals.

     “Medicare Regulations” shall mean, collectively, all Federal statutes
(whether set forth in Title XVIII of the Social Security Act or elsewhere)
affecting the health insurance program for the aged and disabled established by
Title XVIII of the Social Security Act and any statutes succeeding thereto;
together with all applicable provisions of all rules, regulations, manuals and
orders and administrative, reimbursement and other guidelines having the force
of law of all Governmental Authorities (including, without limitation, the
United States Department of Health and Human Services (“HHS”), CMS, the Office
of the Inspector General for HHS (the “OIG”),

 

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or any person succeeding to the functions of any of the foregoing) promulgated
pursuant to or in connection with any of the foregoing having the force of law,
as each may be amended, supplemented or otherwise modified from time to time.

     “Moody’s” shall mean Moody’s Investors Service, Inc.

     “Mortgage Instrument” shall mean any mortgage, deed of trust or deed to
secure debt executed by a Credit Party in favor of the Administrative Agent, for
the benefit of the Lenders, pursuant to the terms of Section 4.1(f)(i), 5.10 or
5.12, as the same may be amended, modified, restated or supplemented from time
to time.

     “Mortgage Policy” shall mean, with respect to any Mortgage Instrument, an
ALTA mortgagee title insurance policy issued by a title company acceptable to
the Administrative Agent in such amount as reasonably approved by the
Administrative Agent, assuring the Administrative Agent that such Mortgage
Instrument creates a valid and enforceable First Priority mortgage lien on the
applicable Mortgaged Property, free and clear of all defects and encumbrances
except Permitted Liens, which Mortgage Policy shall be in form and substance
reasonably satisfactory to the Administrative Agent and shall provide for
affirmative insurance and such reinsurance as the Administrative Agent may
reasonably request.

     “Mortgaged Property” shall mean any owned or leased real property of a
Credit Party with respect to which such Credit Party executes a Mortgage
Instrument in favor of the Administrative Agent.

     “Multiemployer Plan” shall mean a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.

     “Net Cash Proceeds” shall mean the aggregate cash proceeds received by any
Credit Party or any Subsidiary in respect of any Asset Disposition, Equity
Issuance or Debt Issuance, net of (a) direct costs paid or payable as a result
thereof (including, without limitation, reasonable legal, accounting and
investment banking fees, and sales commissions) and (b) taxes paid or payable as
a result thereof; it being understood that “Net Cash Proceeds” shall include,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received by any Credit Party or any Subsidiary in respect
of any Asset Disposition, Equity Issuance or Debt Issuance.

     “Note” or “Notes” shall mean the Revolving Notes, the Term Notes and/or the
Swingline Note, collectively, separately or individually, as appropriate.

     “Notice of Borrowing” shall mean a request for a Revolving Loan borrowing
pursuant to Section 2.1(b)(i) or a Swingline Loan borrowing pursuant to Section
2.4(b)(i), as appropriate.

     “Notice of Conversion/Extension” shall mean the written notice of extension
or conversion as referenced and defined in Section 2.10.

     “Obligations” shall mean, collectively, Loans and LOC Obligations.

 

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     “Obligor” or “Obligors” shall mean the Borrower and the Guarantors.

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

     “Participant” shall have the meaning set forth in Section 9.6(b).

     “Participation Interest” shall mean the purchase by a Revolving Lender of a
participation interest in Letters of Credit as provided in Section 2.3 and in
Swingline Loans as provided in Section 2.4.

     “Patent License” shall mean all agreements, whether written or oral,
providing for the grant by or to an Obligor of any right to manufacture, use or
sell any invention covered by a Patent, including, without limitation, any
thereof referred to in Schedule 3.16.

     “Patents” shall mean (a) all letters patent of the United States or any
other country and all reissues and extensions thereof, including, without
limitation, any thereof referred to in Schedule 3.16, and (b) all applications
for letters patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, including, without limitation,
any thereof referred to in Schedule 3.16.

     “PBGC” shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.

     “Permitted Acquisition” shall mean an acquisition or any series of related
acquisitions by a Credit Party of (a) all or substantially all of the assets or
a majority of the outstanding Voting Stock or economic interests of a Person
that is incorporated, formed or organized in the United States or (b) any
division, line of business or other business unit of a Person that is
incorporated, formed or organized in the United States (such Person or such
division, line of business or other business unit of such Person shall be
referred to herein as the “Target”), in each case that is a type of business (or
assets used in a type of business) permitted to be engaged in by the Credit
Parties and their Subsidiaries pursuant to Section 6.4 hereof, so long as (i) no
Default or Event of Default shall then exist or would exist after giving effect
thereto, (ii) the Credit Parties shall demonstrate to the reasonable
satisfaction of the Administrative Agent and the Required Lenders that, after
giving effect to the acquisition on a pro forma basis, the Credit Parties are in
compliance with each of the financial covenants set forth in Section 5.9, (iii)
the Administrative Agent, on behalf of the Lenders, shall have received (or
shall receive in connection with the closing of such acquisition) a first
priority perfected security interest in all property (including, without
limitation, Capital Stock and real estate) acquired with respect to the Target
in accordance with the terms of Sections 5.10 and 5.12 and the Target, if a
Person, shall have executed a Joinder Agreement in accordance with the terms of
Section 5.10, (iv) the Administrative Agent and the Lenders shall have received
(A) a description of the material terms of such acquisition, (B) audited
financial statements (or, if unavailable, management-prepared

 

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financial statements) of the Target for its two most recent fiscal years and for
any fiscal quarters ended within the fiscal year to date and (C) consolidated
projected income statements of the Borrower and its consolidated Subsidiaries
(giving effect to such acquisition), all in form and substance reasonably
satisfactory to the Administrative Agent, (v) the Target shall have earnings
before interest, taxes, depreciation and amortization for the four fiscal
quarter period prior to the acquisition date in an amount greater than $0, (vi)
such acquisition shall not be a “hostile” acquisition and shall have been
approved by the Board of Directors and/or shareholders of the applicable Credit
Party and the Target, (vii) after giving effect to such acquisition, there shall
be at least $10,000,000 of borrowing availability under the Revolving Committed
Amount and (viii) the aggregate consideration (including without limitation
equity consideration, earn outs or deferred compensation or non-competition
arrangements and the amount of Indebtedness and other liabilities assumed by the
Credit Parties and their Subsidiaries) paid by the Credit Parties and their
Subsidiaries (A) in connection with any individual acquisition shall not exceed
$20,000,000 and (B) for all acquisitions made during any twelve month period
shall not exceed $30,000,000.

     “Permitted Investments” shall mean:

       (i) cash and Cash Equivalents;

       (ii) receivables owing to the Borrower or any of its Subsidiaries or any
receivables and advances to suppliers, in each case if created, acquired or made
in the ordinary course of business and payable or dischargeable in accordance
with customary trade terms;

       (iii) Investments in and loans by any Credit Party to any other Credit
Party;

       (iv) loans and advances to employees in the ordinary course of business
in an aggregate amount not to exceed $1,000,000 at any time outstanding and not
in violation of the Sarbanes-Oxley Act of 2002 or any other Requirement of Law;

       (v) Investments (including debt obligations) received in connection with
the bankruptcy or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business;

       (vi) Investments, acquisitions or transactions permitted under Section
6.4(b);

       (vii) Investments existing as of the Closing Date, as set forth on
Schedule 1.1-2; and

       (viii) Permitted Acquisitions; and

       (ix) additional loan advances and/or Investments of a nature not
contemplated by the foregoing clauses hereof, provided that such loans, advances
and/or Investments made pursuant to this clause (viii) shall not exceed an
aggregate amount of $1,000,000.

 

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     “Permitted Liens” shall mean:

       (i) Liens created by or otherwise existing, under or in connection with
this Agreement or the other Credit Documents in favor of the Lenders;

       (ii) Liens in favor of a Hedging Agreement Provider in connection with a
Secured Hedging Agreement, but only if such Hedging Agreement Provider and the
Administrative Agent, on behalf of the Lenders, shall share pari passu in the
collateral subject to such Liens;

       (iii) Liens securing purchase money Indebtedness and Capital Lease
Obligations to the extent permitted under Section 6.1(c); provided, that (A) any
such Lien attaches to such property concurrently with or within 30 days after
the acquisition thereof and (B) such Lien attaches solely to the property so
acquired in such transaction;

       (iv) Liens for taxes, assessments, charges or other governmental levies
not yet due or as to which the period of grace (not to exceed 90 days), if any,
related thereto has not expired or which are being contested in good faith by
appropriate proceedings, provided that adequate reserves with respect thereto
are maintained on the books of the any Credit Party or its Subsidiaries, as the
case may be, in conformity with GAAP;

       (v) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or
other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 60 days or which are being contested in good
faith by appropriate proceedings;

       (vi) pledges or deposits in connection with workers’ compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements incurred in the ordinary course of business;

       (vii) 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;

       (viii) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any Lien referred to in the
foregoing clauses; provided that such extension, renewal or replacement Lien
shall be limited to all or a part of the property which secured the Lien so
extended, renewed or replaced;

       (ix) Liens existing on the Closing Date and set forth on Schedule 1.1-3;
provided that (a) no such Lien shall at any time be extended to cover property
or assets other than the property or assets subject thereto on the Closing Date
and (b) the principal amount of the Indebtedness secured by such Liens shall not
be extended, renewed, refunded or refinanced;

 

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

       (xiii) Liens on equipment arising from precautionary UCC financing
statements relating to the lease of such equipment to the extent permitted by
this Agreement.

     “Person” shall mean 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” shall mean, at any particular time, any employee benefit plan which
is covered by Title IV of ERISA and in respect of which any Credit Party 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.

     “Pledge Agreement” shall mean the Pledge Agreement dated as of the Closing
Date executed by the Credit Parties in favor of the Administrative Agent, as
amended, modified, restated or supplemented from time to time.

     “Prime Rate” shall have the meaning set forth in the definition of
Alternate Base Rate.

     “Pro Forma Basis” shall mean, with respect to any transaction, that such
transaction shall be deemed to have occurred as of the first day of the
twelve-month period ending as of the most recent month end preceding the date of
such transaction.

     “Properties” shall have the meaning set forth in Section 3.10(a).

     “Purchasing Lenders” shall have the meaning set forth in Section 9.6(c).

     “Recovery Event” shall mean the receipt by any Credit Party or any of its
Subsidiaries of any cash insurance proceeds or condemnation award payable by
reason of theft, loss, physical destruction or damage, taking or similar event
with respect to any of their property or assets.

     “Register” shall have the meaning set forth in Section 9.6(d).

     “Reorganization” shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is in reorganization within the meaning of such term as
used in Section 4241 of ERISA.

     “Related Fund” shall mean, with respect to any Lender, any fund or trust or
entity that invests in commercial bank loans in the ordinary course of business
and is advised or managed by (i) such Lender, (ii) an Affiliate of such Lender,
(iii) any other Lender or any Affiliate thereof or (iv) the same investment
advisor as any Person described in clauses (i) - (iii).

 

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     “Reportable Event” shall mean 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 PBGC Reg. ss.4043.

     “Required Lenders” shall mean, at any time, Lenders holding in the
aggregate a majority of (i) the Commitments (and Participation Interests
therein) or (ii) if the Commitments have been terminated, the outstanding Loans
and Participation Interests (including the Participation Interests of the
Issuing Lender in any Letters of Credit and of the Swingline Lender in Swingline
Loans) provided, however, that if any Lender shall be a Defaulting Lender at
such time, then there shall be excluded from the determination of Required
Lenders, Obligations (including Participation Interests) owing to such
Defaulting Lender and such Defaulting Lender’s Commitments, or after termination
of the Commitments, the principal balance of the Obligations owing to such
Defaulting Lender.

     “Requirement of Law” shall mean, as to any Person, the Certificate of
Incorporation and By-laws or other organizational or governing documents of such
Person, and each 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” shall mean, as to any Credit Party, any of the
President, the Chief Executive Officer, the Chief Financial Officer or any
Vice-President of such Credit Party.

     “Restricted Payments” shall mean (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of Capital Stock of
the Borrower or any of its Subsidiaries, now or hereafter outstanding, (b) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of Capital
Stock of the Borrower or any of its Subsidiaries, now or hereafter outstanding,
(c) any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of Capital
Stock of the Borrower or any of its Subsidiaries, now or hereafter outstanding,
(d) any payment with respect to any earnout obligation, (e) any payment or
prepayment of principal of, premium, if any, or interest on, redemption,
purchase, retirement, defeasance, sinking fund or similar payment with respect
to, any Subordinated Indebtedness or (f) the payment by the Borrower or any of
its Subsidiaries of any management or consulting fee to any Person or of any
salary, bonus or other form of compensation to any Person who is directly or
indirectly a significant partner, shareholder, owner or executive officer of any
such Person, to the extent such salary, bonus or other form of compensation is
not included in the corporate overhead of the Borrower or such Subsidiary.
Notwithstanding the foregoing, for purposes of calculating the amount of
Restricted Payments for the fiscal quarters ending December 31, 2004, March 31,
2005 and June 30, 2005, the amount of Restricted Payments shall be annualized
during such fiscal quarters such that (i) for the calculation of the amount of
Restricted Payments as of December 31, 2004, the amount of Restricted Payments
for the fiscal quarter then ending will be multiplied by four (4), (ii) for the
calculation of the amount of Restricted Payments as of March 31, 2005, the
amount of Restricted Payments for the two fiscal quarter period then ending will
be multiplied by two (2) and (iii) for the calculation of the

 

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amount of Restricted Payments as of June 30, 2005, the amount of Restricted
Payments for the three fiscal quarter period then ending will be multiplied by
one and one-third (1 1/3).

     “Revolving Commitment” shall mean, with respect to each Revolving Lender,
the commitment of such Revolving Lender to make Revolving Loans in an aggregate
principal amount at any time outstanding up to an amount equal to such Revolving
Lender’s Revolving Commitment Percentage of the Revolving Committed Amount.

     “Revolving Commitment Percentage” shall mean, for each Revolving Lender,
the percentage identified as its Revolving Commitment Percentage on Schedule
2.1(a) or in the Register, as such percentage may be modified in connection with
any assignment made in accordance with the provisions of Section 9.6(c).

     “Revolving Committed Amount” shall have the meaning set forth in Section
2.1(a).

     “Revolving Lender” shall mean, as of any date of determination, a Lender
holding a Revolving Commitment on such date.

     “Revolving Loans” shall have the meaning set forth in Section 2.1.

     “Revolving Note” or “Revolving Notes” shall mean the promissory notes of
the Borrower in favor of each of the Revolving Lenders evidencing the Revolving
Loans provided pursuant to Section 2.1(e), individually or collectively, as
appropriate, as such promissory notes may be amended, modified, restated,
supplemented, extended, renewed or replaced from time to time.

     “S&P” shall mean Standard & Poor’s Ratings Group, a division of McGraw
Hill, Inc.

     “Scheduled Funded Debt Payments” shall mean, as of any date of
determination for the Borrower and its Subsidiaries, the sum of all scheduled
payments of principal on Funded Debt for the applicable period ending on the
date of determination (including the principal component of payments due on
Capital Leases during the applicable period ending on the date of
determination).

     “SEC” shall mean the Securities and Exchange Commission or any successor
Governmental Authority.

     “SEC Letter” shall mean that certain letter, dated July 12, 2004, from the
SEC to the Borrower relating to the Borrower’s acquisition of Bioglan
Pharmaceuticals, Inc.

     “Secured Hedging Agreement” shall mean any Hedging Agreement between a
Credit Party and a Hedging Agreement Provider, as amended, modified,
supplemented, extended or restated from time to time.

     “Security Agreement” shall mean the Security Agreement dated as of the
Closing Date executed by the Credit Parties in favor of the Administrative
Agent, as amended, modified or supplemented from time to time in accordance with
its terms.

 

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     “Security Documents” shall mean the Security Agreement, the Pledge
Agreement and such other documents executed and delivered in connection with the
attachment and perfection of the Administrative Agent’s security interests and
liens arising thereunder, including, without limitation, UCC financing
statements.

     “Senior Funded Debt” shall mean, with respect to the Borrower and its
Subsidiaries on a consolidated basis, all Funded Debt of such Persons excluding
any Subordinated Indebtedness.

     “Senior Leverage Ratio” shall mean, with respect to the Borrower and its
Subsidiaries on a consolidated basis for the twelve-month period ending on the
last day of any fiscal quarter of the Borrower, the ratio of (a) Senior Funded
Debt of the Borrower and its Subsidiaries on the last day of such period to (b)
Consolidated EBITDA for such period.

     “Single Employer Plan” shall mean any Plan which is not a Multiemployer
Plan.

     “Subordinated Indebtedness” shall mean the Convertible Bonds and any other
Indebtedness incurred by any Credit Party that is specifically subordinated in
right of payment to the prior payment of the Credit Party Obligations on terms
acceptable to the Administrative Agent and the Lenders.

     “Subsidiary” shall mean, 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
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.

     “Swingline Commitment” shall mean the commitment of the Swingline Lender to
make Swingline Loans in an aggregate principal amount at any time outstanding up
to the Swingline Committed Amount, and the commitment of the Revolving Lenders
to purchase participation interests in the Swingline Loans as provided in
Section 2.4(b)(ii), as such amounts may be reduced from time to time in
accordance with the provisions hereof.

     “Swingline Committed Amount” shall mean the amount of the Swingline
Lender’s Swingline Commitment as specified in Section 2.4(a).

     “Swingline Lender” shall mean Wachovia.

     “Swingline Loan” or “Swingline Loans” shall have the meaning set forth in
Section 2.4(a).

 

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     “Swingline Note” shall mean the promissory note of the Borrower in favor of
the Swingline Lender evidencing the Swingline Loans provided pursuant to Section
2.4(d), as such promissory note may be amended, modified, supplemented,
extended, renewed or replaced from time to time.

     “Tax Exempt Certificate” shall have the meaning set forth in Section
2.17(b).

     “Taxes” shall have the meaning set forth in Section 2.18.

     “Term Loan” shall have the meaning set forth in Section 2.2(a).

     “Term Loan Commitment” shall mean, with respect to each Term Loan Lender,
the commitment of such Term Loan Lender to make its portion of the Term Loan in
a principal amount equal to such Term Loan Lender’s Term Loan Commitment
Percentage of the Term Loan Committed Amount (and for purposes of making
determinations of Requisite Lenders hereunder after the Closing Date, the
principal amount outstanding on the Term Loan).

     “Term Loan Commitment Percentage” shall mean, for any Term Loan Lender, the
percentage identified as its Term Loan Commitment Percentage on Schedule 2.1(a),
as such percentage may be modified in connection with any assignment made in
accordance with the provisions of Section 9.6(c).

     “Term Loan Committed Amount” shall have the meaning set forth in Section
2.2(a).

     “Term Loan Exposure” means, with respect to any Lender as of any date of
determination (i) prior to the funding of the Term Loans, that Lender’s Term
Loan Commitment and (ii) after the funding of the Term Loans, the outstanding
principal amount of the Term Loan of that Lender.

     “Term Loan Lender” shall mean, as of any date of determination, any Lender
that holds a portion of the outstanding Term Loan on such date.

     “Term Note” or “Term Notes” shall mean the promissory notes of Borrower in
favor of each of the Term Loan Lenders evidencing the portion of the Term Loan
provided pursuant to Section 2.2(d), individually or collectively, as
appropriate, as such promissory notes may be amended, modified, restated,
supplemented, extended, renewed or replaced from time to time.

     “Title Insurance Company” shall have the meaning set forth in Section
4.1(f)(iii).

     “Trademark License” shall means any agreement, written or oral, providing
for the grant by or to an Obligor of any right to use any Trademark, including,
without limitation, any thereof referred to in Schedule 3.16.

     “Trademarks” shall mean (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade dress and
service marks, logos and other source or business identifiers, and the goodwill
associated therewith, now existing or hereafter

 

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adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof, or
otherwise, including, without limitation, any thereof referred to in Schedule
3.16, and (b) all renewals thereof, including, without limitation, any thereof
referred to in Schedule 3.16.

     “Tranche” shall mean the collective reference to LIBOR Rate Loans whose
Interest Periods begin and end on the same day. A Tranche may sometimes be
referred to as a “LIBOR Tranche”.

     “Transfer Effective Date” shall have the meaning set forth in each
Commitment Transfer Supplement.

     “Type” shall mean, as to any Loan, its nature as an Alternate Base Rate
Loan or LIBOR Rate Loan, as the case may be.

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

     “Wachovia” shall mean Wachovia Bank, National Association, a national
banking association.

     “WCM” shall mean Wachovia Capital Markets, LLC.

     “Works” shall mean all works which are subject to copyright protection
pursuant to Title 17 of the United States Code.

     Section 1.2 Other Definitional Provisions.

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

       (b) 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, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.

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

     Section 1.3 Accounting Terms.

     Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to

 

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be delivered hereunder shall be prepared in accordance with GAAP applied on a
basis consistent with the most recent audited consolidated financial statements
of the Borrower delivered to the Lenders; provided that, if the Borrower
notifies the Administrative Agent that it wishes to amend any covenant in
Section 5.9 to eliminate the effect of any change in GAAP on the operation of
such covenant (or if the Administrative Agent notifies the Borrower that the
Required Lenders wish to amend Section 5.9 for such purpose), then the
Borrower’s compliance with such covenant shall be determined on the basis of
GAAP in effect immediately before the relevant change in GAAP became effective,
until either such notice is withdrawn or such covenant is amended in a manner
satisfactory to the Borrower and the Required Lenders.

     The Borrower shall deliver to the Administrative Agent and each Lender at
the same time as the delivery of any annual or quarterly financial statements
given in accordance with the provisions of Section 5.1, (i) a description in
reasonable detail of any material change in the application of accounting
principles employed in the preparation of such financial statements from those
applied in the most recently preceding quarterly or annual financial statements
as to which no objection shall have been made in accordance with the provisions
above and (ii) a reasonable estimate of the effect on the financial statements
on account of such changes in application.

     For purposes of computing the financial covenants set forth in Section 5.9
for any applicable test period, any Permitted Acquisition or permitted sale of
assets (including a stock sale) shall have been deemed to have taken place as of
the first day of such applicable test period.

     Section 1.4 Time References.

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

ARTICLE II

THE LOANS; AMOUNT AND TERMS

     Section 2.1 Revolving Loans.

       (a) Revolving Commitment. During the Commitment Period, subject to the
terms and conditions hereof, each Revolving Lender severally, but not jointly,
agrees to make revolving credit loans (“Revolving Loans”) to the Borrower from
time to time in an aggregate principal amount of up to FIFTY MILLION DOLLARS
($50,000,000) (as such aggregate maximum amount may be reduced from time to time
as provided in Section 2.7, the “Revolving Committed Amount”) for the purposes
hereinafter set forth; provided, however, that (i) with regard to each Revolving
Lender individually, the sum of such Revolving Lender’s Revolving Commitment
Percentage of outstanding Revolving Loans plus such Revolving Lender’s Revolving
Commitment Percentage of outstanding Swingline Loans plus such Revolving
Lender’s Revolving Commitment Percentage of

 

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 LOC Obligations shall not exceed such Revolving Lender’s Revolving Committed
Amount and (ii) with regard to the Revolving Lenders collectively, the sum of
the outstanding Revolving Loans plus outstanding Swingline Loans plus LOC
Obligations shall not exceed the Revolving Committed Amount. Revolving Loans may
consist of Alternate Base Rate Loans or LIBOR Rate Loans, or a combination
thereof, as the Borrower may request, and may be repaid and reborrowed in
accordance with the provisions hereof; provided, however, Revolving Loans made
on the Closing Date or on any of the three Business Days following the Closing
Date may only consist of Alternate Base Rate Loans. LIBOR Rate Loans shall be
made by each Revolving Lender at its LIBOR Lending Office and Alternate Base
Rate Loans at its Domestic Lending Office.

       (b) Revolving Loan Borrowings.

       (i) Notice of Borrowing. The Borrower shall request a Revolving Loan
borrowing by delivering a written Notice of Borrowing (or telephone notice
promptly confirmed in writing by delivery of a written Notice of Borrowing,
which delivery be by fax) to the Administrative Agent not later than 11:00 A.M.
on the Business Day prior to the date of requested borrowing in the case of
Alternate Base Rate Loans, and on the third Business Day prior to the date of
the requested borrowing in the case of LIBOR Rate Loans. Each such request for
borrowing shall be irrevocable and shall specify (A) that a Revolving Loan is
requested, (B) the date of the requested borrowing (which shall be a Business
Day), (C) the aggregate principal amount to be borrowed, (D) whether the
borrowing shall be comprised of Alternate Base Rate Loans, LIBOR Rate Loans or a
combination thereof, and if LIBOR Rate Loans are requested, the Interest
Period(s) therefor. A form of Notice of Borrowing (a “Notice of Borrowing”) is
attached as Schedule 2.1(b)(i). If the Borrower shall fail to specify in any
such Notice of Borrowing (I) an applicable Interest Period in the case of a
LIBOR Rate Loan, then such notice shall be deemed to be a request for an
Interest Period of one month, or (II) the type of Revolving Loan requested, then
such notice shall be deemed to be a request for an Alternate Base Rate Loan
hereunder. The Administrative Agent shall give notice to each Revolving Lender
promptly upon receipt of each Notice of Borrowing, the contents thereof and each
such Revolving Lender’s share thereof.

       (ii) Minimum Amounts. Each Revolving Loan shall be in a minimum aggregate
amount of $1,000,000 and in integral multiples of $500,000 in excess thereof (or
the remaining amount of the Revolving Committed Amount, if less).

       (iii) Advances. Each Revolving Lender will make its Revolving Commitment
Percentage of each Revolving Loan borrowing available to the Administrative
Agent for the account of the Borrower at the office of the Administrative Agent
specified in Section 9.2, or at such other office as the Administrative Agent
may designate in writing, by 1:00 P.M. on the date specified in the applicable
Notice of Borrowing in Dollars and in funds immediately available to the
Administrative Agent. Such borrowing will then be

 

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 made available to the Borrower by the Administrative Agent by crediting the
account of the Borrower on the books of such office with the aggregate of the
amounts made available to the Administrative Agent by the Revolving Lenders and
in like funds as received by the Administrative Agent.

       (c) Repayment. The principal amount of all Revolving Loans shall be due
and payable in full on the Maturity Date, unless accelerated sooner pursuant to
Section 7.2.

       (d) Interest. Subject to the provisions of Section 2.10, Revolving Loans
shall bear interest as follows:

       (i) Alternate Base Rate Loans. During such periods as Revolving Loans
shall be comprised of Alternate Base Rate Loans, each such Alternate Base Rate
Loan shall bear interest at a per annum rate equal to the sum of the Alternate
Base Rate plus the Applicable Percentage; and

       (ii) LIBOR Rate Loans. During such periods as Revolving Loans shall be
comprised of LIBOR Rate Loans, each such LIBOR Rate Loan shall bear interest at
a per annum rate equal to the sum of the LIBOR Rate plus the Applicable
Percentage.

 Interest on Revolving Loans shall be payable in arrears on each Interest
Payment Date.

       (e) Revolving Notes. Each Revolving Lender’s Revolving Committed Amount
shall be evidenced by a duly executed promissory note of the Borrower to such
Revolving Lender in substantially the form of Schedule 2.1(e).

     Section 2.2 Term Loan.

       (a) Term Loan. Subject to the terms and conditions hereof and in reliance
upon the representations and warranties set forth herein, each Term Loan Lender
severally agrees to make available to the Borrower on the Closing Date such Term
Loan Lender’s Term Loan Commitment Percentage of a term loan in Dollars (the
“Term Loan”) in the aggregate principal amount of SEVENTY-FIVE MILLION DOLLARS
($75,000,000) (the “Term Loan Committed Amount”) for the purposes hereinafter
set forth. The Term Loan may consist of Alternate Base Rate Loans or LIBOR Rate
Loans, or a combination thereof, as Borrower may request; provided that on the
Closing Date and on the two Business Days following the Closing Date the Term
Loan shall bear interest at the Alternate Base Rate. LIBOR Rate Loans shall be
made by each Term Loan Lender at its LIBOR Lending Office and Alternate Base
Rate Loans at its Domestic Lending Office. Amounts repaid or prepaid on the Term
Loan may not be reborrowed.

 

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       (b) Repayment of Term Loan. The principal amount of the Term Loan shall
be repaid in twenty (20) consecutive quarterly installments unless accelerated
sooner pursuant to Section 7.2 (as reduced pursuant to Section 2.8) as follows:

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

Principal Amortization
Payment  Date Term Loan
Principal Amortization Payment

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

      December 31, 2004 $3,750,000

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        March 31, 2005 $3,750,000

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        June 30, 2005 $3,750,000

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

      September 30, 2005 $3,750,000

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

      December 31, 2005 $3,750,000

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

        March 31, 2006 $3,750,000

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

        June 30, 2006 $3,750,000

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

      September 30, 2006 $3,750,000

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

      December 31, 2006 $3,750,000

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

        March 31, 2007 $3,750,000

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

        June 30, 2007 $3,750,000

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

      September 30, 2007 $3,750,000

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

      December 31, 2007 $3,750,000

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        March 31, 2008 $3,750,000

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

        June 30, 2008 $3,750,000

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

      September 30, 2008 $3,750,000

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

      December 31, 2008 $3,750,000

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

        March 31, 2009 $3,750,000

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        June 30, 2009 $3,750,000

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        Maturity Date Remaining principal balance  

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

       (c) Interest on the Term Loan. Subject to the provisions of Section 2.9,
the Term Loan shall bear interest as follows:

       (i) Alternate Base Rate Loans. During such periods as the Term Loan shall
be comprised of Alternate Base Rate Loans, each such Alternate Base Rate Loan
shall bear interest at a per annum rate equal to the sum of the Alternate Base
Rate plus the Applicable Percentage; and

 

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       (ii) LIBOR Rate Loans. During such periods as the Term Loan shall be
comprised of LIBOR Rate Loans, each such LIBOR Rate Loan shall bear interest at
a per annum rate equal to the sum of the LIBOR Rate plus the Applicable
Percentage.

       (d) Term Notes. The Borrower’s obligation to pay each Term Loan Lender’s
Term Loan shall be evidenced, upon such Term Loan Lender’s request, by a Term
Note made payable to such Lender in substantially the form of Schedule 2.2(d).

     Section 2.3 Letter of Credit Subfacility.

       (a) Issuance. Subject to the terms and conditions hereof and of the LOC
Documents, if any, and any other terms and conditions which the Issuing Lender
may reasonably require, during the Commitment Period the Issuing Lender shall
issue, and the Revolving Lenders shall participate in, Letters of Credit for the
account of the Borrower from time to time upon request in a form acceptable to
the Issuing Lender; provided, however, that (i) the aggregate amount of LOC
Obligations shall not at any time exceed TWO MILLION FIVE HUNDRED THOUSAND
DOLLARS ($2,500,000) (the “LOC Committed Amount”), (ii) the sum of outstanding
Revolving Loans plus outstanding Swingline Loans plus LOC Obligations shall not
at any time exceed the Revolving Committed Amount, (iii) all Letters of Credit
shall be denominated in U.S. Dollars and (iv) Letters of Credit shall be issued
for lawful corporate purposes and may be issued as standby letters of credit,
including in connection with workers’ compensation and other insurance programs,
and trade letters of credit. Except as otherwise expressly agreed upon by all
the Revolving Lenders, no Letter of Credit shall have an original expiry date
more than twelve (12) months from the date of issuance; provided, however, so
long as no Default or Event of Default has occurred and is continuing and
subject to the other terms and conditions to the issuance of Letters of Credit
hereunder, the expiry dates of Letters of Credit may be extended annually or
periodically from time to time on the request of the Borrower or by operation of
the terms of the applicable Letter of Credit to a date not more than twelve (12)
months from the date of extension; provided, further, that no Letter of Credit,
as originally issued or as extended, shall have an expiry date extending beyond
the date that is thirty days prior to the Maturity Date. Each Letter of Credit
shall comply with the related LOC Documents. The issuance and expiry date of
each Letter of Credit shall be a Business Day. Any Letters of Credit issued
hereunder shall be in a minimum original face amount of $100,000 or such lesser
amount as approved by the Issuing Lender. Wachovia shall be the Issuing Lender
on all Letters of Credit issued on or after the Closing Date.

       (b) Notice and Reports. The request for the issuance of a Letter of
Credit shall be submitted to the Issuing Lender at least five Business Days
prior to the requested date of issuance. The Issuing Lender will promptly upon
request provide to the Administrative Agent for dissemination to the Revolving
Lenders a detailed report specifying the Letters of Credit which are then issued
and outstanding and any activity with respect thereto which may have occurred
since the date of any prior report, and

 

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 including therein, among other things, the account party, the beneficiary, the
face amount, expiry date as well as any payments or expirations which may have
occurred. The Issuing Lender will further provide to the Administrative Agent
promptly upon request copies of the Letters of Credit. The Issuing Lender will
provide to the Administrative Agent promptly upon request a summary report of
the nature and extent of LOC Obligations then outstanding.

       (c) Participations. Each Revolving Lender upon issuance of a Letter of
Credit shall be deemed to have purchased without recourse a risk participation
from the Issuing Lender in such Letter of Credit and the obligations arising
thereunder and any collateral relating thereto, in each case in an amount equal
to its Revolving Commitment Percentage of the obligations under such Letter of
Credit and shall absolutely, unconditionally and irrevocably assume, as primary
obligor and not as surety, and be obligated to pay to the Issuing Lender
therefor and discharge when due, its Revolving Commitment Percentage of the
obligations arising under such Letter of Credit. Without limiting the scope and
nature of each Revolving Lender’s participation in any Letter of Credit, to the
extent that the Issuing Lender has not been reimbursed as required hereunder or
under any LOC Document, each such Revolving Lender shall pay to the Issuing
Lender its Revolving Commitment Percentage of such unreimbursed drawing in same
day funds on the day of notification by the Issuing Lender of an unreimbursed
drawing pursuant to and in accordance with the provisions of subsection (d)
hereof. The obligation of each Revolving Lender to so reimburse the Issuing
Lender shall be absolute and unconditional and shall not be affected by the
occurrence of a Default, an Event of Default or any other occurrence or event.
Any such reimbursement shall not relieve or otherwise impair the obligation of
the Borrower to reimburse the Issuing Lender under any Letter of Credit,
together with interest as hereinafter provided.

       (d) Reimbursement. In the event of any drawing under any Letter of
Credit, the Issuing Lender will promptly notify the Borrower and the
Administrative Agent. The Borrower shall reimburse the Issuing Lender on the day
of drawing under any Letter of Credit (with the proceeds of a Revolving Loan
obtained hereunder or otherwise) in same day funds as provided herein or in the
LOC Documents. If the Borrower shall fail to reimburse the Issuing Lender as
provided herein, the unreimbursed amount of such drawing shall bear interest at
a per annum rate equal to the ABR Default Rate. Unless the Borrower shall
immediately notify the Issuing Lender and the Administrative Agent of its intent
to otherwise reimburse the Issuing Lender, the Borrower shall be deemed to have
requested a Revolving Loan in the amount of the drawing as provided in
subsection (e) hereof, the proceeds of which will be used to satisfy the
reimbursement obligations. The Borrower’s reimbursement obligations hereunder
shall be absolute and unconditional under all circumstances irrespective of any
rights of set-off, counterclaim or defense to payment the Borrower may claim or
have against the Issuing Lender, the Administrative Agent, the Lenders, the
beneficiary of the Letter of Credit drawn upon or any other Person, including
without limitation any defense based on any failure of the Borrower to receive
consideration or the legality, validity, regularity or unenforceability of the
Letter of Credit. The Issuing Lender will promptly notify the other Revolving
Lenders of the amount of any unreimbursed drawing and each Revolving Lender
shall promptly pay to

 

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 the Administrative Agent for the account of the Issuing Lender in Dollars and
in immediately available funds, the amount of such Revolving Lender’s Revolving
Commitment Percentage of such unreimbursed drawing. Such payment shall be made
on the day such notice is received by such Revolving Lender from the Issuing
Lender if such notice is received at or before 2:00 P.M., otherwise such payment
shall be made at or before 12:00 Noon on the Business Day next succeeding the
day such notice is received. If such Revolving Lender does not pay such amount
to the Issuing Lender in full upon such request, such Revolving Lender shall, on
demand, pay to the Administrative Agent for the account of the Issuing Lender
interest on the unpaid amount during the period from the date of such drawing
until such Revolving Lender pays such amount to the Issuing Lender in full at a
rate per annum equal to, if paid within three Business Days of the date of
drawing, the Federal Funds Effective Rate and thereafter at a rate equal to the
Alternate Base Rate. Each Revolving Lender’s obligation to make such payment to
the Issuing Lender, and the right of the Issuing Lender to receive the same,
shall be absolute and unconditional, shall not be affected by any circumstance
whatsoever and without regard to the termination of this Agreement or the
Commitments hereunder, the existence of a Default or Event of Default or the
acceleration of the Credit Party Obligations hereunder and shall be made without
any offset, abatement, withholding or reduction whatsoever.

       (e) Repayment with Revolving Loans. On any day on which the Borrower
shall have requested, or been deemed to have requested, a Revolving Loan to
reimburse a drawing under a Letter of Credit, the Administrative Agent shall
give notice to the Revolving Lenders that a Revolving Loan has been requested or
deemed requested in connection with a drawing under a Letter of Credit, in which
case a Revolving Loan borrowing comprised entirely of Alternate Base Rate Loans
(each such borrowing, a “Mandatory LOC Borrowing”) shall be immediately made
(without giving effect to any termination of the Commitments pursuant to Section
7.2) pro rata based on each Revolving Lender’s respective Revolving Commitment
Percentage (determined before giving effect to any termination of the
Commitments pursuant to Section 7.2) and the proceeds thereof shall be paid
directly to the Issuing Lender for application to the respective LOC
Obligations. Each Revolving Lender hereby irrevocably agrees to make such
Revolving Loans immediately upon any such request or deemed request on account
of each Mandatory LOC Borrowing in the amount and in the manner specified in the
preceding sentence and on the same such date notwithstanding (i) the amount of
Mandatory LOC Borrowing may not comply with the minimum amount for borrowings of
Revolving Loans otherwise required hereunder, (ii) whether any conditions
specified in Section 4.2 are then satisfied, (iii) whether a Default or an Event
of Default then exists, (iv) failure for any such request or deemed request for
Revolving Loan to be made by the time otherwise required in Section 2.1(b), (v)
the date of such Mandatory LOC Borrowing, or (vi) any reduction in the Revolving
Committed Amount after any such Letter of Credit may have been drawn upon;
provided, however, that in the event any such Mandatory LOC Borrowing should be
less than the minimum amount for borrowings of Revolving Loans otherwise
provided in Section 2.1(b)(ii), the Borrower shall pay to the Administrative
Agent for its own account an administrative fee of $500. In the event that any
Mandatory LOC Borrowing cannot for any reason be made on the

 

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 date otherwise required above (including, without limitation, as a result of
the commencement of a proceeding under the Bankruptcy Code with respect to any
Credit Party), then each such Revolving Lender hereby agrees that it shall
forthwith fund (as of the date the Mandatory LOC Borrowing would otherwise have
occurred, but adjusted for any payments received from the Borrower on or after
such date and prior to such purchase) its Participation Interests in the LOC
Obligations; provided, further, that in the event any Revolving Lender shall
fail to fund its Participation Interest on the day the Mandatory LOC Borrowing
would otherwise have occurred, then the amount of such Revolving Lender’s
unfunded Participation Interest therein shall bear interest payable by such
Revolving Lender to the Issuing Lender upon demand, at the rate equal to, if
paid within three Business Days of such date, the Federal Funds Effective Rate,
and thereafter at a rate equal to the Alternate Base Rate.

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

       (g) Uniform Customs and Practices. The Issuing Lender shall have the
Letters of Credit be subject to The Uniform Customs and Practice for Documentary
Credits, as published as of the date of issue by the International Chamber of
Commerce (the “UCP”), in which case the UCP may be incorporated therein and
deemed in all respects to be a part thereof.

       (h) Designation of Subsidiaries as Account Parties. Notwithstanding
anything to the contrary set forth in this Agreement, including without
limitation Section 2.3(a), a Letter of Credit issued hereunder may contain a
statement to the effect that such Letter of Credit is issued for the account of
a Subsidiary of the Borrower; provided that, notwithstanding such statement, the
Borrower shall be the actual account party for all purposes of this Agreement
for such Letter of Credit and such statement shall not affect the Borrower’s
reimbursement obligations hereunder with respect to such Letter of Credit.

     Section 2.4 Swingline Loan Subfacility.

       (a) Swingline Commitment. During the Commitment Period, subject to the
terms and conditions hereof, the Swingline Lender, in its individual capacity,
agrees to make certain revolving credit loans to the Borrower (each a “Swingline
Loan” and, collectively, the “Swingline Loans”) for the purposes hereinafter set
forth; provided, however, (i) the aggregate amount of Swingline Loans
outstanding at any time shall not exceed FIVE MILLION DOLLARS ($5,000,000) (the
“Swingline Committed Amount”), and (ii) the sum of the outstanding Revolving
Loans plus outstanding Swingline Loans plus LOC Obligations shall not exceed the
Revolving Committed Amount. Swingline Loans hereunder may be repaid and
reborrowed in accordance with the provisions hereof.

       (b) Swingline Loan Borrowings.

 

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       (i) Notice of Borrowing and Disbursement. The Swingline Lender will make
Swingline Loans available to the Borrower on any Business Day upon delivery of a
Notice of Borrowing by the Borrower to the Administrative Agent not later than
2:00 P.M. on such Business Day. Swingline Loan borrowings hereunder shall be
made in minimum amounts of $100,000 and in integral amounts of $100,000 in
excess thereof.

       (ii) Repayment of Swingline Loans. Each Swingline Loan borrowing shall be
due and payable on the Maturity Date. The Swingline Lender may, at any time, in
its sole discretion, by written notice to the Borrower and the Administrative
Agent, demand repayment of its Swingline Loans by way of a Revolving Loan
borrowing, in which case the Borrower shall be deemed to have requested a
Revolving Loan borrowing comprised entirely of Alternate Base Rate Loans in the
amount of such Swingline Loans; provided, however, that, in the following
circumstances, any such demand shall also be deemed to have been given one
Business Day prior to each of (A) the Maturity Date, (B) the occurrence of any
Event of Default described in Section 7.1(f), (C) upon acceleration of the
Credit Party Obligations hereunder, whether on account of an Event of Default
described in Section 7.1(f) or any other Event of Default, and (D) the exercise
of remedies in accordance with the provisions of Section 7.2 hereof (each such
Revolving Loan borrowing made on account of any such deemed request therefor as
provided herein being hereinafter referred to as “Mandatory Swingline
Borrowing”). Each Revolving Lender hereby irrevocably agrees to make such
Revolving Loans promptly upon any such request or deemed request on account of
each Mandatory Swingline Borrowing in the amount and in the manner specified in
the preceding sentence and on the same such date notwithstanding (1) the amount
of Mandatory Swingline Borrowing may not comply with the minimum amount for
borrowings of Revolving Loans otherwise required hereunder, (2) whether any
conditions specified in Section 4.2 are then satisfied, (3) whether a Default or
an Event of Default then exists, (4) failure of any such request or deemed
request for Revolving Loans to be made by the time otherwise required in Section
2.1(b)(i), (5) the date of such Mandatory Swingline Borrowing, or (6) any
reduction in the Revolving Committed Amount or termination of the Revolving
Commitments immediately prior to such Mandatory Swingline Borrowing or
contemporaneously therewith. In the event that any Mandatory Swingline Borrowing
cannot for any reason be made on the date otherwise required above (including,
without limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code), then each Revolving Lender hereby agrees that it shall
forthwith purchase (as of the date the Mandatory Swingline Borrowing would
otherwise have occurred, but adjusted for any payments received from the
Borrower on or after such date and prior to such purchase) from the Swingline
Lender such participations in the outstanding Swingline Loans as shall be
necessary to cause each such Revolving Lender to share in such Swingline Loans
ratably based upon its respective Revolving Commitment Percentage (determined
before giving effect to any termination of

 

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 the Commitments pursuant to Section 7.2); provided that (x) all interest
payable on the Swingline Loans shall be for the account of the Swingline Lender
until the date as of which the respective participation is purchased, and (y) at
the time any purchase of participations pursuant to this sentence is actually
made, the purchasing Revolving Lender shall be required to pay to the Swingline
Lender interest on the principal amount of such participation purchased for each
day from and including the day upon which the Mandatory Swingline Borrowing
would otherwise have occurred to but excluding the date of payment for such
participation, at the rate equal to, if paid within three Business Days of the
date of the Mandatory Swingline Borrowing, the Federal Funds Effective Rate, and
thereafter at a rate equal to the Alternate Base Rate.

       (c) Interest on Swingline Loans. Subject to the provisions of Section
2.10, Swingline Loans shall bear interest at a per annum rate equal to the
Alternate Base Rate plus the Applicable Percentage for Revolving Loans that are
Alternate Base Rate Loans. Interest on Swingline Loans shall be payable in
arrears on each Interest Payment Date.

       (d) Swingline Note. The Swingline Loans shall be evidenced by a duly
executed promissory note of the Borrower to the Swingline Lender in the original
amount of the Swingline Committed Amount and substantially in the form of
Schedule 2.4(d).

     Section 2.5 [Reserved].

     Section 2.6 Fees.

       (a) Commitment Fee. In consideration of the Revolving Commitments, the
Borrower agrees to pay to the Administrative Agent for the ratable benefit of
the Revolving Lenders a commitment fee (the “Commitment Fee”) in an amount equal
to the Applicable Percentage per annum on the average daily unused amount of the
Revolving Committed Amount. For purposes of computation of the Commitment Fee,
LOC Obligations shall be considered usage of the Revolving Committed Amount but
Swingline Loans shall not be considered usage of the Revolving Committed Amount.
The Commitment Fee shall be payable quarterly in arrears on the last Business
Day of each calendar quarter.

       (b) Letter of Credit Fees. In consideration of the LOC Commitments, the
Borrower agrees to pay to the Administrative Agent, for the ratable benefit of
the Revolving Lenders, a fee (the “Letter of Credit Fee”) equal to the
Applicable Percentage per annum on the average daily maximum amount available to
be drawn under each Letter of Credit from the date of issuance to the date of
expiration. In addition to such Letter of Credit Fee, the Borrower agrees to pay
to the Issuing Lender, for its own account and without sharing by the other
Lenders, an additional fronting fee (the “Fronting Fee”) of one-quarter of one
percent (0.25%) per annum on the average daily maximum amount available to be
drawn under each such Letter of Credit issued by it. The Letter of Credit Fee
and the Fronting Fee shall be payable quarterly in arrears on the last Business
Day of each calendar quarter.

 

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       (c) Issuing Lender Fees. In addition to the Letter of Credit Fees and
Fronting Fees payable pursuant to subsection (b) hereof, the Borrower shall pay
to the Issuing Lender for its own account without sharing by the other Lenders
the reasonable and customary charges from time to time of the Issuing Lender
with respect to the amendment, transfer, administration, cancellation and
conversion of, and drawings under, such Letters of Credit (collectively, the
“Issuing Lender Fees”).

       (d) Administrative Fee. The Borrower agrees to pay to the Administrative
Agent the annual administrative fee as described in the Fee Letter.

     Section 2.7 Commitment Reductions.

       (a) Voluntary Reductions. The Borrower shall have the right to terminate
or permanently reduce the unused portion of the Revolving Committed Amount at
any time or from time to time upon not less than five Business Days’ prior
notice to the Administrative Agent (which shall notify the Lenders thereof as
soon as practicable) of each such termination or reduction, which notice shall
specify the effective date thereof and the amount of any such reduction which
shall be in a minimum amount of $1,000,000 or a whole multiple of $500,000 in
excess thereof and shall be irrevocable and effective upon receipt by the
Administrative Agent, provided that no such reduction or termination shall be
permitted if after giving effect thereto, and to any prepayments of the Loans
made on the effective date thereof, the sum of the outstanding Revolving Loans
plus outstanding Swingline Loans plus LOC Obligations would exceed the Revolving
Committed Amount.

       (b) Maturity Date. The Revolving Commitment, the Swingline Commitment and
the LOC Commitment shall automatically terminate on the Maturity Date.

     Section 2.8 Prepayments.

       (a) Optional Prepayments. The Borrower shall have the right to prepay
Loans in whole or in part from time to time; provided, however, that each
partial prepayment of a Revolving Loan and the Term Loan shall be in a minimum
principal amount of $1,000,000 and integral multiples of $500,000 in excess
thereof, and each partial prepayment of a Swingline Loan shall be in a minimum
principal amount of $100,000 and integral multiples of $100,000 in excess
thereof. The Borrower shall give three Business Days’ irrevocable notice in the
case of LIBOR Rate Loans and one Business Day’s irrevocable notice in the case
of Alternate Base Rate Loans, to the Administrative Agent (which shall notify
the Lenders thereof as soon as practicable). To the extent the Borrower elects
to prepay the Term Loans, amounts prepaid under this Section 2.8(a) shall be
applied to the remaining amortization payments thereof on a pro rata basis,
first to Alternate Base Rate Loans and then to LIBOR Rate Loans in direct order
of Interest Period maturities. All prepayments under this Section 2.8(a) shall
be subject to Section 2.18, but otherwise without premium or penalty. Interest
on the principal amount prepaid shall be payable on the next occurring Interest
Payment Date that would have occurred

 

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 had such Loans not been prepaid or, at the request of the Administrative Agent,
interest on the principal amount prepaid shall be payable on any date that a
prepayment is made hereunder through the date of prepayment. Amounts prepaid on
the Revolving Loans and the Swingline Loans may be reborrowed in accordance with
the terms hereof. Amounts prepaid on the Term Loans may not be reborrowed.

       (b) Mandatory Prepayments.

       (i) Revolving Committed Amount. If at any time after the Closing Date,
the sum of the outstanding Revolving Loans plus outstanding Swingline Loans plus
LOC Obligations shall exceed the Revolving Committed Amount, the Borrower
immediately shall prepay the Loans and cash collateralize the LOC Obligations in
an amount sufficient to eliminate such excess (such prepayment to be applied as
set forth in clause (vi) below).

       (ii) Asset Dispositions. Promptly following any Asset Disposition (or
related series of Asset Dispositions), the Borrower shall prepay the Loans and
cash collateralize the LOC Obligations in an aggregate amount equal to 100% of
the Net Cash Proceeds derived from such Asset Disposition (or related series of
Asset Dispositions) (such prepayment to be applied as set forth in clause (vi)
below); provided, however, that such Net Cash Proceeds shall not be required to
be so applied to the extent the Borrower delivers to the Administrative Agent
promptly following such Asset Disposition a certificate stating that it intends
to use such Net Cash Proceeds to acquire like assets used in the business of the
Borrower and its Subsidiaries within 180 days of the receipt of such Net Cash
Proceeds, it being expressly agreed that any Net Cash Proceeds not so reinvested
shall be applied to prepay the Loans and cash collateralize the LOC Obligations
immediately thereafter (such prepayment to be applied as set forth in clause
(vi) below).

       (iii) Issuances. Immediately upon receipt by any Credit Party of proceeds
from (A) any Debt Issuance, the Borrower shall prepay the Loans and cash
collateralize the LOC Obligations in an aggregate amount equal to one hundred
percent (100%) of the Net Cash Proceeds of such Debt Issuance to the Lenders
(such prepayment to be applied as set forth in clause (vi) below) or (B) any
Equity Issuance, the Borrower shall prepay the Loans and cash collateralize the
LOC Obligations in an aggregate amount equal to fifty percent (50%) of the Net
Cash Proceeds of such Equity Issuance (such prepayment to be applied as set
forth in clause (vi) below).

       (iv) Recovery Event. Immediately upon receipt by any Credit Party of
proceeds from any Recovery Event, the Borrower shall prepay the Loans and cash
collateralize the LOC Obligations in an aggregate amount equal to one hundred
percent (100%) of such cash proceeds (such prepayment to be applied as set forth
in clause (vi) below; provided, however, that, so long as no Default or Event of
Default has occurred and is continuing at the time of such Recovery Event,

 

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 (A) the Borrower and its Subsidiaries may retain Net Cash Proceeds consisting
of business interruption insurance proceeds and (B) any other Net Cash Proceeds
shall not be required to be so applied to the extent the Borrower delivers to
the Administrative Agent a certificate stating that the Borrower intends to use
such Net Cash Proceeds to repair, restore or replace the assets subject to the
Recovery Event within 180 days of the receipt of such Net Cash Proceeds, it
being expressly agreed that any Net Cash Proceeds not so reinvested by the end
of the applicable period shall be applied to repay the Loans and/or cash
collateralize the LOC Obligations immediately thereafter (such prepayment to be
applied as set forth in clause (vi) below).

       (v) Excess Cash Flow. Within 90 days after the end of each fiscal year
(commencing with the fiscal year ending December 31, 2005), the Borrower shall
prepay the Loans and cash collateralize the LOC Obligations in an amount equal
to 75% of the Excess Cash Flow earned during such prior fiscal year (such
prepayments to be applied as set forth in clause (vi) below).

       (vi) Application of Mandatory Prepayments. All amounts required to be
paid pursuant to this Section 2.8(b) shall be applied as follows: (A) with
respect to all amounts prepaid pursuant to Sections 2.8(b)(i), (1) first, to the
outstanding Swingline Loans, (2) second, to the outstanding Revolving Loans and
(3) third (after all Revolving Loans have been repaid), to a cash collateral
account in respect of LOC Obligations, and (B) with respect to all amounts
prepaid pursuant to Sections 2.8(b)(ii), (iii), (iv) and (v), (1) first, to the
remaining Term Loan amortization payments set forth in Section 2.2(b) on pro
rata basis, (2) second, to the outstanding Swingline Loans (without a
corresponding permanent reduction in the Revolving Committed Amount), (3) third,
to the outstanding Revolving Loans (without a corresponding permanent reduction
in the Revolving Committed Amount) and (4) fourth (after all Revolving Loans
have been repaid), to a cash collateral account in respect of LOC Obligations.
Within the parameters of the applications set forth above, prepayments shall be
applied first to Alternate Base Rate Loans and then to LIBOR Rate Loans in
direct order of Interest Period maturities. Each Lender shall receive its pro
rata share (except with respect to prepayments of Swingline Loans) of any such
prepayment based on its Revolving Commitment Percentage or Term Loan Commitment
Percentages, as applicable. All prepayments under this Section 2.8(b) shall be
subject to Section 2.18 and be accompanied by interest on the principal amount
prepaid through the date of prepayment.

       (c) Hedging Obligations Unaffected. Any repayment or prepayment made
pursuant to this Section 2.8 shall not affect the Borrower’s obligation to
continue to make payments under any Secured Hedging Agreement, which shall
remain in full force and effect notwithstanding such repayment or prepayment,
subject to the terms of such Secured Hedging Agreement.

 

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     Section 2.9 Lending Offices.

     LIBOR Rate Loans shall be made by each Lender at its LIBOR Lending Office
and Alternate Base Rate Loans at its Domestic Lending Office.

     Section 2.10 Default Rate.

     Upon the occurrence, and during the continuance, of an Event of Default, at
the discretion of the Required Lenders, the principal of and, to the extent
permitted by law, interest on the Loans and any other amounts owing hereunder or
under the other Credit Documents shall bear interest, payable on demand, at a
per annum rate 2% greater than the rate which would otherwise be applicable (or
if no rate is applicable, whether in respect of interest, fees or other amounts,
then the ABR Default Rate).

     Section 2.11 Conversion Options.

       (a) The Borrower may, in the case of Revolving Loans and the Term Loan,
elect from time to time to convert all or any portion of an Alternate Base Rate
Loan to a LIBOR Rate Loan by giving the Administrative Agent at least three
Business Days’ prior irrevocable written notice of such election; provided that
(i) no Alternate Base Rate Loan or portion thereof may be converted into a LIBOR
Rate Loan when any Default or Event of Default has occurred and is continuing
and (ii) conversions shall be in an aggregate principal amount of (A) in the
case of Revolving Loans $1,000,000 or a whole multiple of $500,000 in excess
thereof and (B) in the case of the Term Loan, $2,000,000 or a whole multiple of
$1,000,000 in excess thereof. In addition, the Borrower may elect from time to
time to convert all or any portion of a LIBOR Rate Loan to an Alternate Base
Rate Loan by giving the Administrative Agent irrevocable written notice thereof
by 11:00 A.M. one Business Date prior to the proposed date of conversion. A form
of Notice of Conversion/Extension is attached as Schedule 2.11. If the date upon
which an Alternate Base Rate Loan is to be converted to a LIBOR Rate Loan is not
a Business Day, then such conversion shall be made on the next succeeding
Business Day and during the period from such last day of an Interest Period to
such succeeding Business Day such Loan shall bear interest as if it were an
Alternate Base Rate Loan. LIBOR Rate Loans may only be converted to Alternate
Base Rate Loans on the last day of the applicable Interest Period. If the date
upon which a LIBOR Rate Loan is to be converted to an Alternate Base Rate Loan
is not a Business Day, then such conversion shall be made on the next succeeding
Business Day and during the period from such last day of an Interest Period to
such succeeding Business Day such Loan shall bear interest as if it were an
Alternate Base Rate Loan.

       (b) Any LIBOR Rate Loans may be continued as such upon the expiration of
an Interest Period with respect thereto by compliance by the Borrower with the
notice provisions contained in Section 2.11(a); provided, that no LIBOR Rate
Loan may be continued as such when any Default or Event of Default has occurred
and is continuing, in which case such Loan shall be automatically converted to
an Alternate Base Rate Loan at the end of the applicable Interest Period with
respect thereto. If the Borrower shall fail

 

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 to give timely notice of an election to continue a LIBOR Rate Loan, or the
continuation of LIBOR Rate Loans is not permitted hereunder, such LIBOR Rate
Loans shall be automatically converted to Alternate Base Rate Loans at the end
of the applicable Interest Period with respect thereto.

     Section 2.12 Computation of Interest and Fees.

       (a) Interest payable hereunder with respect to Alternate Base Rate Loans
based on the Prime Rate shall be calculated on the basis of a year of 365 days
(or 366 days, as applicable) for the actual days elapsed. All other fees,
interest and all other amounts payable hereunder shall be calculated on the
basis of a 360-day year for the actual days elapsed. The Administrative Agent
shall as soon as practicable notify the Borrower and the Lenders of each
determination of a LIBOR Rate on the Business Day of the determination thereof.
Any change in the interest rate on a Loan resulting from a change in the
Alternate Base Rate shall become effective as of the opening of business on the
day on which such change in the Alternate Base Rate shall become 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.

       (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 computations used by the Administrative Agent
in determining any interest rate.

       (c) It is the intent of the Lenders and the Credit Parties to conform to
and contract in strict compliance with applicable usury law from time to time in
effect. All agreements between the Lenders and the Credit Parties are hereby
limited by the provisions of this paragraph which shall override and control all
such agreements, whether now existing or hereafter arising and whether written
or oral. In no way, nor in any event or contingency (including but not limited
to prepayment or acceleration of the maturity of any Credit Party Obligation),
shall the interest taken, reserved, contracted for, charged, or received under
this Credit Agreement, under the Notes or otherwise, exceed the maximum
nonusurious amount permissible under applicable law. If, from any possible
construction of any of the Credit Documents or any other document, interest
would otherwise be payable in excess of the maximum nonusurious amount, any such
construction shall be subject to the provisions of this paragraph and such
interest shall be automatically reduced to the maximum nonusurious amount
permitted under applicable law, without the necessity of execution of any
amendment or new document. If any Lender shall ever receive anything of value
which is characterized as interest on the Loans under applicable law and which
would, apart from this provision, be in excess of the maximum nonusurious
amount, an amount equal to the amount which would have been excessive interest
shall, without penalty, be applied to the reduction of the principal amount
owing on the Loans and not to the payment of interest, or refunded to the
Borrower or the other payor thereof if and to the extent such amount which would
have been excessive exceeds such unpaid principal amount of the Loans. The right
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 payment of the Loans or any other Indebtedness evidenced by any of the Credit
Documents does not include the right to receive any interest which has not
otherwise accrued on the date of such demand, and the Lenders do not intend to
charge or receive any unearned interest in the event of such demand. All
interest paid or agreed to be paid to the Lenders with respect to the Loans
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term (including any renewal or
extension) of the Loans so that the amount of interest on account of such
indebtedness does not exceed the maximum nonusurious amount permitted by
applicable law.

     Section 2.13 Pro Rata Treatment and Payments.

       (a) Allocation of Payments Prior to Exercise of Remedies. Each borrowing
of Revolving Loans and any reduction of the Revolving Commitments shall be made
pro rata according to the respective Revolving Commitment Percentages of the
Lenders. Unless otherwise specified herein, each payment under this Agreement or
any Note shall be applied, first, to any fees then due and owing by the Borrower
pursuant to Section 2.6, second, to interest then due and owing hereunder and
under the Notes and, third, to principal then due and owing hereunder and under
the Notes. Each payment on account of any fees pursuant to Section 2.6 shall be
made pro rata in accordance with the respective amounts due and owing (except as
to the Fronting Fees and the Issuing Lender and the Issuing Lender Fees).
Subject to Section 2.2(b), each payment (other than prepayments) by the Borrower
on account of principal of and interest on the Revolving Loans and on the Term
Loan shall be applied to such Loans as directed by the Borrower or otherwise
applied in accordance with the terms of Section 2.8(a) hereof. Each optional
prepayment on account of principal of the Loans shall be applied an accordance
with Section 2.8(a); provided, that prepayments made pursuant to Section 2.16
shall be applied in accordance with such section. Each optional prepayment on
account of principal of the Loans shall be applied in accordance with Section
2.8(a) and each mandatory prepayment on account of principal of the Loans shall
be applied in accordance with Section 2.8(b)(vi). All payments (including
prepayments) to be made by the Borrower on account of principal, interest and
fees shall be made without defense, set-off or counterclaim (except as provided
in Section 2.19(b)) and shall be made to the Administrative Agent for the
account of the Lenders at the Administrative Agent’s office specified in Section
9.2 in Dollars and in immediately available funds not later than 1:00 P.M. on
the date when due. The Administrative Agent shall distribute such payments to
the Lenders entitled thereto promptly upon receipt in like funds as received. If
any payment hereunder (other than payments on the LIBOR Rate Loans) becomes due
and payable on a day other than a Business Day, such payment shall be extended
to the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension. If any payment on a LIBOR Rate 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.

 

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       (b) Allocation of Payments After Exercise of Remedies. Notwithstanding
any other provisions of this Agreement to the contrary, after the exercise of
remedies (other than the invocation of default interest pursuant to Section 2.9)
by the Administrative Agent or the Lenders pursuant to Section 7.2 (or after the
Commitments shall automatically terminate and the Loans (with accrued interest
thereon) and all other amounts under the Credit Documents shall automatically
become due and payable in accordance with the terms of such Section), all
amounts collected or received by the Administrative Agent or any Lender on
account of the Credit Party Obligations or any other amounts outstanding under
any of the Credit Documents or in respect of the Collateral shall be paid over
or delivered as follows (irrespective of whether the following costs, expenses,
fees, interest, premiums, scheduled periodic payments or Credit Party
Obligations are allowed, permitted or recognized as a claim in any proceeding
resulting from the occurrence of a Bankruptcy Event):

       FIRST, to the payment of all reasonable out-of-pocket costs and expenses
(including without limitation reasonable attorneys’ fees) of the Administrative
Agent in connection with enforcing the rights of the Lenders under the Credit
Documents and any protective advances made by the Administrative Agent with
respect to the Collateral under or pursuant to the terms of the Collateral
Documents;

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

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

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

       FIFTH, to the payment of the outstanding principal amount of the Credit
Party Obligations and the payment or cash collateralization of the outstanding
LOC Obligations, and including with respect to any Secured Hedging Agreement,
any fees, premiums, scheduled periodic payments, breakage, termination or other
payments due under such Secured Hedging Agreement and any interest accrued
thereon;

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

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

 

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 In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders and any Hedging Agreement
Providers shall receive an amount equal to its pro rata share (based on the
proportion that the then outstanding Loans and LOC Obligations held by such
Lender or the outstanding obligations payable to such Hedging Agreement Provider
bears to the aggregate then outstanding Loans, LOC Obligations and obligations
payable under all Secured Hedging Agreements) of amounts available to be applied
pursuant to clauses “THIRD”, “FOURTH”, “FIFTH” and “SIXTH” above; and (iii) to
the extent that any amounts available for distribution pursuant to clause
“FIFTH” above are attributable to the issued but undrawn amount of outstanding
Letters of Credit, such amounts shall be held by the Administrative Agent in a
cash collateral account and applied (A) first, to reimburse the Issuing Lender
from time to time for any drawings under such Letters of Credit and (B) then,
following the expiration of all Letters of Credit, to all other obligations of
the types described in clauses “FIFTH” and “SIXTH” above in the manner provided
in this Section 2.13(b). Notwithstanding the foregoing terms of this Section
2.13(b), only Collateral proceeds and payments under the Guaranty with respect
to Secured Hedging Agreements shall be applied to obligations under any Secured
Hedging Agreement.

     Section 2.14 Non-Receipt of Funds by the Administrative Agent.

       (a) Unless the Administrative Agent shall have been notified in writing
by a Lender prior to the date a Loan is to be made by such Lender (which notice
shall be effective upon receipt) that such Lender does not intend to make the
proceeds of such Loan available to the Administrative Agent, the Administrative
Agent may assume that such Lender has made such proceeds available to the
Administrative Agent on such date, and the Administrative Agent may in reliance
upon such assumption (but shall not be required to) make available to the
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent, the Administrative Agent shall be
able to recover such corresponding amount from such Lender. If such Lender does
not pay such corresponding amount forthwith upon the Administrative Agent’s
demand therefor, the Administrative Agent will promptly notify the Borrower, and
the Borrower shall immediately pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also be entitled to recover
from such Lender or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Administrative Agent to the Borrower to the
date such corresponding amount is recovered by the Administrative Agent at a per
annum rate equal to (i) from the Borrower at the applicable rate for the
applicable borrowing pursuant to the Notice of Borrowing and (ii) from such
Lender at the Federal Funds Effective Rate.

       (b) Unless the Administrative Agent shall have been notified in writing
by the Borrower, prior to the date on which any payment is due from it hereunder
(which notice shall be effective upon receipt) that the Borrower does not intend
to make such payment, the Administrative Agent may assume that such Borrower has
made such payment when due, and the Administrative Agent may in reliance upon
such assumption (but shall not

 

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 be required to) make available to each Lender on such payment date an amount
equal to the portion of such assumed payment to which such Lender is entitled
hereunder, and if the Borrower has not in fact made such payment to the
Administrative Agent, such Lender shall, on demand, repay to the Administrative
Agent the amount made available to such Lender. If such amount is repaid to the
Administrative Agent on a date after the date such amount was made available to
such Lender, such Lender shall pay to the Administrative Agent on demand
interest on such amount in respect of each day from the date such amount was
made available by the Administrative Agent to such Lender to the date such
amount is recovered by the Administrative Agent at a per annum rate equal to the
Federal Funds Effective Rate.

       (c) A certificate of the Administrative Agent submitted to the Borrower
or any Lender with respect to any amount owing under this Section 2.14 shall be
conclusive in the absence of manifest error.

     Section 2.15 Inability to Determine Interest Rate.

     Notwithstanding any other provision of this Agreement, if (i) the
Administrative Agent shall reasonably determine (which determination shall be
conclusive and binding absent manifest error) that, by reason of circumstances
affecting the relevant market, reasonable and adequate means do not exist for
ascertaining LIBOR for such Interest Period, or (ii) the Required Lenders shall
reasonably determine (which determination shall be conclusive and binding absent
manifest error) that the LIBOR Rate does not adequately and fairly reflect the
cost to such Lenders of funding LIBOR Rate Loans that the Borrower has requested
be outstanding as a LIBOR Tranche during such Interest Period, the
Administrative Agent shall forthwith give telephone notice of such
determination, confirmed in writing, to the Borrower, and the Lenders at least
two Business Days prior to the first day of such Interest Period. Unless the
Borrower shall have notified the Administrative Agent upon receipt of such
telephone notice that it wishes to rescind or modify its request regarding such
LIBOR Rate Loans, any Loans that were requested to be made as LIBOR Rate Loans
shall be made as Alternate Base Rate Loans and any Loans that were requested to
be converted into or continued as LIBOR Rate Loans shall remain as or be
converted into Alternate Base Rate Loans. Until any such notice has been
withdrawn by the Administrative Agent, no further Loans shall be made as,
continued as, or converted into, LIBOR Rate Loans for the Interest Periods so
affected.

     Section 2.16 Illegality.

     Notwithstanding any other provision of this Agreement, if the adoption of
or any change in any Requirement of Law or in the interpretation or application
thereof by the relevant Governmental Authority to any Lender shall make it
unlawful for such Lender or its LIBOR Lending Office to make or maintain LIBOR
Rate Loans as contemplated by this Agreement or to obtain in the interbank
eurodollar market through its LIBOR Lending Office the funds with which to make
such Loans, (a) such Lender shall promptly notify the Administrative Agent and
the Borrower thereof, (b) the commitment of such Lender hereunder to make LIBOR
Rate Loans or continue LIBOR Rate Loans as such shall forthwith be suspended
until the Administrative Agent shall give notice that the condition or situation
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longer exist, and (c) such Lender’s Loans then outstanding as LIBOR Rate Loans,
if any, shall be converted on the last day of the Interest Period for such Loans
or within such earlier period as required by law to Alternate Base Rate Loans.
The Borrower hereby agrees promptly to pay any Lender, upon its demand, any
additional amounts necessary to compensate such Lender for actual and direct
costs (but not including anticipated profits) reasonably incurred by such Lender
including, but not limited to, any interest or fees payable by such Lender to
lenders of funds obtained by it in order to make or maintain its LIBOR Rate
Loans hereunder. A certificate as to any additional amounts payable pursuant to
this Section submitted by such Lender, through the Administrative Agent, to the
Borrower shall be conclusive in the absence of manifest error. Each Lender
agrees to use reasonable efforts (including reasonable efforts to change its
LIBOR Lending Office) to avoid or to minimize any amounts which may otherwise be
payable pursuant to this Section; provided, however, that such efforts shall not
cause the imposition on such Lender of any additional costs or legal or
regulatory burdens deemed by such Lender in its sole discretion to be material.

     Section 2.17 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 such Lender to any tax of any kind whatsoever with
respect to any Letter of Credit, any Participation Interest therein or any
application relating thereto, any LIBOR Rate Loan made by it, or change the
basis of taxation of payments to such Lender in respect thereof (except for
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 which is not otherwise included in the determination of the LIBOR
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 of making or maintaining LIBOR Rate Loans or the Letters of Credit (or
the Participations Interests therein) or to reduce any amount receivable
hereunder or under any Note, 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 additional cost or reduced amount receivable which such
Lender reasonably deems to be material as determined by such Lender with respect
to its LIBOR Rate Loans or Letters of Credit. A certificate as to any additional
amounts payable pursuant to this Section submitted by such Lender, through the
Administrative Agent, to the Borrower shall be conclusive in the absence of
manifest error. Each Lender agrees to use reasonable efforts (including

 

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 reasonable efforts to change its Domestic Lending Office or LIBOR Lending
Office, as the case may be) to avoid or to minimize any amounts which might
otherwise be payable pursuant to this paragraph of this Section; provided,
however, that such efforts shall not cause the imposition on such Lender of any
additional costs or legal or regulatory burdens deemed by such Lender in its
sole discretion to be material.

       (b) If any Lender shall have reasonably 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 central bank
or Governmental Authority made subsequent to the date hereof does or 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 in its sole discretion to be material, then from time to
time, within fifteen days after demand by such Lender, the Borrower shall pay to
such Lender such additional amount as shall be certified by such Lender as being
required to compensate it for such reduction. Such a certificate as to any
additional amounts payable under this Section submitted by a Lender (which
certificate shall include a description of the basis for the computation),
through the Administrative Agent, to the Borrower shall be conclusive absent
manifest error.

       (c) The agreements in this Section 2.17 shall survive the termination of
this Agreement and payment of the Notes and all other amounts payable hereunder.

     Section 2.18 Indemnity.

     The Borrower hereby agrees to indemnify each Lender and to hold such Lender
harmless from any funding loss or expense which such Lender may sustain or incur
as a consequence of (a) the failure of the Borrower to pay the principal amount
of or interest on any Loan by such Lender in accordance with the terms hereof,
(b) the failure of the Borrower to accept a borrowing after the Borrower has
given a notice in accordance with the terms hereof, (c) the failure of the
Borrower to make any prepayment after the Borrower has given a notice in
accordance with the terms hereof, and/or (d) the making by the Borrower of a
prepayment of a Loan, or the conversion thereof, on a day which is not the last
day of the Interest Period with respect thereto, in each case including, but not
limited to, any such loss or expense arising from interest or fees payable by
such Lender to lenders of funds obtained by it in order to maintain its Loans
hereunder, but excluding any such loss or expense due to such Lender’s gross
negligence or willful misconduct. A certificate as to any additional amounts
payable pursuant to this Section submitted by any Lender, through the
Administrative Agent, to the Borrower (which certificate must be delivered to
the Administrative Agent within thirty days following such default, prepayment
or conversion) shall be conclusive in the absence of manifest error. The
agreements in this Section shall survive termination of this Agreement and
payment of the Notes and all other amounts payable hereunder.

 

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     Section 2.19 Taxes.

       (a) All payments made by the Borrower hereunder or under any Note will
be, except as provided in Section 2.19(b), made free and clear of, and without
deduction or withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or hereafter
imposed by any Governmental Authority or by any political subdivision or taxing
authority thereof or therein with respect to such payments (but excluding any
tax imposed on or measured by the net income or profits of a Lender pursuant to
the laws of the jurisdiction in which it is organized or the jurisdiction in
which the principal office or applicable lending office of such Lender is
located or any subdivision thereof or therein) and all interest, penalties or
similar liabilities with respect thereto (all such non-excluded taxes, levies,
imposts, duties, fees, assessments or other charges being referred to
collectively as “Taxes”). If any Taxes are so levied or imposed, the Borrower
agrees to pay the full amount of such Taxes, and such additional amounts as may
be necessary so that every payment of all amounts due under this Credit
Agreement or under any Note, after withholding or deduction for or on account of
any Taxes, will not be less than the amount provided for herein or in such Note.
The Borrower will furnish to the Administrative Agent as soon as practicable
after the date the payment of any Taxes is due pursuant to applicable law
certified copies (to the extent reasonably available and required by law) of tax
receipts evidencing such payment by the Borrower. The Borrower agrees to
indemnify and hold harmless each Lender, and reimburse such Lender upon its
written request, for the amount of any Taxes so levied or imposed and paid by
such Lender.

       (b) Each Lender that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower
and the Administrative Agent on or prior to the Closing Date, or in the case of
a Lender that is an assignee or transferee of an interest under this Credit
Agreement pursuant to Section 9.6(d) (unless the respective Lender was already a
Lender hereunder immediately prior to such assignment or transfer), on the date
of such assignment or transfer to such Lender, (i) if the Lender is a “bank”
within the meaning of Section 881(c)(3)(A) of the Code, two accurate and
complete original signed copies of Internal Revenue Service Form W-8BEN, W-8ECI
or W-8IMY (or successor forms) certifying such Lender’s entitlement to a
complete exemption from United States withholding tax with respect to payments
to be made under this Credit Agreement and under any Note, or (ii) if the Lender
is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, Internal
Revenue Service Form W-8BEN, W-8ECI or W-8IMY as set forth in clause (i) above,
or (x) a certificate in substantially the form of Schedule 2.19 (any such
certificate, a “Tax Exempt Certificate”) and (y) two accurate and complete
original signed copies of Internal Revenue Service Form W-8BEN (or successor
form) certifying such Lender’s entitlement to an exemption from United States
withholding tax with respect to payments of interest to be made under this
Credit Agreement and under any Note. In addition, each Lender agrees that it
will deliver upon the Borrower’s request updated versions of the foregoing, as
applicable, whenever the previous certification has become obsolete or
inaccurate in any material respect, together with such other forms as may be
required in order to

 

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 confirm or establish the entitlement of such Lender to a continued exemption
from or reduction in United States withholding tax with respect to payments
under this Credit Agreement and any Note. Notwithstanding anything to the
contrary contained in Section 2.19(a), but subject to the immediately succeeding
sentence, (x) the Borrower shall be entitled, to the extent it is required to do
so by law, to deduct or withhold Taxes imposed by the United States (or any
political subdivision or taxing authority thereof or therein) from interest,
fees or other amounts payable hereunder for the account of any Lender which is
not a United States person (as such term is defined in Section 7701(a)(30) of
the Code) for U.S. federal income tax purposes to the extent that such Lender
has not provided to the Borrower U.S. Internal Revenue Service Forms that
establish a complete exemption from such deduction or withholding and (y) the
Borrower shall not be obligated pursuant to Section 2.19(a) hereof to gross-up
payments to be made to a Lender in respect of Taxes imposed by the United States
if (I) such Lender has not provided to the Borrower the Internal Revenue Service
Forms required to be provided to the Borrower pursuant to this Section 2.19(b)
or (II) in the case of a payment, other than interest, to a Lender described in
clause (ii) above, to the extent that such Forms do not establish a complete
exemption from withholding of such Taxes. Notwithstanding anything to the
contrary contained in the preceding sentence or elsewhere in this Section 2.19,
the Borrower agrees to pay additional amounts and to indemnify each Lender in
the manner set forth in Section 2.19(a) (without regard to the identity of the
jurisdiction requiring the deduction or withholding) in respect of any amounts
deducted or withheld by it as described in the immediately preceding sentence as
a result of any changes after the Closing Date in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the interpretation
thereof, relating to the deducting or withholding of Taxes.

       (c) Each Lender agrees to use reasonable efforts (including reasonable
efforts to change its Domestic Lending Office or LIBOR Lending Office, as the
case may be) to avoid or to minimize any amounts which might otherwise be
payable pursuant to this Section; provided, however, that such efforts shall not
cause the imposition on such Lender of any additional costs or legal or
regulatory burdens deemed by such Lender in its reasonable discretion to be
material.

       (d) If the Borrower pays any additional amount pursuant to this Section
2.19 with respect to a Lender, such Lender shall use reasonable efforts to
obtain a refund of tax or credit against its tax liabilities on account of such
payment; provided that such Lender shall have no obligation to use such
reasonable efforts if either (i) it is in an excess foreign tax credit position
or (ii) it believes in good faith, in its sole discretion, that claiming a
refund or credit would cause adverse tax consequences to it. In the event that
such Lender receives such a refund or credit, such Lender shall pay to the
Borrower an amount that such Lender reasonably determines is equal to the net
tax benefit obtained by such Lender as a result of such payment by the Borrower.
In the event that no refund or credit is obtained with respect to the Borrower’s
payments to such Lender pursuant to this Section 2.19, then such Lender shall
upon request provide a certification that such Lender has not received a refund
or credit for such payments. Nothing contained in this Section 2.19 shall
require a Lender to disclose or detail the basis of its calculation of the
amount

 

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 of any tax benefit or any other amount or the basis of its determination
referred to in the proviso to the first sentence of this Section 2.19 to the
Borrower or any other party.

       (e) The agreements in this Section 2.19 shall survive the termination of
this Credit Agreement and the payment of the Notes and all other amounts payable
hereunder.

     Section 2.20 Indemnification; Nature of Issuing Lender’s Duties.

       (a) In addition to its other obligations under Section 2.3, the Borrower
hereby agrees to protect, indemnify, pay and save the Issuing Lender and each
Revolving Lender harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys’ fees) that the Issuing Lender or such Revolving Lender may incur or
be subject to as a consequence, direct or indirect, of (i) the issuance of any
Letter of Credit or (ii) the failure of the Issuing Lender to honor a drawing
under a Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions, herein called “Government
Acts”).

       (b) As between the Borrower and the Issuing Lender and each Revolving
Lender, the Borrower shall assume all risks of the acts, omissions or misuse of
any Letter of Credit by the beneficiary thereof. Neither the Issuing Lender nor
any Revolving Lender shall be responsible: (i) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (iii) for failure of the beneficiary of a Letter of
Credit to comply fully with conditions required in order to draw upon a Letter
of Credit; (iv) for errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (v) for errors in interpretation of technical
terms; (vi) for any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under a Letter of Credit or of the
proceeds thereof; and (vii) for any consequences arising from causes beyond the
control of the Issuing Lender or any Revolving Lender, including, without
limitation, any Government Acts. None of the above shall affect, impair, or
prevent the vesting of the Issuing Lender’s rights or powers hereunder.

       (c) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Issuing
Lender or any Revolving Lender, under or in connection with any Letter of Credit
or the related certificates, if taken or omitted in the absence of gross
negligence or willful misconduct, shall not put such Issuing Lender or such
Revolving Lender under any resulting liability to the Borrower. It is the
intention of the parties that this Credit Agreement shall be construed and
applied to protect and indemnify the Issuing Lender and each Revolving

 

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 Lender against any and all risks involved in the issuance of the Letters of
Credit, all of which risks are hereby assumed by the Borrower, including,
without limitation, any and all risks of the acts or omissions, whether rightful
or wrongful, of any Government Authority. The Issuing Lender and the Revolving
Lenders shall not, in any way, be liable for any failure by the Issuing Lender
or anyone else to pay any drawing under any Letter of Credit as a result of any
Government Acts or any other cause beyond the control of the Issuing Lender and
the Revolving Lenders.

       (d) Nothing in this Section 2.20 is intended to limit the reimbursement
obligation of the Borrower contained in Section 2.3(d) hereof. The obligations
of the Borrower under this Section 2.20 shall survive the termination of this
Credit Agreement. No act or omissions of any current or prior beneficiary of a
Letter of Credit shall in any way affect or impair the rights of the Issuing
Lender and the Revolving Lenders to enforce any right, power or benefit under
this Credit Agreement.

       (e) Notwithstanding anything to the contrary contained in this Section
2.20, the Borrower shall have no obligation to indemnify the Issuing Lender or
any Revolving Lender in respect of any liability incurred by the Issuing Lender
or such Revolving Lender arising out of the gross negligence or willful
misconduct of the Issuing Lender (including action not taken by the Issuing
Lender or such Revolving Lender), as determined by a court of competent
jurisdiction or pursuant to arbitration.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

     To induce the Lenders to enter into this Agreement and to make the
Extensions of Credit herein provided for, the Credit Parties hereby represent
and warrant to the Administrative Agent and to each Lender that:

     Section 3.1 Financial Condition.

     The Borrower has delivered the following financial statements to the
Administrative Agent and the Lenders, in form and substance reasonably
satisfactory to the Administrative Agent:

       (a) balance sheets and the related statements of income and of cash flows
of (i) the Borrower for fiscal years ended December 31, 2002 and December 31,
2003 audited by Grant Thornton LLP and (ii) Bioglan and its Subsidiaries for the
fiscal year ended December 31, 2003 audited by PriceWaterhouseCoopers LLP;

       (b) company-prepared unaudited (i) monthly balance sheets and related
statements of income and cash flows for the Borrower through the month most
recently ended prior to the Closing Date for which such statements are
available, (ii) balance sheet(s) of Bioglan and its Subsidiaries as of March 31,
2004 and, June 30, 2004, (iii)

 

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 income statements, cash flows and statements of equity of Bioglan and its
Subsidiaries for the six-month period ended June 30, 2004;

       (c) an opening pro forma balance sheet of the Borrower as of June 30,
2004 in form and substance satisfactory to the Administrative Agent and the
Lenders giving effect to the initial fundings hereunder and the other
transactions to occur on the Closing Date; and

       (d) five-year projections (consisting of projected balance sheets and
statements of income and cash flows prepared by the Borrower) of the Borrower,
which shall have been prepared in good faith based upon reasonable assumptions.

     The financial statements referred to in subsection (a) above are complete
and correct and present fairly the financial condition of the Borrower and its
Subsidiaries as of such dates and the Acquired Company and its Subsidiaries. All
such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as disclosed therein).

     Section 3.2 No Change.

     Since December 31, 2003 there has been no development or event which has
had or could reasonably be expected to have a Material Adverse Effect.

     Section 3.3 Corporate Existence; Compliance with Law.

     Each of the Borrower and the other Credit Parties (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization; (b) has the requisite power and authority and the
legal right to own and operate all 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 to conduct business 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 to the extent that
the failure to so qualify or be in good standing could not, in the aggregate,
reasonably be expected to 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; provided, however, that the Borrower is not in
compliance with certain SEC requirements as set forth in the SEC Letter but such
non-compliance could not reasonably be expected to have a Material Adverse
Effect. Without limiting the generality of the foregoing, each of the Borrower
and the other Credit Parties represents that:

       (i) (A) There is no Credit Party or individual employed by any Credit
Party who may reasonably be expected to have criminal culpability or to be
excluded or suspended from participation in any Medical Reimbursement Program
for their corporate or individual actions or failures to act where such
culpability, exclusion and/or suspension has or could be reasonably expected to
result in a Material Adverse Effect; and (B) there is no member of management
continuing to be employed by any Credit

 

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 Party who may reasonably be expected to have individual culpability for matters
under investigation by any Governmental Authority unless such member of
management has been, within a reasonable period of time after discovery of such
actual or potential culpability, either suspended or removed from positions of
responsibility related to those activities under challenge by the Governmental
Authority and where such failure to suspend or remove such Person has or could
be reasonably expected to result in a Material Adverse Effect;

       (ii) Current billing policies, arrangements, protocols and instructions
comply with requirements of Medical Reimbursement Programs and are administered
by properly trained personnel except where any such failure to comply could not
reasonably be expected to result in a Material Adverse Effect; and

       (iii) Current medical director compensation arrangements, if any, and
other arrangements with referring physicians, if any, comply with state and
federal self-referral and anti-kickback laws, including without limitation 42
U.S.C. Section 1320a-7b(b)(1) - (b)(2) and 42 U.S.C. Section 1395nn, except
where any such failure to comply could not reasonably be expected to result in a
Material Adverse Effect.

     Section 3.4 Corporate Power; Authorization; Enforceable Obligations.

     Each of the Borrower and the other Credit Parties has full power and
authority and the legal right to make, deliver and perform the Credit Documents
to which it is party and has taken all necessary limited liability company or
corporate action to authorize the execution, delivery and performance by it of
the Credit Documents to which it is party. No consent or authorization of,
filing with, notice to or other act by or in respect of, any Governmental
Authority or any other Person (except as it may relate to immaterial contracts)
is required in connection with the borrowings hereunder or with the execution,
delivery or performance of any Credit Document by the Borrower or the other
Credit Parties (other than those which have been obtained) or with the validity
or enforceability of any Credit Document against the Borrower or the other
Credit Parties (except such filings as are necessary in connection with the
perfection of the Liens created by such Credit Documents). Each Credit Document
to which it is a party has been duly executed and delivered on behalf of the
Borrower or the other Credit Parties, as the case may be. Each Credit Document
to which it is a party constitutes a legal, valid and binding obligation of the
Borrower or the other Credit Parties, as the case may be, enforceable against
the Borrower or such other Credit Party, as the case may be, 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 3.5 No Legal Bar; No Default.

     The execution, delivery and performance of the Credit Documents, the
borrowings thereunder and the use of the proceeds of the Loans will not violate
any Requirement of Law or any material Contractual Obligation of the Borrower or
any other Credit Party (except those as to which waivers or consents have been
obtained), and will not result in, or require, the creation or

 

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imposition of any Lien on any of its or their respective properties or revenues
pursuant to any Requirement of Law or Contractual Obligation other than the
Liens arising under or contemplated in connection with the Credit Documents.
Neither the Borrower nor any other Credit Party is in default under or with
respect to any of its Contractual Obligations in any respect which could
reasonably be expected to have a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing.

     Section 3.6 No Material Litigation.

     No litigation, investigation, claim, criminal prosecution, civil
investigative demand, imposition of criminal or civil fines and penalties, or
any other proceeding of or before any arbitrator or Governmental Authority
including but not limited to those regulatory agencies responsible for
licensing, accrediting or issuing Medicare or Medicaid certification to clinical
laboratories is pending or, to the best knowledge of the Credit Parties,
threatened by or against any Credit Party or any of its Subsidiaries or against
any of its or their respective properties or revenues (a) with respect to the
Credit Documents or any Loan or any of the transactions contemplated hereby, or
(b) which, if adversely determined, could reasonably be expected to have a
Material Adverse Effect.

     Section 3.7 Investment Company Act.

     Neither the Borrower nor any other Credit 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.

     Section 3.8 Margin Regulations.

     No part of the proceeds of any Loan hereunder will be used directly or
indirectly for any purpose which violates, or which would be inconsistent with,
the provisions of Regulation T, U or X of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect. The Credit
Parties and their Subsidiaries taken as a group do not own “margin stock” except
as identified in the financial statements referred to in Section 3.1 and the
aggregate value of all “margin stock” owned by the Credit Parties and their
Subsidiaries taken as a group does not exceed 25% of the value of their assets.

     Section 3.9 ERISA.

     Neither a Reportable Event 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 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, except
to the extent that any such occurrence or failure to comply would not reasonably
be expected to have a Material Adverse Effect. No termination of a Single
Employer Plan has occurred resulting in any liability that has remained
underfunded, and no Lien in favor of the PBGC or a Plan has arisen, during such
five-year period which could reasonably be expected to have a Material Adverse
Effect. The present value of all accrued benefits under each

 

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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 an amount which, as determined in
accordance with GAAP, could reasonably be expected to have a Material Adverse
Effect. Neither any Credit Party nor any Commonly Controlled Entity is currently
subject to any liability for a complete or partial withdrawal from a
Multiemployer Plan which could reasonably be expected to have a Material Adverse
Effect.

     Section 3.10 Environmental Matters.

       (a) To the best knowledge of the Borrower and the other Credit Parties,
the facilities and properties owned, leased or operated by the Borrower and the
other Credit Parties or any of their Subsidiaries (the “Properties”) do not
contain any Materials of Environmental Concern in amounts or concentrations
which (i) constitute a violation of, or (ii) could give rise to liability on
behalf of any Credit Party under, any Environmental Law, which could reasonably
be expected to result in a Material Adverse Effect.

       (b) To the best knowledge of the Borrower and the other Credit Parties,
the Properties and all operations of the Borrower and the other Credit Parties
and/or their Subsidiaries at the Properties are in compliance, and have during
the last five years (or in the case of leased Property, during the period of
time that the applicable Credit Party have leased such Property), been in
compliance, in all material respects with all applicable Environmental Laws, and
there is no contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the business operated by the
Borrower and the other Credit Parties or any of their Subsidiaries (the
“Business”) for which any Credit Party could reasonably be expected to have
liability that could result in a Material Adverse Effect.

       (c) Neither the Borrower nor any of the other Credit Parties has received
any written or actual notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or compliance
with Environmental Laws with regard to any of the Properties or the Business,
nor does the Borrower or any of the other Credit Parties nor any of their
Subsidiaries have knowledge or reason to believe that any such notice will be
received or is being threatened.

       (d) To the best knowledge of the Borrower and the other Credit Parties,
Materials of Environmental Concern have not been transported or disposed of from
the Properties in violation of, or in a manner or to a location which could give
rise to liability on behalf of any Credit Party under any Environmental Law,
nor, to the knowledge of any Credit Party, have any Materials of Environmental
Concern been generated, treated, stored or disposed of at, on or under any of
the Properties in violation of, or in a manner that could give rise to liability
on behalf of any Credit Party under, any applicable Environmental Law which
could reasonably be expected to result in a Material Adverse Effect.

 

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       (e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower and the other Credit Parties,
threatened, under any Environmental Law to which the Borrower or any other
Credit Party or any Subsidiary is or will be named as a party with respect to
the Properties or the Business, nor to the knowledge of any Credit Party are
there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Properties or the
Business pursuant to which any Credit Party would have liability which could
reasonably be expected to have a Material Adverse Effect.

       (f) To the best knowledge of the Borrower and the other Credit Parties,
there has been no release or threat of release of Materials of Environmental
Concern at or from the Properties, or arising from or related to the operations
of the Borrower or any other Credit Party or any Subsidiary in connection with
the Properties or otherwise in connection with the Business, in violation of or
in amounts or in a manner that could give rise to liability on behalf of any
Credit Party under Environmental Laws which could reasonably be expected to
result in a Material Adverse Effect.

     Section 3.11 Use of Proceeds.

     The proceeds of the Extensions of Credit shall be used solely by the
Borrower to (i) repay certain existing indebtedness (including the Borrower’s
existing credit facility), (ii) pay any fees and expenses owing to the Lenders
and the Administrative Agent in connection with this Agreement and (iii) provide
for working capital and other general corporate purposes including Permitted
Acquisitions.

     Section 3.12 Subsidiaries.

     Set forth on Schedule 3.12 is a complete and accurate list of all
Subsidiaries of the Credit Parties. Information on the attached Schedule
includes state of incorporation or organization; the number of shares of each
class of Capital Stock or other equity interests outstanding; the number and
percentage of outstanding shares of each class of Capital Stock; and the number
and effect, if exercised, of all outstanding options, warrants, rights of
conversion or purchase and similar rights. The outstanding Capital Stock and
other equity interests of all such Subsidiaries is validly issued, fully paid
and non-assessable and is owned, free and clear of all Liens (other than those
arising under or contemplated in connection with the Credit Documents).

     Section 3.13 Ownership.

     Each Credit Party and its Subsidiaries is the owner of, and has good and
marketable title to, all of its respective assets, except as may be permitted
pursuant Section 6.13 hereof, and none of such assets is subject to any Lien
other than Permitted Liens.

 

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     Section 3.14 Indebtedness.

     Except as otherwise permitted under Section 6.1, the Credit Parties and
their Subsidiaries have no Indebtedness.

     Section 3.15 Taxes.

     Each of the Credit Parties and its Subsidiaries has filed, or caused to be
filed, all tax returns (federal, state, local and foreign) required to be filed
and paid (a) all amounts of taxes shown thereon to be due (including interest
and penalties) and (b) all other taxes, fees, assessments and other governmental
charges (including mortgage recording taxes, documentary stamp taxes and
intangibles taxes) owing by it, except for such taxes (i) which are not yet
delinquent or (ii) that are being contested in good faith and by proper
proceedings, and against which adequate reserves are being maintained in
accordance with GAAP. Neither any of the Credit Parties nor any of its
Subsidiaries are aware as of the Closing Date of any proposed tax assessments
against it or any of its Subsidiaries which could reasonably be expected to have
a Material Adverse Effect.

     Section 3.16 Intellectual Property.

     Each of the Credit Parties and its Subsidiaries owns, or has the legal
right to use, all Intellectual Property to conduct its business as currently
conducted, except to the extent that the failure thereof in the aggregate could
not reasonably be expected to have a Material Adverse Effect. Set forth on
Schedule 3.16 is a list of all Intellectual Property owned by each of the Credit
Parties and its Subsidiaries or that each of the Credit Parties or any of its
Subsidiaries has the right to use. Except as disclosed on Schedule 3.16 hereto,
(a) and except for the licensed Intellectual Property as disclosed on Schedule
3.16, the specified Credit Party has the right to use the material Intellectual
Property disclosed on Schedule 3.16 hereto in perpetuity and without payment of
royalties, (b) all registrations with and applications to Governmental
Authorities in respect of the material Intellectual Property owned by the Credit
Parties, and to the knowledge of the Credit Parties, the material licensed
Intellectual Property, are valid and in full force and effect and are not
subject to the payment of any taxes or maintenance fees to maintain their
validity or effectiveness, and (c) there are no restrictions on the direct or
indirect transfer of any material Intellectual Property, or any interest
therein, held by any of the Credit Parties in respect of any such material
Intellectual Property which has not been obtained. To the knowledge of the
Credit Parties: (i) none of the Credit Parties is in default (or with the giving
of notice or lapse of time or both, would be in default) under any license to
use such material Intellectual Property; (ii) no claim has been asserted and is
pending by any Person challenging or questioning the use of any such material
Intellectual Property or the validity or effectiveness of any such material
Intellectual Property, nor do the Credit Parties or any of their Subsidiaries
know of any such claim which could reasonably be expected to have a Material
Adverse Effect; and, to the knowledge of the Credit Parties or any of their
Subsidiaries, the use of such material Intellectual Property by any of the
Credit Parties or any of its Subsidiaries does not infringe on the rights of any
Person, in each case which could reasonably be expected to have a Material
Adverse Effect. The Credit Parties have recorded or deposited with and paid to
the United States Copyright Office, the Register of Copyrights, the Copyrights
Royalty Tribunal or other Governmental Authority, all notices, statements of
account, royalty fees and other documents and instruments required to be
recorded or deposited by any of the Credit Parties under the terms and
conditions

 

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of any Contractual Obligation of the Credit Parties applicable to the
Intellectual Property and/or under Title 17 of the United States Code and the
rules and regulations issued thereunder (collectively, the “Copyright Act”), and
are not liable to any Person for copyright infringement under the Copyright Act
or any other law, rule, regulation, contract or license as a result of their
business operations. Schedule 3.16 may be updated from time to time by the
Borrower to include new Intellectual Property by giving written notice thereof
to the Administrative Agent.

     Section 3.17 Solvency.

     The fair saleable value of each Credit Party’s assets, measured on a going
concern basis, exceeds all probable liabilities, including those to be incurred
pursuant to this Credit Agreement. None of the Credit Parties (a) has
unreasonably small capital in relation to the business in which it is or
proposes to be engaged or (b) has incurred, or believes that it will incur after
giving effect to the transactions contemplated by this Credit Agreement, debts
beyond its ability to pay such debts as they become due.

     Section 3.18 Investments.

     All Investments of each of the Credit Parties and its Subsidiaries are
Permitted Investments.

     Section 3.19 Location of Collateral.

     Set forth on Schedule 3.19(a) is a list of the Properties of the Credit
Parties and their Subsidiaries with street address, county and state where
located. Set forth on Schedule 3.19(b) is a list of all locations where any
tangible personal property of the Credit Parties and their Subsidiaries with a
fair market value in excess of $25,000 is located, including county and state
where located. Set forth on Schedule 3.19(c) is the chief executive office and
principal place of business of each of the Credit Parties and their Subsidiaries
and the State of incorporation or organization of each such Person. Schedule
3.19(a), 3.19(b) and 3.19(c) may be updated from time to time by the Borrower to
include new properties or locations by giving written notice thereof to the
Administrative Agent.

     Section 3.20 Brokers’ Fees.

     None of the Credit Parties or any of its Subsidiaries has any obligation to
any Person in respect of any finder’s, broker’s, investment banking or other
similar fee in connection with any of the transactions contemplated under the
Credit Documents other than the closing and other fees payable pursuant to this
Credit Agreement.

     Section 3.21 Labor Matters.

     There are no collective bargaining agreements or Multiemployer Plans
covering the employees of any of the Credit Parties or any of its Subsidiaries
as of the Closing Date, other than as set forth in Schedule 3.21 hereto, and
none of the Credit Parties or any of its Subsidiaries (i) has suffered any
strikes, walkouts, work stoppages or other material labor difficulty within the

 

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last five years, other than as set forth in Schedule 3.21 hereto or (ii) has
knowledge of any potential or pending strike, walkout or work stoppage. Other
than as set forth on Schedule 3.21, no unfair labor practice complaint is
pending against any Credit Party or any of its Subsidiaries or, to the best
knowledge of the Credit Parties, before any Governmental Authority.

     Section 3.22 Security Documents.

     The Security Documents create valid security interests in, and Liens on,
the Collateral purported to be covered thereby, which security interests and
Liens are currently (or will be, upon the filing of appropriate financing
statements in favor of the Administrative Agent, on behalf of the Lenders, and
upon the Administrative Agent, on behalf of the Lenders, obtaining Control (as
defined in the Security Agreement) over those items of Collateral in which a
security interest is perfected through Control) perfected security interests and
Liens, prior to all other Liens other than Permitted Liens.

     Section 3.23 Accuracy and Completeness of Information.

     All factual information heretofore, contemporaneously or hereafter
furnished by or on behalf of any Credit Party or any of its Subsidiaries to the
Administrative Agent or any Lender for purposes of or in connection with this
Agreement or any other Credit Document, or any transaction contemplated hereby
or thereby, is or will be true and accurate in all material respects and not
incomplete by omitting to state any material fact necessary to make such
information not misleading. There is no fact now known to the Borrower, any
other Credit Party or any of their Subsidiaries which has, or could reasonably
be expected to have, a Material Adverse Effect which fact has not been set forth
herein, in the financial statements of the Borrower and its Subsidiaries
furnished to the Administrative Agent and/or the Lenders, or in any certificate,
opinion or other written statement made or furnished by any Credit Party to the
Administrative Agent and/or the Lenders.

     Section 3.24 Fraud and Abuse.

     Neither the Credit Parties nor, to the knowledge of the officers of the
Credit Parties, any of their officers or directors, have engaged in any
activities which are prohibited under federal Medicare and Medicaid statutes, 42
U.S.C. ss.1320a-7b, or 42 U.S.C. ss.1395nn or the regulations promulgated
pursuant to such statutes or related state or local statutes or regulations, or
which are prohibited by binding rules of professional conduct, including but not
limited to the following: (a) knowingly and willfully making or causing to be
made a false statement or representation of a material fact in any applications
for any benefit or payment; (b) knowingly and willfully making or causing to be
made any false statement or representation of a material fact for use in
determining rights to any benefit or payment; (c) failing to disclose knowledge
by a claimant of the occurrence of any event affecting the initial or continued
right to any benefit or payment on its own behalf or on behalf of another with
the intent to secure such benefit or payment fraudulently; (d) knowingly and
willfully soliciting or receiving any remuneration (including any kickback,
bribe or rebate), directly or indirectly, overtly or covertly, in cash or in
kind or offering to pay such remuneration (i) in return for referring an
individual to a Person for the furnishing or arranging for the furnishing of any
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made in whole or in part by Medicare, Medicaid or other applicable third party
payors, or (ii) in return for purchasing, leasing or ordering or arranging for
or recommending the purchasing, leasing or ordering of any good, facility,
service, or item for which payment may be made in whole or in part by Medicare,
Medicaid or other applicable third party payors.

     Section 3.25 Licensing and Accreditation.

     Each of the Credit Parties has, to the extent applicable: (a) obtained and
maintains in good standing all required licenses; (b) to the extent prudent and
customary in the industry in which it is engaged, obtained and maintains
accreditation from all generally recognized accrediting agencies; (c) obtained
and maintains Medicaid Certification and Medicare Certification; and (d) entered
into and maintains in good standing its Medicare Provider Agreement and Medicaid
Provider Agreement, if any, except as to (a), (b), and (c) above to the extent
that any such noncompliance could not reasonably be expected to have a Material
Adverse Effect. To the knowledge of the officers of the Credit Parties, all such
required licenses are in full force and effect on the date hereof and have not
been revoked or suspended or otherwise limited.

     Section 3.26 Other Regulatory Protection.

     Each of the Credit Parties and its Subsidiaries represent that it does not
manufacture pharmaceutical products and is in compliance with all rules,
regulations and other requirements of the Food and Drug Administration (“FDA”),
the Drug Enforcement Administration (“DEA”), the Federal Trade Commission
(“FTC”), the Occupational Safety and Health Administration (“OSHA”), the
Department of Agriculture (“USDA”), the Consumer Product Safety Commission, the
United States Customs Service and the United States Postal Service and other
state or federal regulatory authorities or jurisdictions in which any of the
Credit Parties or any of its Subsidiaries do business or distribute and market
pharmaceutical products, except to the extent that any such noncompliance would
not have a Material Adverse Effect. Except as so disclosed, neither the FDA, the
DEA, the FTC, OSHA, the USDA, the Consumer Product Safety Commission, nor any
other such regulatory authority has requested (or, to the Credit Parties’
knowledge, are considering requesting) any product recalls or other enforcement
actions that (a) if not complied with would result in a Material Adverse Effect
and (b) with which the Credit Parties have not complied within the time period
(as may be extended) allowed.

     Section 3.27 Material Contracts.

     Schedule 3.27 sets forth a true and correct and complete list of all
Material Contracts currently in effect. All of the Material Contracts are in
full force and effect and to the knowledge of the Credit Parties no material
defaults currently exist thereunder.

     Section 3.28 Insurance.

     The present insurance coverage of the Credit Parties and their Subsidiaries
is outlined as to carrier, policy number, expiration date, type and amount on
Schedule 3.28 and such insurance

 

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coverage complies with the requirements set forth in Section 5.5(b) or has been
otherwise approved by the Administrative Agent.

     Section 3.29 Reimbursement from Third Party Payors.

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

     Section 3.30 Other Agreements.

     No Credit Party is in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in (i) any Medicaid
Provider Agreement, Medicare Provider Agreement or other agreement or instrument
to which a Credit Party is a party, which default has resulted in, or if not
remedied within any applicable grace period could result in, the revocation,
termination, cancellation or suspension of Medicaid Certification or Medicare
Certification of any Credit Party and which could reasonably be expected to have
a Material Adverse Effect; or (ii) any other agreement or instrument to which
any Credit Party is a party, which default as to items (i) and (ii) above has,
or if not remedied within any applicable grace period could reasonably be
expected to have, a Material Adverse Effect.

     Section 3.31 Classification as Senior Indebtedness.

     The Credit Party Obligations constitute “Senior Indebtedness” and
“Designated Senior Indebtedness” under and as defined in any agreement governing
the outstanding Subordinated Indebtedness, including, without limitation, the
Convertible Bonds, and the subordination provisions set forth in each such
agreement are legally valid and enforceable against the parties thereto.

     Section 3.32 Foreign Assets Control Regulations, Etc.

     None of the Credit Parties and none of their Subsidiaries is an “enemy” or
an “ally of the enemy” within the meaning of Section 2 of the Trading with the
Enemy Act of the United States of America (50 U.S.C. App. ss.ss. 1 et seq.), as
amended. None of the Credit Parties and none of their Subsidiaries is in
violation of (a) the Trading with the Enemy Act, as amended, (b) any of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto or (c) the Patriot Act (as defined in Section 9.19). None
of the Credit Parties (i) is a blocked person

 

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described in section 1 of the Anti-Terrorism Order or (ii) to the best of its
knowledge, engages in any dealings or transactions, or is otherwise associated,
with any such blocked person.

ARTICLE IV

CONDITIONS PRECEDENT

     Section 4.1 Conditions to Closing Date and Initial Extensions of Credit.

     This Agreement shall become effective upon, and the obligation of each
Lender to make the initial Revolving Loans, Term Loan and the Swingline Loans on
the Closing Date is subject to, the satisfaction of the following conditions
precedent:

       (a) Execution of Agreements. The Administrative Agent shall have received
(i) counterparts of this Agreement, (ii) for the account of each applicable
Revolving Lender, a Revolving Note, (iii) for the account of each Term Loan
Lender, a Term Note, (iv) for the account of the Swingline Lender, the Swingline
Note, and (v) counterparts of the Security Agreement, the Pledge Agreement and
each Mortgage Instrument, in each case conforming to the requirements of this
Agreement and executed by a duly authorized officer of each party thereto, and
in each case in form and substance satisfactory to the Lenders.

       (b) Authority Documents. The Administrative Agent shall have received the
following:

       (i) Articles of Incorporation/Charter Documents. Copies of the articles
of incorporation or other charter documents, as applicable, of each Credit Party
certified to be true and complete as of a recent date by the appropriate
Governmental Authority of the state of its incorporation.

       (ii) Resolutions. Copies of resolutions of the board of directors of each
Credit Party approving and adopting the Credit Documents, the transactions
contemplated therein and authorizing execution and delivery thereof, certified
by a secretary or assistant secretary of such Credit Party (pursuant to a
secretary’s certificate in substantially the form of Schedule 4.1-1 attached
hereto) as of the Closing Date to be true and correct and in force and effect as
of such date.

       (iii) Bylaws/Operating Agreement. A copy of the bylaws or comparable
operating agreement of each Credit Party certified by a secretary or assistant
secretary of such Credit Party (pursuant to a secretary’s certificate in
substantially the form of Schedule 4.1-1 attached hereto) as of the Closing Date
to be true and correct and in force and effect as of such date.

       (iv) Good Standing. Copies of (i) certificates of good standing,
existence or its equivalent with respect to the each Credit Party certified as
of a

 

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 recent date by the appropriate Governmental Authorities of the state of
incorporation or organization and each other state in which the failure to so
qualify and be in good standing could reasonably be expected to have a Material
Adverse Effect on the business or operations of the Credit Parties and their
Subsidiaries in such state and (ii) a certificate indicating payment of all
corporate franchise taxes certified as of a recent date by the appropriate
governmental taxing authorities.

       (v) Incumbency. An incumbency certificate of each Credit Party certified
by a secretary or assistant secretary (pursuant to a secretary’s certificate in
substantially the form of Schedule 4.1-1 attached hereto) to be true and correct
as of the Closing Date.

       (c) Legal Opinions of Counsel. The Administrative Agent shall have
received opinions of legal counsel (including local counsel to the extent
required by the Administrative Agent) for the Credit Parties, dated the Closing
Date and addressed to the Administrative Agent and the Lenders, which opinions
shall provide, among other things, that the Credit Parties and their
Subsidiaries are in compliance with all regulatory requirements, corporate
instruments and material agreements on the Closing Date after giving effect to
the transactions contemplated herein and shall otherwise be in form and
substance acceptable to the Administrative Agent.

       (d) Personal Property Collateral. The Administrative Agent shall have
received, in form and substance satisfactory to the Administrative Agent:

       (i) searches of Uniform Commercial Code filings in the jurisdiction of
the chief executive office of each Credit Party, the State of incorporation or
organization of each Credit Party and each jurisdiction where any Collateral is
located or where a filing would need to be made in order to perfect the
Administrative Agent’s security interest in the Collateral, copies of the
financing statements on file in such jurisdictions and evidence that no Liens
exist other than Permitted Liens;

       (ii) UCC financing statements for each appropriate jurisdiction as is
necessary, in the Administrative Agent’s sole discretion, to perfect the
Administrative Agent’s security interest in the Collateral;

       (iii) duly executed consents as are necessary, in the Administrative
Agent’s sole discretion, to perfect the Lenders’ security interest in the
Collateral;

       (iv) in the case of any warehouse, plant or other real property material
to the Credit Parties’ business that is leased by a Credit Party, such estoppel
letters, consents and waivers from the landlords on real property leased by the
Borrower or any of its Subsidiaries as reasonably requested by the
Administrative Agent; and

 

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       (v) all stock certificates, if any, evidencing the Capital Stock pledged
to the Administrative Agent pursuant to the Pledge Agreement, together with duly
executed in blank undated stock powers attached thereto.

       (e) Real Property Collateral. The Administrative Agent shall have
received, in form and substance satisfactory to the Administrative Agent and the
Lenders:

       (i) fully executed and notarized Mortgage Instruments encumbering the
Mortgaged Properties listed in Schedule 4.1-4;

       (ii) a title report obtained by the Credit Parties in respect of each of
the Mortgaged Properties listed in Schedule 4.1-4;

       (iii) a Mortgage Policy with respect to each of the Mortgaged Properties
listed in Schedule 4.1-4;

       (iv) evidence as to (A) whether any Mortgaged Property listed in Schedule
4.1-4 is in an area designated by the Federal Emergency Management Agency as
having special flood or mud slide hazards (a “Flood Hazard Property”) and (B) if
any such Mortgaged Property is a Flood Hazard Property, (1) whether the
community in which such Mortgaged Property is located is participating in the
National Flood Insurance Program, (2) the applicable Credit Party’s written
acknowledgment of receipt of written notification from the Administrative Agent
(x) as to the fact that such Mortgaged Property is a Flood Hazard Property and
(y) as to whether the community in which each such Flood Hazard Property is
located is participating in the National Flood Insurance Program and (z) copies
of insurance policies or certificates of insurance of the Credit Parties
evidencing flood insurance reasonably satisfactory to the Administrative Agent
and naming the Administrative Agent as sole loss payee on behalf of the Lenders;

       (v) Surveys of the Mortgaged Properties listed in Schedule 4.1-4;

       (vi) reasonably satisfactory phase I environmental reports with respect
to each of the Mortgaged Properties listed in Schedule 4.1-4, together with
reliance letters with respect to such reports in favor of the Lenders; and

       (vii) an opinion of counsel to the Credit Parties for each jurisdiction
in which the Mortgaged Properties are located.

       (f) Liability, Casualty and Business Interruption Insurance. The
Administrative Agent shall have received copies of insurance policies or
certificates of insurance evidencing liability and casualty insurance meeting
the requirements set forth herein or in the Security Documents and business
interruption insurance satisfactory to the Administrative Agent. The
Administrative Agent shall be named as loss payee or mortgagee, as its interest
may appear, and/or additional insured with respect to any such

 

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 insurance providing coverage in respect of any Collateral, and each provider of
any such insurance shall agree, by endorsement upon the policy or policies
issued by it or by independent instruments furnished to the Administrative
Agent, that it will give the Administrative Agent thirty days prior written
notice before any such policy or policies shall be altered or canceled.

       (g) Fees. The Administrative Agent and the Lenders shall have received
all fees, if any, owing pursuant to the Fee Letter and Section 2.4.

       (h) Litigation. Except as set forth on Schedule 4.1-2, there shall not
exist pending or, to the knowledge of the Credit Parties’, threatened
litigation, investigation, claim, criminal prosecution, civil investigative
demand, imposition of criminal or civil fines and penalties, or any other
proceeding of or before any arbitrator or Governmental Authority, including but
not limited to those regulatory agencies responsible for licensing, accrediting
or issuing Medicare or Medicaid certifications, by or against any Credit Party
or any of its Subsidiaries or against any of its or their respective properties
or revenues (a) affecting or relating to the Credit Documents or any Loan or any
of the transactions contemplated hereby, or (b) affecting or relating to any
Credit Party or any of its Subsidiaries, that has not been settled, dismissed,
vacated, discharged or terminated prior to the Closing Date.

       (i) Solvency Certificate. The Administrative Agent shall have received an
officer’s certificate prepared by the chief financial officer of the Borrower as
to the financial condition, solvency and related matters of each Credit Party,
in each case after giving effect to the initial borrowings under the Credit
Documents, in substantially the form of Schedule 4.1-3 hereto.

       (j) Account Designation Letter. The Administrative Agent shall have
received the executed Account Designation Letter in the form of Schedule 1.1-1
hereto.

       (k) Corporate Structure. The corporate, capital and ownership structure
of the Credit Parties and their Subsidiaries shall be as described in Schedule
3.12, and shall otherwise be satisfactory to the Administrative Agent and the
Lenders. The Administrative Agent and the Lenders shall be satisfied with the
management of the Credit Parties and their Subsidiaries and with all legal, tax,
accounting, business and other matters relating to the Credit Parties and their
Subsidiaries.

       (l) Consents. The Administrative Agent shall have received evidence that
all governmental, shareholder, board of director and material third party
consents and approvals necessary in connection with the financings and other
transactions contemplated hereby have been obtained and all applicable waiting
periods have expired without any action being taken by any authority that could
restrain, prevent or impose any material adverse conditions on such transactions
or that could seek or threaten any of such transactions.

 

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       (m) Compliance with Laws. The financings and other transactions
contemplated hereby shall be in compliance in all material respects with all
applicable laws and regulations (including all applicable securities and banking
laws, rules and regulations); provided, however, that the Borrower is not in
compliance with certain SEC requirements as set forth in the SEC Letter but such
non-compliance could not reasonably be expected to have a Material Adverse
Effect.

       (n) Bankruptcy. There shall be no bankruptcy or insolvency proceedings
with respect to the any Credit Party or any of its Subsidiaries.

       (o) Material Adverse Effect. No material adverse change shall have
occurred since December 31, 2003 in the business, properties, operations or
financial condition of the Borrower or of the Credit Parties and their
Subsidiaries taken as a whole.

       (p) Minimum Consolidated EBITDA. The Administrative Agent shall have
received evidence satisfactory thereto provided by the Borrower that the
Consolidated EBITDA of the Borrower and its Subsidiaries on a Pro Forma Basis as
of June 30, 2004 shall be no less than $53,000,000.

       (q) Financial Statements. The Administrative Agent shall have received
copies of the financial statements referred to in Section 3.1 hereof, each in
form and substance satisfactory to it.

       (r) Termination of Existing Indebtedness. All existing Indebtedness
(except for Indebtedness set forth on Schedule 6.1(b)) for borrowed money of the
Borrower and its Subsidiaries shall have been repaid in full and all commitments
relating thereto shall have been terminated and all Liens relating thereto shall
have been terminated.

       (s) Officer’s Certificates. The Administrative Agent shall have received
a certificate executed by a Responsible Officer of the Borrower as of the
Closing Date stating that (i) no action, suit, investigation or proceeding is
pending or, to the knowledge of any Credit Party, threatened in any court or
before any arbitrator or governmental instrumentality that purports to affect
any Credit Party or any other transaction contemplated by the Credit Documents,
if such action, suit, investigation or proceeding could reasonably be expected
to have a Material Adverse Effect and (ii) immediately after giving effect to
this Credit Agreement (including the initial Extensions of Credit hereunder),
the other Credit Documents and all the transactions contemplated therein to
occur on such date, (A) no Default or Event of Default exists, (B) all
representations and warranties contained herein and in the other Credit
Documents are true and correct in all material respects, and (C) the Credit
Parties are in compliance with each of the financial covenants set forth in
Section 5.9 in each case after giving effect to the initial borrowings under the
Credit Documents on a pro forma basis, and demonstrating compliance with such
financial covenants.

       (t) Patriot Act Certificate. The Administrative Agent shall have received
a certificate satisfactory thereto, for benefit of itself and the Lenders,
provided by the

 

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 Borrower that sets forth information required by the Patriot Act (as defined in
Section 9.19) including, without limitation, the identity of the Borrower, the
name and address of the Borrower and other information that will allow the
Administrative Agent or any Lender, as applicable, to identify the Borrower in
accordance with the Patriot Act.

       (u) Additional Matters. All other documents and legal matters in
connection with the transactions contemplated by this Agreement shall be
reasonably satisfactory in form and substance to the Administrative Agent and
its counsel.

     Section 4.2 Conditions to All Extensions of Credit.

     The obligation of each Lender to make any Extension of Credit hereunder is
subject to the satisfaction of the following conditions precedent on the date of
making such Extension of Credit:

       (a) Representations and Warranties. The representations and warranties
made by the Credit Parties herein, in the Security Documents or which are
contained in any certificate furnished at any time under or in connection
herewith (i) that contain a materiality qualification shall be true and correct
on and as of the date of such Extension of Credit as if made on and as of such
date and (ii) that do not contain a materiality qualification shall be true and
correct in all material respects on and as of the date of such Extension of
Credit as if made on and as of such date.

       (b) No Default or Event of Default. No Default or Event of Default shall
have occurred and be continuing on such date or after giving effect to the
Extension of Credit to be made on such date unless such Default or Event of
Default shall have been waived in accordance with this Agreement.

       (c) Compliance with Commitments. Immediately after giving effect to the
making of any such Extension of Credit (and the application of the proceeds
thereof), (i) the sum of outstanding Revolving Loans plus outstanding Swingline
Loans plus LOC Obligations shall not exceed the Revolving Committed Amount, (ii)
the LOC Obligations shall not exceed the LOC Committed Amount and (iii) the
Swingline Loans shall not exceed the Swingline Committed Amount.

       (d) Additional Conditions to Extensions of Credit. If such Extension of
Credit is made pursuant to Sections 2.1, 2.2, 2.3 or 2.4 all conditions set
forth in such Section shall have been satisfied.

     Each request for an Extension of Credit and each acceptance by the Borrower
of any such Extension of Credit shall be deemed to constitute a representation
and warranty by the Borrower as of the date of such Extension of Credit that the
applicable conditions in paragraphs (a) through (d) of this Section have been
satisfied.

 

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ARTICLE V

AFFIRMATIVE COVENANTS

     The Credit Parties hereby covenant and agree that on the Closing Date, and
thereafter for so long as this Agreement is in effect and until the Commitments
have terminated, no Note remains outstanding and unpaid and the Credit Party
Obligations, together with interest, Commitment Fees and all other amounts owing
to the Administrative Agent or any Lender hereunder, are paid in full, the
Credit Parties shall, and shall cause each of their Subsidiaries, to:

     Section 5.1 Financial Statements.

     Furnish to the Administrative Agent and each of the Lenders:

       (a) Annual Financial Statements. As soon as available, and in any event
no later than the earlier of (i) the date the Borrower is required by the SEC to
deliver its Form 10-K for any fiscal year of the Borrower and (ii) ninety (90)
days after the end of each fiscal year of the Borrower, a copy of the
consolidated and consolidating balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such fiscal year and the related
consolidated and consolidating statements of income and retained earnings and of
cash flows of the Borrower and its consolidated Subsidiaries for such year,
audited (with respect to the consolidated statements only) by a firm of
independent certified public accountants of nationally recognized standing
reasonably acceptable to the Administrative Agent, in each case setting forth in
comparative form consolidated and consolidating figures for the preceding fiscal
year, reported on without a “going concern” or like qualification or exception,
or qualification indicating that the scope of the audit was inadequate to permit
such independent certified public accountants to certify such financial
statements without such qualification;

       (b) Quarterly Financial Statements. As soon as available, and in any
event no later than the earlier of (i) the date the Borrower is required by the
SEC to deliver its Form 10-Q for any fiscal quarter of the Borrower and (ii)
forty-five (45) days after the end of each of the fiscal quarters of the
Borrower, a company-prepared consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such period and related
company-prepared consolidated statements of income for the Borrower and its
consolidated Subsidiaries for such quarterly period and for the portion of the
fiscal year ending with such period, in each case setting forth in comparative
form consolidated figures for the corresponding period or periods of the
preceding fiscal year (subject to normal recurring year-end audit adjustments)
and including management discussion and analysis of operating results inclusive
of operating metrics in comparative form and a summary of accounts receivable
and accounts payable aging reports in form satisfactory to the Lenders;

       (c) Monthly Financial Statements. As soon as available and in any event
within thirty (30) days after the end of each month of the Borrower from the
Closing Date through the end of fiscal year 2004, a company-prepared
consolidated balance sheet of

 

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 the Borrower and its consolidated Subsidiaries as at the end of such period and
related company-prepared consolidated statements of income for the Borrower and
its consolidated Subsidiaries for such monthly period and for the portion of the
fiscal year ending with such period, in each case setting forth in comparative
form consolidated figures for the corresponding period or periods of the
preceding fiscal year (subject to normal recurring year-end audit adjustments);
and

       (d) Annual Budget Plan. As soon as available, but in any event within
forty-five days (45) after the end of each fiscal year, a copy of the detailed
annual budget or plan of the Borrower for the next fiscal year on a quarterly
basis, in form and detail reasonably acceptable to the Administrative Agent and
the Required Lenders, together with a summary of the material assumptions made
in the preparation of such annual budget or plan;

all such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal recurring
year-end audit adjustments) and to be prepared in reasonable detail and, in the
case of the annual and quarterly financial statements provided in accordance
with subsections (a) and (b) above, in accordance with GAAP applied consistently
throughout the periods reflected therein and further accompanied by a
description of, and an estimation of the effect on the financial statements on
account of, a change, if any, in the application of accounting principles as
provided in Section 1.3.

     Section 5.2 Certificates; Other Information.

     Furnish to the Administrative Agent and each of the Lenders:

       (a) concurrently with the delivery of the financial statements referred
to in Section 5.1(a) above, 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;

       (b) concurrently with the delivery of the financial statements referred
to in Sections 5.1(a) and 5.1(b) above (commencing with the fiscal year and
fiscal quarter ending December 31, 2004), a certificate of a Responsible Officer
stating that, to the best of such Responsible Officer’s knowledge, during such
period each of the Credit Parties observed or performed in all material respects
all of its covenants and other agreements, and satisfied in all material
respects every condition, contained in this Agreement 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
such certificate shall include the calculations in reasonable detail required to
indicate compliance with Section 5.9 as of the last day of such period;

       (c) within ten days after the same are sent, copies of all reports (other
than those otherwise provided pursuant to Section 5.1 and those which are of a
promotional nature) and other financial information which the Borrower sends to
its members and

 

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 equity holders, and within ten days after the same are filed, copies of all
financial statements and non-confidential reports which the Borrower may make
to, or file with the Securities and Exchange Commission or any successor or
analogous Governmental Authority;

       (d) within ninety days after the end of each fiscal year of the Borrower,
a certificate containing information regarding the amount of all Asset
Dispositions, Debt Issuances, and Equity Issuances that were made during the
prior fiscal year and amounts received in connection with any Recovery Event
during the prior fiscal year;

       (e) promptly upon receipt thereof, a copy of any other report or
“management letter” submitted by independent accountants to any Credit Party or
any of its Subsidiaries in connection with any annual, interim or special audit
of the books of such Person; and

       (f) promptly, such additional financial and other information as the
Administrative Agent, on behalf of any Lender, may from time to time reasonably
request.

     Section 5.3 Payment of Obligations.

     Pay, discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, all its taxes (Federal, state, local and
any other taxes) and all its other obligations and liabilities of whatever
nature and any additional costs that are imposed as a result of any failure to
so pay, discharge or otherwise satisfy such obligations and liabilities, except
when the amount or validity of such obligations, liabilities and costs is
currently being contested in good faith by appropriate proceedings and reserves,
if applicable, 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 except
to the extent that failure to so pay, discharge or otherwise satisfy such
obligations and liabilities could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.

     Section 5.4 Conduct of Business and Maintenance of Existence.

     Continue to engage in business of the same general type as now conducted by
it on the Closing Date and preserve, renew and keep in full force and effect its
corporate existence and take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business; comply with all Contractual Obligations and Requirements of Law
applicable to it except to the extent that failure to comply therewith could
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

     Section 5.5 Maintenance of Property; Insurance.

       (a) Keep all material property useful and necessary in its business in
good working order and condition (ordinary wear and tear and obsolescence
excepted);

 

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       (b) Maintain with financially sound and reputable insurance companies
insurance on all its material property (including without limitation its
material tangible Collateral) in at least such amounts and against at least such
risks as are usually insured against in the same general area by companies
engaged in the same or a similar business; and furnish to the Administrative
Agent, upon written request, full information as to the insurance carried. The
Administrative Agent shall be named as loss payee or mortgagee, as its interest
may appear, and/or additional insured with respect to any such insurance
providing coverage in respect of any Collateral, and each provider of any such
insurance shall agree, by endorsement upon the policy or policies issued by it
or by independent instruments furnished to the Administrative Agent, that it
will give the Administrative Agent thirty days prior written notice before any
such policy or policies shall be altered or canceled, and that no act or default
of any Credit Party or any of its Subsidiaries or any other Person shall affect
the rights of the Administrative Agent or the Lenders under such policy or
policies; and

       (c) In case of any material loss, damage to or destruction of the
Collateral of any Credit Party or any part thereof, such Credit Party shall
promptly give written notice thereof to the Administrative Agent generally
describing the nature and extent of such damage or destruction. In case of any
loss, damage to or destruction of the Collateral of any Credit Party or any part
thereof, such Credit Party, whether or not the insurance proceeds, if any,
received on account of such damage or destruction shall be sufficient for that
purpose, at such Credit Party’s cost and expense, will promptly repair or
replace the Collateral of such Credit Party so lost, damaged or destroyed to the
extent such Collateral is reasonably necessary for such Credit Party’s business.

     Section 5.6 Inspection of Property; Books and Records; Discussions.

     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 businesses and activities; and
permit, during regular business hours and upon reasonable notice by the
Administrative Agent or any Lender, the Administrative Agent or any Lender to
visit and inspect any of its properties and examine and make abstracts from any
of its books and records (other than materials protected by the attorney-client
privilege and materials which the Borrower may not disclose without violation of
a confidentiality obligation binding upon it) 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 Credit Parties and their
Subsidiaries with officers and employees of the Credit Parties and their
Subsidiaries and with its independent certified public accountants, in each case
at the Borrower’s expense.

     Section 5.7 Notices.

     Give notice in writing to the Administrative Agent (which shall promptly
transmit such notice to each Lender) of:

 

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       (a) promptly, but in any event within two Business Days after any Credit
Party knows or has reason to know thereof, the occurrence of any Default or
Event of Default;

       (b) promptly, but in any event within three Business Days after any
Credit Party knows or has reason to know thereof, any default or event of
default under any Contractual Obligation of any Credit Party or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect or involve a monetary claim in excess of $1,000,000;

       (c) promptly, but in any event within three Business Days after any
Credit Party knows or has reason to know thereof, any litigation, or any
investigation or proceeding known to a Credit Party, affecting any Credit Party
or any of its Subsidiaries which, if adversely determined, could reasonably be
expected to have a Material Adverse Effect;

       (d) as soon as possible and in any event within thirty days after any
Credit Party knows or has reason to know thereof: (i) the occurrence or expected
occurrence of any Reportable Event with respect to any Plan, a failure to make
any required contribution to a Plan, the creation of any Lien in favor of the
PBGC (other than a Permitted Lien) or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC or any
Credit Party or any Commonly Controlled Entity or any Multiemployer Plan with
respect to the withdrawal from, or the terminating, Reorganization or Insolvency
of, any Plan;

       (e) promptly, of the institution of any investigation or proceeding
against any Credit Party to suspend, revoke or terminate or which may result in
the termination of any Medicaid Provider Agreement, Medicaid Certification,
Medicare Provider Agreement, Medicare Certification or exclusion from any
Medical Reimbursement Program;

       (f) promptly, after any Credit Party becomes involved in a pending civil
or criminal investigation, criminal action or civil proposed debarment,
exclusion or other sanctioning action related to any Federal or state healthcare
program; and

       (g) promptly, any other development or event which 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 proposes to take with respect thereto. In
the case of any notice of a Default or Event of Default, the Borrower shall
specify that such notice is a Default or Event of Default notice on the face
thereof.

 

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     Section 5.8 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 except to the extent that failure to do so could 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 Governmental Authorities regarding Environmental
Laws except to the extent that the same are being contested in good faith by
appropriate proceedings and the pendency of such proceedings could not
reasonably be expected to have a Material Adverse Effect; and

       (c) Defend, indemnify and hold harmless the Administrative Agent and the
Lenders, and their respective employees, agents, officers and directors and
affiliates, from and against any and all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or nature
known or unknown, contingent or otherwise, arising out of, or in any way
relating to the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of the any Credit Party or any of
its Subsidiaries or the Properties, or any orders, requirements or demands of
Governmental Authorities related thereto, including, without limitation,
reasonable attorney’s and consultant’s fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, except to the extent that
any of the foregoing arise out of the gross negligence or willful misconduct of
the party seeking indemnification therefor. The agreements in this paragraph
shall survive repayment of the Notes and all other amounts payable hereunder.

     Section 5.9 Financial Covenants.

     Commencing on the day immediately following the Closing Date, each of the
Credit Parties shall, and shall cause each of its Subsidiaries to, comply with
the following financial covenants:

       (a) Senior Leverage Ratio. At all times during the periods indicated
below, the Senior Leverage Ratio for the twelve month period ending on any date
of determination during any such period shall be less than or equal to the
following:

 

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 Period

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

Ratio

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

  Closing Date through June 30, 2005 2.50 to 1.00   July 1, 2005 through June
30, 2006 2.25 to 1.00   July 1, 2006 and thereafter 2.00 to 1.00

       (b) Leverage Ratio. At all times during the periods indicated below, the
Leverage Ratio for the twelve month period ending on any date of determination
during any such period shall be less than or equal to the following:

 Period

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

Ratio

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

  Closing Date through June 30, 2005 3.00 to 1.00   July 1, 2005 through June
30, 2006 2.75 to 1.00   July 1, 2006 and thereafter 2.50 to 1.0

       (c) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio at all
times shall be greater than or equal to 1.20 to 1.00.

     For purposes of all calculations made in determining compliance with this
Section 5.9 after the Closing Date and through the fiscal quarter ending
September 30, 2005, income statement items and other balance sheet items
(whether positive or negative) attributable to Bioglan and its Subsidiaries
shall be included in such calculations to the extent relating to such applicable
period.

     Section 5.10 Additional Guarantors.

     The Credit Parties will cause each of their Domestic Subsidiaries that is
not an Immaterial Subsidiary, whether newly formed, after acquired or otherwise
existing, to promptly become a Guarantor hereunder by way of execution of a
Joinder Agreement; provided that the Credit Parties shall have no more than five
(5) Immaterial Subsidiaries at any time that are not Guarantors. The guaranty
obligations of any such Additional Credit Party shall be secured by, among other
things, the Collateral of the Additional Credit Party and such Domestic
Subsidiary shall execute and deliver to the Administrative Agent such Security
Documents, legal opinions and related documents as the Administrative Agent may
reasonably request with respect to such Collateral.

     Section 5.11 Compliance with Law.

     Each Credit Party will, and will cause each of its Subsidiaries to, (a)
comply with all laws, rules, regulations and orders, and all applicable
restrictions imposed by all Governmental Authorities, applicable to it and its
Property if noncompliance with any such law, rule, regulation, order or
restriction could reasonably be expected to have a Material Adverse Effect and
(b) conform with and duly observe in all material respects all laws, rules and
regulations and all other valid requirements of any regulatory authority with
respect to the conduct of its business, including without limitation Titles
XVIII and XIX of the Social Security Act, Medicare Regulations, Medicaid
Regulations, and all laws, rules and regulations of Governmental Authorities,
pertaining to the business of the Credit Parties if noncompliance with any such
law,

 

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rule, regulation, order or restriction could reasonably be expected to have a
Material Adverse Effect; and (c) obtain and maintain all licenses, permits,
certifications and approvals of all applicable Governmental Authorities as are
required for the conduct of its business as currently conducted and herein
contemplated, including without limitation professional licenses, Medicaid
Certifications and Medicare Certifications, if failure to do so could have a
Material Adverse Effect. Specifically, but without limiting the foregoing, and
except where any such failure to comply could not reasonably be expected to have
a Material Adverse Effect: (i) billing policies, arrangements, protocols and
instructions will comply with reimbursement requirements under Medicare,
Medicaid and other Medical Reimbursement Programs and will be administered by
properly trained personnel; and (ii) medical director compensation arrangements
and other arrangements with referring physicians will comply with applicable
state and federal self-referral and anti-kickback laws, including without
limitation 42 U.S.C. Section 1320a-7b(b)(1) - (b)(2) 42 U.S.C. and 42 U.S.C.
Section 1395nn.

     Section 5.12 Pledged Assets.

     Each Credit Party will, and will cause each of its Subsidiaries to be
subject at all times to a first priority, perfected Lien with respect to all of
such Subsidiary’s real property and tangible and intangible personal property
(subject in each case to Permitted Liens) in favor of the Administrative Agent
pursuant to the terms and conditions of the Security Documents or such other
security documents as the Administrative Agent shall reasonably request. Each
Credit Party shall, and shall cause each of its Subsidiaries to, adhere to the
covenants set forth in the Security Documents.

     Section 5.13 Post-Closing Covenants.

       (a) The Borrower shall, as soon as possible after the Closing Date
(taking into account the applicable governmental time periods), deliver to the
Administrative Agent a certificate of dissolution or other comparable document
reasonably satisfactory to the Administrative Agent from the appropriate
Governmental Authority evidencing the dissolution of Bradley Pharmaceuticals
(Canada) Inc.

       (b) No later than October 15, 2004 (or such later date as agreed to by
the Administrative Agent) the Borrower shall deliver to the Lenders a pro forma
balance sheet of the Borrower and its subsidiaries as of August 10, 2004, giving
effect to the initial fundings hereunder and the other transactions on the
Closing Date, in form and substance satisfactory to the Administrative Agent and
the Lenders.

       (c) The Borrower shall use its commercially reasonable efforts to deliver
to the Administrative Agent such documentation as may be reasonably required by
the Administrative Agent to correct any chain-of-title issues in the records of
the United States Patent and Trademark Office and the United States Copyright
Office with respect to the IP Collateral of the Credit Parties and to release of
record any security interests filed against such IP Collateral in favor of any
Person other than the Administrative Agent. The Borrower hereby represents and
warrants to the Lenders that none of the IP

 

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 Collateral requiring such chain-of-title or release-of-record corrective
measures is material to the Borrower’s business.

ARTICLE VI

NEGATIVE COVENANTS

     The Credit Parties hereby covenant and agree that on the Closing Date, and
thereafter for so long as this Agreement is in effect and until the Commitments
have terminated, no Note remains outstanding and unpaid and the Credit Party
Obligations, together with interest, Commitment Fee and all other amounts owing
to the Administrative Agent or any Lender hereunder, are paid in full that:

     Section 6.1 Indebtedness.

     Each of the Credit Parties will not, nor will it permit any Subsidiary to,
contract, create, incur, assume or permit to exist any Indebtedness, except:

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

       (b) Indebtedness of the Borrower and its Subsidiaries existing as of the
Closing Date as referenced in the financial statements referenced in Section 3.1
(and set out more specifically in Schedule 6.1(b)) hereto and renewals,
refinancings or extensions thereof in a principal amount not in excess of that
outstanding as of the date of such renewal, refinancing or extension;

       (c) Indebtedness of the Borrower and its Subsidiaries incurred after the
Closing Date consisting of Capital Leases or Indebtedness incurred to provide
all or a portion of the purchase price or cost of construction of an asset
provided that (i) such Indebtedness when incurred shall not exceed the purchase
price or cost of construction of such asset; (ii) no such Indebtedness shall be
refinanced for a principal amount in excess of the principal balance outstanding
thereon at the time of such refinancing; and (iii) the total amount of all such
Indebtedness shall not exceed $5,000,000 at any time outstanding;

       (d) Unsecured intercompany Indebtedness among the Credit Parties,
provided that any such Indebtedness shall be (i) fully subordinated to the
Credit Party Obligations hereunder on terms reasonably satisfactory to the
Administrative Agent and (ii) evidenced by promissory notes which shall be
pledged to the Administrative Agent as Collateral for the Credit Party
Obligations;

       (e) Indebtedness and obligations owing under Secured Hedging Agreements
and other Hedging Agreements entered into in order to manage existing or
anticipated interest rate or exchange rate risks and not for speculative
purposes;

 

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       (f) Indebtedness and obligations of Credit Parties owing under
documentary letters of credit for the purchase of goods or other merchandise
(but not under standby, direct pay or other letters of credit except for the
Letters of Credit hereunder) generally;

       (g) Guaranty Obligations in respect of Indebtedness of a Credit Party to
the extent such Indebtedness is permitted to exist or be incurred pursuant to
this Section 6.1; and

       (h) other Indebtedness of the Borrower and its Subsidiaries which does
not exceed $2,500,000 in the aggregate at any time outstanding.

     Section 6.2 Liens.

     Each of the Credit Parties will not, nor will it permit any Subsidiary to,
contract, create, incur, assume or permit to exist any Lien with respect to any
of its property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or hereafter acquired, except for Permitted
Liens.

     Section 6.3 Nature of Business.

     Each of the Credit Parties will not, nor will it permit any Subsidiary to,
alter the character of its business in any material respect from that conducted
as of the Closing Date.

     Section 6.4 Consolidation, Merger, Sale or Purchase of Assets, etc.

     Each of the Credit Parties will not, nor will it permit any Subsidiary to,

       (a) dissolve, liquidate or wind up its affairs, sell, transfer, lease or
otherwise dispose of its property or assets or agree to do so at a future time
except the following, without duplication, shall be expressly permitted:

       (i) the sale, transfer, lease or other disposition of inventory and
materials in the ordinary course of business

       (ii) the sale, transfer or other disposition of cash and Cash
Equivalents;

       (iii) (A) the disposition of property or assets as a direct result of a
Recovery Event or (B) the sale, lease, transfer or other disposition of
machinery, parts and equipment no longer used or useful in the conduct of the
business of the Borrower or any of its Subsidiaries, so long as the net proceeds
therefrom are used to replace such machinery, parts and equipment or to purchase
or otherwise acquire new assets or property within 180 days of receipt of the
net proceeds;

       (iv) the sale, lease or transfer of property or assets (for fair market
value) between the Borrower and any Guarantor;

 

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       (v) the sale, lease or transfer of property or assets from a Credit Party
other than the Borrower to another Credit Party;

       (vi) the sale, lease or transfer of property or assets not to exceed
$1,000,000 in the aggregate in any fiscal year; and

       (vii) the voluntary termination of Hedging Agreements;

 provided, that, in the case of clauses (i), (ii), (iii) and (vi) above, at
least 75% of the consideration received therefor by the Borrower or any other
Credit Party is in the form of cash or Cash Equivalents; provided, further, that
with respect to sales of assets permitted hereunder only, the Administrative
Agent shall be entitled, without the consent of the Required Lenders, to release
its Liens relating to the particular assets sold; or

       (b) (i) purchase, lease or otherwise acquire (in a single transaction or
a series of related transactions) the property or assets of any Person (other
than purchases or other acquisitions of inventory, leases, licenses,
Intellectual Property, materials, property and equipment in the ordinary course
of business, except as otherwise limited or prohibited herein) or (ii) enter
into any transaction of merger or consolidation, except for (A) investments or
acquisitions permitted pursuant to Section 6.5, and (B) the merger or
consolidation of a Credit Party with and into another Credit Party; provided
that if the Borrower is a party thereto, the Borrower will be the surviving
corporation.

     Section 6.5 Advances, Investments and Loans.

     Each of the Credit Parties will not, nor will it permit any Subsidiary to,
make any Investment except for Permitted Investments.

     Section 6.6 Transactions with Affiliates.

     Except as permitted in subsection (iv) of the definition of Permitted
Investments, each of the Credit Parties will not, nor will it permit any
Subsidiary to, enter into any transaction or series of transactions, whether or
not in the ordinary course of business, with any officer, director, shareholder
or Affiliate other than on terms and conditions substantially as favorable as
would be obtainable in a comparable arm’s-length transaction with a Person other
than an officer, director, shareholder or Affiliate.

     Section 6.7 Ownership of Subsidiaries; Restrictions.

     Each of the Credit Parties will not, nor will it permit any Subsidiary to,
create, form or acquire any Subsidiaries, except for (a) Domestic Subsidiaries,
other than certain Immaterial Subsidiaries, which are joined as Additional
Credit Parties in accordance with the terms hereof and (b) Immaterial
Subsidiaries, subject to the terms of Section 5.10. The Borrower will not sell,
transfer, pledge or otherwise dispose of any Capital Stock or other equity
interests in any of its Subsidiaries, nor will it permit any of its Subsidiaries
to issue, sell, transfer, pledge or otherwise

 

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dispose of any of their Capital Stock or other equity interests, except in a
transaction permitted by Section 6.4.

     Section 6.8 Fiscal Year; Organizational Documents; Material Contracts.

     Each of the Credit Parties will not, nor will it permit any Subsidiary to,
change its fiscal year or its accounting policies. Each of the Credit Parties
will not, nor will it permit any Subsidiary to, amend, modify or change its
articles of incorporation (or corporate charter or other similar organizational
document) or bylaws (or other similar document) without the prior written
consent of the Administrative Agent. Each of the Credit Parties will not, nor
will it permit any Subsidiary to, without the prior written consent of the
Administrative Agent, amend, modify, cancel or terminate or fail to renew or
extend or permit the amendment, modification, cancellation or termination of any
of the Material Contracts, except in the event that such amendments,
modifications, cancellations or terminations could not reasonably be expected to
have a Material Adverse Effect. The Borrower will not, without the prior written
consent of the Required Lenders, amend, modify, waive or extend or permit the
amendment, modification, waiver or extension of any Subordinated Indebtedness or
of any documentation governing or evidencing such Subordinated Indebtedness in a
manner that is adverse to the interests of the Lenders or the issuer of such
Subordinated Indebtedness.

     Section 6.9 Limitation on Restricted Actions.

     Each of the Credit Parties will not, nor will it permit any Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any such Person to
(a) pay dividends or make any other distributions to any Credit Party on its
Capital Stock or with respect to any other interest or participation in, or
measured by, its profits, (b) pay any Indebtedness or other obligation owed to
any Credit Party, (c) make loans or advances to any Credit Party, (d) sell,
lease or transfer any of its properties or assets to any Credit Party, or (e)
act as a Guarantor and pledge its assets pursuant to the Credit Documents or any
renewals, refinancings, exchanges, refundings or extension thereof, except (in
respect of any of the matters referred to in clauses (a)-(d) above) for such
encumbrances or restrictions existing under or by reason of (i) this Agreement
and the other Credit Documents, (ii) applicable law, (iii) any document or
instrument governing Indebtedness incurred pursuant to Section 6.1(c); provided
that any such restriction contained therein relates only to the asset or assets
constructed or acquired in connection therewith, or (iv) any Permitted Lien or
any document or instrument governing any Permitted Lien; provided that any such
restriction contained therein relates only to the asset or assets subject to
such Permitted Lien.

     Section 6.10 Restricted Payments.

     Each of the Credit Parties will not, nor will it permit any Subsidiary to,
directly or indirectly, declare, order, make or set apart any sum for or pay any
Restricted Payment, except (a) to make dividends payable solely in the same
class of Capital Stock of such Person, (b) to make dividends or other
distributions payable to any Credit Party (directly or indirectly through
Subsidiaries), (c) so long as no Default or Event of Default shall have occurred
and be continuing, the Borrower may repurchase shares of its Capital Stock in an
aggregate amount not

 

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to exceed $3,000,000 during the term of this Credit Agreement, (d) so long as no
Default or Event of Default has occurred and is continuing, the Borrower may pay
accrued and unpaid interest on the Convertible Bonds and (e) so long as no
Default or Event of Default has occurred and is continuing or shall result
therefrom, on or after June 15, 2008, to repay the Convertible Bonds.

     Section 6.11 Sale Leasebacks.

     Each of the Credit Parties will not, nor will it permit any Subsidiary to,
directly or indirectly become or remain liable as lessee or as guarantor or
other surety with respect to any lease, whether an operating lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (a) which any Credit Party or any Subsidiary has sold or
transferred or is to sell or transfer to a Person which is not another Credit
Party or Subsidiary or (b) which any Credit Party or any Subsidiary intends to
use for substantially the same purpose as any other property which has been sold
or is to be sold or transferred by such Credit Party or such Subsidiary to
another Person which is not another Credit Party or Subsidiary in connection
with such lease.

     Section 6.12 No Further Negative Pledges.

     Each of the Credit Parties will not, nor will it permit any Subsidiary to,
enter into, assume or become subject to any agreement prohibiting or otherwise
restricting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired, or requiring the grant of any
security for such obligation if security is given for some other obligation,
except (a) pursuant to this Agreement and the other Credit Documents, (b)
pursuant to any document or instrument governing Indebtedness incurred pursuant
to Section 6.1(c), provided that any such restriction contained therein relates
only to the asset or assets constructed or acquired in connection therewith and
(c) in connection with any Permitted Lien or any document or instrument
governing any Permitted Lien, provided that any such restriction contained
therein relates only to the asset or assets subject to such Permitted Lien.

     Section 6.13 Operating Lease Obligations.

     Each of the Credit Parties will not, nor will it permit any Subsidiary to,
enter into, assume or permit to exist any obligations for the payment of rent
under Operating Leases which in the aggregate for all such Persons would exceed
$3,250,000 in any fiscal year.

 

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ARTICLE VII

EVENTS OF DEFAULT

     Section 7.1 Events of Default.

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

       (a) The Borrower shall fail to pay any principal on any Loan when due in
accordance with the terms thereof or hereof; or the Borrower shall fail to
reimburse the Issuing Lender for any LOC Obligations when due in accordance with
the terms hereof; or the Borrower shall fail to pay any interest on any Loan or
any fee or other amount payable hereunder when due in accordance with the terms
thereof or hereof and such failure shall continue unremedied for three Business
Days (or any Guarantor shall fail to pay on the Guaranty in respect of any of
the foregoing or in respect of any other Guaranty Obligations thereunder within
the aforesaid period of time); or

       (b) Any representation or warranty made or deemed made herein, in the
Security Documents or in any of the other Credit Documents or which is contained
in any certificate, document or financial or other statement furnished at any
time under or in connection with this Agreement shall prove to have been
incorrect, false or misleading in any material respect on or as of the date made
or deemed made; or

       (c) (i) Any Credit Party shall fail to perform, comply with or observe
any term, covenant or agreement applicable to it contained in Section 5.1(a),
Section 5.1(b), Section 5.2, Section 5.4, Section 5.7(a), Section 5.9 or Article
VI hereof; or (ii) any Credit Party shall fail to comply with Section 5.1(c) or
Section 5.1(d) and such breach or failure to comply is not cured within ten
Business Days of its occurrence; or (iii) any Credit Party shall fail to comply
with any other covenant, contained in this Credit Agreement or the other Credit
Documents or any other agreement, document or instrument among any Credit Party,
the Administrative Agent and the Lenders or executed by any Credit Party in
favor of the Administrative Agent or the Lenders (other than as described in
Sections 7.1(a), 7.1(b), 7.1(c)(i) or 7.1(c)(ii) above), and in the event such
breach or failure to comply is capable of cure, is not cured within thirty days
of its occurrence; or

       (d) Any Credit Party or any of its Subsidiaries shall (i) default in any
payment of principal of or interest on any Indebtedness (other than the Notes)
in a principal amount outstanding of at least $1,000,000 in the aggregate for
the Credit Parties and their Subsidiaries beyond the period of grace (not to
exceed 30 days), if any, provided in the instrument or agreement under which
such Indebtedness was created; or (ii) default in the observance or performance
of any other agreement or condition relating to any Indebtedness in a principal
amount outstanding of at least $1,000,000 in the aggregate for the Credit
Parties and their Subsidiaries or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist,

 

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 the effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause, with the giving of
notice if required, such Indebtedness to become due prior to its stated
maturity; or (iii) breach or default in any material respect under any Secured
Hedging Agreement; or

       (e) The Credit Parties or any of their Subsidiaries shall default in (i)
the payment when due under any Material Contract or (ii) in the performance or
observance, of any obligation or condition of any Material Contract and such
failure to perform or observe such other obligation or condition continues
unremedied for a period of thirty (30) days after notice of the occurrence of
such default unless, but only as long as, the existence of any such default is
being contested by the Borrower or such Subsidiary in good faith by appropriate
proceedings and adequate reserves in respect thereof have been established on
the books of the Borrower or such Subsidiary to the extent required by GAAP.

       (f) (i) The Borrower or any of the Borrower’s 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 Subsidiary shall make a general assignment for the benefit of
its creditors; or (ii) there shall be commenced against the Borrower or any of
the Borrower’s Subsidiaries any case, proceeding or other action of a nature
referred to in clause (i) above which (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 the Borrower’s 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 which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) the Borrower or any of the
Borrower’s 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
clauses (i), (ii), or (iii) above; or (v) the Borrower or any of its
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) One or more judgments or decrees shall be entered against any Credit
Party or any of its Subsidiaries involving in the aggregate a liability (to the
extent not paid when due or covered by insurance) of $1,000,000 or more and all
such judgments or decrees shall not have been paid and satisfied, vacated,
discharged, stayed or bonded pending appeal within 30 days from the entry
thereof; or

 

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       (h) (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 (other than a Permitted Lien) shall arise on the assets of
any Credit Party 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) any Credit Party or any of its Subsidiaries or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Required Lenders is
likely to, incur any liability in connection with a withdrawal from, or the
Insolvency or Reorganization of, any Multiemployer Plan or (vi) any other
similar event or condition shall occur or exist with respect to a Plan; and in
each case in clauses (i) through (vi) above, such event or condition, together
with all other such events or conditions, if any, could have a Material Adverse
Effect; or

       (i) There shall occur a Change of Control; or

       (j) The Guaranty or any provision thereof shall cease to be in full force
and effect or any Guarantor or any Person acting by or on behalf of any
Guarantor shall deny or disaffirm any Guarantor’s obligations under the
Guaranty; or

       (k) Any other Credit Document shall fail to be in full force and effect
or to give the Administrative Agent and/or the Lenders the security interests,
liens, rights, powers, priority and privileges purported to be created thereby
(except as such documents may be terminated or no longer in force and effect in
accordance with the terms thereof, other than those indemnities and provisions
which by their terms shall survive), or any Credit Party or any Person acting by
or on behalf of any Credit Party shall assert in writing any of the foregoing or
shall deny or disaffirm such Person’s obligations under this Credit Agreement or
any other Credit Document; or

       (l) Any default (which is not waived or cured within the applicable
period of grace) or event of default shall occur under any document governing or
evidencing any Subordinated Indebtedness or the subordination provisions
contained therein shall cease to be in full force and effect or to give the
Lenders the rights, powers and privileges purported to be created thereby; or

       (m) Any Credit Party shall be suspended or excluded from (i) any Medicaid
Provider Agreement, Medicaid Certification, Medicare Provider Agreement,
Medicare Certification or (ii) any Medical Reimbursement Program, where such
exclusion or suspension arises from fraud or other claims or allegations which
could reasonably be expected to have a Material Adverse Effect.

 

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     Section 7.2 Acceleration; Remedies.

     Upon the occurrence of an Event of Default, then, and in any such event,
(a) if such event is an Event of Default specified in Section 7.1(f) above,
automatically the Commitments shall immediately terminate and the Loans (with
accrued interest thereon), and all other amounts under the Credit Documents
(including without limitation the maximum amount of all contingent liabilities
under Letters of Credit) shall immediately become due and payable, and (b) if
such event is any other Event of Default, any or all of the following actions
may be taken: (i) with the written consent of the Required Lenders, the
Administrative Agent may, or upon the written request of the Required Lenders,
the Administrative Agent shall, by notice to the Borrower declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; (ii) the Administrative Agent may, or upon the written
request of the Required Lenders, the Administrative Agent shall, by notice of
default to the Borrower, declare the Loans (with accrued interest thereon) and
all other amounts owing under this Agreement and the Notes to be due and payable
forthwith and direct the Borrower to pay to the Administrative Agent cash
collateral as security for the LOC Obligations for subsequent drawings under
then outstanding Letters of Credit in an amount equal to the maximum amount of
which may be drawn under Letters of Credit then outstanding, whereupon the same
shall immediately become due and payable; (iii) exercise any rights or remedies
of the Administrative Agent or the Lenders under this Agreement or any other
Credit Document, including, without limitation, any rights or remedies with
respect to the Collateral; and (iv) exercise any rights or remedies available to
the Administrative Agent or Lenders under applicable law.

ARTICLE VIII

THE AGENT

     Section 8.1 Appointment.

     Each Lender hereby irrevocably designates and appoints Wachovia as the
Administrative Agent of such Lender under this Credit Agreement, and each such
Lender irrevocably authorizes Wachovia, as the Administrative Agent for such
Lender, to take such action on its behalf under the provisions of this Credit
Agreement and to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this Credit Agreement,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Credit
Agreement, the Administrative Agent shall not 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
Credit Agreement or otherwise exist against the Administrative Agent.

 

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     Section 8.2 Delegation of Duties.

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

     Section 8.3 Exculpatory Provisions.

     Neither the Administrative Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact, Subsidiaries or affiliates shall be (a)
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Credit Agreement (except for its or such
Person’s own gross negligence or willful misconduct) or (b) responsible in any
manner to any of the Lenders for any recitals, statements, representations or
warranties made by any Credit Party or any officer thereof contained in this
Credit Agreement or in any certificate, report, statement or other document
referred to or provided for in, or received by the Administrative Agent under or
in connection with, this Credit Agreement or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of any of the Credit
Documents or for any failure of any Credit Party to perform its obligations
hereunder or thereunder. The Administrative Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance by any Credit Party of any of the agreements contained in, or
conditions of, this Credit Agreement, or to inspect the properties, books or
records of any Credit Party.

     Section 8.4 Reliance by Administrative Agent.

       (a) The Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it in
good faith to be genuine and correct and to have been signed, sent or made by
the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Credit Parties), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless an executed Commitment Transfer Supplement has
been filed with the Administrative Agent pursuant to Section 9.6(c) with respect
to the Loans evidenced by such Note. The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Credit Agreement
unless it shall first receive such advice or concurrence of the Required Lenders
as it deems appropriate or it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
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 such action. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under any of the Credit Documents in
accordance with a request of the Required Lenders or all of the Lenders, as may
be required under this Credit Agreement, and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Notes.

       (b) For purposes of determining compliance with the conditions specified
in Section 4.1, each Lender that has signed this Credit Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to a Lender.

     Section 8.5 Notice of Default.

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

     Section 8.6 Non-Reliance on Administrative Agent and Other Lenders.

     Each Lender expressly acknowledges that neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representation or warranty to it and that no act by the
Administrative Agent hereinafter taken, including any review of the affairs of
any Credit Party, shall be deemed to constitute any representation or warranty
by the Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative 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 Borrower or any other Credit Party and
made its own decision to make its Loans hereunder and enter into this Credit
Agreement. Each Lender also represents that it will, independently and without
reliance upon the Administrative 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 Credit Agreement, 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 Borrower and the other Credit
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reports and other documents expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, the Administrative Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of the Borrower or any other Credit
Party which may come into the possession of the Administrative Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates.

     Section 8.7 Indemnification.

     The Lenders agree to indemnify the Agent in its capacity hereunder (to the
extent not reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so), ratably according to their respective Commitment Percentages
in effect on the date on which indemnification is sought under this Section,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Notes or any Reimbursement Obligation) be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of any Credit Document 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 the Agent under or in connection with any of the
foregoing; provided, however, 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 to the extent
resulting from the Agent’s gross negligence or willful misconduct, as determined
by a court of competent jurisdiction. The agreements in this Section 8.7 shall
survive the termination of this Credit Agreement and payment of the Notes, any
Reimbursement Obligation and all other amounts payable hereunder.

     Section 8.8 The Administrative Agent in Its Individual Capacity.

     The Administrative Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Borrower and
the other Credit Parties as though the Administrative Agent were not the
Administrative Agent hereunder. With respect to the Loans made or renewed by it
and any Note issued to it, the Administrative Agent shall have the same rights
and powers under this Credit Agreement as any Lender and may exercise the same
as though it were not the Administrative Agent, and the terms “Lender” and
“Lenders” shall include the Administrative Agent in its individual capacity.

     Section 8.9 Successor Administrative Agent.

     The Administrative Agent may resign as Administrative Agent upon 30 days’
prior written notice to the Borrower and the Lenders. If the Administrative
Agent shall resign as Administrative Agent under this Credit Agreement and the
other Credit Documents, then the Required Lenders shall appoint from among the
Lenders a successor administrative agent for the Lenders, which successor agent
shall have capital of at least $500,000,000 and be approved by the Borrower
(such approval not to be unreasonably withheld) so long as no Default or Event
of Default has occurred and is continuing, whereupon such successor
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succeed to the rights, powers and duties of the Administrative Agent, and the
term “Administrative Agent” shall mean such successor administrative agent
effective upon such appointment and approval, and the former Administrative
Agent’s rights, powers and duties as Administrative Agent shall be terminated,
without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Credit Agreement or any
holders of the Notes. If no successor Administrative Agent has accepted
appointment as Administrative Agent within thirty (30) days after the retiring
Administrative Agent’s giving notice of resignation, the retiring Administrative
Agent shall have the right, on behalf of the Lenders, to appoint a successor
administrative agent, which successor shall have capital of at least
$500,000,000 and be approved by the Borrower (such approval not to be
unreasonably withheld) so long as no Default or Event of Default has occurred
and is continuing. If no successor administrative agent has accepted appointment
as Administrative Agent within sixty (60) days after the retiring Administrative
Agent’s giving notice of resignation, the retiring Administrative Agent’s
resignation shall nevertheless become effective and the Lenders shall perform
all duties of the Administrative Agent hereunder until such time, if any, as the
Required Lenders appoint a successor administrative agent as provided for above.
After any retiring Administrative Agent’s resignation as Administrative Agent,
the indemnification provisions of this Credit Agreement and the other Credit
Documents and the provisions of this Article VIII shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Administrative
Agent under this Credit Agreement.

     Section 8.10 Other Agents.

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

ARTICLE IX

MISCELLANEOUS

     Section 9.1 Amendments, Waivers and Release of Collateral.

     Neither this Credit Agreement, nor any of the Notes, nor any of the other
Credit Documents, nor any terms hereof or thereof may be amended, supplemented,
waived or modified except in accordance with the provisions of this Section, nor
may the Borrower or any Guarantor be released except in accordance with the
provisions of this Section 9.1. The Required Lenders may, or, with the written
consent of the Required Lenders, the Administrative Agent may, from

 

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time to time, (a) enter into with the Borrower or any other Credit Party written
amendments, supplements or modifications hereto and to the other Credit
Documents for the purpose of adding any provisions to this Credit Agreement or
the other Credit Documents or changing in any manner the rights of the Lenders
or of the Borrower or any other Credit Party hereunder or thereunder or (b)
waive, on such terms and conditions as the Required Lenders may specify in such
instrument, any of the requirements of this Credit Agreement or the other Credit
Documents or any Default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, waiver, supplement,
modification or release shall:

       (i) reduce the amount or extend the scheduled date of maturity of any
Loan or Note or any installment thereon, or reduce the stated rate of any
interest or fee payable hereunder (except in connection with a waiver of
interest at the increased post-default rate set forth in Section 2.9 which shall
be determined by a vote of the Required Lenders) or extend the scheduled date of
any payment thereof or increase the amount or extend the expiration date of any
Lender’s Commitment, in each case without the written consent of each Lender
directly affected thereby; provided that, it is understood and agreed that no
waiver, reduction or deferral of a mandatory prepayment required pursuant to
Section 2.8(b), nor any amendment of Section 2.8(b) or the definitions of Asset
Disposition, Debt Issuance, Equity Issuance, Excess Cash Flow, or Recovery
Event, shall constitute a reduction of the amount of, or an extension of the
scheduled date of, any principal installment of any Loan or Note; or

       (ii) amend, modify or waive any provision of this Section 9.1 or reduce
the percentage specified in the definition of Required Lenders, without the
written consent of all the Lenders directly affected thereby; or

       (iii) amend, modify or waive any provision of Article VIII without the
written consent of the then Administrative Agent; or

       (iv) release the Borrower or all or substantially all of the Guarantors
from their respective obligations hereunder or under the Guaranty, without the
written consent of all of the Lenders and, to the extent the Secured Hedging
Agreements will cease to rank pari passu with the Credit Party Obligations in
connection therewith, all of the Hedging Agreement Providers; or

       (v) release all or substantially all of the Collateral without the
written consent of all of the Lenders and, to the extent the Secured Hedging
Agreements will cease to rank pari passu with the Credit Party Obligations in
connection therewith, all of the Hedging Agreement Providers; or

       (vi) amend, modify or waive any provision of the Credit Documents
requiring consent, approval or request of the Required Lenders or all Lenders,
without the written consent of all of the Required Lenders or Lenders as
appropriate; or

 

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       (vii) without the consent of Lenders holding in the aggregate more than
50% of the outstanding Revolving Commitments (or if the Revolving Commitments
have been terminated, the outstanding Revolving Loans), amend, modify or waive
any provision in Section 4.2 or waive any Default or Event of Default (or amend
any Credit Document to effectively waive any Default or Event of Default) if the
effect of such waiver is that the Lenders shall be required to fund Revolving
Loans when such Lenders would otherwise not be required to do so; or

       (viii) amend, modify or waive any provision of the Credit Documents
affecting the rights or duties of the Administrative Agent, the Issuing Lender
or the Swingline Lender under any Credit Document without the written consent of
the Administrative Agent, the Issuing Lender and/or the Swingline Lender, as
applicable, in addition to the Lenders required hereinabove to take such action;
or

       (ix) amend, modify or waive the order in which Credit Party Obligations
are paid in Section 2.8(b)(vi) or Section 2.13(b), without the written consent
of each Lender and each Hedging Agreement Provider directly affected thereby; or

       (x) amend the definitions of “Credit Party Obligations,” Secured Hedging
Agreement,” or “Hedging Agreement Provider” without the consent of any Hedging
Agreement Provider that would be adversely affected thereby.

     Any such waiver, any such amendment, supplement or modification and any
such release shall apply equally to each of the Lenders and shall be binding
upon the Borrower, the other Credit Parties, the Lenders, the Administrative
Agent and all future holders of the Notes. In the case of any waiver, the
Borrower, the other Credit Parties, the Lenders and the Administrative Agent
shall be restored to their former position and rights hereunder and under the
outstanding Loans and Notes and other Credit Documents, and any Default or Event
of Default permanently 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.

     Notwithstanding any of the foregoing to the contrary, the consent of the
Borrower shall not be required for any amendment, modification or waiver of the
provisions of Article VIII (other than the provisions of Section 8.9); provided,
however, that the Administrative Agent will provide written notice to the
Borrower of any such amendment, modification or waiver. In addition, the
Borrower and the Lenders hereby authorize the Administrative Agent to modify
this Credit Agreement by unilaterally amending or supplementing Schedule 2.1(a)
from time to time in the manner requested by the Borrower, the Administrative
Agent or any Lender in order to reflect any assignments or transfers of the
Loans as provided for hereunder; provided further, however, that the
Administrative Agent shall promptly deliver a copy of any such modification to
the Borrower and each Lender.

     Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote as
such Lender sees fit on any bankruptcy reorganization plan that affects the
Loans, and each Lender acknowledges that the

 

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provisions of Section 1126(c) of the Bankruptcy Code supersedes the unanimous
consent provisions set forth herein and (y) the Required Lenders may consent to
allow a Credit Party to use cash collateral in the context of a bankruptcy or
insolvency proceeding.

     Section 9.2 Notices.

     Except as otherwise provided in Article II, 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 deemed to have been duly given or made (a) when delivered by
hand, (b) when transmitted via telecopy (or other facsimile device) to the
number set out herein, (c) the day following the day on which the same has been
delivered prepaid (or pursuant to an invoice arrangement) to a reputable
national overnight air courier service, or (d) the third Business Day following
the day on which the same is sent by certified or registered mail, postage
prepaid, in each case addressed as follows in the case of the Borrower, the
other Credit Parties and the Administrative Agent, and as set forth on Schedule
9.2 in the case of the Lenders, or to such other address as may be hereafter
notified by the respective parties hereto and any future holders of the Notes:

The Borrower
and the other
Credit Parties: Bradley Pharmaceuticals, Inc.
383 Route 46 West
Fairfield, New Jersey 07084-2402
Attention: R. Brent Lenczycki,
                 Chief Financial Officer
Telecopier: 973-575-5366
Telephone: 973-882-1505 (x510)

with a copy to:

Epstein Becker & Green, P.C.
250 Park Avenue
New York, NY 10177
Attention: Theodore L. Polin, Esq.
Telecopier: (212) 878-8622
Telephone: (212) 351-4522         The Administrative
Agent: Wachovia Bank, National Association, as Administrative Agent
Charlotte Plaza
201 South College Street, CP-8
Charlotte, North Carolina 28288-0680
Attention: Syndication Agency Services
Telecopier: (704) 383-0288
Telephone: (704) 715-8946
 

 

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    with a copy to:

Wachovia Bank, National Association,
One Wachovia Center, DC-5
Charlotte, North Carolina 28288-0737
Attention: Christian Bradeen
                 Agency Management
Telecopier: (704) 383-7611
Telephone: (704) 715-7708  

     Section 9.3 No Waiver; Cumulative Remedies.

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

     Section 9.4 Survival of Representations and Warranties.

     All representations and warranties made hereunder 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 Notes and the
making of the Loans; provided that all such representations and warranties shall
terminate on the date upon which the Commitments have been terminated and all
amounts owing under the Credit Documents have been paid in full.

     Section 9.5 Payment of Expenses and Taxes.

     The Credit Parties agree (a) to pay or reimburse the Administrative Agent
and the Arranger for all their reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation, negotiation, printing
and execution of, and any amendment, supplement or modification to, this
Agreement and the other Credit Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, together with the reasonable fees
and disbursements of counsel to the Administrative Agent and the Arranger, (b)
to pay or reimburse each Lender and the Administrative Agent for all its costs
and expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement and the other Credit Documents, including, without
limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent and to the Lenders (including reasonable allocated costs of
in-house legal counsel), and (c) on demand, to pay, indemnify, and hold each
Lender, the Administrative Agent and the Arranger 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 similar 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,
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under or in respect of, the Credit Documents and any such other documents, and
(d) to pay, indemnify, and hold each Lender, the Administrative Agent, the
Arranger and their Affiliates and their respective officers, directors,
employees, partners, members, counsel, agents, representatives, advisors and
affiliates (collectively called the “Indemnitees”) harmless from and against,
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of the Credit Documents and any such other documents and the use,
or proposed use, of proceeds of the Loans (all of the foregoing, collectively,
the “indemnified liabilities”); provided, however, that the Borrower shall not
have any obligation hereunder to an Indemnitee with respect to indemnified
liabilities arising from the gross negligence or willful misconduct of such
Indemnitee, as determined by a court of competent jurisdiction pursuant to a
final non-appealable judgment. The agreements in this Section 9.5 shall survive
repayment of the Loans, Notes and all other amounts hereunder.

     Section 9.6 Successors and Assigns; Participations; Purchasing Lenders.

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

       (b) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or other
entities (“Participants”) participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Commitment of such Lender, or any
other interest of such Lender hereunder. In the event of any such sale by a
Lender of participating interests 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 Note for all purposes
under this Agreement, and the Borrower and the Administrative Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement. No Lender shall transfer
or grant any participation under which the Participant shall have rights to
approve any amendment to or waiver of this Agreement or any other Credit
Document except to the extent such amendment or waiver would (i) extend the
scheduled maturity of any Loan or Note or any installment thereon in which such
Participant is participating, or reduce the stated rate or extend the time of
payment of interest or fees thereon (except in connection with a waiver of
interest at the increased post-default rate) or reduce the principal amount
thereof, or increase the amount of the Participant’s participation over the
amount thereof then in effect (it being understood that a waiver of any Default
or Event of Default shall not constitute a change in the terms of such
participation, and that an increase in any Commitment or Loan shall be permitted
without consent of any participant if the Participant’s participation is not
increased as a result thereof), (ii) release all or substantially all of the
Guarantors from their obligations under the Guaranty, (iii) release all or
substantially all of the Collateral, or (iv) consent to the assignment or
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 the Borrower of any of its rights and obligations under this Agreement. In the
case of any such participation, the Participant shall not have any rights under
this Agreement or any of the other Credit Documents (the Participant’s rights
against such Lender in respect of such participation to be those set forth in
the agreement executed by such Lender in favor of the Participant relating
thereto) and all amounts payable by the Borrower hereunder shall be determined
as if such Lender had not sold such participation; provided that each
Participant shall be entitled to the benefits of Sections 2.15, 2.16, 2.17, 2.18
and 9.5 with respect to its participation in the Commitments and the Loans
outstanding from time to time; provided further, that no Participant shall be
entitled to receive any greater amount pursuant to such Sections 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.

       (c) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time, sell or assign to any Lender or any
Affiliate or Related Fund thereof and, with the consent of the Administrative
Agent and, so long as no Default or Event of Default has occurred and is
continuing, the Borrower (in each case, which consent shall not be unreasonably
withheld or delayed), to one or more additional banks, insurance companies,
funds or financial institutions or entities (each such Lender, Affiliate,
Related Fund, bank, insurance company, fund or financial institution or entity,
a “Purchasing Lender”), all or any part of its rights and obligations under this
Agreement and the Notes in minimum amounts of (A) $2,000,000 with respect to its
Revolving Commitment or its Revolving Loans and (B) $1,000,000 with respect to
its Term Loan Commitment (or, if less, the entire amount of such Lender’s
obligations), pursuant to a Commitment Transfer Supplement, executed by such
Purchasing Lender and such transferor Lender (and, to the extent required above,
the Administrative Agent and the Borrower), and delivered to the Administrative
Agent for its acceptance and recording in the Register; provided, however, that
any sale or assignment to an existing Lender or an Affiliate or Related Fund of
an existing Lender shall not require the consent of the Administrative Agent or
the Borrower nor shall any such sale or assignment be subject to the minimum
assignment amounts specified herein. Upon such execution, delivery, acceptance
and recording, from and after the Transfer Effective Date specified in such
Commitment Transfer Supplement, (x) the Purchasing Lender thereunder shall be a
party hereto and, to the extent provided in such Commitment Transfer Supplement,
have the rights and obligations of a Lender hereunder with a Commitment as set
forth therein, and (y) the transferor Lender thereunder shall, to the extent
provided in such Commitment Transfer Supplement, be released from its
obligations under this Agreement (and, in the case of a Commitment Transfer
Supplement covering all or the remaining portion of a transferor Lender’s rights
and obligations under this Agreement, such transferor Lender shall cease to be a
party hereto; provided, however, that such Lender shall still be entitled to any
indemnification rights that expressly survive hereunder). Such Commitment
Transfer Supplement shall be deemed to amend this Agreement to the extent, and
only to the extent, necessary to reflect the addition of such Purchasing Lender
and the resulting adjustment of Commitment Percentages arising from the purchase
by such Purchasing Lender of all or a portion of the rights and obligations of
such transferor Lender under this Agreement and the Notes. On or prior to the
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 such Commitment Transfer Supplement, the Borrower, at its own expense, shall
execute and deliver to the Administrative Agent in exchange for the Notes
delivered to the Administrative Agent pursuant to such Commitment Transfer
Supplement new Notes to the order of such Purchasing Lender in an amount equal
to the Commitment assumed by it pursuant to such Commitment Transfer Supplement
and, unless the transferor Lender has not retained a Commitment hereunder, new
Notes to the order of the transferor Lender in an amount equal to the Commitment
retained by it hereunder. Such new Notes shall be dated the Closing Date and
shall otherwise be in the form of the Notes replaced thereby. The Notes
surrendered by the transferor Lender shall be returned by the Administrative
Agent to the Borrower marked “canceled”.

       (d) The Administrative Agent shall maintain at its address referred to in
Section 9.2 a copy of each Commitment Transfer Supplement 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, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register as the
owner of the Loan recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.

       (e) Upon its receipt of a duly executed Commitment Transfer Supplement,
together with payment to the Administrative Agent by the transferor Lender or
the Purchasing Lender, as agreed between them, of a registration and processing
fee of $3,500.00 for each Purchasing Lender (other than a Purchasing Lender that
is an Affiliate of the transferor Lender or a Related Fund) listed in such
Commitment Transfer Supplement and the Notes subject to such Commitment Transfer
Supplement, the Administrative Agent shall (i) accept such Commitment Transfer
Supplement, (ii) record the information contained therein in the Register and
(iii) give prompt notice of such acceptance and recordation to the Lenders and
the Borrower.

       (f) The Borrower authorizes each Lender to disclose to any Participant or
Purchasing Lender (each, a “Transferee”) and any prospective Transferee any and
all financial information in such Lender’s possession concerning the Borrower
and its Affiliates which has been delivered to such Lender by or on behalf of
the Borrower pursuant to this Agreement or which has been delivered to such
Lender by or on behalf of the Borrower in connection with such Lender’s credit
evaluation of the Borrower and its Subsidiaries prior to becoming a party to
this Agreement, in each case subject to Section 9.15.

       (g) At the time of each assignment pursuant to this Section 9.6 to a
Person which is not already a Lender hereunder and which is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code) for Federal
income tax purposes, the respective assignee Lender shall provide to the
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 the appropriate Internal Revenue Service Forms (and, if applicable, a Tax
Exempt Certificate) described in Section 2.18.

       (h) Nothing herein shall prohibit any Lender from pledging or assigning
any of its rights under this Agreement (including, without limitation, any right
to payment of principal and interest under any Note) to secure obligations of
such Lender, including without limitation, (i) any pledge or assignment to
secure obligations to a Federal Reserve Bank and (ii) in the case of any Lender
that is a fund or trust or entity that invests in commercial bank loans in the
ordinary course of business, any pledge or assignment to any holders of
obligations owed, or securities issued, by such Lender including to any trustee
for, or any other representative of, such holders; it being understood that the
requirements for assignments set forth in this Section 9.6 shall not apply to
any such pledge or assignment of a security interest, except with respect to any
foreclosure or similar action taken by such pledgee or assignee with respect to
such pledge or assignment; provided that no such pledge or assignment of a
security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto and
no such pledgee or assignee shall have any voting rights under this Agreement
unless and until the requirements for assignments set forth in this Section 9.6
are complied with in connection with any foreclosure or similar action taken by
such pledgee or assignee.

     Section 9.7 Adjustments; Set-off.

       (a) Each Lender agrees that if any Lender (a “benefited Lender”) shall at
any time receive any payment of all or part of its Loans, or interest thereon,
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 7.1(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 Loans, or interest thereon, such benefited Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender’s Loan, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefited Lender to share the excess payment or benefits
of such collateral or proceeds ratably with each of the Lenders; provided,
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. The Borrower agrees that each Lender so
purchasing a portion of another Lender’s Loans may exercise all rights of
payment (including, without limitation, rights of set-off) with respect to such
portion as fully as if such Lender were the direct holder of such portion.

       (b) In addition to any rights and remedies of the Lenders provided by law
(including, without limitation, other rights of set-off), 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 the
occurrence of any Event of Default, to setoff and appropriate and apply any and
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 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 by or
owing to such Lender or any branch or agency thereof to or for the credit or the
account of the Borrower or any other Credit Party, or any part thereof in such
amounts as such Lender may elect, against and on account of the Loans and other
Credit Party Obligations of the Borrower and the other Credit Parties to such
Lender hereunder and claims of every nature and description of such Lender
against the Borrower and the other Credit Parties, in any currency, whether
arising hereunder, under any other Credit Document or any Hedging Agreement
provided by such Lender pursuant to the terms of this Agreement, as such Lender
may elect, whether or not such Lender has made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured. The aforesaid right of set-off may be exercised by such Lender
against the Borrower, any other Credit Party or against any trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receiver or execution, judgment or attachment creditor of the Borrower or any
other Credit Party, or against anyone else claiming through or against the
Borrower, any other Credit Party or any such trustee in bankruptcy, debtor in
possession, assignee for the benefit of creditors, receiver, or execution,
judgment or attachment creditor, notwithstanding the fact that such right of
set-off shall not have been exercised by such Lender prior to the occurrence of
any Event of Default. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such set-off and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application.

     Section 9.8 Table of Contents and Section Headings.

     The table of contents and the Section and subsection headings herein are
intended for convenience only and shall be ignored in construing this Agreement.

     Section 9.9 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 agreement.

     Section 9.10 Effectiveness.

     This Credit Agreement shall become effective on the date on which all of
the parties have signed a copy hereof (whether the same or different copies) and
shall have delivered the same to the Administrative Agent pursuant to Section
9.2 or, in the case of the Lenders, shall have given to the Administrative Agent
written, telecopied or telex notice (actually received) at such office that the
same has been signed and mailed to it.

 

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     Section 9.11 Severability.

     Any provision of this Agreement which 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 9.12 Integration.

     This Agreement and the other Credit Documents represent the agreement of
the Borrower, the Administrative Agent and the Lenders with respect to the
subject matter hereof, and there are no promises, undertakings, representations
or warranties by the Administrative Agent, the Borrower or any Lender relative
to the subject matter hereof not expressly set forth or referred to herein or in
the other Credit Documents.

     Section 9.13 Governing Law.

     This Agreement and the other Credit Documents and the rights and
obligations of the parties under this Agreement and the other Credit Documents
shall be governed by, and construed and interpreted in accordance with, the law
of the State of New York without regard to principles of conflicts of laws that
would call for the application of the laws of any other jurisdiction.

     Section 9.14 Consent to Jurisdiction and Service of Process.

     All judicial proceedings brought against the Borrower and/or any other
Credit Party with respect to this Agreement, any Note or any of the other Credit
Documents may be brought in any state or federal court of competent jurisdiction
in the State of New York, and, by execution and delivery of this Agreement, each
of the Borrower and the other Credit Parties accepts, for itself and in
connection with its properties, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts and irrevocably agrees to be bound by any
final judgment rendered thereby in connection with this Agreement, any Note or
any other Credit Document from which no appeal has been taken or is available.
Each of the Borrower and the other Credit Parties irrevocably agrees that all
service of process in any such proceedings in any such court may be effected by
mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to it at its address set forth in
Section 9.2 or at such other address of which the Administrative Agent shall
have been notified pursuant thereto, such service being hereby acknowledged by
the each of the Borrower and the other Credit Parties to be effective and
binding service in every respect. Each of the Borrower, the other Credit
Parties, the Administrative Agent and the Lenders irrevocably waives any
objection, including, without limitation, any objection to the laying of venue
based on the grounds of forum non conveniens which it may now or hereafter have
to the bringing of any such action or proceeding in any such jurisdiction.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of any Lender to bring proceedings
against the Borrower or the other Credit Parties in the court of any other
jurisdiction.

 

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     Section 9.15 Arbitration.

       (a) Notwithstanding the provisions of Section 9.14 to the contrary, upon
demand of any party hereto, whether made before or within three months after
institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Agreement and other Credit
Documents (“Disputes”) between or among parties to this Agreement shall be
resolved by binding arbitration as provided herein. Institution of a judicial
proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort claims,
counterclaims, disputes as to whether a matter is subject to arbitration, claims
brought as class actions, claims arising from Credit Documents executed in the
future, or claims arising out of or connected with the transaction reflected by
this Agreement.

       Arbitration shall be conducted under and governed by the Commercial
Arbitration Rules (the “Arbitration Rules”) of the American Arbitration
Association (the “AAA”) and Title 9 of the U.S. Code. All arbitration hearings
shall be conducted in Charlotte, North Carolina. A hearing shall begin within 90
days of demand for arbitration and all hearings shall be concluded within 120
days of demand for arbitration. These time limitations may not be extended
unless a party shows cause for extension and then no more than a total extension
of 60 days. The expedited procedures set forth in Rule 51 et seq. of the
Arbitration Rules shall be applicable to claims of less than $1,000,000. All
applicable statutes of limitation shall apply to any Dispute. A judgment upon
the award may be entered in any court having jurisdiction. Arbitrators shall be
licensed attorneys selected from the Commercial Financial Dispute Arbitration
Panel of the AAA. The parties hereto do not waive applicable Federal or state
substantive law except as provided herein. Notwithstanding the foregoing, this
arbitration provision does not apply to disputes under or related to Hedging
Agreements.

       (b) Notwithstanding the preceding binding arbitration provisions, the
Administrative Agent, the Lenders, the Borrower and the other Credit Parties
agree to preserve, without diminution, certain remedies that the Administrative
Agent on behalf of the Lenders may employ or exercise freely, independently or
in connection with an arbitration proceeding or after an arbitration action is
brought. The Administrative Agent on behalf of the Lenders shall have the right
to proceed in any court of proper jurisdiction or by self-help to exercise or
prosecute the following remedies, as applicable (i) all rights to foreclose
against any real or personal property or other security by exercising a power of
sale granted under Credit Documents or under applicable law or by judicial
foreclosure and sale, including a proceeding to confirm the sale; (ii) all
rights of self-help including peaceful occupation of real property and
collection of rents, set-off, and peaceful possession of personal property;
(iii) obtaining provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and filing an
involuntary bankruptcy proceeding; and (iv) when applicable, a judgment by
confession of judgment. Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a party in a
Dispute.

 

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       (c) The parties hereto agree that they shall not have a remedy of
punitive or exemplary damages against the other in any Dispute and hereby waive
any right or claim to punitive or exemplary damages they have now or which may
arise in the future in connection with any Dispute whether the Dispute is
resolved by arbitration or judicially.

       (d) By execution and delivery of this Agreement, each of the parties
hereto accepts, for itself and in connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction relating to any arbitration
proceedings conducted under the Arbitration Rules in Charlotte, North Carolina
and irrevocably agrees to be bound by any final judgment rendered thereby in
connection with this Agreement from which no appeal has been taken or is
available.

     Section 9.16 Confidentiality.

     The Administrative Agent and each of the Lenders agrees that during the
Commitment Period and for one year thereafter, without the prior consent of the
Borrower, it will use its best efforts not to disclose any information with
respect to the Credit Parties which is furnished pursuant to this Credit
Agreement, any other Credit Document or any documents contemplated by or
referred to herein or therein and which is designated by the Borrower to the
Lenders in writing as confidential or as to which it is otherwise reasonably
clear such information is not public, except that any Lender may disclose any
such information (a) to its employees, Affiliates, auditors and counsel or to
another Lender, (b) as has become generally available to the public other than
by a breach of this Section 9.16, (c) as may be required or appropriate in any
report, statement or testimony submitted to any municipal, state or federal
regulatory body having or claiming to have jurisdiction over such Lender or to
the Federal Reserve Board or the Federal Deposit Insurance Corporation or the
OCC or the NAIC or similar organizations (whether in the United States or
elsewhere) or their successors, (d) as may be required or appropriate in
response to any summons or subpoena or any law, order, regulation or ruling
applicable to such Lender, (e) to any prospective Participant or assignee or
pledgee in connection with any contemplated transfer pursuant to Section 9.6;
provided that such prospective transferee shall have been made aware of this
Section 9.16 and shall have agreed to be bound by its provisions as if it were a
party to this Credit Agreement, (f) to Gold Sheets and other similar bank trade
publications; such information to consist of deal terms and other information
regarding the credit facilities evidenced by this Credit Agreement customarily
found in such publications, (g) in connection with any suit, action or
proceeding for the purpose of defending itself, reducing its liability, or
protecting or exercising any of its claims, rights, remedies or interests under
or in connection with the Credit Documents or any Secured Hedging Agreement, (h)
to any 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 9.16), (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, (j) to a Person that is an investor or prospective investor in a
Securitization (as defined below) that agrees that its access to information
regarding the Borrower and the Loans is solely for purposes of evaluating an

 

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investment in such Securitization; provided that such Person shall have been
made aware of this Section 9.16 and shall have agreed to be bound by its
provisions as if it were a party to this Agreement, or (k) to a Person that is a
trustee, collateral manager, servicer, noteholder or secured party in a
Securitization in connection with the administration, servicing and reporting on
the assets serving as collateral for such Securitization; provided that such
Person shall have been made aware of this Section 9.16 and shall have agreed to
be bound by its provisions as if it were a party to this Agreement. For purposes
of this Section “Securitization” shall mean a public or private offering by a
Lender or any of its affiliates or their respective successors and assigns, of
securities which represent an interest in, or which are collateralized in whole
or in part by, the Loans.

     Section 9.17 Acknowledgments.

     The Borrower and the other Credit Parties each hereby acknowledges that:

       (a) it has been advised by counsel in the negotiation, execution and
delivery of each Credit Document;

       (b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower or any other Credit Party arising out
of or in connection with this Agreement and the relationship between
Administrative Agent and Lenders, on one hand, and the Borrower and the other
Credit Parties, on the other hand, in connection herewith is solely that of
debtor and creditor; and

       (c) no joint venture exists among the Lenders or among the Borrower or
the other Credit Parties and the Lenders.

     Section 9.18 Waivers of Jury Trial; Waiver of Consequential Damages.

     THE BORROWER, THE OTHER CREDIT PARTIES, THE ADMINISTRATIVE AGENT AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
Each the Borrower, the other Credit Parties, the Administrative Agent and the
Lenders agree not to assert any claim against any other party to this Credit
Agreement or any their respective directors, officers, employees, attorneys,
Affiliates or agents, on any theory of liability, for special, indirect,
consequential or punitive damages arising out of or otherwise relating to any of
the transactions contemplated herein.

     Section 9.19 Patriot Act Notice.

     Each Lender and the Administrative Agent (for itself and not on behalf of
any other party) hereby notifies the Borrower that, pursuant to the requirements
of the USA Patriot Act, Title III of Pub. L. 107-56, signed into law October 26,
2001 (the “Patriot Act”), it is required to obtain, verify and record
information that identifies the Borrower, which information includes

 

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the name and address of the Borrower and other information that will allow such
Lender or the Administrative Agent, as applicable, to identify the Borrower in
accordance with the Patriot Act.

ARTICLE X

GUARANTY

     Section 10.1 The Guaranty.

     In order to induce the Lenders to enter into this Credit Agreement and any
Hedging Agreement Provider to enter into any Secured Hedging Agreement and to
extend credit hereunder and thereunder and in recognition of the direct benefits
to be received by the Guarantors from the Extensions of Credit hereunder and any
Secured Hedging Agreement, each of the Guarantors hereby agrees with the
Administrative Agent, the Lenders and the Hedging Agreement Providers as
follows: the Guarantor hereby unconditionally and irrevocably jointly and
severally guarantees as primary obligor and not merely as surety the full and
prompt payment when due, whether upon maturity, by acceleration or otherwise, of
any and all indebtedness of the Borrower to the Administrative Agent, the
Lenders and the Hedging Agreement Providers. If any or all of the indebtedness
becomes due and payable hereunder or under any Secured Hedging Agreement, each
Guarantor unconditionally promises to pay such indebtedness to the
Administrative Agent, the Lenders, the Hedging Agreement Providers, or their
respective order, or demand, together with any and all reasonable expenses which
may be incurred by the Administrative Agent or the Lenders in collecting any of
the Credit Party Obligations. The word “indebtedness” is used in this Article X
in its most comprehensive sense and includes any and all advances, debts,
obligations and liabilities of the Borrower, including specifically all Credit
Party Obligations, arising in connection with this Credit Agreement, the other
Credit Documents or any Secured Hedging Agreement, in each case, heretofore,
now, or hereafter made, incurred or created, whether voluntarily or
involuntarily, absolute or contingent, liquidated or unliquidated, determined or
undetermined, whether or not such indebtedness is from time to time reduced, or
extinguished and thereafter increased or incurred, whether the Borrower may be
liable individually or jointly with others, whether or not recovery upon such
indebtedness may be or hereafter become barred by any statute of limitations,
and whether or not such indebtedness may be or hereafter become otherwise
unenforceable.

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

     Section 10.2 Bankruptcy.

     Additionally, each of the Guarantors unconditionally and irrevocably
guarantees jointly and severally the payment of any and all Credit Party
Obligations of the Borrower to the Lenders

 

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and any Hedging Agreement Provider whether or not due or payable by the Borrower
upon the occurrence of any of the events specified in Section 7.1(f), and
unconditionally promises to pay such Credit Party Obligations to the
Administrative Agent for the account of the Lenders and to any such Hedging
Agreement Provider, or order, on demand, in lawful money of the United States.
Each of the Guarantors further agrees that to the extent that the Borrower or a
Guarantor shall make a payment or a transfer of an interest in any property to
the Administrative Agent, any Lender or any Hedging Agreement Provider, which
payment or transfer or any part thereof is subsequently invalidated, declared to
be fraudulent or preferential, or otherwise is avoided, and/or required to be
repaid to the Borrower or a Guarantor, the estate of the Borrower or a
Guarantor, a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then to the extent of such
avoidance or repayment, the obligation or part thereof intended to be satisfied
shall be revived and continued in full force and effect as if said payment had
not been made.

     Section 10.3 Nature of Liability.

     The liability of each Guarantor hereunder is exclusive and independent of
any security for or other guaranty of the Credit Party Obligations of the
Borrower whether executed by any such Guarantor, any other guarantor or by any
other party, and no Guarantor’s liability hereunder shall be affected or
impaired by (a) any direction as to application of payment by the Borrower or by
any other party, or (b) any other continuing or other guaranty, undertaking or
maximum liability of a guarantor or of any other party as to the Credit Party
Obligations of the Borrower, or (c) any payment on or in reduction of any such
other guaranty or undertaking, or (d) any dissolution, termination or increase,
decrease or change in personnel by the Borrower, or (e) any payment made to the
Administrative Agent, the Lenders or any Hedging Agreement Provider on the
Credit Party Obligations which the Administrative Agent, such Lenders or such
Hedging Agreement Provider repay the Borrower pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding, and each of the Guarantors waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding.

     Section 10.4 Independent Obligation.

     The obligations of each Guarantor hereunder are independent of the
obligations of any other Guarantor or the Borrower, and a separate action or
actions may be brought and prosecuted against each Guarantor whether or not
action is brought against any other Guarantor or the Borrower and whether or not
any other Guarantor or the Borrower is joined in any such action or actions.

     Section 10.5 Authorization.

     Each of the Guarantors authorizes the Administrative Agent, each Lender and
each Hedging Agreement Provider without notice or demand (except as shall be
required by applicable statute and cannot be waived), and without affecting or
impairing its liability hereunder, from time to time to (a) renew, compromise,
extend, increase, accelerate or otherwise change the time for payment of, or
otherwise change the terms of the Credit Party Obligations or

 

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any part thereof in accordance with this Agreement and any Secured Hedging
Agreement, as applicable, including any increase or decrease of the rate of
interest thereon, (b) take and hold security from any Guarantor or any other
party for the payment of this Guaranty or the Credit Party Obligations and
exchange, enforce waive and release any such security, (c) apply such security
and direct the order or manner of sale thereof as the Administrative Agent and
the Lenders in their discretion may determine and (d) release or substitute any
one or more endorsers, Guarantors, the Borrower or other obligors.

     Section 10.6 Reliance.

     It is not necessary for the Administrative Agent, the Lenders or any
Hedging Agreement Provider to inquire into the capacity or powers of the
Borrower or the officers, directors, members, partners or agents acting or
purporting to act on its behalf, and any Credit Party Obligations made or
created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.

     Section 10.7 Waiver.

       (a) Each of the Guarantors waives any right (except as shall be required
by applicable statute and cannot be waived) to require the Administrative Agent,
any Lender or any Hedging Agreement Provider to (i) proceed against the
Borrower, any other guarantor or any other party, (ii) proceed against or
exhaust any security held from the Borrower, any other guarantor or any other
party, or (iii) pursue any other remedy in the Administrative Agent’s, any
Lender’s or any Hedging Agreement Provider’s power whatsoever. Each of the
Guarantors waives any defense based on or arising out of any defense of the
Borrower, any other guarantor or any other party other than payment in full of
the Credit Party Obligations (other than contingent indemnity obligations),
including without limitation any defense based on or arising out of the
disability of the Borrower, any other guarantor or any other party, or the
unenforceability of the Credit Party Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of the Borrower other
than payment in full of the Credit Party Obligations. The Administrative Agent
may, at its election, foreclose on any security held by the Administrative Agent
by one or more judicial or nonjudicial sales (to the extent such sale is
permitted by applicable law), or exercise any other right or remedy the
Administrative Agent or any Lender may have against the Borrower or any other
party, or any security, without affecting or impairing in any way the liability
of any Guarantor hereunder except to the extent the Credit Party Obligations
have been paid in full and the Commitments have been terminated. Each of the
Guarantors waives any defense arising out of any such election by the
Administrative Agent or any of the Lenders, even though such election operates
to impair or extinguish any right of reimbursement or subrogation or other right
or remedy of the Guarantors against the Borrower or any other party or any
security.

       (b) Each of the Guarantors waives all presentments, demands for
performance, protests and notices, including without limitation notices of
nonperformance, notice of protest, notices of dishonor, notices of acceptance of
this Guaranty, and notices of the existence, creation or incurring of new or
additional Credit

 

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 Party Obligations. Each Guarantor assumes all responsibility for being and
keeping itself informed of the Borrower’s financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Credit Party
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that neither the Administrative Agent
nor any Lender shall have any duty to advise such Guarantor of information known
to it regarding such circumstances or risks.

       (c) Each of the Guarantors hereby agrees it will not exercise any rights
of subrogation which it may at any time otherwise have as a result of this
Guaranty (whether contractual, under Section 509 of the U.S. Bankruptcy Code, or
otherwise) to the claims of the Lenders or any Hedging Agreement Provider
against the Borrower or any other guarantor of the Credit Party Obligations of
the Borrower owing to the Lenders or such Hedging Agreement Provider
(collectively, the “Other Parties”) and all contractual, statutory or common law
rights of reimbursement, contribution or indemnity from any Other Party which it
may at any time otherwise have as a result of this Guaranty until such time as
the Credit Party Obligations shall have been paid in full and the Commitments
have been terminated. Each of the Guarantors hereby further agrees not to
exercise any right to enforce any other remedy which the Administrative Agent,
the Lenders or any Hedging Agreement Provider now have or may hereafter have
against any Other Party, any endorser or any other guarantor of all or any part
of the Credit Party Obligations of the Borrower and any benefit of, and any
right to participate in, any security or collateral given to or for the benefit
of the Lenders and/or the Hedging Agreement Providers to secure payment of the
Credit Party Obligations of the Borrower until such time as the Credit Party
Obligations (other than contingent indemnity obligations) shall have been paid
in full and the Commitments have been terminated.

     Section 10.8 Limitation on Enforcement.

     The Lenders and the Hedging Agreement Providers agree that this Guaranty
may be enforced only by the action of the Administrative Agent acting upon the
instructions of the Required Lenders or such Hedging Agreement Provider (only
with respect to obligations under the applicable Secured Hedging Agreement) and
that no Lender or Hedging Agreement Provider shall have any right individually
to seek to enforce or to enforce this Guaranty, it being understood and agreed
that such rights and remedies may be exercised by the Administrative Agent for
the benefit of the Lenders under the terms of this Credit Agreement and for the
benefit of any Hedging Agreement Provider under any Secured Hedging Agreement.
The Lenders and the Hedging Agreement Providers further agree that this Guaranty
may not be enforced against any director, officer, employee or stockholder of
the Guarantors.

     Section 10.9 Confirmation of Payment.

     The Administrative Agent and the Lenders will, upon request after payment
of the indebtedness and obligations which are the subject of this Guaranty and
termination of the Commitments relating thereto, confirm to the Borrower, the
Guarantors or any other Person that such indebtedness and obligations have been
paid and the Commitments relating thereto terminated, subject to the provisions
of Section 10.2.

 

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BRADLEY PHARMACEUTICALS, INC.
CREDIT AGREEMENT

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

BORROWER: BRADLEY PHARMACEUTICALS, INC.,
a Delaware corporation       By: /s/ R. Brent Lenczycki

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Name: R. Brent Lenczycki
Title: CFO & Vice President         GUARANTORS: DOAK DERMATOLOGICS, INC.,
a New York corporation       By: /s/ R. Brent Lenczycki

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Name: R. Brent Lenczycki
Title: CFO & Vice President           BIOGLAN PHARMACEUTICALS CORP.,
a Delaware corporation       By: /s/ R. Brent Lenczycki

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Name: R. Brent Lenczycki
Title: CFO & Vice President

 

   

 

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BRADLEY PHARMACEUTICALS, INC.
CREDIT AGREEMENT

ADMINISTRATIVE AGENT
AND LENDERS: WACHOVIA BANK, NATIONAL
ASSOCIATION,
as Administrative Agent and as a Lender       By: /s/ Chris McCoy

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Name: Chris McCoy
Title: Vice President

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BRADLEY PHARMACEUTICALS, INC.
CREDIT AGREEMENT

  KEY BANK NATIONAL ASSOCIATION,
as a Lender       By: /s/ Christopher A. Swindell

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Name: Christopher A. Swindell
Title: Portfolio Manager

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BRADLEY PHARMACEUTICALS, INC.
CREDIT AGREEMENT

  RAYMOND JAMES BANK, FSB,
as a Lender       By: /s/ Andrew D. Hahn

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Name: Andrew D. Hahn
Title: Vice President

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BRADLEY PHARMACEUTICALS, INC.
CREDIT AGREEMENT

  BROWN BROTHERS HARRIMAN & CO.,
as a Lender       By: /s/ Donald H. Roberts, Jr.

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Name: Donald H. Roberts, Jr.
Title: Senior Vice President

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BRADLEY PHARMACEUTICALS, INC.
CREDIT AGREEMENT

  JPMORGAN CHASE BANK,
as a Lender       By: /s/ Catherine Brody

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Name: Catherine Brody
Title: Vice President

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BRADLEY PHARMACEUTICALS, INC.
CREDIT AGREEMENT

  FIRSTRUST BANK,
as a Lender       By: /s/ Bryan T. Denney

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Name: Bryan T. Denney
Title: Vice President

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BRADLEY PHARMACEUTICALS, INC.
CREDIT AGREEMENT

  FLEET NATIONAL BANK,
as a Lender       By: /s/ Laura H. McAulay

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Name: Laura H. McAulay
Title: Senior Vice President

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BRADLEY PHARMACEUTICALS, INC.
CREDIT AGREEMENT

  RZB FINANCE LLC,
as a Lender       By: /s/ Astrid Wilke

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Name: Astrid Wilke
Title: Vice President

By: /s/ Christoph Hoedl

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Name: Christoph Hoedl
Title: Vice President

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BRADLEY PHARMACEUTICALS, INC.
CREDIT AGREEMENT

  PNC BANK, NATIONAL ASSOCIATION,
as a Lender       By: /s/ Brian J. Clark

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Name: Brian J. Clark Title:
Senior Vice President

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BRADLEY PHARMACEUTICALS, INC.
CREDIT AGREEMENT

  GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender       By: /s/ Keith Kennedy

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Name: Keith Kennedy
Title: Duly Authorized Signatory

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BRADLEY PHARMACEUTICALS, INC.
CREDIT AGREEMENT

  CITIBANK F.S.B.,
as a Lender       By: /s/ Thomas J. Harris

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Name: Thomas J. Harris
Title: Group Vice President

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BRADLEY PHARMACEUTICALS, INC.
CREDIT AGREEMENT

  SOVEREIGN BANK,
as a Lender       By: /s/ Eric Ritter

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Name: Eric Ritter
Title: AVP

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BRADLEY PHARMACEUTICALS, INC.
CREDIT AGREEMENT

  COMMERCEBANK, N.A.,
as a Lender       By: /s/ Peter L. Davis

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Name: Peter L. Davis
Title: SVP

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